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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q



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(Mark One)



|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007

OR



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from                      to

Commission File
Number 001-33201



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DCT INDUSTRIAL TRUST INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Maryland                                                       |  | 82-0538520                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|518 Seventeenth Street, Suite 1700 Denver, Colorado            |  | 80202                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(303) 597-2400

(Registrants telephone number, including area code)

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  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

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



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As of October 31, 2007, 168,429,204 shares of common stock of DCT Industrial Trust Inc., par value $0.01 per share, were outstanding.



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##### Table of Contents

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Index to Form 10-Q



|           |  |                                                                                                                                      |  |     
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|           |  |                                                                                                                                      |  | Page
|PART I.    |  | FINANCIAL INFORMATION                                                                                                                |  |     
|           |  |                                                                                                                                     
|Item 1.    |  | Financial Statements:                                                                                                                |  |     
|           |  |                                                                                                                                     
|           |  | Consolidated Balance Sheets as of September 30, 2007 (unaudited) and December 31, 2006                                               |  | 1   
|           |  |                                                                                                                                     
|           |  | Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2007 and 2006 (unaudited)                    |  | 2   
|           |  |                                                                                                                                     
|           |  | Consolidated Statement of Stockholders Equity and Other Comprehensive Loss for the Nine Months Ended September 30, 2007 (unaudited) |  | 3   
|           |  |                                                                                                                                     
|           |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006 (unaudited)                              |  | 4   
|           |  |                                                                                                                                     
|           |  | Notes to Consolidated Financial Statements (unaudited)                                                                               |  | 5   
|           |  |                                                                                                                                     
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                |  | 23  
|           |  |                                                                                                                                     
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                           |  | 45  
|           |  |                                                                                                                                     
|Item 4.    |  | Controls and Procedures                                                                                                              |  | 46  
|           |  |                                                                                                                                     
|PART II.   |  | OTHER INFORMATION                                                                                                                    |  |     
|           |  |                                                                                                                                     
|Item 1.    |  | Legal Proceedings                                                                                                                    |  | 46  
|           |  |                                                                                                                                     
|Item 1A.   |  | Risk Factors                                                                                                                         |  | 46  
|           |  |                                                                                                                                     
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                          |  | 46  
|           |  |                                                                                                                                     
|Item 3.    |  | Defaults upon Senior Securities                                                                                                      |  | 46  
|           |  |                                                                                                                                     
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                                  |  | 46  
|           |  |                                                                                                                                     
|Item 5.    |  | Other Information                                                                                                                    |  | 46  
|           |  |                                                                                                                                     
|Item 6.    |  | Exhibits                                                                                                                             |  | 47  
|           | 
|SIGNATURES |  | 48                                                                                                                                  



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##### Table of Contents

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share information)



|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                       |  | September 30,2007 |           |   | December 31,2006 |  
|                                                                                                                                                       |  | (unaudited)       |           |   |                  |  
|ASSETS                                                                                                                                                 |  |                   |           |   |                  |   |           |  
|Land                                                                                                                                                   |  | $                 | 502,871   |   |                  | $ | 513,143   |  
|Buildings and improvements                                                                                                                             |  |                   | 2,083,661 |   |                  |   | 2,120,821 |  
|Intangible lease assets                                                                                                                                |  |                   | 181,342   |   |                  |   | 198,222   |  
|Construction in progress                                                                                                                               |  |                   | 25,244    |   |                  |   | 32,702    |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Total Investment in Properties                                                                                                                         |  |                   | 2,793,118 |   |                  |   | 2,864,888 |  
|Less accumulated depreciation and amortization                                                                                                         |  |                   | (281,185  | ) |                  |   | (199,574  | )
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Net Investment in Properties                                                                                                                           |  |                   | 2,511,933 |   |                  |   | 2,665,314 |  
|Investments in and advances to unconsolidated joint ventures                                                                                           |  |                   | 67,177    |   |                  |   | 42,336    |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Net Investment in Real Estate                                                                                                                          |  |                   | 2,579,110 |   |                  |   | 2,707,650 |  
|Cash and cash equivalents                                                                                                                              |  |                   | 56,137    |   |                  |   | 23,310    |  
|Notes receivable                                                                                                                                       |  |                   | 25,207    |   |                  |   | 9,205     |  
|Deferred loan costs, net                                                                                                                               |  |                   | 5,160     |   |                  |   | 6,175     |  
|Deferred loan costs  financing obligations, net                                                                                                       |  |                   | 5,314     |   |                  |   | 16,467    |  
|Straight-line rent and other receivables                                                                                                               |  |                   | 22,727    |   |                  |   | 17,137    |  
|Other assets, net                                                                                                                                      |  |                   | 22,476    |   |                  |   | 27,637    |  
|Assets held for sale                                                                                                                                   |  |                   | 16,287    |   |                  |   | 41,895    |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Total Assets                                                                                                                                           |  | $                 | 2,732,418 |   |                  | $ | 2,849,476 |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                   |  |                   |           |   |                  |   |           |  
|Liabilities:                                                                                                                                           |  |                   |           |   |                  |   |           |  
|Accounts payable and accrued expenses                                                                                                                  |  | $                 | 31,296    |   |                  | $ | 27,341    |  
|Distributions payable                                                                                                                                  |  |                   | 32,394    |   |                  |   | 30,777    |  
|Tenant prepaids and security deposits                                                                                                                  |  |                   | 13,705    |   |                  |   | 12,329    |  
|Other liabilities                                                                                                                                      |  |                   | 3,717     |   |                  |   | 14,135    |  
|Intangible lease liability, net                                                                                                                        |  |                   | 12,948    |   |                  |   | 17,595    |  
|Lines of credit                                                                                                                                        |  |                   |          |   |                  |   | 34,278    |  
|Senior unsecured notes                                                                                                                                 |  |                   | 425,000   |   |                  |   | 425,000   |  
|Mortgage notes                                                                                                                                         |  |                   | 646,703   |   |                  |   | 641,081   |  
|Financing obligations                                                                                                                                  |  |                   | 57,433    |   |                  |   | 191,787   |  
|Liabilities related to assets held for sale                                                                                                            |  |                   | 140       |   |                  |   | 276       |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Total Liabilities                                                                                                                                      |  |                   | 1,223,336 |   |                  |   | 1,394,599 |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Minority interests                                                                                                                                     |  |                   | 317,352   |   |                  |   | 225,920   |  
|Stockholders equity:                                                                                                                                  |  |                   |           |   |                  |   |           |  
|Preferred stock, $0.01 par value, 50,000,000 shares authorized, none outstanding                                                                       |  |                   |          |   |                  |   |          |  
|Shares-in-trust, $0.01 par value, 100,000,000 shares authorized, none outstanding                                                                      |  |                   |          |   |                  |   |          |  
|Common stock, $0.01 par value, 350,000,000 shares authorized, 168,354,596 shares issued and outstanding as of September 30, 2007 and
December 31, 2006 |  |                   | 1,684     |   |                  |   | 1,684     |  
|Additional paid-in capital                                                                                                                             |  |                   | 1,594,551 |   |                  |   | 1,595,808 |  
|Distributions in excess of earnings                                                                                                                    |  |                   | (403,995  | ) |                  |   | (357,076  | )
|Accumulated other comprehensive loss                                                                                                                   |  |                   | (510      | ) |                  |   | (11,459   | )
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Total Stockholders Equity                                                                                                                             |  |                   | 1,191,730 |   |                  |   | 1,228,957 |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  
|Total Liabilities and Stockholders Equity                                                                                                             |  | $                 | 2,732,418 |   |                  | $ | 2,849,476 |  
|                                                                                                                                                       |  |                   |           |   |                  |   |           |  

The accompanying notes are an integral part of these Consolidated Financial Statements.



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##### Table of Contents

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited, in thousands, except per share information)



|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                               |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                               |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|REVENUES:                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Rental revenues                                                                |  | $                               | 63,627  |   |                                | $ | 60,908  |      |  | $ | 191,610 |   |  | $ | 155,025 |  
|Institutional capital management and other fees                                |  |                                 | 417     |   |                                |   | 220     |      |  |   | 1,735   |   |  |   | 398     |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total Revenues                                                                 |  |                                 | 64,044  |   |                                |   | 61,128  |      |  |   | 193,345 |   |  |   | 155,423 |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|OPERATING EXPENSES:                                                            |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Rental expenses                                                                |  |                                 | 7,086   |   |                                |   | 7,033   |      |  |   | 22,410  |   |  |   | 15,704  |  
|Real estate taxes                                                              |  |                                 | 8,294   |   |                                |   | 7,829   |      |  |   | 25,062  |   |  |   | 20,324  |  
|Real estate related depreciation and amortization                              |  |                                 | 29,761  |   |                                |   | 29,536  |      |  |   | 86,918  |   |  |   | 79,128  |  
|General and administrative                                                     |  |                                 | 5,102   |   |                                |   | 1,399   |      |  |   | 14,835  |   |  |   | 3,341   |  
|Asset management fees, related party                                           |  |                                 |        |   |                                |   | 5,092   |      |  |   |        |   |  |   | 12,907  |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total Operating Expenses                                                       |  |                                 | 50,243  |   |                                |   | 50,889  |      |  |   | 149,225 |   |  |   | 131,404 |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Operating Income                                                               |  |                                 | 13,801  |   |                                |   | 10,239  |      |  |   | 44,120  |   |  |   | 24,019  |  
|OTHER INCOME AND EXPENSE:                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Equity in income (losses) of unconsolidated joint ventures, net                |  |                                 | 56      |   |                                |   | (72     | )    |  |   | 99      |   |  |   | (254    | )
|Interest expense                                                               |  |                                 | (14,716 | ) |                                |   | (20,489 | )    |  |   | (46,787 | ) |  |   | (46,646 | )
|Interest income and other                                                      |  |                                 | 839     |   |                                |   | 476     |      |  |   | 3,978   |   |  |   | 4,998   |  
|Income taxes                                                                   |  |                                 | (294    | ) |                                |   | (358    | )    |  |   | (1,278  | ) |  |   | (598    | )
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (Loss) Before Minority Interests                                        |  |                                 | (314    | ) |                                |   | (10,204 | )    |  |   | 132     |   |  |   | (18,481 | )
|Minority interests                                                             |  |                                 | 80      |   |                                |   | 284     |      |  |   | 132     |   |  |   | 711     |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (Loss) From Continuing Operations                                       |  |                                 | (234    | ) |                                |   | (9,920  | )    |  |   | 264     |   |  |   | (17,770 | )
|Income (loss) from discontinued operations                                     |  |                                 | (226    | ) |                                |   | 224     |      |  |   | 7,982   |   |  |   | 484     |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (Loss) Before Gain (Loss) On Disposition Of Real Estate Interests       |  |                                 | (460    | ) |                                |   | (9,696  | )    |  |   | 8,246   |   |  |   | (17,286 | )
|Gain (loss) on dispositions of real estate interests, net of minority interest |  |                                 | 11,709  |   |                                |   | (469    | )    |  |   | 26,195  |   |  |   | 7,430   |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|NET INCOME (LOSS)                                                              |  | $                               | 11,249  |   |                                | $ | (10,165 | )    |  | $ | 34,441  |   |  | $ | (9,856  | )
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|INCOME PER COMMON SHARE  BASIC:                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (Loss) From Continuing Operations                                       |  | $                               | (0.00   | ) |                                | $ | (0.07   | )    |  | $ | 0.00    |   |  | $ | (0.12   | )
|Income (loss) from discontinued operations                                     |  |                                 | (0.00   | ) |                                |   | 0.00    |      |  |   | 0.05    |   |  |   | 0.00    |  
|Gain (loss) on dispositions of real estate interests, net of minority interest |  |                                 | 0.07    |   |                                |   | (0.00   | )    |  |   | 0.15    |   |  |   | 0.05    |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net Income (Loss)                                                              |  | $                               | 0.07    |   |                                | $ | (0.07   | )    |  | $ | 0.20    |   |  | $ | (0.07   | )
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|INCOME PER COMMON SHARE  DILUTED:                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (Loss) From Continuing Operations                                       |  | $                               | (0.00   | ) |                                | $ | (0.07   | )    |  | $ | 0.00    |   |  | $ | (0.12   | )
|Income (loss) from discontinued operations                                     |  |                                 | (0.00   | ) |                                |   | 0.00    |      |  |   | 0.05    |   |  |   | 0.00    |  
|Gain (loss) on dispositions of real estate interests, net of minority interest |  |                                 | 0.07    |   |                                |   | (0.00   | )    |  |   | 0.15    |   |  |   | 0.05    |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net Income (Loss)                                                              |  | $                               | 0.07    |   |                                | $ | (0.07   | )    |  | $ | 0.20    |   |  | $ | (0.07   | )
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Basic                                                                          |  |                                 | 168,355 |   |                                |   | 150,725 |      |  |   | 168,355 |   |  |   | 148,731 |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Diluted                                                                        |  |                                 | 201,956 |   |                                |   | 150,725 |      |  |   | 199,135 |   |  |   | 148,731 |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  

The accompanying notes are an integral part of these Consolidated Financial Statements.



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##### Table of Contents

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders Equity

And Other Comprehensive Loss

For the Nine Months Ended September 30, 2007

(unaudited, in thousands)



|                                                                                                |  |              |  |                           |       |  |                                    |           |   |                                     |   |          |                           |  |   |         |   |  |   |           |  
|----------------------------------------------------------------------------------------------- |  | ------------ |  | ------------------------- | ----- |  | ---------------------------------- | --------- | - | ----------------------------------- | - | -------- | ------------------------- |  | - | ------- | - |  | - | --------- | -
|                                                                                                |  |              |  | Additional Paid-inCapital |       |  | Distributions in Excess ofEarnings |           |   | Accumulated Other ComprehensiveLoss |   |          | Total StockholdersEquity | 
|                                                                                                |  | Common Stock |  |                           |       | 
|                                                                                                |  | Shares       |  | Amount                    |       |  |                                    |          
|Balance at December 31, 2006                                                                    |  | 168,355      |  | $                         | 1,684 |  | $                                  | 1,595,808 |   |                                     | $ | (357,076 | )                         |  | $ | (11,459 | ) |  | $ | 1,228,957 |  
|Cumulative impact of change in accounting for uncertainty in income taxes (FIN 48  see Note 1) |  |             |  |                           |      |  |                                    |          |   |                                     |   | (500     | )                         |  |   |        |   |  |   | (500      | )
|Comprehensive income:                                                                           |  |              |  |                           |       |  |                                    |           |   |                                     |   |          |                           |  |   |         |   |  |   |           |  
|Net income                                                                                      |  |             |  |                           |      |  |                                    |          |   |                                     |   | 34,441   |                           |  |   |        |   |  |   | 34,441    |  
|Net unrealized gain on cash flow hedging derivatives                                            |  |             |  |                           |      |  |                                    |          |   |                                     |   |         |                           |  |   | 10,167  |   |  |   | 10,167    |  
|Settled hedges                                                                                  |  |             |  |                           |      |  |                                    |          |   |                                     |   |         |                           |  |   | 327     |   |  |   | 327       |  
|Amortization of cash flow hedging derivatives                                                   |  |             |  |                           |      |  |                                    |          |   |                                     |   |         |                           |  |   | 455     |   |  |   | 455       |  
|                                                                                                |  |              |  |                           |       |  |                                    |           |   |                                     |   |          |                           |  |   |         |   |  |   |           |  
|Comprehensive income                                                                            |  |              |  |                           |       |  |                                    |           |   |                                     |   |          |                           |  |   |         |   |  |   | 45,390    |  
|                                                                                                |  |              |  |                           |       |  |                                    |           |   |                                     |   |          |                           |  |   |         |   |  |   |           |  
|Offering costs related to issuance of common stock                                              |  |             |  |                           |      |  |                                    | (1,479    | ) |                                     |   |         |                           |  |   |        |   |  |   | (1,479    | )
|Amortization of stock-based compensation                                                        |  |             |  |                           |      |  |                                    | 504       |   |                                     |   |         |                           |  |   |        |   |  |   | 504       |  
|Premium related to redemptions of OP Units                                                      |  |             |  |                           |      |  |                                    | (282      | ) |                                     |   |         |                           |  |   |        |   |  |   | (282      | )
|Distributions on common stock                                                                   |  |             |  |                           |      |  |                                    |          |   |                                     |   | (80,860  | )                         |  |   |        |   |  |   | (80,860   | )
|                                                                                                |  |              |  |                           |       |  |                                    |           |   |                                     |   |          |                           |  |   |         |   |  |   |           |  
|Balance at September 30, 2007                                                                   |  | 168,355      |  | $                         | 1,684 |  | $                                  | 1,594,551 |   |                                     | $ | (403,995 | )                         |  | $ | (510    | ) |  | $ | 1,191,730 |  
|                                                                                                |  |              |  |                           |       |  |                                    |           |   |                                     |   |          |                           |  |   |         |   |  |   |           |  

The accompanying notes are an integral part of these Consolidated Financial Statements.



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##### Table of Contents

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited, in thousands)



|                                                                                                                     |  |                                |          |   |      |   |          |  
|-------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                                                     |  | Nine Months EndedSeptember 30, |         
|                                                                                                                     |  | 2007                           |          |   | 2006 |  
|OPERATING ACTIVITIES:                                                                                                |  |                                |          |   |      |   |          |  
|Net income (loss)                                                                                                    |  | $                              | 34,441   |   |      | $ | (9,856   | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:                             |  |                                |          |   |      |   |          |  
|Minority interests                                                                                                   |  |                                | 6,068    |   |      |   | (588     | )
|Real estate related depreciation and amortization                                                                    |  |                                | 86,933   |   |      |   | 82,764   |  
|Gain on disposition of real estate interests                                                                         |  |                                | (27,828  | ) |      |   | (3,476   | )
|Gain on dispositions of non-depreciated real estate                                                                  |  |                                | (12,737  | ) |      |   | (4,074   | )
|(Gain) loss on hedging activities                                                                                    |  |                                | (1,458   | ) |      |   | 11       |  
|Distributions of earnings from unconsolidated joint ventures                                                         |  |                                | 904      |   |      |   | 251      |  
|Equity in income of unconsolidated joint ventures, net, and other                                                    |  |                                | (2,493   | ) |      |   | (4,983   | )
|Changes in operating assets and liabilities:                                                                         |  |                                |          |   |      |   |          |  
|Other receivables and other assets                                                                                   |  |                                | (2,372   | ) |      |   | 1,144    |  
|Accounts payable, accrued expenses and other liabilities                                                             |  |                                | 5,670    |   |      |   | 15,727   |  
|                                                                                                                     |  |                                |          |   |      |   |          |  
|Net cash provided by operating activities                                                                            |  |                                | 87,128   |   |      |   | 76,920   |  
|                                                                                                                     |  |                                |          |   |      |   |          |  
|INVESTING ACTIVITIES:                                                                                                |  |                                |          |   |      |   |          |  
|Real estate acquisitions                                                                                             |  |                                | (157,239 | ) |      |   | (957,734 | )
|Capital expenditures                                                                                                 |  |                                | (36,511  | ) |      |   | (63,959  | )
|Decrease in deferred acquisition costs and deposits                                                                  |  |                                | 8,188    |   |      |   | (4,531   | )
|Proceeds from dispositions of real estate investments                                                                |  |                                | 333,596  |   |      |   | 116,050  |  
|Investments in unconsolidated joint ventures                                                                         |  |                                | (75,999  | ) |      |   | (15,678  | )
|Distributions from investments in unconsolidated joint ventures                                                      |  |                                | 39,552   |   |      |   |         |  
|Originations of notes receivable                                                                                     |  |                                | (16,042  | ) |      |   | (650     | )
|Other investing activities                                                                                           |  |                                | (315     | ) |      |   | 1,046    |  
|                                                                                                                     |  |                                |          |   |      |   |          |  
|Net cash provided by (used in) investing activities                                                                  |  |                                | 95,230   |   |      |   | (925,456 | )
|                                                                                                                     |  |                                |          |   |      |   |          |  
|FINANCING ACTIVITIES:                                                                                                |  |                                |          |   |      |   |          |  
|Net proceeds from (payments on) lines of credit                                                                      |  |                                | (34,278  | ) |      |   | 164,996  |  
|Proceeds from unsecured notes                                                                                        |  |                                |         |   |      |   | 425,000  |  
|Principal payments on mortgage notes                                                                                 |  |                                | (10,424  | ) |      |   | (5,064   | )
|Proceeds from financing obligations                                                                                  |  |                                |         |   |      |   | 121,322  |  
|Principal payments on financing obligations                                                                          |  |                                | (5,971   | ) |      |   | (6,136   | )
|Increase in deferred loan costs                                                                                      |  |                                | (137     | ) |      |   | (502     | )
|Increase in deferred loan costs  financing obligation                                                               |  |                                |         |   |      |   | (12,198  | )
|Proceeds from sale of common stock                                                                                   |  |                                |         |   |      |   | 153,411  |  
|Offering costs for issuance of common stock and OP Units                                                             |  |                                | (2,901   | ) |      |   | (9,220   | )
|Redemption of common stock                                                                                           |  |                                |         |   |      |   | (16,802  | )
|Redemption of OP Units                                                                                               |  |                                | (2,840   | ) |      |   |         |  
|Proceeds from settlement of cash flow hedging derivative                                                             |  |                                | 1,544    |   |      |   |         |  
|Distributions to common stockholders                                                                                 |  |                                | (80,845  | ) |      |   | (39,101  | )
|Distributions to minority interests                                                                                  |  |                                | (13,880  | ) |      |   | (2,581   | )
|Contributions from minority interests                                                                                |  |                                | 201      |   |      |   |         |  
|                                                                                                                     |  |                                |          |   |      |   |          |  
|Net cash provided by (used in) financing activities                                                                  |  |                                | (149,531 | ) |      |   | 773,125  |  
|                                                                                                                     |  |                                |          |   |      |   |          |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                 |  |                                | 32,827   |   |      |   | (75,411  | )
|CASH AND CASH EQUIVALENTS, beginning of period                                                                       |  |                                | 23,310   |   |      |   | 94,918   |  
|                                                                                                                     |  |                                |          |   |      |   |          |  
|CASH AND CASH EQUIVALENTS, end of period                                                                             |  | $                              | 56,137   |   |      | $ | 19,507   |  
|                                                                                                                     |  |                                |          |   |      |   |          |  
|Supplemental Disclosures of Cash Flow Information                                                                    |  |                                |          |   |      |   |          |  
|Cash paid for interest                                                                                               |  | $                              | 53,236   |   |      | $ | 43,335   |  
|Amount issued in common stock pursuant to the distribution reinvestment plan                                         |  | $                              |         |   |      | $ | 37,720   |  
|Debt assumed in connection with purchase of TIC Interests (see Note 5)                                               |  | $                              | 14,886   |   |      | $ |         |  
|Reduction of financing obligation and issuance of OP Units in connection with purchase of TIC Interests (see Note 5) |  | $                              | 113,497  |   |      | $ | 34,926   |  
|Assumption of secured debt in connection with real estate acquired                                                   |  | $                              | 8,821    |   |      | $ | 12,369   |  

The accompanying notes are an integral part of these Consolidated Financial Statements.



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DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 1  Organization and Summary
of Significant Accounting Policies

Organization

DCT Industrial Trust Inc. is a leading real estate company specializing in the ownership, acquisition, development and management of bulk distribution and light industrial properties located in 24 of the highest volume distribution markets
in the United States, and is expanding into Mexico. In addition, we manage, and own interests in, industrial properties through our institutional capital management program. We were formed as a Maryland corporation in April 2002 and have elected to
be treated as a real estate investment trust (REIT) for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2003. We are structured as an umbrella partnership REIT under which substantially all
of our current and future business is, and will be, conducted through a majority owned and controlled subsidiary, DCT Industrial Operating Partnership LP (our operating partnership), a Delaware limited partnership, for which DCT
Industrial Trust Inc. is the sole general partner. As used herein, DCT Industrial Trust, the Company, we, our and us refer to DCT Industrial Trust Inc. and its consolidated subsidiaries and
partnerships except where the context otherwise requires.

As of September 30, 2007, we owned interests in, or managed, 426 industrial real
estate buildings comprised of approximately 68.5 million square feet. Our portfolio of consolidated operating properties included 371 industrial real estate buildings, which consisted of 217 bulk distribution properties, 111 light
industrial properties and 43 service center properties comprised of approximately 52.0 million square feet. Our portfolio of 371 consolidated operating properties was 92.7% occupied as of September 30, 2007. As of September 30, 2007,
we also consolidated eight development properties, seven redevelopment properties and one property held for sale. In addition, as of September 30, 2007, we had ownership interests ranging from 10% to 20% in 25 unconsolidated properties in
institutional joint ventures, or funds, comprised of approximately 9.4 million square feet, and investments in two unconsolidated operating properties and six unconsolidated development joint venture properties. We managed six properties where
we had no ownership interests.

Summary of Significant Accounting Policies

Interim Financial Information

The accompanying unaudited Consolidated Financial Statements have been prepared in
accordance with United States generally accepted accounting principles (GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of
the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all adjustments, consisting only of normal recurring items necessary
for their fair presentation in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with our audited Consolidated Financial
Statements as of December 31, 2006 and related notes thereto as filed on Form 10-K on March 14, 2007.

Use of Estimates

The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.

Reclassifications

Certain items in the
Consolidated Statements of Operations for three and nine months ended September 30, 2006 have been reclassified to conform to 2007 classifications.



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Investment in Real Estate, Valuation and Allocation of Real Estate Acquisitions

We capitalize direct costs associated with, and incremental to, the acquisition, development, redevelopment or improvement of real estate, including asset acquisition
costs and leasing costs as well as direct internal costs, if appropriate. Costs associated with acquisition or development pursuits are capitalized as incurred and, if the pursuit is abandoned, these costs are expensed during the period in which the
pursuit is abandoned. Such costs considered for capitalization include construction costs, interest, real estate taxes, insurance and other such costs if appropriate. Interest is capitalized on actual expenditures from the period when development or
redevelopment commences until the asset is substantially complete based on our current borrowing rates. Costs incurred for maintaining and making repairs to our real estate, which do not extend the life of our assets, are expensed as incurred.

Upon acquisition, the total cost of a property is allocated to land, building, building and land improvements, tenant improvements and intangible lease
assets and liabilities pursuant to Statement of Financial Accounting Standards (SFAS) No. 141,Business Combinations (SFAS 141). The fair value of identifiable tangible assets such as land, building, building and
land improvements and tenant improvements is determined on an as-if-vacant basis. Management considers the replacement cost of such assets, appraisals, property condition reports, market data and other related information in determining
the fair value of the tangible assets. Pursuant to SFAS 141, the difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to Interest
expense over the life of the debt assumed. The valuation of assumed liabilities is based on the current market rate for similar liabilities. The allocation of the total cost of a property to an intangible lease asset includes the value
associated with customer relationships and in-place leases that may include leasing commissions, legal and other costs. In addition, the allocation of the total cost of a property requires allocating costs to an intangible asset or liability
resulting from in-place leases being above or below the market rental rates on the date of the acquisition. Intangible lease assets or liabilities will be amortized over the life of the remaining in-place leases as an adjustment to Rental
revenues.

We have certain properties which we have acquired or removed from service with the intention to redevelop the building. Buildings under
redevelopment require significant construction activities prior to being placed back into service. Additionally, we may acquire, develop, or redevelop certain properties with the intention to contribute the property to an institutional capital
management joint venture, in which we may retain ownership in or manage the assets of the joint venture. We refer to these properties as held for contribution. Land undergoing activities necessary to prepare it for its intended use prior to
significant construction activities is classified as pre-development.

Real estate, including land, building, building and land improvements, tenant
improvements and leasing costs, and intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the estimated useful
lives of the related assets or liabilities as follows:



|                                           |  |                                    
|------------------------------------------ |  | -----------------------------------
|Description                                |  | Standard Depreciable
Life          
|Land                                       |  | Not depreciated                    
|Building                                   |  | 40 years                           
|Building and land improvements             |  | 20 years                           
|Tenant improvements                        |  | Lease term                         
|Lease costs                                |  | Lease term                         
|Intangible lease assets and liabilities    |  | Average term of leases for property
|Above/below market rent assets/liabilities |  | Lease term                         

The table above reflects the standard depreciable lives typically used to compute depreciation and amortization.
However, such depreciable lives may be different based on the estimated useful life of such assets or liabilities. The cost of assets sold or retired and the related accumulated depreciation and/or amortization is removed from the accounts and the
resulting write off or gain, if necessary, is reflected in the Consolidated Statements of Operations during the period in which such sale or retirement occurs.



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Depreciation and Useful Lives of Real Estate Assets

We estimate the depreciable portion of our real estate assets and their related useful lives in order to record depreciation expense. Our managements ability to accurately estimate the depreciable portions of
our real estate assets and their useful lives is critical to the determination of the appropriate amount of depreciation expense recorded and the carrying values of the underlying assets. Any change to the estimated depreciable lives of these assets
would have an impact on the depreciation expense we recognize. Depreciation is not recorded on buildings currently in pre-development, being developed or redeveloped until the building is substantially completed and placed into service, not later
than one year from cessation of major construction activity.

During the three months ended September 30, 2007, the estimated useful lives of certain
buildings were reduced based on facts specific to each building. The reduction in the estimated useful lives resulted in increased depreciation expense and decreased Income (Loss) From Continuing Operations and Net Income
(Loss) of approximately $1.1 million, or $0.01 per share, for the three and nine months ended September 30, 2007.

Consolidation

Our Consolidated Financial Statements include the accounts of our company and our consolidated subsidiaries and partnerships that we control either
through ownership of a majority voting interest, as the primary beneficiary, or otherwise. All significant intercompany accounts and transactions have been eliminated in consolidation. Investments in entities in which we do not own a majority voting
interest but over which we have the ability to exercise significant influence over operating and financial policies are presented under the equity method. Investments in entities in which we do not own a majority voting interest and over which we do
not have the ability to exercise significant influence are carried at the lower of cost or fair value, as appropriate. Our judgments with respect to our level of influence or control of an entity and whether we are the primary beneficiary of a
variable interest entity as defined by Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities (FIN No. 46(R)), involve consideration of various
factors including the form of our ownership interest, our representation on the entitys board of directors, the size of our investment (including loans) and our ability to participate in policy making decisions. Our ability to correctly assess
our influence or control over an entity affects the presentation of these investments in our Consolidated Financial Statements and, consequently, our financial position and specific items in our results of operations that are used by our
stockholders, lenders and others in their evaluation of us.

Generally, we consolidate real estate partnerships and other entities that are not variable
interest entities (as defined in FIN No. 46(R)) when we own, directly or indirectly, a majority voting interest in the entity. In June 2005, the FASB ratified Emerging Issues Task Force Issue (EITF) 04-5, Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (EITF 04-5). EITF 04-5 provides an accounting model to be used by a general partner,
or group of general partners, to determine whether the general partner(s) controls a limited partnership or similar entity in light of certain rights held by the limited partners and provides additional guidance on what constitutes substantive
kick-out rights and substantive participating rights.

Equity Method Investments

We present investments in unconsolidated joint ventures under the equity method. The equity method is used when we have the ability to exercise significant influence over the operating and financial policies of a
joint venture but do not control the joint venture. Under the equity method, these investments (including advances to joint ventures) are initially recorded on our Consolidated Balance Sheets at our cost and are subsequently adjusted to reflect our
proportionate share of net earnings or losses of each of the joint ventures, distributions received, contributions made and certain other adjustments, as appropriate. Such investments are included in Investments in and advances to
unconsolidated joint ventures on the accompanying Consolidated Balance Sheets. Distributions from these investments that are related to earnings from operations are included as operating activities and distributions that are related to capital
transactions are included as investing activities in the Consolidated Statements of Cash Flows.



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Investment properties that are contributed to unconsolidated joint ventures are not considered discontinued operations
due to our continuing involvement through maintaining an ownership interest in these investment properties and continuing to act as manager of the assets. We recognize any gains from the contribution of investment properties into an unconsolidated
joint venture in accordance with SFAS No. 66, Accounting for Sales of Real Estate, if the recognition criteria have been met. Such gains are recognized to the extent of the outside ownership interest in the joint venture in our
Consolidated Statements of Operations under the heading of Gain (loss) on dispositions of real estate interests, net of minority interest. Any gain related to the remaining proceeds reduces our basis in the investment in the
unconsolidated joint venture, and is recognized into earnings over the weighted average life of the related propertys real estate assets. We recognize our proportionate share of the ongoing earnings or losses of each unconsolidated joint
venture in Equity in income (losses) of unconsolidated joint ventures, net in our Consolidated Statements of Operations.

Notes Receivable

As of September 30, 2007 and December 31, 2006, we had approximately $25.2 million and $9.2 million in notes receivable outstanding. The
interest rates on these notes range from approximately 6% to 10%, and the notes mature on dates ranging from July 2008 to July 2014. In June 2007, we issued a secured $16.0 million, 6.0% interest note, maturing on July 1, 2014 to TRT-DCT
Industrial Joint Venture I. Interest is due monthly on the unpaid balance. For the three and nine months ended September 30, 2007, we recognized interest income from notes receivable of approximately $444,000 and $888,000, respectively. For the
same periods of 2006 we recognized approximately $215,000 and $683,000, respectively, in interest income from notes receivable. All costs associated with executing these notes have been capitalized as deferred loan costs and are included in
Deferred loan costs, net in our Consolidated Balance Sheets. Such costs are amortized as a reduction in interest income over the term of the applicable outstanding notes receivable.

Revenue Recognition

We record rental revenues on a straight-line
basis under which contractual rent increases are recognized evenly over the full lease term. Certain properties have leases that provide for tenant occupancy during periods where no rent is due or where minimum rent payments increase during the term
of the lease. Accordingly, we record receivables from tenants that we expect to collect over the remaining lease term rather than currently, which are recorded as straight-line rents receivable. When we acquire a property, the terms of existing
leases are considered to commence as of the acquisition date for the purposes of this calculation. For the three and nine months ended September 30, 2007, the total increase to Rental revenues due to straight-line rent adjustments,
including amounts reported from discontinued operations, was approximately $1.7 million and $4.5 million, respectively. The total increase to Rental revenues due to straight-line rent adjustments, including amounts reported from
discontinued operations, during the same periods in 2006 was approximately $2.0 million and $5.9 million, respectively.

Tenant recovery income includes
payments and amounts due from tenants for real estate taxes, insurance and other recoverable property operating expenses and is recognized as Rental revenues during the same period the related expenses are incurred. Tenant recovery
income recognized as Rental revenues for the three and nine months ended September 30, 2007 was $12.5 million and $37.3 million, respectively. For the three and nine months ended September 30, 2006, tenant recovery income
recognized as Rental revenues was approximately $11.1 million and $26.9 million, respectively.

In connection with property acquisitions, we
may acquire leases with rental rates above or below the market rental rates. Such differences are recorded as an intangible asset or liability pursuant to SFAS 141, and amortized to Rental revenues over the life of the related leases.
Additionally, the unamortized balances of SFAS 141 assets and liabilities associated with the early termination of leases are fully amortized to their respective revenue and expense line items in our Consolidated Statements of Operations over the
shorter of the expected life of such assets and liabilities or the remaining lease term. For the three months ended September 30, 2007, the total net increase to Rental revenues due to the amortization of above and below market
rents, including amounts reported from discontinued operations and accelerated amortization due to early terminations, was approximately $0.1 million, while the total net decrease to Rental revenues for the nine months ended
September 30, 2007 was approximately $0.6 million. The total net decrease to Rental revenues due to the amortization of above and below market rents, including amounts reported from discontinued operations and accelerated
amortization due to early terminations, for the same periods of 2006 was approximately $0.3 million and $1.0 million, respectively.



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Early lease termination fees are recorded in Rental revenues when such amounts are earned. During the three
and nine months ended September 30, 2007, no revenues associated with early lease termination fees were recorded. During the three and nine months ended September 30, 2006, revenues associated with early lease termination fees were $0.3
million and $0.7 million, respectively.

We earn revenues from asset management fees, acquisition fees and fees for other services pursuant to joint
venture and other agreements. These may include acquisition fees based on the sale or contribution of assets and are included in the Consolidated Statements of Operations in Institutional capital management and other fees. We recognize
revenues from asset management fees, acquisition fees and fees for other services when the related fees are earned and are realized or realizable.

New
Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (SFAS 159) which expands the use of the fair value measurement to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting provisions. We are currently evaluating the application of SFAS 159 and its effect on our Consolidated Financial Statements.

In December 2006, the FASB issued FASB Staff Position (FSP) on EITF No. 00-19, Accounting for Registration Payment Arrangements (FSP EITF
00-19-2). FSP EITF 00-19-2 addresses an issuers accounting for registration payment arrangements, specifying that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment
arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for
Contingencies. This FSP further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for in accordance with other applicable generally accepted accounting principles without regard to the
contingent obligation to transfer consideration pursuant to the registration payment arrangement. This FSP is effective for new and modified registration payment arrangements. Registration payment arrangements that were entered into before the FSP
was issued would become subject to its guidance for fiscal years beginning after December 15, 2006 by recognizing a cumulative-effect adjustment in retained earnings as of the year of adoption. We adopted FSP EITF 00-19-2 in the first quarter
of 2007 and the adoption did not have a material impact on our Consolidated Financial Statements.

In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements (SFAS 157) which defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair-value measurements. SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007. As SFAS 157 does not require any new fair value measurements or remeasurements of previously computed fair values, we do not believe adoption of this statement will have a
material effect on our Consolidated Financial Statements.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entitys financial statements in
accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a
tax return. This interpretation also provides guidance on derecognition, classification of interest and penalties, accounting in interim periods, disclosure and transition.



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The Company is subject to the provisions of FIN 48 as of January 1, 2007, and has analyzed its various federal and
state filing positions, including the assertion that the Company is not taxable. The Company believes that its income tax filing positions are well documented and supported. As a result of the implementation of FIN 48, the Company recognized a $0.5
million liability for unrecognized tax benefits, which includes approximately $41,000 for accrued interest and penalties, and was accounted for as an increase to the January 1, 2007 balance of Distributions in excess of earnings in
our accompanying Consolidated Balance Sheets. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. For the nine months ended September 30, 2007, an additional $15,000 was
recognized as accrued interest expense related to the $0.5 million liability for unrecognized tax benefits. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected
as a reduction of the overall income tax expense. All years of the Companys operations remain open for examination.

Note 2  Real Estate

Our consolidated real estate assets consist of operating properties, operating properties held for contribution, development and redevelopment
properties, properties in pre-development and land held for future development or other purposes. Our real estate assets, presented at historical cost, include the following as of September 30, 2007 and December 31, 2006 (in thousands):



|                                                  |  |                   |           |   |                  |   |           |  
|------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                                  |  | September 30,2007 |           |   | December 31,2006 |  
|Operating properties                              |  | $                 | 2,588,874 |   |                  | $ | 2,754,076 |  
|Properties under redevelopment                    |  |                   | 49,642    |   |                  |   | 21,518    |  
|Operating properties held for contribution        |  |                   | 63,041    |   |                  |   | 32,142    |  
|Properties under development                      |  |                   | 67,210    |   |                  |   | 26,289    |  
|Properties in pre-development including land held |  |                   | 24,351    |   |                  |   | 30,863    |  
|                                                  |  |                   |           |   |                  |   |           |  
|Total Investment in Properties                    |  |                   | 2,793,118 |   |                  |   | 2,864,888 |  
|Less accumulated depreciation and amortization    |  |                   | (281,185  | ) |                  |   | (199,574  | )
|                                                  |  |                   |           |   |                  |   |           |  
|Net Investment in Properties                      |  | $                 | 2,511,933 |   |                  | $ | 2,665,314 |  
|                                                  |  |                   |           |   |                  |   |           |  

Acquisition Activity

During the three months ended September 30, 2007, we acquired five properties located in five markets, comprised of approximately 0.9 million square feet for a total cost of approximately $47.0 million,
which includes acquisition costs. During the nine months ended September 30, 2007, we acquired 17 properties located in 11 markets, comprised of approximately 3.4 million square feet for a total cost of approximately $154.2 million, which
includes acquisition costs. All properties were acquired from unrelated third parties using existing cash balances and short-term borrowings. For all properties acquired and consolidated, the results of operations for such properties are included in
our Consolidated Statements of Operations from the dates of acquisition.

Disposition Activity

During the three months ended September 30, 2007, we disposed of six operating properties comprised of approximately 2.8 million square feet located in five
markets, which were contributed to an institutional joint venture in which we retain ownership interests for a total contribution value of approximately $138.7 million (see discussion below).

During the nine months ended September 30, 2007, we disposed of 18 operating properties comprised of approximately 5.9 million square feet located in 12
markets. We sold three properties comprised of approximately 266,000 square feet to unrelated third parties for total gross proceeds of approximately $54.4 million, which resulted in a gain of approximately $9.5 million. The remaining 15 properties
comprised of approximately 5.6 million square feet were contributed to institutional joint ventures in which we retain ownership interests for a total contribution value of approximately $290.1 million (see discussion below).



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Contributions of Properties to Institutional Capital Management Joint Ventures

TRT-DCT Industrial Joint Venture I

On September 1, 2006, we entered
into our first joint venture agreement with Dividend Capital Total Realty Trust Inc., (DCTRT), TRT-DCT Industrial Joint Venture I, G.P., (TRT-DCT Venture I), pursuant to which we anticipate TRT-DCT Venture I will own up to
$208.0 million of industrial properties. As of September 30, 2007, this joint venture owned approximately $144.5 million in real estate assets. This joint venture is funded as follows: (i) an equity contribution from DCTRT to the joint
venture (which we estimate to be not less than approximately 90% of the joint ventures required equity capitalization); (ii) an equity contribution from us to the joint venture (which we estimate to be approximately 10% of the joint
ventures required equity capitalization); and (iii) secured debt financing to be obtained by the joint venture with a targeted loan-to-value of no less than 55.0% and no more than 75.0%. In June 2007, we issued a secured $16.0 million,
6.0% interest note, maturing on July 1, 2014 to TRT-DCT Venture I. Our actual ownership percentage may vary depending on amounts of capital contributed and the timing of contributions and distributions.

As co-general partner, we make the initial determination as to whether an asset will be acquired by TRT-DCT Venture I, and this determination is then subject to
DCTRTs review and approval. With respect to our own assets, if the proposed asset has been owned by us for four months or less and no significant leasing, development or repositioning of the asset has occurred, the purchase price for the asset
is equal to our total gross cost basis and, if the proposed asset has been owned by us for more than four months or significant leasing, development or repositioning of the asset has occurred, the purchase price for the asset is equal to the
assets fair market value as determined by an unaffiliated appraiser plus incremental third-party costs including legal, due diligence and debt financing expenses. However, we have no obligation to sell an asset if the appraised value is less
than our cost basis. Assets that are acquired from third parties are valued at the acquisitions total gross cost, which includes the purchase price, due diligence costs and closing costs. We will receive an acquisition fee of 50 basis points
in connection with all assets that are contributed by us or acquired by TRT-DCT Venture I from third parties.

No properties were contributed to TRT-DCT
Venture I during the three months ended September 30, 2007. During the nine months ended September 30, 2007, we contributed four properties to TRT-DCT Venture I comprised of approximately 1.4 million square feet with a combined gross
contribution value of approximately $84.2 million. The contribution of the four properties into TRT-DCT Venture I during 2007 resulted in a gain of approximately $12.1 million, of which approximately $10.9 million was recognized in our earnings
during the nine months ended September 30, 2007. The remaining gain of approximately $1.2 million reduces our basis in the investment and is recognized into earnings over the weighted average life of the related propertys real estate
assets.

TRT-DCT Industrial Joint Venture II

On
March 27, 2007, we entered into our second joint venture agreement with DCTRT, TRT-DCT Industrial Joint Venture II, G.P., (TRT-DCT Venture II), pursuant to which we anticipate TRT-DCT Venture II will own up to $175.0 million of
industrial properties. As of September 30, 2007, this joint venture owned approximately $67.8 million of real estate assets. TRT-DCT Venture II is structured and funded in a manner similar to TRT-DCT Venture I.

No properties were contributed to TRT-DCT Venture II during the three months ended September 30, 2007. During the nine months ended September 30, 2007, we
contributed five properties to TRT-DCT Venture II comprised of approximately 1.4 million square feet with a combined gross contribution value of approximately $67.2 million. The contribution of the five properties into TRT-DCT Venture II
resulted in a total gain of approximately $6.7 million, of which approximately $6.0 million was recognized in our earnings during the nine months ended September 30, 2007. The remaining gain of approximately $0.7 million reduces our basis in
the investment and is recognized into earnings over the weighted average life of the related propertys real estate assets.



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DCT/SPF Industrial Operating LLC

On August 30, 2007, we entered into a joint venture agreement with Industrial Acquisition LLC (JP Morgan), an entity advised by JPMorgan Asset Management, to form DCT/SPF Industrial Operating LLC (JP Morgan
Venture). As of September 30, 2007, this joint venture owned approximately $140.0 million of real estate assets. This joint venture is funded with an equity contribution from JP Morgan to the joint venture (approximately 80% of the joint
ventures equity capitalization) and an equity contribution from us to the joint venture (approximately 20% of the joint ventures equity capitalization). Our actual ownership percentage may vary depending on amounts of capital contributed
and the timing of contributions and distributions.

During the three and nine months ended September 30, 2007, we contributed six properties to the JP
Morgan Venture comprised of approximately 2.8 million square feet with a combined gross contribution value of approximately $138.7 million. The contribution of the six properties into JP Morgan Venture resulted in a total gain of approximately
$17.6 million, of which approximately $14.0 million was recognized in our earnings during the three and nine months ended September 30, 2007. The remaining gain of approximately $3.6 million reduces our basis in the investment and is recognized
into earnings over the weighted average life of the related propertys real estate assets.

Discontinued Operations

As of September 30, 2007, we determined that the potential sale of one property to a third party was considered probable and classified that property as held for
sale in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). The property, as well as three properties sold during the nine months ended September 30, 2007, and seven
properties sold during the year ended December 31, 2006 to third parties, were classified as discontinued operations. See Note 11 for additional information.

Intangible Assets

Aggregate net amortization of intangible assets recognized pursuant to SFAS 141 in connection with property
acquisitions (excluding assets and liabilities related to above and below market rents) was approximately $7.3 million and $22.9 million for the three and nine months ended September 30, 2007, respectively, and $8.7 million and $23.5 million
for the same periods in 2006, respectively. Our intangible assets and liabilities included the following as of September 30, 2007 and December 31, 2006 (in thousands):



|                        |  |                    |         |   |                         |   |         |     |  |   |         |   |  |                         |         |   |     |   |         |   |  |   |         |  
|----------------------- |  | ------------------ | ------- | - | ----------------------- | - | ------- | --- |  | - | ------- | - |  | ----------------------- | ------- | - | --- | - | ------- | - |  | - | ------- | -
|                        |  | September 30, 2007 |         |   | December 31, 2006       |  
|                        |  | Gross              |         |   | AccumulatedAmortization |   |         | Net |  |   | Gross   |   |  | AccumulatedAmortization |         |   | Net |  
|Intangible lease assets |  | $                  | 154,601 |   |                         | $ | (74,603 | )   |  | $ | 79,998  |   |  | $                       | 170,129 |   |     | $ | (54,605 | ) |  | $ | 115,524 |  
|Above market rent       |  |                    | 26,741  |   |                         |   | (14,687 | )   |  |   | 12,054  |   |  |                         | 28,093  |   |     |   | (10,996 | ) |  |   | 17,097  |  
|Below market rent       |  |                    | (22,608 | ) |                         |   | 9,660   |     |  |   | (12,948 | ) |  |                         | (24,197 | ) |     |   | 6,602   |   |  |   | (17,595 | )

The following table describes the estimated net amortization of such intangible assets and liabilities for the
next five years. In addition, the table describes the net increase (decrease) to Rental revenues due to the amortization of above and below market rents for the next 5 years (in thousands):



|                                  |  |                                                     |        |                                                                                                         |   |      |  
|--------------------------------- |  | --------------------------------------------------- | ------ | ------------------------------------------------------------------------------------------------------- | - | ---- | -
|For the years ending December 31, |  | Estimated Net Amortizationof
IntangibleLease Assets |        | Estimated Net Increase(Decrease) to RentalRevenues Related toAmortization of Aboveand Below
MarketRents |  
|Remainder of 2007                 |  | $                                                   | 6,633  |                                                                                                         | $ | (1   | )
|2008                              |  |                                                     | 22,998 |                                                                                                         |   | 94   |  
|2009                              |  |                                                     | 14,937 |                                                                                                         |   | 298  |  
|2010                              |  |                                                     | 9,358  |                                                                                                         |   | 460  |  
|2011                              |  |                                                     | 6,096  |                                                                                                         |   | (160 | )
|                                  |  |                                                     |        |                                                                                                         |   |      |  
|Total                             |  | $                                                   | 60,022 |                                                                                                         | $ | 691  |  
|                                  |  |                                                     |        |                                                                                                         |   |      |  



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Note 3  Investments in and Advances to Unconsolidated Joint Ventures

We enter into joint ventures primarily for purposes of developing industrial real estate and establishing funds or other commingled investment vehicles with institutional
partners. The following describes our net equity investment in unconsolidated joint ventures as of September 30, 2007 and December 31, 2006:



|                                        |  |                                                 |                   |  |                     |  |                             |        |  |   |       
|--------------------------------------- |  | ----------------------------------------------- | ----------------- |  | ------------------- |  | --------------------------- | ------ |  | - | ------
|Unconsolidated Joint Ventures           |  | DCT OwnershipPercentage as of September 30,2007 |                   |  | Number of Buildings |  | Net Equity Investment as of
|                                        |  |                                                 | September 30,2007 |  | December 31,2006   
|                                        |  |                                                 |                   |  |                     |  | (in thousands)             
|Institutional Funds:                    |  |                                                 |                   |  |                     |  |                             |        |  |   |       
|DCT Fund I LLC                          |  | 20                                              | %                 |  | 6                   |  | $                           | 2,785  |  | $ | 3,426 
|TRT-DCT Venture I                       |  | 10                                              | %                 |  | 8                   |  |                             | 2,572  |  |   | 5,704 
|TRT-DCT Venture II                      |  | 12.5                                            | %                 |  | 5                   |  |                             | 1,753  |  |   |      
|DCT/SPF Industrial Operating LLC        |  | 20                                              | %                 |  | 6                   |  |                             | 23,826 |  |   |      
|Developments:                           |  |                                                 |                   |  |                     |  |                             |        |  |   |       
|SouthCreek IV Distribution Facility (2) |  | 100                                             | %                 |  |                    |  |                             |       |  |   | 6,280 
|Panattoni Investments                   |  | 0.5                                             | %                 |  | 3                   |  |                             | 251    |  |   | 251   
|Sycamore Canyon                         |  | 90                                              | %                 |  | 2                   |  |                             | 5,015  |  |   | 4,109 
|Stirling Capital Investments (SCLA) (1) |  | 50                                              | %                 |  | 5                   |  |                             | 27,500 |  |   | 19,246
|Logistics Way                           |  | 95                                              | %                 |  | 1                   |  |                             | 3,475  |  |   | 3,320 
|                                        |  |                                                 |                   |  |                     |  |                             |        |  |   |       
|Total                                   |  |                                                 |                   |  | 36                  |  | $                           | 67,177 |  | $ | 42,336
|                                        |  |                                                 |                   |  |                     |  |                             |        |  |   |       

| | 
| | 

| | (1) | Although we contributed 100% of the initial cash equity capital required by the venture, our partners retain
certain participation rights in the ventures available cash flows.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | During the three months ended September 30, 2007, we acquired the remaining interest in the SouthCreek
IV Distribution Facility development joint venture, and consolidated one building comprised of approximately 557,000 square feet.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 4  Hedging Activities

During June 2006, we entered into an eight-month, LIBOR-based, forward-starting swap to mitigate the
effect on cash outflows attributable to changes in LIBOR related to $275.0 million variable rate, unsecured notes maturing in June 2008 issued in June 2006. This swap expired in February 2007. Concurrent with the $275.0 million note issuance, we
also entered into a forward-starting swap to hedge our exposure to variability in the cash outflows of a future fixed rate debt issuance due to fluctuations in the USD-LIBOR swap rate. On June 13, 2007, this swap was settled. In total, we
received net cash proceeds of approximately $1.5 million related to this instrument. Both of these forward-starting interest rate swaps were designated as cash flow hedges.

Net unrealized losses of approximately $4.0 million and net unrealized gains of approximately $10.2 million were recorded during the three and nine months ended
September 30, 2007, respectively, and net unrealized losses of approximately $15.4 million and $9.4 million were recorded during the three and nine months ended September 30, 2006, respectively, to Accumulated other comprehensive
loss as a result of the change in fair value of outstanding hedges. Upon settlement of the swap on June 13, 2007 (discussed above), we recorded a realized gain of approximately $1.8 million, offset by approximately $0.3 million related to
the ineffectiveness due to the change in estimated timing of the anticipated debt issuance of the $275.0 million forward-starting swap. Gains and losses resulting from hedging ineffectiveness and hedge settlements are recorded as increases and
decreases, respectively, to Interest income and other in our accompanying Consolidated Statements of Operations.

As of September 30, 2007
and December 31, 2006, the Accumulated other comprehensive loss balance pertaining to the hedges were losses of approximately $0.5 million and $11.5 million, respectively. Amounts reported in Accumulated other comprehensive
loss related to derivatives will be amortized to Interest expense as interest payments are made on our current fixed-rate debt and anticipated debt issuances. During the next 12 months, we estimate that approximately $0.6
million will be amortized from Accumulated other comprehensive loss to Interest expense resulting in an increase in such expense.



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Note 5  Our Operating Partnerships Private Placement

Prior to October 10, 2006, our operating partnership offered undivided tenancy-in-common interests (TIC Interests) in certain of our properties to
accredited investors in a private placement exempt from registration under the Securities Act of 1933, as amended, and, as of September 30, 2007, the historical cost of those properties included in our operating partnerships private
placement was $71.6 million. These TIC Interests may have served as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the
Code).

The TIC Interests are 100% leased by our operating partnership pursuant to master leases and such leases contain purchase options
whereby our operating partnership has the right, but not the obligation, to acquire the TIC Interests from the investors at a point in time in exchange for units of limited partnership interest in our operating partnership (OP Units)
under Section 721 of the Code. In October 2006, we discontinued our operating partnerships private placement of TIC Interests.

During the three
and nine months ended September 30, 2006, we raised approximately $22.9 million and $121.3 million, respectively, from the sale of TIC Interests in certain of our properties. The amount of gross proceeds associated with the sales of TIC
Interests are recorded in Financing obligations in the accompanying Consolidated Balance Sheets pursuant to SFAS No. 98 Accounting for Leases (SFAS No. 98). We have leased back the portion of the building
sold to the unrelated third-party investors and, in accordance with SFAS No. 98, a portion of the rental payments made to such investors under the lease agreements are recognized as Interest expense using the interest method.

During the three and nine months ended September 30, 2007, we incurred approximately $1.0 million and $4.6 million, respectively, of rental payments
under various lease agreements with certain of the third-party investors. During the same periods of 2006, we incurred approximately $3.8 million and $10.1 million, respectively, of rental payments under various lease agreements with certain of the
third-party investors. A portion of such amounts was accounted for as a reduction of the outstanding principal balance of the financing obligations and a portion was accounted for as Interest expense in the accompanying Consolidated
Financial Statements. Included in Interest expense was approximately $0.8 million and $4.0 million for the three and nine months ended September 30, 2007, respectively, and $3.2 million and $8.2 million for the same periods in 2006,
respectively, of interest expense related to the financing obligation. The various lease agreements in place as of September 30, 2007 contain expiration dates ranging from May 2021 to August 2021.

Prior to October 10, 2006, our operating partnership paid certain up-front fees and reimbursed certain related expenses to Dividend Capital Advisors LLC (our
Former Advisor), Dividend Capital Securities LLC (our Former Dealer Manager) and Dividend Capital Exchange Facilitators LLC (our Former Facilitator), an affiliate of our Former Advisor, for raising capital through
our operating partnerships private placement. Our Former Advisor was obligated to pay all of the offering and marketing related costs associated with the private placement. However, our operating partnership was obligated to pay our Former
Advisor a non-accountable expense allowance, which equaled 2% of the gross equity proceeds raised through the private placement. In addition, our operating partnership was obligated to pay our Former Dealer Manager a dealer manager fee of up to 1.5%
of gross equity proceeds raised and a commission of up to 5% of the gross equity proceeds raised through the private placement. Our Former Dealer Manager has re-allowed such commissions and a portion of such dealer manager fee to participating
broker dealers. Our operating partnership was also obligated to pay a transaction facilitation fee to our Former Facilitator of up to 1.5% of the gross equity proceeds raised through the private placement. We terminated these arrangements with our
Former Dealer Manager and our Former Facilitator on October 10, 2006, in connection with the consummation of the acquisition of our Former Advisor (the Internalization).

During the three and nine months ended September 30, 2006 our operating partnership incurred up-front fees of approximately $2.3 million and $12.0 million, respectively, payable to our Former Advisor and other
affiliates for effecting these transactions which are accounted for as deferred loan costs. Such deferred loan costs are included in Deferred loan costs  financing obligation, net in the accompanying Consolidated Balance Sheets and
amortized to Interest expense over the life of the financing obligation. If our operating partnership elects to exercise any purchase option as described above and issue OP Units, the unamortized portion of up-front fees and expense
reimbursements paid to affiliates will be recorded against minority interests as a selling cost of the OP Units. If our operating partnership does not elect to exercise any such purchase option, we will not meet the standards set forth in SFAS
No. 98 in order to recognize the sale of such TIC Interests.



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During the three months ended September 30, 2007, our operating partnership exercised purchase options to acquire
certain TIC Interests it had previously sold in three industrial properties located in Indiana and Texas. In connection with the exercise of these options, our operating partnership issued an aggregate of approximately 3.6 million OP Units
valued at approximately $38.4 million to acquire such TIC Interests. During the nine months ended September 30, 2007, our operating partnership exercised purchase options to acquire certain TIC Interests it had previously sold in 17 industrial
properties located in Tennessee, Indiana and Texas. In connection with the exercise of these options, our operating partnership issued an aggregate of approximately 10.4 million OP Units valued at approximately $115.3 million to acquire such
TIC Interests. Related to the purchase of one of these buildings, we assumed $14.9 million of a secured note with an interest rate of 5.0% that was previously reflected in Financing obligations.

During the three months ended September 30, 2006, our operating partnership exercised purchase options to acquire certain TIC Interests it had previously sold in
two industrial properties located in Georgia and Kentucky. In connection with the exercise of these options, our operating partnership issued an aggregate of approximately 1.2 million OP Units valued at approximately $12.5 million to acquire
such TIC Interests. During the nine months ended September 30, 2006, our operating partnership exercised purchase options to acquire certain TIC Interests it had previously sold in four properties located in Indiana, Kentucky and Georgia. In
connection with the exercise of these options, our operating partnership issued an aggregate of approximately 3.3 million OP Units valued at approximately $34.9 million to acquire such TIC Interests.

Note 6  Minority Interests

Minority interests consisted of the
following as of September 30, 2007 and December 31, 2006 (in thousands):



|                                |  |                   |         |   |                  |   |         |  
|------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                |  | September 30,2007 |         |   | December 31,2006 |  
|OP Units:                       |  |                   |         |   |                  |   |         |  
|Net investment                  |  | $                 | 351,739 |   |                  | $ | 251,094 |  
|Distributions                   |  |                   | (21,143 | ) |                  |   | (5,661  | )
|Share of cumulative net loss    |  |                   | (15,014 | ) |                  |   | (21,227 | )
|                                |  |                   |         |   |                  |   |         |  
|Sub-total                       |  |                   | 315,582 |   |                  |   | 224,206 |  
|Cabot non-voting common stock:  |  |                   |         |   |                  |   |         |  
|Net investment                  |  |                   | 63      |   |                  |   | 63      |  
|Distributions                   |  |                   | (4      | ) |                  |   | (4      | )
|Share of cumulative net loss    |  |                   | (1      | ) |                  |   | (2      | )
|                                |  |                   |         |   |                  |   |         |  
|Sub-total                       |  |                   | 58      |   |                  |   | 57      |  
|Joint venture partner interest: |  |                   |         |   |                  |   |         |  
|Net investment                  |  |                   | 1,859   |   |                  |   | 1,658   |  
|Distributions                   |  |                   | (1      | ) |                  |   | (1      | )
|Share of cumulative net loss    |  |                   | (146    | ) |                  |   |        |  
|                                |  |                   |         |   |                  |   |         |  
|Sub-total                       |  |                   | 1,712   |   |                  |   | 1,657   |  
|                                |  |                   |         |   |                  |   |         |  
|Total                           |  | $                 | 317,352 |   |                  | $ | 225,920 |  
|                                |  |                   |         |   |                  |   |         |  



|                                                                                 |  |                                 |        |   |                                |   |     |      |  |   |        |   |  |   |      |  
|-------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | --- | ---- |  | - | ------ | - |  | - | ---- | -
|                                                                                 |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                                                 |  | 2007                            |        |   | 2006                           |   |     | 2007 |  |   | 2006   |  
|Minority interests share of operations:                                          |  |                                 |        |   |                                |   |     |      |  |   |        |   |  |   |      |  
|Minority interests share of Income (Loss) From Continuing Operations             |  | $                               | 80     |   |                                | $ | 284 |      |  | $ | 132    |   |  | $ | 711  |  
|Minority interests share of (income) loss from discontinued operations           |  |                                 | 45     |   |                                |   | (7  | )    |  |   | (1,333 | ) |  |   | (3   | )
|Minority interests share of (gain) loss on dispositions of real estate interests |  |                                 | (2,336 | ) |                                |   | 13  |      |  |   | (4,867 | ) |  |   | (120 | )
|                                                                                 |  |                                 |        |   |                                |   |     |      |  |   |        |   |  |   |      |  
|Total minority interests share of operations                                     |  | $                               | (2,211 | ) |                                | $ | 290 |      |  | $ | (6,068 | ) |  | $ | 588  |  
|                                                                                 |  |                                 |        |   |                                |   |     |      |  |   |        |   |  |   |      |  



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OP Units

At
September 30, 2007 and December 31, 2006, we owned approximately 83% and 88%, respectively, of the outstanding equity interests of our operating partnership, with the remaining equity interest in our operating partnership owned by
third-party investors and Dividend Capital Advisors Group LLC, our Former Advisors parent. Subject to certain agreements, OP Units are redeemable at the option of the unitholder after a fixed period. We have the option of redeeming the OP
Units with cash or with shares of our common stock on a one-for-one basis, subject to adjustment. As of September 30, 2007 and December 31, 2006, we had issued approximately 18.8 million and 8.6 million OP Units, respectively, to
unrelated third-party investors in connection with our operating partnerships private placement (see Note 5 for additional information).

Note 7
 Stockholders Equity

Common Stock

In December 2006, we completed a listing on the New York Stock Exchange and prior to then, since December 2002, we conducted four prior consecutive public offerings of our common stock on a continuous basis and raised approximately $1.6
billion of net proceeds. On January 23, 2006, we closed the primary offering component of our fourth continuous public offering, but we continued to offer shares pursuant to our former distribution reinvestment plan through our 2006 third
quarter distribution. Our former distribution reinvestment plan was terminated on December 23, 2006. During the nine months ended September 30, 2007, there were no shares of common stock issued and, for the nine months ended
September 30, 2006, we raised approximately $174.4 million of net proceeds from the sale of our common stock.

As of September 30, 2007,
approximately 168.4 million shares of common stock were issued and outstanding. The net proceeds from the sales of these securities were transferred to our operating partnership for a number of OP Units equal to the shares of common stock sold
in our public and private offerings. Our operating partnership has used these proceeds to fund the acquisition and development of our properties.

Restricted Stock

During the three and nine months ended September 30, 2007, we granted approximately 6,000 shares and 75,000
shares, respectively, of restricted stock to certain officers and employees. The restricted stock was recorded at the fair market value of our common stock on the date of issuance. These shares of restricted common stock may not be sold, assigned,
transferred, pledged or otherwise disposed of and are subject to a risk of forfeiture prior to the expiration of the applicable vesting period. These shares of restricted common stock have voting rights and rights to receive dividends.

Dividend Reinvestment and Stock Purchase Plan

In April
2007, we began offering shares of our common stock through our new Dividend Reinvestment and Stock Purchase Plan (the Plan). The Plan permits stockholders to acquire additional shares with quarterly dividends and to make additional cash
investments to buy shares directly. Shares of common stock may be purchased in the open market, through privately negotiated transactions, or directly from us as newly issued shares of common stock. All shares issued under the Plan were acquired in
the open market.

Note 8  Related Party Transactions

Our Former Advisor

Through October 9, 2006, our day-to-day activities were managed by our Former Advisor, under the supervision
of our board of directors pursuant to the terms and conditions of an advisory agreement. On October 10, 2006, our operating partnership acquired our Former Advisor in the transaction we refer to as the Internalization. As a result of the
Internalization, on October 10, 2006, our Former Advisor became our wholly-owned subsidiary and we no longer incur the cost of the advisory fees and other amounts payable under the advisory agreement.



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##### Table of Contents

The responsibilities of our Former Advisor included the selection of our investment properties, the negotiations for
these investments and the asset management and leasing of these properties. Pursuant to the advisory agreement, we paid certain acquisition and asset management fees to our Former Advisor. The amount of such acquisition fees was equal to 1% of the
aggregate purchase price of all properties we acquired in excess of $170.0 million. During the three and nine months ended September 30, 2006, our Former Advisor earned approximately $0.4 million and $10.6 million, respectively, for acquisition
fees which were accounted for as part of the historical cost of the acquired properties. Additionally, we paid our Former Advisor an asset management fee equal to 0.75% per annum of the total undepreciated cost of the properties we owned in
excess of $170.0 million. During the three and nine months ended September 30, 2006, we incurred asset management fees of $5.1 million and $12.9 million, respectively.

Pursuant to the advisory agreement, our Former Advisor was obligated to advance all of our offering costs subject to its right to be reimbursed for such costs by us in an amount up to 2% of the aggregate gross
offering proceeds raised in our prior continuous public offerings of common stock. Such offering costs included, but were not limited to, actual legal, accounting, printing and other expenses attributable to preparing the SEC registration
statements, qualification of the shares for sale in the states and filing fees incurred by our Former Advisor, as well as reimbursements for marketing, salaries and direct expenses of its employees while engaged in registering and marketing the
shares, other than selling commissions and the dealer manager fee.

During the three and nine months ended September 30, 2006, our Former Advisor
incurred approximately $0.1 million and $1.5 million, respectively, of offering costs and, during the same period, we reimbursed our Former Advisor approximately $0.2 million and $2.0 million, respectively, for such costs, which included
unreimbursed costs from prior periods. These costs were considered a cost of raising capital and as such, were included as a reduction of Additional paid-in capital on the accompanying Consolidated Balance Sheets when such reimbursement
obligations were incurred. We closed the primary offering component of our fourth continuous public offering on January 23, 2006, and as of December 31, 2006, we had reimbursed our Former Advisor for all of the then existing unreimbursed
offering costs.

Our Former Advisor was obligated to pay all of the offering and marketing related costs associated with our operating partnerships
private placement. However, our operating partnership was obligated to pay our Former Advisor a non-accountable expense allowance which equaled 2% of the gross equity proceeds raised through our operating partnerships private placement. During
the three and nine months ended September 30, 2006, our operating partnership incurred approximately $0.5 million and $2.4 million, respectively, payable to our Former Advisor for such expense allowance.

In accordance with the advisory agreement we were obligated, subject to certain limitations, to reimburse our Former Advisor for certain other expenses incurred on our
behalf for providing services contemplated in the advisory agreement, provided that our Former Advisor did not receive a specific fee for the activities which generated the expenses to be reimbursed. For the three and nine months ended
September 30, 2006, we reimbursed approximately $0.3 million and $0.8 million, respectively, for such costs.

As of December 31, 2006, we owed
our Former Advisor $213,000 for various fees and reimbursements as described above, which is included in Accounts payable and accrued expenses on the accompanying Consolidated Balance Sheets. All liabilities with our Former Advisor were
settled as of September 30, 2007.

Our Former Dealer Manager

Our prior continuous public offerings of shares of common stock and our operating partnerships private placement were managed by our Former Dealer Manager pursuant to the terms of certain dealer manager
agreements. We terminated these dealer manager agreements on October 10, 2006 in connection with the consummation of the Internalization. Our Former Dealer Manager is owned by Dividend Capital Securities Group LLLP, in which Tom Wattles, Evan
Zucker and James Mulvihill and their affiliates indirectly own limited partnership interests.

We previously entered into a dealer manager agreement with
our Former Dealer Manager pursuant to which we paid a dealer manager fee of up to 2.0% of gross offering proceeds raised pursuant to our prior continuous public offerings of common stock to our Former Dealer Manager as compensation for managing such
offerings. Our Former Dealer Manager had discretionary authority to re-allow a portion of such fees to broker-dealers who participated in an offering. We also paid up to a 6% sales commission of gross offering proceeds raised pursuant to our prior
continuous public offerings of common stock. For the three and nine months ended September 30, 2006,



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##### Table of Contents

we incurred no such costs and approximately $11.0 million, respectively, payable to our Former Dealer Manager for dealer manager fees and sales commissions.
As of December 31, 2006, all sales commissions had been re-allowed to participating broker-dealers. Such amounts are considered a cost of raising capital and as such were included as a reduction of Additional paid-in capital on the
accompanying Consolidated Balance Sheets. We terminated this dealer manager agreement on October 10, 2006, in connection with the consummation of the Internalization.

We also previously entered into a dealer manager agreement with our Former Dealer Manager pursuant to which we paid a dealer manager fee of up to 1.5% of the gross equity proceeds raised through our operating
partnerships private placement. We also have paid our Former Dealer Manager a sales commission of up to 5.0% of the gross equity proceeds raised through our operating partnerships private placement. For the three and nine months ended
September 30, 2006 we incurred up-front fees of approximately $1.5 million and $7.7 million, respectively, payable to our Former Dealer Manager for dealer manager fees and sales commissions. As of December 31, 2006, substantially all of
the sales commissions were re-allowed to participating broker-dealers who are responsible for affecting sales. Such amounts are included in Deferred loan costs  financing obligation, net on the accompanying Consolidated Balance
Sheets. We terminated this dealer manager agreement on October 10, 2006 in connection with the consummation of the Internalization.

As of
December 31, 2006, we owed our Former Dealer Manager $159,000 for various fees, which is included in Accounts payable and accrued expenses on the accompanying Consolidated Balance Sheets. All liabilities with our Former Dealer
Manager were settled as of September 30, 2007.

Our Former Facilitator

Our Former Facilitator has been responsible for the facilitation of transactions associated with our operating partnerships private placement. We terminated our arrangements with our Former Facilitator,
including the agreement described below, on October 10, 2006 in connection with the consummation of the Internalization. Our Former Facilitator was considered a related party as it is indirectly majority owned and/or controlled by Tom Wattles,
Evan Zucker and James Mulvihill and their affiliates.

We previously entered into an agreement with our Former Facilitator whereby we paid a transaction
facilitation fee associated with our operating partnerships private placement. We paid our Former Facilitator up to 1.5% of the gross equity proceeds raised through our operating partnerships private placement for transaction
facilitation. For the three and nine months ended September 30, 2006, we incurred approximately $0.3 million and $1.8 million, respectively, payable to our Former Facilitator for such fees. In accordance with SFAS No. 98, these fees, as
well as the other fees associated with our operating partnerships private placement, were recorded as Deferred loan costs  financing obligation, net and amortized over the life of the financing obligation (see Note 5 for
additional information).



18



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##### Table of Contents

Note 9  Earnings per Share

We determine basic earnings per common share by dividing net income attributable to common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding during the
period. We determine diluted earnings per common share by taking into account the effects of potentially issuable common stock, but only if the issuance of stock would be dilutive, including the presumed exchange of OP Units for shares of common
stock. The following table sets forth the computation of our basic and diluted earnings per common share (in thousands except per share information):



|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|---------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | ---- | ------- |  | - | ------- | -
|                                                                                                           |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                                           |  | 2007                            |         |   | 2006                           |   |         | 2007 |  | 2006 |        
|Numerator                                                                                                  |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Income (Loss) From Continuing Operations                                                                   |  | $                               | (234    | ) |                                | $ | (9,920  | )    |  | $    | 264     |  | $ | (17,770 | )
|Minority interests share of net income related to potentially dilutive shares                             |  |                                 |        |   |                                |   |        |      |  |      |        |  |   |        |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Numerator for diluted earnings per share  adjusted income (loss) from continuing operations               |  | $                               | (234    | ) |                                | $ | (9,920  | )    |  | $    | 264     |  | $ | (17,770 | )
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|                                                                                                           |  |                                 |         |  
|Income (loss) from discontinued operations                                                                 |  | $                               | (226    | ) |                                | $ | 224     |      |  | $    | 7,982   |  | $ | 484     |  
|Minority interests share of net income related to potentially dilutive shares                             |  |                                 |        |   |                                |   |        |      |  |      | 1,428   |  |   |        |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Numerator for diluted earnings per share  adjusted income (loss) from discontinued operations             |  | $                               | (226    | ) |                                | $ | 224     |      |  | $    | 9,410   |  | $ | 484     |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|                                                                                                           |  |                                 |         |  
|Gain (loss) on dispositions of real estate interests, net of minority interest                             |  | $                               | 11,709  |   |                                | $ | (469    | )    |  | $    | 26,195  |  | $ | 7,430   |  
|Minority interests share of net income related to potentially dilutive shares                             |  |                                 | 2,244   |   |                                |   |        |      |  |      | 4,785   |  |   |        |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Numerator for diluted earnings per share  adjusted gain (loss) from dispositions of real estate interests |  | $                               | 13,953  |   |                                | $ | (469    | )    |  | $    | 30,980  |  | $ | 7,430   |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Adjusted net income (loss) attributable to common stockholders                                             |  | $                               | 13,493  |   |                                | $ | (10,165 | )    |  | $    | 40,654  |  | $ | (9,856  | )
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Denominator                                                                                                |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Weighted average common shares outstanding  basic                                                         |  |                                 | 168,355 |   |                                |   | 150,725 |      |  |      | 168,355 |  |   | 148,731 |  
|Potentially dilutive common shares                                                                         |  |                                 | 33,601  |   |                                |   |        |      |  |      | 30,780  |  |   |        |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Weighted average common shares outstanding  diluted                                                       |  |                                 | 201,956 |   |                                |   | 150,725 |      |  |      | 199,135 |  |   | 148,731 |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Net Income (Loss) per Common Share  Basic                                                                 |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Income (Loss) From Continuing Operations                                                                   |  | $                               | (0.00   | ) |                                | $ | (0.07   | )    |  | $    | 0.00    |  | $ | (0.12   | )
|Income (loss) from discontinued operations                                                                 |  |                                 | (0.00   | ) |                                |   | 0.00    |      |  |      | 0.05    |  |   | 0.00    |  
|Gain (loss) on dispositions of real estate interests, net of minority interest                             |  |                                 | 0.07    |   |                                |   | (0.00   | )    |  |      | 0.15    |  |   | 0.05    |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Net Income (Loss)                                                                                          |  | $                               | 0.07    |   |                                | $ | (0.07   | )    |  | $    | 0.20    |  | $ | (0.07   | )
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|                                                                                                           |  |                                 |         |  
|Net Income (Loss) per Common Share  Diluted                                                               |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Income (Loss) From Continuing Operations                                                                   |  | $                               | (0.00   | ) |                                | $ | (0.07   | )    |  | $    | 0.00    |  | $ | (0.12   | )
|Income (loss) from discontinued operations                                                                 |  |                                 | (0.00   | ) |                                |   | 0.00    |      |  |      | 0.05    |  |   | 0.00    |  
|Gain (loss) on dispositions of real estate interests, net of minority interest                             |  |                                 | 0.07    |   |                                |   | (0.00   | )    |  |      | 0.15    |  |   | 0.05    |  
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  
|Net Income (Loss)                                                                                          |  | $                               | 0.07    |   |                                | $ | (0.07   | )    |  | $    | 0.20    |  | $ | (0.07   | )
|                                                                                                           |  |                                 |         |   |                                |   |         |      |  |      |         |  |   |         |  



19



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Potentially Dilutive Shares

We have excluded from diluted earnings per share the weighted average common share equivalents related to approximately 1,000 and 9,000 stock options for the three and nine months ended September 30, 2007,
because their effect would be anti-dilutive. No anti-dilutive common share equivalents were excluded from the diluted earnings per share for the three and nine months ended September 30, 2006. For purposes of calculating diluted earnings per
share in accordance with SFAS No. 128, Earnings per Share, we treat the dilutive impact of the unvested portion of restricted shares as common stock equivalents.

Note 10  Segment Information

We consider each operating property to be an individual operating segment that
has similar economic characteristics to all our other operating properties, which excludes the results from discontinued operations and includes results from properties held for contribution. Our management considers rental revenues and property net
operating income aggregated by property type to be the appropriate way to analyze performance. Certain reclassifications have been made to prior year results to conform to the current presentation, primarily related to discontinued operations (see
Note 11 for additional information). The following table sets forth the rental revenues and property net operating income of our property type segments in continuing operations for the three and nine months ended September 30, 2007 and 2006 (in
thousands).



|                           |  |                                  |        |                                 |   |                 |  |                  |        |      |   |        |  |      |         |      |   |         |  |   |         |  |   |        
|-------------------------- |  | -------------------------------- | ------ | ------------------------------- | - | --------------- |  | ---------------- | ------ | ---- | - | ------ |  | ---- | ------- | ---- | - | ------- |  | - | ------- |  | - | -------
|                           |  | Three Months Ended September 30, |        | Nine Months Ended September 30,
|                           |  | Rental Revenues                  |        | Property NOI (1)                |   | Rental Revenues |  | Property NOI (1)
|                           |  | 2007                             |        | 2006                            |   | 2007            |  | 2006             |        | 2007 |   | 2006   |  | 2007 |         | 2006
|Bulk distribution          |  | $                                | 49,493 |                                 | $ | 48,839          |  | $                | 38,103 |      | $ | 37,659 |  | $    | 151,387 |      | $ | 125,659 |  | $ | 115,953 |  | $ | 98,105 
|Light industrial and other |  |                                  | 14,134 |                                 |   | 12,069          |  |                  | 10,144 |      |   | 8,387  |  |      | 40,223  |      |   | 29,366  |  |   | 28,185  |  |   | 20,892 
|                           |  |                                  |        |                                 |   |                 |  |                  |        |      |   |        |  |      |         |      |   |         |  |   |         |  |   |        
|Total                      |  | $                                | 63,627 |                                 | $ | 60,908          |  | $                | 48,247 |      | $ | 46,046 |  | $    | 191,610 |      | $ | 155,025 |  | $ | 144,138 |  | $ | 118,997
|                           |  |                                  |        |                                 |   |                 |  |                  |        |      |   |        |  |      |         |      |   |         |  |   |         |  |   |        

| | 
| | 

| | (1) | Net operating income (NOI) is defined as rental revenues, including reimbursements, less rental
expenses and real estate taxes, which excludes depreciation, amortization, general and administrative expenses and interest expense. We consider NOI to be an appropriate supplemental performance measure because NOI reflects the operating performance
of our properties and excludes certain items that are not considered to be controllable in connection with the management of the property such as depreciation, amortization, general and administrative expenses and interest expense. However, NOI
should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they
may use different methodologies for calculating NOI. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



20



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##### Table of Contents

The following table is a reconciliation of our NOI to our reported Income (Loss) From Continuing Operations
for the three and nine months ended September 30, 2007 and 2006 (in thousands).



|                                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|Property NOI                                                    |  | $                               | 48,247  |   |                                | $ | 46,046  |      |  | $ | 144,138 |   |  | $ | 118,997 |  
|Institutional capital management and other fees                 |  |                                 | 417     |   |                                |   | 220     |      |  |   | 1,735   |   |  |   | 398     |  
|Real estate related depreciation and amortization               |  |                                 | (29,761 | ) |                                |   | (29,536 | )    |  |   | (86,918 | ) |  |   | (79,128 | )
|General and administrative expenses                             |  |                                 | (5,102  | ) |                                |   | (1,399  | )    |  |   | (14,835 | ) |  |   | (3,341  | )
|Asset management fees, related party                            |  |                                 |        |   |                                |   | (5,092  | )    |  |   |        |   |  |   | (12,907 | )
|Equity in income (losses) of unconsolidated joint ventures, net |  |                                 | 56      |   |                                |   | (72     | )    |  |   | 99      |   |  |   | (254    | )
|Interest expense                                                |  |                                 | (14,716 | ) |                                |   | (20,489 | )    |  |   | (46,787 | ) |  |   | (46,646 | )
|Interest income and other                                       |  |                                 | 839     |   |                                |   | 476     |      |  |   | 3,978   |   |  |   | 4,998   |  
|Income taxes                                                    |  |                                 | (294    | ) |                                |   | (358    | )    |  |   | (1,278  | ) |  |   | (598    | )
|Minority interests                                              |  |                                 | 80      |   |                                |   | 284     |      |  |   | 132     |   |  |   | 711     |  
|                                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (Loss) From Continuing Operations                        |  | $                               | (234    | ) |                                | $ | (9,920  | )    |  | $ | 264     |   |  | $ | (17,770 | )
|                                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  

The following table reflects our total assets, net of accumulated depreciation and amortization, by property type
segment (in thousands).



|                                                  |  |                   |           |                  |   |          
|------------------------------------------------- |  | ----------------- | --------- | ---------------- | - | ---------
|                                                  |  | September 30,2007 |           | December 31,2006
|Property type segments:                           |  |                   |           |                  |   |          
|Bulk distribution                                 |  | $                 | 1,905,433 |                  | $ | 2,126,898
|Light industrial and other                        |  |                   | 516,595   |                  |   | 528,167  
|                                                  |  |                   |           |                  |   |          
|Total segment net assets                          |  |                   | 2,422,028 |                  |   | 2,655,065
|Development and redevelopment assets              |  |                   | 117,577   |                  |   | 47,922   
|Assets held for sale                              |  |                   | 16,287    |                  |   | 41,895   
|Non-segment assets:                               |  |                   |           |                  |   |          
|Properties in pre-development including land held |  |                   | 24,351    |                  |   | 30,863   
|Non-segment cash and cash equivalents             |  |                   | 37,550    |                  |   | 3,361    
|Other non-segment assets (1)                      |  |                   | 114,625   |                  |   | 70,370   
|                                                  |  |                   |           |                  |   |          
|Total Assets                                      |  | $                 | 2,732,418 |                  | $ | 2,849,476
|                                                  |  |                   |           |                  |   |          

| | 
| | 

| | (1) | Other non-segment assets primarily consists of corporate assets including investments in unconsolidated joint
ventures, notes receivable, certain loan costs, including loan costs associated with our financing obligations, and deferred acquisition costs.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Note 11  Discontinued Operations

In accordance with SFAS No. 144, we report results of operations from real estate assets that meet the definition of a component of an entity and have been sold, or meet the criteria to be classified as held for
sale, as discontinued operations. During the three months ended September 30, 2007, no properties were sold to unrelated third parties. During the nine months ended September 30, 2007, we sold three properties in our light industrial and
other segment comprised of approximately 266,000 square feet to third parties for a net gain of $9.5 million. During the year ended December 31, 2006, we sold seven properties comprised of approximately 659,000 square feet. These seven
properties were sold subsequent to September 30, 2006. For the three and nine months ended September 30, 2007 and 2006, discontinued operations includes the results of operations of these properties prior to the date of sale. No properties
were sold to unrelated third parties during the three and nine months ended September 30, 2006. We included all results of these discontinued operations in a separate component of income on the Consolidated Statements of Operations under the
heading Income (loss) from discontinued operations. This treatment resulted in certain reclassifications of 2007 and 2006 financial statement amounts.

As of September 30, 2007, we had one 500,000 square foot property classified as held for sale. We expect that all properties classified as held for sale will sell within one year from the date classified as held for sale. For the three
and nine months ended September 30, 2007 and 2006, discontinued operations included the results of operations of this property.

The following is a
summary of the components of Income (loss) from discontinued operations for the three and nine months ended September 30, 2007 and 2006 (in thousands):



|                                                                               |  |                                 |      |   |                                |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------ |  | ------------------------------- | ---- | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                               |  | Three Months EndedSeptember 30, |      |   | Nine Months EndedSeptember 30, |  
|                                                                               |  | 2007                            |      |   | 2006                           |   |        | 2007 |  |   | 2006   |  
|Rental revenues                                                                |  | $                               |     |   |                                | $ | 2,100  |      |  | $ | 255    |   |  | $ | 6,374  |  
|Rental expenses and real estate taxes                                          |  |                                 | (213 | ) |                                |   | (595   | )    |  |   | (395   | ) |  |   | (1,816 | )
|Real estate related depreciation and amortization                              |  |                                 |     |   |                                |   | (1,119 | )    |  |   | (15    | ) |  |   | (3,636 | )
|                                                                               |  |                                 |      |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Operating income (loss)                                                        |  |                                 | (213 | ) |                                |   | 386    |      |  |   | (155   | ) |  |   | 922    |  
|Interest expense, net                                                          |  |                                 |     |   |                                |   | (155   | )    |  |   | (13    | ) |  |   | (435   | )
|Income taxes                                                                   |  |                                 |     |   |                                |   |       |      |  |   | (20    | ) |  |   |       |  
|                                                                               |  |                                 |      |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) before minority interest and gain on dispositions of real estate |  |                                 | (213 | ) |                                |   | 231    |      |  |   | (188   | ) |  |   | 487    |  
|Gain (loss) on dispositions of real estate interests                           |  |                                 | (58  | ) |                                |   |       |      |  |   | 9,503  |   |  |   |       |  
|Minority interests                                                             |  |                                 | 45   |   |                                |   | (7     | )    |  |   | (1,333 | ) |  |   | (3     | )
|                                                                               |  |                                 |      |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from discontinued operations                                     |  | $                               | (226 | ) |                                | $ | 224    |      |  | $ | 7,982  |   |  | $ | 484    |  
|                                                                               |  |                                 |      |   |                                |   |        |      |  |   |        |   |  |   |        |  

As of September 30, 2007 and December 31, 2006, the assets related to the properties held for sale and
related liabilities were as follows (in thousands):



|                                                  |  |                    |        |                   |   |       
|------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|                                                  |  | September 30, 2007 |        | December 31, 2006
|Net investment in properties held for sale        |  | $                  | 16,287 |                   | $ | 40,785
|Other assets held for sale                        |  |                    |       |                   |   | 1,110 
|                                                  |  |                    |        |                   |   |       
|Total assets held for sale                        |  | $                  | 16,287 |                   | $ | 41,895
|                                                  |  |                    |        |                   |   |       
|Mortgage notes related to assets held for sale    |  | $                  |       |                   | $ |      
|Other liabilities related to assets held for sale |  |                    | 140    |                   |   | 276   
|                                                  |  |                    |        |                   |   |       
|Liabilities related to assets held for sale       |  | $                  | 140    |                   | $ | 276   
|                                                  |  |                    |        |                   |   |       



22



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##### Table of Contents

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

Forward-Looking Information

We make statements in this report that are considered forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are
usually identified by the use of words such as anticipates, believes, estimates, expects, intends, may, plans, projects, seeks,
should, will, and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and
prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking
statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and
will be affected by a variety of risks and factors that are beyond our control including, without limitation:



| |  |  | the competitive environment in which we operate;
| | - |  | ------------------------------------------------



| |  |  | real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | decreased rental rates or increasing vacancy rates;
| | - |  | ---------------------------------------------------



| |  |  | defaults on or non-renewal of leases by tenants;
| | - |  | ------------------------------------------------



| |  |  | acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the timing of acquisitions and dispositions;
| | - |  | --------------------------------------------



| |  |  | natural disasters such as fires, hurricanes and earthquakes;
| | - |  | ------------------------------------------------------------



| |  |  | national, international, regional and local economic conditions;
| | - |  | ----------------------------------------------------------------



| |  |  | the general level of interest rates;
| | - |  | ------------------------------------



| |  |  | energy costs;
| | - |  | -------------



| |  |  | the terms of governmental regulations that affect us and interpretations of those regulations, including changes in real estate and zoning laws and increases in
real property tax rates;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal, and interest and other
commitments;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | lack of or insufficient amounts of insurance;
| | - |  | ---------------------------------------------



| |  |  | litigation, including costs associated with prosecuting or defending claims and any adverse outcomes;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | the consequences of future terrorist attacks;
| | - |  | ---------------------------------------------



| |  |  | possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently
owned or previously owned by us; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | other risks and uncertainties detailed in Item 1.A of our 2006 Annual Report on Form 10-K.
| | - |  | ------------------------------------------------------------------------------------------

In addition, our current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of
the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update
publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the
Consolidated Financial Statements included elsewhere in this report.

Unless the context otherwise requires, the terms we, us, and
our refer to DCT Industrial Trust Inc. and DCT Industrial Operating Partnership LP, or our operating partnership, and their consolidated subsidiaries.



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Overview

We are a
leading real estate company specializing in the ownership, acquisition, development and management of bulk distribution and light industrial properties located in 24 of the highest volume distribution markets in the United States, and are expanding
into Mexico. In addition, we manage and own interests in industrial properties through our institutional capital management program. Our properties primarily consist of high-quality, generic bulk distribution warehouses and light industrial
properties leased to corporate tenants. We own our properties through our operating partnership and its subsidiaries. DCT Industrial Trust Inc. is the sole general partner and owned approximately 83% of the outstanding equity interests of our
operating partnership as of September 30, 2007. We acquired our first property in June 2003 and have built a portfolio of 371 consolidated operating properties through September 30, 2007.

Our primary business objectives are to maximize sustainable long-term growth in earnings and Funds From Operations, or FFO, as defined on page 44, and to maximize total
return to our stockholders. In our pursuit of these objectives, we will:



| |  |  | expand our operations in selected markets, including Mexico, through acquisitions and development opportunities, including through joint ventures;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | pursue development
| | - |  | ------------------



| |  |  | expand our institutional capital management program;
| | - |  | ----------------------------------------------------



| |  |  | actively manage our existing portfolio to maximize operating cash flows; and
| | - |  | ----------------------------------------------------------------------------



| |  |  | sell non-core assets that no longer fit our investment criteria;
| | - |  | ----------------------------------------------------------------

In order to achieve these objectives, we have raised capital through common stock issuances, our operating partnerships private placement (as more fully described below) and issued and assumed debt, while
maintaining a conservative leverage ratio. Prior to October 10, 2006, our day-to-day operations were managed by Dividend Capital Advisors LLC, or our Former Advisor, under the supervision of our board of directors pursuant to the terms and
conditions of an advisory agreement with our Former Advisor. On October 10, 2006, our operating partnership acquired our Former Advisor in the transaction we refer to as the Internalization. As a result of the Internalization, we became a
self-administered and self-advised REIT, as our Former Advisor is now our wholly-owned subsidiary and we no longer incur the cost of the advisory fees and other amounts payable under the advisory agreement.

Outlook

The primary source of our operating revenues and earnings is
rents received from tenants under operating leases at our properties, including reimbursements from tenants for certain operating costs. We seek long-term earnings growth primarily through increasing rents and operating income at existing
properties, acquiring and developing additional high-quality properties in major distribution markets, increasing fee revenues from our institutional capital management program, and generating profits from our development activities. In addition, we
may reposition our portfolio by selling certain non-core assets and contributing assets to our joint ventures, funds or other commingled investment vehicles with institutional partners.

Although the national real estate credit market has experienced increased volatility, we believe that long-term demand for high-quality industrial warehouse space in major distribution markets will remain favorable.
We expect near-term operating income from our existing properties should increase through rental rate growth on leases that are expiring and through a moderate increase in occupancy rates. Additionally, growth in operating earnings should be derived
from development and acquisitions in our target markets and selected new markets, which may be partially offset in the short term by disposing or contributing existing properties. We also believe our focus on our target distribution markets from
which companies distribute nationally, regionally and/or locally, mitigates the risk of any individual tenant reconfiguring distribution networks and changing the balance of supply and demand in a market.



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##### Table of Contents

Regarding our overhead expenses, while we no longer incur the costs of the various fees and expenses previously paid to
our Former Advisor as a result of becoming self-advised, our expenses include the compensation and benefits of our officers and the other employees and consultants, as well as other general expenses, previously paid by our Former Advisor or its
affiliates.

The principal risks to our business plan include:



| |  |  | our ability to locate development opportunities and to successfully develop such properties on time and within budget and then to successfully lease such
properties;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to acquire properties that meet our quantitative and qualitative criteria and whether we can successfully integrate such acquisitions;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to attract institutional partners in our institutional capital management program on terms that we find acceptable;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to sell or contribute assets at prices we find acceptable which generates funding for our business plan;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to retain and attract talented management; and
| | - |  | ----------------------------------------------------------



| |  |  | our ability to lease space to customers at rates which provide acceptable returns.
| | - |  | ----------------------------------------------------------------------------------

We believe our investment focus on the largest and most active distribution markets in the United States and Mexico and our monitoring of market and submarket demand and supply imbalances helps mitigate some of these
risks.

We also expect the following key trends to affect our industry positively:



| |  |  | the continued restructuring of corporate supply chains which may impact local demand for distribution space as companies relocate their operations consistent with
their particular requirements or needs;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the growth or continuing importance of industrial markets located near seaports, airports and major intermodal facilities; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | continuing advancements in technology and information systems which enhance companies abilities to control their investment in inventories.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------

These key trends may gradually change the characteristics of the facilities needed by our tenants. However, we believe the buildings in
our portfolio are designed to be reconfigured and can accommodate gradual changes that may occur.

For the financing of our capital needs, we are not aware
of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, including increased costs of borrowing, that we anticipate will have a material impact on either capital
resources or the revenues or income to be derived from the operation of real estate properties. Our financing needs will depend largely on our ability to acquire or develop properties as the majority of our cash generated from operations will be
used for payment of distributions and to finance other activities. We expect the funding of additional cash needs to come from new borrowings and/or proceeds from the sale or contribution of properties.



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##### Table of Contents

Significant Transactions During 2007

Summary of the nine months ended September 30, 2007

During 2007, we expanded our institutional capital
management program to include two new joint ventures, and proceeds from contributions of properties into joint ventures provided capital for re-deployment into development projects, acquisitions and expansion into Mexico. We entered the Mexico
market with the acquisition of two buildings during the third quarter of 2007. The following further describes certain significant transactions that occurred during the nine months ended September 30, 2007.



| |  |  | Acquisition Activity  During the nine months ended September 30, 2007, we acquired 17 operating properties located in 11 markets, comprised of
approximately 3.4 million square feet for a total cost of approximately $154.2 million, which includes acquisition costs.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Disposition Activity  During the nine months ended September 30, 2007, we disposed of 18 operating properties comprised of approximately
5.9 million square feet located in 12 markets. We sold three properties comprised of approximately 266,000 square feet to unrelated third parties for total gross proceeds of approximately $54.4 million. The remaining 15 properties comprised of
approximately 5.6 million square feet were contributed to institutional joint ventures in which we retain ownership interests for a total contribution value of approximately $290.1 million (see discussion below).
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Institutional Capital Management
| | - |  | --------------------------------

TRT-DCT Industrial Joint Venture I (TRT-DCT Venture I)  During the nine months ended September 30, 2007, we contributed four properties comprised of approximately 1.4 million square feet with a combined gross
contribution value of approximately $84.2 million.

TRT-DCT Industrial Joint Venture II(TRT-DCT Venture II)  During the nine
months ended September 30, 2007, we contributed five properties comprised of approximately 1.4 million square feet with a combined gross contribution value of approximately $67.2 million.

DCT/SPF Industrial Operating LLC(JP Morgan Venture)  During the nine months ended September 30, 2007, we contributed six properties
comprised of approximately 2.8 million square feet with a combined gross contribution value of approximately $138.7 million.



| |  |  | Major Capital Deployment Activities
| | - |  | -----------------------------------

Mexico  During the nine months ended September 30, 2007, construction commenced on six buildings comprised of approximately 859,000 square feet located in four submarkets in the metropolitan area of Monterrey, Nuevo Leon,
Mexico that we have forward commitments to purchase. Construction is expected to be completed during the remainder of 2007 and early 2008, and leasing activities have commenced with one 108,000 square foot building currently leased.

SCLA  During 2006, we entered into a joint venture agreement with Stirling Airports International, LLC, or Stirling, an unrelated third
party, to be the master developer of up to 4,350 acres in Victorville, California, part of the Inland Empire submarket in Southern California. The development project is located at the former George Air Force Base which closed in 1992 and is now
known as Southern California Logistics Airport, or SCLA. We refer to this joint venture as the SCLA joint venture. Stirling entered into two master development agreements which gave it certain rights to be the exclusive developer of the SCLA
development project for the next 13 years (including extensions) and assigned these rights to the SCLA joint venture upon the closing of the venture. While our exact share of the equity interests in the SCLA joint venture will depend on the amount
of capital we contribute and the timing of contributions and distributions, the SCLA joint venture contemplates an equal sharing between us and Stirling of residual profits and cash flows after all priority distributions.

During the nine months ended September 30, 2007, the SCLA joint venture began construction on four buildings comprised of approximately 926,000
square feet, of which one 408,000 square foot building pre-leased to Newell Rubbermaid was completed during the third quarter of 2007.



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##### Table of Contents

Critical Accounting Policies

General

Our discussion and analysis of financial condition and results of operations is based on our Consolidated Financial
Statements, which have been prepared in accordance with United States generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our assumptions and estimates on an on-going basis. We base our estimates on
historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following discussion pertains to accounting policies management believes are most critical to the portrayal of our
financial condition and results of operations that require managements most difficult, subjective or complex judgments.

Revenue Recognition

We record rental revenues on a straight-line basis under which contractual rent increases are recognized evenly over the full lease term. Certain
properties have leases that provide for tenant occupancy during periods where no rent is due or where minimum rent payments increase during the term of the lease. Accordingly, we record receivables from tenants that we expect to collect over the
remaining lease term rather than currently, which are recorded as straight-line rents receivable. When we acquire a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation.
For the three and nine months ended September 30, 2007, the total increase to Rental revenues due to straight-line rent adjustments, including amounts reported from discontinued operations, was approximately $1.7 million and $4.5
million, respectively. The total increase to Rental revenues due to straight-line rent adjustments, including amounts reported from discontinued operations, during the same periods in 2006 was approximately $2.0 million and $5.9 million,
respectively.

Tenant recovery income includes payments and amounts due from tenants for real estate taxes, insurance and other recoverable property
operating expenses and is recognized as Rental revenues during the same period the related expenses are incurred. Tenant recovery income recognized as Rental revenues for the three and nine months ended September 30,
2007 was $12.5 million and $37.3 million, respectively. For the three and nine months ended September 30, 2006, tenant recovery income recognized as Rental revenues was approximately $11.1 million and $26.9 million, respectively.

In connection with property acquisitions, we may acquire leases with rental rates above or below the market rental rates. Such differences are recorded as
an intangible asset or liability pursuant to SFAS 141, and amortized to Rental revenues over the life of the related leases. Additionally, the unamortized balances of SFAS 141 assets and liabilities associated with the early termination
of leases are fully amortized to their respective revenue and expense line items in our Consolidated Statements of Operations over the shorter of the expected life of such assets and liabilities or the remaining lease term. For the three months
ended September 30, 2007, the total net increase to Rental revenues due to the amortization of above and below market rents, including amounts reported from discontinued operations and accelerated amortization due to early
terminations, was approximately $0.1 million, while the total net decrease to Rental revenues for the nine months ended September 30, 2007 was approximately $0.6 million. The total net decrease to Rental revenues due to
the amortization of above and below market rents, including amounts reported from discontinued operations and accelerated amortization due to early terminations, for the same periods of 2006 was approximately $0.3 million and $1.0 million,
respectively.

Early lease termination fees are recorded in Rental revenues when such amounts are earned. During the three and nine months
ended September 30, 2007, no revenues associated with early lease termination fees were recorded. During the three and nine months ended September 30, 2006, revenues associated with early lease termination fees were $0.3 million and $0.7
million, respectively.



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##### Table of Contents

We earn revenues from asset management fees, acquisition fees and fees for other services pursuant to joint venture and
other agreements. These may include acquisition fees based on the sale or contribution of assets and are included in the Consolidated Statements of Operations in Institutional capital management and other fees. We recognize revenues from
asset management fees, acquisition fees and fees for other services when the related fees are earned and are realized or realizable.

Investment in
Real Estate, Valuation and Allocation of Real Estate Acquisitions

We capitalize direct costs associated with, and incremental to, the acquisition,
development, redevelopment or improvement of real estate, including acquisition costs and leasing costs as well as direct internal costs, if appropriate. Costs associated with acquisition or development pursuits are capitalized as incurred and, if
the pursuit is abandoned, these costs are expensed during the period in which the pursuit is abandoned. Such costs considered for capitalization include construction costs, interest, real estate taxes, insurance and other such costs if appropriate.
Interest is capitalized on actual expenditures from the period when development or redevelopment commences until the asset is substantially complete based on our current borrowing rates. Costs incurred for maintaining and making repairs to our real
estate, which do not extend the life of our assets, are expensed as incurred.

Upon acquisition, the total cost of a property is allocated to land,
building, building and land improvements, tenant improvements and intangible lease assets and liabilities pursuant to SFAS 141. The fair value of identifiable tangible assets such as land, building, building and land improvements and tenant
improvements is determined on an as-if-vacant basis. Management considers the replacement cost of such assets, appraisals, property condition reports, market data and other related information in determining the fair value of the
tangible assets. Pursuant to SFAS 141, the difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to Interest expense over the life of the
debt assumed. The valuation of assumed liabilities is based on the current market rate for similar liabilities. The allocation of the total cost of a property to an intangible lease asset includes the value associated with customer relationships and
in-place leases that may include leasing commissions, legal and other costs. In addition, the allocation of the total cost of a property requires allocating costs to an intangible asset or liability resulting from in-place leases being above or
below the market rental rates on the date of the acquisition. Intangible lease assets or liabilities will be amortized over the life of the remaining in-place leases as an adjustment to Rental revenues.

We have certain properties which we have acquired or removed from service with the intention to redevelop the building. Buildings under redevelopment require significant
construction activities prior to being placed back into service. Additionally, we may acquire, develop, or redevelop certain properties with the intention to contribute the property to an institutional capital management joint venture, in which we
may retain ownership in or manage the assets of the joint venture. We refer to these properties as held for contribution. Land undergoing activities necessary to prepare it for its intended use prior to significant construction activities is
classified as pre-development.

Real estate, including land, building, building and land improvements, tenant improvements and leasing costs, and
intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets or
liabilities as follows:



|                                           |  |                                    
|------------------------------------------ |  | -----------------------------------
|Description                                |  | Standard Depreciable Life          
|Land                                       |  | Not depreciated                    
|Building                                   |  | 40 years                           
|Building and land improvements             |  | 20 years                           
|Tenant improvements                        |  | Lease term                         
|Lease costs                                |  | Lease term                         
|Intangible lease assets and liabilities    |  | Average term of leases for property
|Above/below market rent assets/liabilities |  | Lease term                         



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##### Table of Contents

The table above reflects the standard depreciable lives typically used to compute depreciation and amortization. However,
such depreciable lives may be different based on the estimated useful life of such assets or liabilities. The cost of assets sold or retired and the related accumulated depreciation and/or amortization is removed from the accounts and the resulting
write off or gain, if necessary, is reflected in the Consolidated Statements of Operations during the period in which such sale or retirement occurs.

Depreciation and Useful Lives of Real Estate Assets

We estimate the depreciable portion of our real estate assets and their related
useful lives in order to record depreciation expense. Our managements ability to accurately estimate the depreciable portions of our real estate assets and their useful lives is critical to the determination of the appropriate amount of
depreciation expense recorded and the carrying values of the underlying assets. Any change to the estimated depreciable lives of these assets would have an impact on the depreciation expense we recognize. Depreciation is not recorded on buildings
currently in pre-development, being developed or redeveloped until the building is substantially completed and placed into service, not later than one year from cessation of major construction activity. If the useful life estimate was reduced by one
year for all buildings and building and land improvements in continuing operations, depreciation expense would have increased $1.9 million.

During the
three months ended September 30, 2007, the estimated useful lives of certain buildings were reduced based on facts specific to each building. The reduction in the estimated useful lives resulted in increased depreciation expense and decreased
Income (Loss) From Continuing Operations and Net Income (Loss) of approximately $1.1 million, or $0.01 per share, for the three and nine months ended September 30, 2007.

Impairment of Long-Lived Assets

Long-lived assets held
and used are carried at cost and evaluated for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or SFAS No. 144. SFAS No. 144 provides that such an
evaluation should be performed when events or changes in circumstances indicate such an evaluation is warranted. Examples include the point at which we deem the long-lived asset to be held for sale, downturns in the economy, etc. Impairment of
long-lived assets is considered a critical accounting estimate because the evaluation of impairment and the determination of fair values involve a number of management assumptions relating to future economic events that could materially
affect the determination of the ultimate value, and therefore, the carrying amounts of our real estate. Such assumptions include, but are not limited to, projecting vacancy rates, rental rates, property operating expenses, capital expenditures and
debt financing rates, among other things. The capitalization rate is also a significant driving factor in determining the property valuation which requires managements judgment of factors such as market knowledge, historical experience, lease
terms, tenant financial strength, economy, demographics, environment, property location, visibility, age, physical condition and investor return requirements, among other things. All of the aforementioned factors are taken as a whole by management
in determining the valuation of investment property. The valuation is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole. Should the actual results differ from managements judgment, the
valuation could be negatively affected and may result in a negative impact to our Consolidated Financial Statements.

Principles of
Consolidation

Our Consolidated Financial Statements include the accounts of our company and our consolidated subsidiaries and partnerships that we
control either through ownership of a majority voting interest, as the primary beneficiary, or otherwise. All significant intercompany accounts and transactions have been eliminated in consolidation. Investments in entities in which we do not own a
majority voting interest but over which we have the ability to exercise significant influence over operating and financial policies are presented under the equity method. Investments in entities in which we do not own a majority voting interest and
over which we do not have the ability to exercise significant influence are carried at the lower of cost or fair value, as appropriate. Our judgments with respect to our level of influence or control of an entity and whether we are the primary
beneficiary of a variable interest entity as defined by Financial Accounting Standards Board, or FASB, Interpretation No. 46(R), Consolidation of Variable Interest Entities, or FIN No. 46(R), involve consideration of various factors
including the form of our ownership interest, our representation on the entitys board of directors, the size of our investment (including loans) and our ability to participate in policy making decisions. Our ability to correctly assess our
influence or control over an entity affects the presentation of these investments in our Consolidated Financial Statements and, consequently, our financial position and specific items in our results of operations that are used by our stockholders,
lenders and others in their evaluation of us.



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##### Table of Contents

Generally, we consolidate real estate partnerships and other entities that are not variable interest entities (as defined
in FIN No. 46(R)) when we own, directly or indirectly, a majority voting interest in the entity. In June 2005, the FASB ratified Emerging Issues Task Force, or EITF, Issue No. 04-5, Determining Whether a General Partner, or the General
Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights, or EITF 04-5. EITF 04-5 provides an accounting model to be used by a general partner, or group of general partners, to determine
whether the general partner(s) controls a limited partnership or similar entity in light of certain rights held by the limited partners and provides additional guidance on what constitutes substantive kick-out rights and substantive participating
rights.

Customer Diversification

As of
September 30, 2007, there were no customers that occupied more that 5.0% of our consolidated and unconsolidated operating properties and development properties based on annualized base rent or gross leased square feet. The following table
reflects our ten largest customers, based on annualized base rent as of September 30, 2007, that occupy approximately 10.5 million square feet in all consolidated and unconsolidated operating properties, and development properties.

Deutsche Post World Net (DHL & Exel)

Technicolor

Whirlpool Corporation

Bridgestone/Firestone

EGL, Inc.

S.C Johnson & Son, Inc.

The
Clorox Sales Company

United Parcel Service (UPS)

Ozburn-Hessey Logistics

Verizon



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New Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, or SFAS 159, which expands the use of the fair value measurement to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. We are currently evaluating the application of SFAS
159 and its effect on our Consolidated Financial Statements.

In December 2006, the FASB issued FASB Staff Position, or FSP, on EITF No. 00-19,
Accounting for Registration Payment Arrangements, or FSP EITF 00-19-2. FSP EITF 00-19-2 addresses an issuers accounting for registration payment arrangements, specifying that the contingent obligation to make future payments or
otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance
with FASB Statement No. 5, Accounting for Contingencies. This FSP further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for in accordance with other applicable generally accepted
accounting principles without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. This FSP is effective for new and modified registration payment arrangements. Registration payment
arrangements that were entered into before the FSP was issued would become subject to its guidance for fiscal years beginning after December 15, 2006 by recognizing a cumulative-effect adjustment in retained earnings as of the year of adoption.
We adopted FSP EITF 00-19-2 in the first quarter of 2007 and the adoption did not have a material impact on our Consolidated Financial Statements.

In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, or SFAS 157, which defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair-value measurements.
SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. As SFAS 157 does not require any new fair value measurements or remeasurements of previously computed fair values, we do not believe
adoption of this statement will have a material effect on our Consolidated Financial Statements.

In July 2006, the FASB issued FASB Interpretation
No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109, or FIN 48. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entitys financial
statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to
be taken in a tax return. This interpretation also provides guidance on derecognition, classification of interest and penalties, accounting in interim periods, disclosure and transition.

The Company is subject to the provisions of FIN 48 as of January 1, 2007, and has analyzed its various federal and state filing positions, including the assertion that the Company is not taxable. The Company
believes that its income tax filing positions are well documented and supported. As a result of the implementation of FIN 48, the Company recognized a $0.5 million liability for unrecognized tax benefits, which includes approximately $41,000 for
accrued interest and penalties, and was accounted for as an increase to the January 1, 2007 balance of Distributions in excess of earnings in our accompanying Consolidated Balance Sheets. The Company recognizes potential accrued
interest and penalties related to unrecognized tax benefits as income tax expense. For the nine months ended September 30, 2007, an additional $15,000 was recognized as accrued interest expense related to the $0.5 million liability for
unrecognized tax benefits. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax expense. All years of the Companys
operations remain open for examination.



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Results of Operations

As of September 30, 2007, we consolidated 371 operating properties (including nine operating properties held for contribution), seven redevelopment properties, eight development properties, and one property held for sale, located in a
total of 24 markets throughout the United States. As of September 30, 2006, we consolidated 374 operating properties, ten of which are excluded from continuing operations as they were disposed of as of September 30, 2007, and four
development properties. The average square feet in our continuing operations portfolio for the three months ended September 30, 2007 decreased by approximately 940,000 compared to the same period in 2006. The average square feet in our
continuing operations portfolio for the nine months ended September 30, 2007 increased by approximately 7.2 million compared to the same period in 2006. Since the financial results from additional operating properties are only included in
our consolidated operations from the acquisition date forward, our revenues and expenses from our continuing operations for the nine months ended September 30, 2007 reflect a significant increase compared to the revenues and expenses for the
nine months ended September 30, 2006.

The following table illustrates the changes in our consolidated operating properties in continuing operations
as of, and for the three and nine months ended, September 30, 2007 compared to September 30, 2006, respectively (dollar amounts in thousands).



|                                                   |  |                                                               |           |   |                           |   |         |                  |  |   |                           |   |  |   |         |  
|-------------------------------------------------- |  | ------------------------------------------------------------- | --------- | - | ------------------------- | - | ------- | ---------------- |  | - | ------------------------- | - |  | - | ------- | -
|                                                   |  | As of, and for the Three and Nine Months Ended, September 30, |          
|                                                   |  | 2007                                                          |           |   | 2006                      |  
|                                                   |  | BulkDistribution                                              |           |   | Light Industrialand Other |   |         | BulkDistribution |  |   | Light Industrialand Other |  
|Operating properties in continuing operations (1): |  |                                                               |           |   |                           |   |         |                  |  |   |                           |   |  |   |         |  
|Number of buildings                                |  |                                                               | 217       |   |                           |   | 154     |                  |  |   | 215                       |   |  |   | 149     |  
|Square feet (in thousands)                         |  |                                                               | 44,619    |   |                           |   | 7,370   |                  |  |   | 46,999                    |   |  |   | 7,117   |  
|Occupancy at end of period                         |  |                                                               | 93.3      | % |                           |   | 88.8    | %                |  |   | 93.9                      | % |  |   | 88.2    | %
|Segment net assets                                 |  | $                                                             | 1,905,433 |   |                           | $ | 516,595 |                  |  | $ | 2,074,232                 |   |  | $ | 514,320 |  
|For the three months ended September 30:           |  |                                                               |           |   |                           |   |         |                  |  |   |                           |   |  |   |         |  
|Rental revenues                                    |  | $                                                             | 49,493    |   |                           | $ | 14,134  |                  |  | $ | 48,839                    |   |  | $ | 12,069  |  
|Net operating income (2)                           |  | $                                                             | 38,103    |   |                           | $ | 10,144  |                  |  | $ | 37,659                    |   |  | $ | 8,387   |  
|For the nine months ended September 30:            |  |                                                               |           |   |                           |   |         |                  |  |   |                           |   |  |   |         |  
|Rental revenues                                    |  | $                                                             | 151,387   |   |                           | $ | 40,223  |                  |  | $ | 125,659                   |   |  | $ | 29,366  |  
|Net operating income (2)                           |  | $                                                             | 115,953   |   |                           | $ | 28,185  |                  |  | $ | 98,105                    |   |  | $ | 20,892  |  

| | 
| | 

| | (1) | Includes nine operating properties held for contribution as of September 30, 2007, which are included in continuing
operations as they do not meet the criteria to be classified as held for sale, in accordance with SFAS No. 144.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Net operating income, or NOI, is defined as rental revenues, including reimbursements, less rental expenses and real
estate taxes, which excludes depreciation, amortization, general and administrative expenses and interest expense. We consider NOI to be an appropriate supplemental performance measure because NOI reflects the operating performance of our properties
and excludes certain items that are not considered to be controllable in connection with the management of the property such as depreciation, amortization, general and administrative expenses and interest expense. However, NOI should not be viewed
as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different
methodologies for calculating NOI. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



32



---

##### Table of Contents

The following table is a reconciliation of our NOI to our reported Income (Loss) From Continuing Operations
for the three and nine months ended September 30, 2007 and 2006 (in thousands):



|                                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|Property NOI                                                    |  | $                               | 48,247  |   |                                | $ | 46,046  |      |  | $ | 144,138 |   |  | $ | 118,997 |  
|Institutional capital management and other fees                 |  |                                 | 417     |   |                                |   | 220     |      |  |   | 1,735   |   |  |   | 398     |  
|Real estate related depreciation and amortization               |  |                                 | (29,761 | ) |                                |   | (29,536 | )    |  |   | (86,918 | ) |  |   | (79,128 | )
|General and administrative expenses                             |  |                                 | (5,102  | ) |                                |   | (1,399  | )    |  |   | (14,835 | ) |  |   | (3,341  | )
|Asset management fees, related party                            |  |                                 |        |   |                                |   | (5,092  | )    |  |   |        |   |  |   | (12,907 | )
|Equity in income (losses) of unconsolidated joint ventures, net |  |                                 | 56      |   |                                |   | (72     | )    |  |   | 99      |   |  |   | (254    | )
|Interest expense                                                |  |                                 | (14,716 | ) |                                |   | (20,489 | )    |  |   | (46,787 | ) |  |   | (46,646 | )
|Interest income and other                                       |  |                                 | 839     |   |                                |   | 476     |      |  |   | 3,978   |   |  |   | 4,998   |  
|Income taxes                                                    |  |                                 | (294    | ) |                                |   | (358    | )    |  |   | (1,278  | ) |  |   | (598    | )
|Minority interests                                              |  |                                 | 80      |   |                                |   | 284     |      |  |   | 132     |   |  |   | 711     |  
|                                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (Loss) From Continuing Operations                        |  | $                               | (234    | ) |                                | $ | (9,920  | )    |  | $ | 264     |   |  | $ | (17,770 | )
|                                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  

The following table reflects our total assets, net of accumulated depreciation and amortization, by property type
segment (in thousands).



|                                                  |  |                    |           |                    |   |          
|------------------------------------------------- |  | ------------------ | --------- | ------------------ | - | ---------
|                                                  |  | September 30, 2007 |           | September 30, 2006
|Property type segments:                           |  |                    |           |                    |   |          
|Bulk distribution                                 |  | $                  | 1,905,433 |                    | $ | 2,074,232
|Light industrial and other                        |  |                    | 516,595   |                    |   | 514,320  
|                                                  |  |                    |           |                    |   |          
|Total segment net assets                          |  |                    | 2,422,028 |                    |   | 2,588,552
|Development and redevelopment assets              |  |                    | 117,577   |                    |   | 49,776   
|Assets held for sale                              |  |                    | 16,287    |                    |   | 39,715   
|Properties excluded from continuing operations    |  |                    |          |                    |   | 66,466   
|Non-segment assets:                               |  |                    |           |                    |   |          
|Properties in pre-development including land held |  |                    | 24,351    |                    |   | 10,930   
|Non-segment cash and cash equivalents             |  |                    | 37,550    |                    |   | 2,864    
|Other non-segment assets (1)                      |  |                    | 114,625   |                    |   | 61,351   
|                                                  |  |                    |           |                    |   |          
|Total Assets                                      |  | $                  | 2,732,418 |                    | $ | 2,819,654
|                                                  |  |                    |           |                    |   |          

| | 
| | 

| | (1) | Other non-segment assets primarily consists of corporate assets including investments in unconsolidated joint ventures,
notes receivable, certain loan costs, including loan costs associated with our financing obligations, and deferred acquisition costs.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33



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##### Table of Contents

Comparison of the three months ended September 30, 2007 compared to the three months ended September 30,
2006

The following table illustrates the changes in rental revenues, rental expenses and real estate taxes, property net operating income, other income
and other expenses for the three months ended September 30, 2007 compared to the three months ended September 30, 2006. Our same store portfolio includes all operating properties that we owned for the entirety of both the current and prior
year reporting periods for which the operations had been stabilized. The same store portfolio for the three months ended September 30, 2007 totaled 342 buildings comprised of approximately 47.8 million square feet. A discussion of these
changes follows the table (in thousands).



|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|--------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------- | ------- |  | - | ------ | -
|                                                                |  | Three Months EndedSeptember 30, |        |   |      |  
|                                                                |  | 2007                            |        |   | 2006 |   |         | $Change | 
|Rental Revenues                                                 |  |                                 |        |   |      |   |         |         |  |   |        |  
|Same store                                                      |  | $                               | 56,251 |   |      | $ | 54,449  |         |  | $ | 1,802  |  
|2006/2007 acquisitions and dispositions                         |  |                                 | 5,775  |   |      |   | 6,008   |         |  |   | (233   | )
|Development and redevelopment                                   |  |                                 | 592    |   |      |   | 451     |         |  |   | 141    |  
|Held for contribution                                           |  |                                 | 1,009  |   |      |   |        |         |  |   | 1,009  |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Total rental revenues                                           |  |                                 | 63,627 |   |      |   | 60,908  |         |  |   | 2,719  |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Rental Expenses and Real Estate Taxes                           |  |                                 |        |   |      |   |         |         |  |   |        |  
|Same store                                                      |  |                                 | 13,728 |   |      |   | 13,317  |         |  |   | 411    |  
|2006/2007 acquisitions and dispositions                         |  |                                 | 1,307  |   |      |   | 1,348   |         |  |   | (41    | )
|Development and redevelopment                                   |  |                                 | 84     |   |      |   | 197     |         |  |   | (113   | )
|Held for contribution                                           |  |                                 | 261    |   |      |   |        |         |  |   | 261    |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Total rental expenses and real estate taxes                     |  |                                 | 15,380 |   |      |   | 14,862  |         |  |   | 518    |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Property Net Operating Income (1)                               |  |                                 |        |   |      |   |         |         |  |   |        |  
|Same store                                                      |  |                                 | 42,523 |   |      |   | 41,132  |         |  |   | 1,391  |  
|2006/2007 acquisitions and dispositions                         |  |                                 | 4,468  |   |      |   | 4,660   |         |  |   | (192   | )
|Development and redevelopment                                   |  |                                 | 508    |   |      |   | 254     |         |  |   | 254    |  
|Held for contribution                                           |  |                                 | 748    |   |      |   |        |         |  |   | 748    |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Total property net operating income                             |  |                                 | 48,247 |   |      |   | 46,046  |         |  |   | 2,201  |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Other Income                                                    |  |                                 |        |   |      |   |         |         |  |   |        |  
|Institutional capital management and other fees                 |  |                                 | 417    |   |      |   | 220     |         |  |   | 197    |  
|Gain (loss) on disposition of real estate assets                |  |                                 | 14,033 |   |      |   | (491    | )       |  |   | 14,524 |  
|Gain on dispositions of non-depreciated real estate             |  |                                 | 12     |   |      |   | 9       |         |  |   | 3      |  
|Equity in income (losses) of unconsolidated joint ventures, net |  |                                 | 56     |   |      |   | (72     | )       |  |   | 128    |  
|Interest income and other                                       |  |                                 | 839    |   |      |   | 476     |         |  |   | 363    |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Total other income                                              |  |                                 | 15,357 |   |      |   | 142     |         |  |   | 15,215 |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Other Expenses                                                  |  |                                 |        |   |      |   |         |         |  |   |        |  
|Real estate related depreciation and amortization               |  |                                 | 29,761 |   |      |   | 29,536  |         |  |   | 225    |  
|General and administrative expenses                             |  |                                 | 5,102  |   |      |   | 1,399   |         |  |   | 3,703  |  
|Asset management fees, related party                            |  |                                 |       |   |      |   | 5,092   |         |  |   | (5,092 | )
|Income taxes                                                    |  |                                 | 294    |   |      |   | 358     |         |  |   | (64    | )
|Interest expense                                                |  |                                 | 14,716 |   |      |   | 20,489  |         |  |   | (5,773 | )
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Total other expenses                                            |  |                                 | 49,873 |   |      |   | 56,874  |         |  |   | (7,001 | )
|Minority interests                                              |  |                                 | (2,256 | ) |      |   | 297     |         |  |   | (2,553 | )
|Income (loss) from discontinued operations                      |  |                                 | (226   | ) |      |   | 224     |         |  |   | (450   | )
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  
|Net income (loss)                                               |  | $                               | 11,249 |   |      | $ | (10,165 | )       |  | $ | 21,414 |  
|                                                                |  |                                 |        |   |      |   |         |         |  |   |        |  

| | 
| | 

| | (1) | For a discussion as to why we view net operating income to be an appropriate supplemental performance measure, and a
reconciliation of our net operating income for the three months ended September 30, 2007 and 2006 to our reported Income (Loss) From Continuing Operations for the three months ended September 30, 2007 and 2006, see page 32
above.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



34



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##### Table of Contents

Rental Revenues

Rental revenues increased by approximately $2.7 million, or 4.5%, for the three months ended September 30, 2007 compared to the same period in 2006, primarily as a result of increased base rent per square foot and tenant recovery
income. Tenant recovery income increased by $1.4 million for the three months ended September 30, 2007 compared to the same period in 2006 primarily due to higher recoverable operating expenses. Same store rental revenues increased by
approximately $1.8 million, or 3.3%, for the three months ended September 30, 2007 compared to the same period in 2006 primarily due to increased base rent per square foot. Additionally, tenant recovery income for same store properties
increased by $0.9 million for the three months ended September 30, 2007 compared to the same period in 2006.

Rental Expenses and Real Estate Taxes

Rental expenses and real estate taxes increased by approximately $0.5 million, or 3.5%, for the three months ended September 30, 2007 compared to
the same period in 2006, primarily as a result of increased real estate tax rates and higher asset management fees, all of which are generally recoverable from our tenants offset by a decrease in expenses that are generally not recoverable from our
tenants. Same store rental expenses and real estate taxes increased by approximately $0.4 million, or 3.1%, for the three months ended September 30, 2007 as compared to the same period in 2006, primarily as a result of increased higher real
estate tax rates, maintenance costs and higher asset management fees, all of which are generally recoverable from our tenants, partially offset by a decrease in expenses that are generally not recoverable from our tenants.

Other Income

Other income increased by approximately $15.2 million
for the three months ended September 30, 2007 as compared to the same period in 2006, primarily as a result of approximately $14.5 million more gain related to dispositions of real estate interests during the three months ended
September 30, 2007 compared to the three months ended September 30, 2006. During the three months ended September 30, 2007, we disposed of six operating properties comprised of approximately 2.8 million square feet located in
five markets, which were contributed to an institutional joint venture in which we retain ownership interests for a total contribution value of approximately $138.7 million.

Other Expenses

Real estate related depreciation and amortization increased by approximately $0.2 million for the
three months ended September 30, 2007 as compared to the same period in 2006, primarily due to a reduction of the estimated useful lives of certain buildings which resulted in increased depreciation expense of approximately $1.1 million,
partially offset by lower average depreciable asset balances. The increase in general and administrative expenses of $3.7 million and the decrease in asset management fees of $5.1 million are primarily attributable to the internalization of our
management in October 2006. The decrease in interest expense of approximately $5.8 million is primarily attributable to lower average outstanding debt balances during the three months ended September 30, 2007 compared to the same period in
2006.

Minority Interest

Minority interest in our
operating partnership increased from approximately 3% as of September 30, 2006 to approximately 17% as of September 30, 2007, primarily due to issuance of units in our operating partnership, or OP Units, in relation to our Internalization
during October 2006, and to unrelated third-party investors in connection with our operating partnerships private placement (see Note 5 to the Consolidated Financial Statements for additional information).



35



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##### Table of Contents

Comparison of the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006

The following table illustrates the changes in rental revenues, rental expenses and real estate taxes, property net operating income, other income and
other expenses for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006. Our same store portfolio includes all operating properties that we owned for the entirety of both the current and prior year
reporting periods for which the operations had been stabilized. The same store portfolio for the nine months ended September 30, 2007 totaled 246 buildings comprised of approximately 36.9 million square feet. A discussion of these changes
follows the table (in thousands).



|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|--------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | ------- |  | - | ------- | -
|                                                                |  | Nine Months EndedSeptember 30, |         |   |      |  
|                                                                |  | 2007                           |         |   | 2006 |   |         | $Change | 
|Rental Revenues                                                 |  |                                |         |   |      |   |         |         |  |   |         |  
|Same store                                                      |  | $                              | 125,644 |   |      | $ | 122,851 |         |  | $ | 2,793   |  
|2006/2007 acquisitions and dispositions                         |  |                                | 63,738  |   |      |   | 31,410  |         |  |   | 32,328  |  
|Development and redevelopment                                   |  |                                | 1,126   |   |      |   | 764     |         |  |   | 362     |  
|Held for contribution                                           |  |                                | 1,102   |   |      |   |        |         |  |   | 1,102   |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Total rental revenues                                           |  |                                | 191,610 |   |      |   | 155,025 |         |  |   | 36,585  |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Rental Expenses and Real Estate Taxes                           |  |                                |         |   |      |   |         |         |  |   |         |  
|Same store                                                      |  |                                | 30,492  |   |      |   | 29,010  |         |  |   | 1,482   |  
|2006/2007 acquisitions and dispositions                         |  |                                | 16,291  |   |      |   | 6,742   |         |  |   | 9,549   |  
|Development and redevelopment                                   |  |                                | 398     |   |      |   | 276     |         |  |   | 122     |  
|Held for contribution                                           |  |                                | 291     |   |      |   |        |         |  |   | 291     |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Total rental expenses and real estate taxes                     |  |                                | 47,472  |   |      |   | 36,028  |         |  |   | 11,444  |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Property Net Operating Income (1)                               |  |                                |         |   |      |   |         |         |  |   |         |  
|Same store                                                      |  |                                | 95,152  |   |      |   | 93,841  |         |  |   | 1,311   |  
|2006/2007 acquisitions and dispositions                         |  |                                | 47,447  |   |      |   | 24,668  |         |  |   | 22,779  |  
|Development and redevelopment                                   |  |                                | 728     |   |      |   | 488     |         |  |   | 240     |  
|Held for contribution                                           |  |                                | 811     |   |      |   |        |         |  |   | 811     |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Total property net operating income                             |  |                                | 144,138 |   |      |   | 118,997 |         |  |   | 25,141  |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Other Income                                                    |  |                                |         |   |      |   |         |         |  |   |         |  
|Institutional capital management and other fees                 |  |                                | 1,735   |   |      |   | 398     |         |  |   | 1,337   |  
|Gain on disposition of real estate assets                       |  |                                | 18,325  |   |      |   | 3,476   |         |  |   | 14,849  |  
|Gain on dispositions of non-depreciated real estate             |  |                                | 12,737  |   |      |   | 4,074   |         |  |   | 8,663   |  
|Equity in income (losses) of unconsolidated joint ventures, net |  |                                | 99      |   |      |   | (254    | )       |  |   | 353     |  
|Interest income and other                                       |  |                                | 3,978   |   |      |   | 4,998   |         |  |   | (1,020  | )
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Total other income                                              |  |                                | 36,874  |   |      |   | 12,692  |         |  |   | 24,182  |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Other Expenses                                                  |  |                                |         |   |      |   |         |         |  |   |         |  
|Real estate related depreciation and amortization               |  |                                | 86,918  |   |      |   | 79,128  |         |  |   | 7,790   |  
|General and administrative expenses                             |  |                                | 14,835  |   |      |   | 3,341   |         |  |   | 11,494  |  
|Asset management fees, related party                            |  |                                |        |   |      |   | 12,907  |         |  |   | (12,907 | )
|Income taxes                                                    |  |                                | 1,278   |   |      |   | 598     |         |  |   | 680     |  
|Interest expense                                                |  |                                | 46,787  |   |      |   | 46,646  |         |  |   | 141     |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Total other expenses                                            |  |                                | 149,818 |   |      |   | 142,620 |         |  |   | 7,198   |  
|Minority interests                                              |  |                                | (4,735  | ) |      |   | 591     |         |  |   | (5,326  | )
|Income from discontinued operations                             |  |                                | 7,982   |   |      |   | 484     |         |  |   | 7,498   |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  
|Net income (loss)                                               |  | $                              | 34,441  |   |      | $ | (9,856  | )       |  | $ | 44,297  |  
|                                                                |  |                                |         |   |      |   |         |         |  |   |         |  

| | 
| | 

| | (1) | For a discussion as to why we view net operating income to be an appropriate supplemental performance measure, and a
reconciliation of our net operating income for the nine months ended September 30, 2007 and 2006 to our reported Income (Loss) From Continuing Operations for the nine months ended September 30, 2007 and 2006, see page 32 above.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



36



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##### Table of Contents

Rental Revenues

Rental revenues increased by approximately $36.6 million, or 24%, for the nine months ended September 30, 2007 compared to the same period in 2006, primarily as a result of the net increase in operating properties due to acquisitions.
In particular, on June 9, 2006, we purchased a portfolio of 78 buildings comprised of approximately 7.9 million square feet located in eight markets (collectively referred to as the Cal TIA Portfolio). Upon acquisition, this portfolio was
92.2% occupied and its operations were only included in our consolidated operations from the acquisition date forward. Additionally, tenant recovery income increased by $10.4 million for the nine months ended September 30, 2007 compared to the
same period in 2006 primarily due to the increased number of operating properties. Same store rental revenues increased by approximately $2.8 million, or 2.3%, for the nine months ended September 30, 2007 compared to the same period in 2006
primarily due to increased base rent per square foot offset by slightly lower average occupancy.

Rental Expenses and Real Estate Taxes

Rental expenses and real estate taxes increased by approximately $11.4 million, or 32%, for the nine months ended September 30, 2007 compared to the same period
in 2006, primarily as a result of the increased number of operating properties, as well as higher insurance costs, increased maintenance costs due to winter weather, and higher asset management fees, all of which are generally recoverable from our
tenants. Same store rental expenses and real estate taxes increased by approximately $1.5 million, or 5.1%, for the nine months ended September 30, 2007 as compared to the same period in 2006, primarily related to higher insurance costs,
increased maintenance costs due to winter weather, and higher asset management fees, all of which are generally recoverable from our tenants. Additionally, expenses that are generally not recoverable from our tenants also increased.

Other Income

Other income increased by approximately $24.2 million
for the nine months ended September 30, 2007 as compared to the same period in 2006, primarily as a result of approximately $23.5 million increase in gains related to dispositions of real estate interests and increased institutional capital
management and other fees of $1.3 million, offset by a decrease in interest income of $1.0 million due to lower average cash balances. During the nine months ended September 30, 2007, we disposed of 18 operating properties comprised of
approximately 5.9 million square feet located in 12 markets. Additionally, upon settlement of a $275.0 million forward-starting swap (see additional discussion in Note 4 to the Consolidated Financial Statements), we recorded a gain of
approximately $1.8 million, offset by approximately $0.3 million related to ineffectiveness in Interest income and other for the nine months ended September 30, 2007.

Other Expenses

Real estate related depreciation and amortization increased by approximately $7.8 million for the
nine months ended September 30, 2007 as compared to the same period in 2006, primarily related to increased average depreciable asset balances due to acquisitions, and by increased depreciation expense related to a reduction of the estimated
useful lives of certain buildings. The increase in general and administrative expenses of $11.5 million and the decrease in asset management fees of $12.9 million are primarily attributable to the internalization of our management in October 2006.
The increase in interest expense of approximately $0.1 million is primarily attributable to similar average outstanding debt balances during the nine months ended September 30, 2007 compared to the same period in 2006.

Income from Discontinued Operations

Income from discontinued
operations increased primarily due to the $9.5 million gain on sale of three properties that we sold to unrelated third parties during the nine months ended September 30, 2007. No properties were sold during the nine months ended
September 30, 2006.

Minority Interest

Minority
interest in our operating partnership increased from approximately 3% as of September 30, 2006 to approximately 17% as of September 30, 2007, primarily due to issuance of OP Units in relation to our Internalization during October 2006, and
to unrelated third-party investors in connection with our operating partnerships private placement (see Note 5 to the Consolidated Financial Statements for additional information).



37



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##### Table of Contents

Liquidity and Capital Resources

Overview

We currently expect that our principal sources of working capital and funding for acquisitions and
potential capital requirements for expansions and renovation of properties, developments, distributions to investors and debt service will include:



| |  |  | Cash flows from operations;
| | - |  | ---------------------------



| |  |  | Proceeds from capital recycling, including asset contributions and dispositions;
| | - |  | --------------------------------------------------------------------------------



| |  |  | Borrowings under our senior unsecured credit facility;
| | - |  | ------------------------------------------------------



| |  |  | Other forms of secured or unsecured financings;
| | - |  | -----------------------------------------------



| |  |  | Current cash balances; and
| | - |  | --------------------------



| |  |  | Capital from our institutional capital management program.
| | - |  | ----------------------------------------------------------

We believe that our sources of capital are adequate and will continue to be adequate to meet our short-term liquidity requirements and capital commitments. These liquidity requirements and capital commitments include operating activities,
debt service obligations, regular quarterly equityholder distributions, capital expenditures at our properties, development funding requirements, forward purchase commitments (as more fully described below) and future acquisitions.

We expect to utilize the same sources of capital we rely on to meet our short-term liquidity requirements to meet our long-term liquidity requirements. We expect these
resources will be adequate to fund our operating activities, debt service obligations and equityholder distributions and will be sufficient to fund our ongoing acquisition and development activities as well as to provide capital for investment in
future development and other joint ventures along with additional potential forward purchase commitments. In addition, we may engage in future offerings of common stock or other securities.

Cash Flows

During the nine months ended September 30,
2007 compared to the same period in 2006, our cash provided by operating activities increased $10.2 million, primarily related to increased operating income from our consolidated operating properties, offset by $13.6 million additional working
capital used in operations. During the nine months ended September 30, 2007 our cash provided by investing activities was approximately $95.2 million and during the nine months ended September 30, 2006, our cash used in investing
activities was approximately $925.5 million. We acquired $800.5 million less in real estate during the nine months ended September 30, 2007 than during the same period in 2006. Additionally, we completed the sale or contribution of 18
operating properties compared to six operating properties during the nine months ended September 30, 2006, which resulted in an increase of approximately $217.5 million in proceeds from dispositions of real estate investments. Finally, our
capital expenditures were $27.4 million less during the nine months ended September 30, 2007 compared to the same period in 2006 due to fewer construction projects completed during the nine months ended September 30, 2007, and the
completion of several large projects started in late 2005 during 2006. During the nine months ended September 30, 2007, our cash used in financing activities was approximately $149.5 million and during the nine months ended
September 30, 2006, our cash provided by financing activities was approximately $773.1 million. During the nine months ended September 30, 2007, we received no proceeds from the sale of our common stock or debt issuances, however
during the same period in 2006, we received $153.4 million and $425.0 million, respectively, in such proceeds. Additionally, our cash distributions to our equityholders increased by $53.0 million for the nine months ended September 30, 2007
compared to the same period in 2006 related to the increase in common stock and OP Units outstanding as of September 30, 2007, partially offset by the payment for the distributions declared for the three months ended September 30, 2006
occurring during the quarter.

During the nine months ended September 30, 2007, we paid distributions of $94.7 million, which were satisfied through
our existing cash balances and cash provided by operations. During the nine months ended September 30, 2006, we paid cash distributions of approximately $41.7 million, which included the cash portion of distributions declared for the three
months ended September 30, 2006, and issued $37.7 million in common stock pursuant to our previous distribution reinvestment plan.



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Acquisition Activities Subsequent to September 30, 2007

Subsequent to September 30, 2007, we acquired five properties comprised of approximately 916,000 square feet for a purchase price of approximately $42.6 million,
excluding acquisition costs, and had four properties under contract comprised of 296,000 square feet for a purchase price of approximately $18 million. We anticipate that the acquisitions that have not yet closed will close over the next several
months.

Institutional Capital Management

Property contributions to institutional joint ventures enable us to recycle capital while maintaining a long-term ownership interest in contributed properties. This business strategy also provides liquidity to fund future activities and
generates revenues from fees for acting as the manager, and we may earn additional fees and incentives by providing other services including, but not limited to, acquisition, development, construction management and leasing.

Subsequent to September 30, three buildings comprised of approximately 811,000 square feet were purchased directly by our institutional joint ventures.

TRT-DCT Industrial Joint Venture I and II

We have entered into a
strategic relationship with Dividend Capital Total Realty Trust, or DCTRT, whereby we entered into two joint ventures with DCTRT and/or its affiliates to serve as the exclusive vehicles through which the joint ventures will continue to acquire
industrial real estate assets in certain major markets in which we currently operate until the end of 2008. The exclusivity provisions remain in effect so long as we introduce a certain minimum amount of potential acquisition opportunities within a
specified time frame for each joint venture. Additionally, we receive revenues from DCTRT for asset management and acquisition services.

DCT/SPF
Industrial Operating LLC

During the three months ended September 30, 2007, we entered into a joint venture with Industrial Acquisition LLC, or JP
Morgan, an entity advised by JPMorgan Asset Management, to serve as a vehicle through which the venture will acquire industrial real estate assets in certain major markets in which we currently operate. Additionally, we receive revenues from the
joint venture for asset management and acquisition services.

Our Operating Partnerships Private Placement

Prior to October 10, 2006, our operating partnership offered undivided tenancy-in-common interests, or TIC Interests, in our properties to accredited investors in a
private placement exempt from registration under the Securities Act. These TIC Interests served as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Code. The TIC Interests are
100% leased by our operating partnership pursuant to master leases and such leases contain purchase options whereby our operating partnership has the right, but not the obligation, to acquire the TIC Interests from the investors at a later point in
time in exchange for OP Units under Section 721 of the Code.

The sales of the TIC Interests were included in Financing obligations in our
accompanying Consolidated Balance Sheets pursuant to SFAS No. 98, Accounting for Leases, or SFAS No. 98. We have leased the TIC Interests sold to unrelated third parties, and in accordance with SFAS No. 98, a portion of the
rental payments made to third parties under the lease agreements are recognized as a reduction to the related financing obligation and a portion is recognized as interest expense using the interest method.

During the three and nine months ended September 30, 2007, we incurred approximately $1.0 million and $4.6 million, respectively, of rental payments under various
lease agreements with certain of the third-party investors. During the same periods of 2006, we incurred approximately $3.8 million and $10.1 million, respectively, of rental payments under various lease agreements with certain of the third-party
investors. A portion of such amounts was accounted for as a reduction of the outstanding principal balance of the financing obligations and a portion was accounted for as Interest expense in the accompanying Consolidated Financial
Statements. Included in Interest expense was approximately $0.8 million and $4.0 million for the three and nine months ended September 30, 2007, respectively, and $3.2 million and $8.2 million for the same periods in 2006,
respectively, of interest expense related to the financing obligation. The various lease agreements in place as of September 30, 2007 contain expiration dates ranging from May 2021 to August 2021.



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##### Table of Contents

The following table sets forth the five-year, future minimum rental payments due to third parties under the various lease
agreements (in thousands):



|                         |  |                               |       
|------------------------ |  | ----------------------------- | ------
|Year Ending December 31, |  | Future MinimumRental Payments
|Remainder of 2007        |  | $                             | 1,093 
|2008                     |  |                               | 4,423 
|2009                     |  |                               | 4,423 
|2010                     |  |                               | 4,510 
|2011                     |  |                               | 4,596 
|Thereafter               |  |                               | 43,463
|                         |  |                               |       
|Total                    |  | $                             | 62,508
|                         |  |                               |       

During the nine months ended September 30, 2007, our operating partnership exercised purchase options to
acquire certain TIC Interests it had previously sold in 17 industrial properties located in Tennessee, Indiana and Texas. In connection with the exercise of these options, our operating partnership issued an aggregate of approximately
10.4 million OP Units valued at approximately $115.3 million to acquire such TIC Interests. Related to the purchase of one of these buildings, we assumed $14.9 million of a secured note with an interest rate of 5.0% that was previously
reflected in Financing obligations. In connection with unexpired call options, during the first quarter of 2008 we anticipate issuing between five and six million OP Units, depending on the average price of our common stock.

Debt Service Requirements

As of September 30, 2007,
we had total outstanding debt, excluding premiums and financing obligations related to our operating partnerships private placement, of approximately $1.1 billion consisting primarily of unsecured notes and secured, fixed-rate, non-recourse
mortgage notes. All of these notes require monthly or quarterly payments of interest and many require, or will ultimately require, monthly or quarterly repayments of principal. Currently, cash flows from our operations are sufficient to satisfy
these monthly and quarterly debt service requirements and we anticipate that cash flows from operations will continue to be sufficient to satisfy our regular monthly and quarterly debt service. During the three and nine months ended
September 30, 2007 our debt service, including principal and interest, totaled $21.3 million and $57.4 million, respectively. Debt service, including principal and interest for the same periods of 2006, totaled $19.3 million and $43.4 million,
respectively.

Forward Purchase Commitments

Nexxus

In November 2006, we entered into six separate forward purchase commitments with Nexxus Desarrollos Industriales, or Nexxus, an unrelated
third party, to acquire six newly constructed buildings comprised of approximately 859,000 square feet. The six buildings will be located on separate development sites in four submarkets in the metropolitan area of Monterrey, Nuevo Leon, Mexico. The
forward purchase commitments obligate us to acquire each of the six facilities from Nexxus upon completion, subject to a variety of conditions related to, among other things, the buildings complying with approved drawings and specifications. Timing
on the closings under the purchase obligations depends on leasing at each building. Our aggregate purchase price for the six facilities is estimated to be no less than $33.8 million and increases as buildings are leased prior to closing.
Contemporaneously with the execution of the forward purchase commitments, we provided Nexxus with six separate letters of credit aggregating $33.8 million to secure our future performance under the forward purchase commitments, all subject to a
variety of construction and site-related conditions. Construction of all six buildings commenced during the first and second quarters of 2007, and is estimated to be completed during the fourth quarter of 2007. Closing on the individual buildings is
expected to occur during the remainder of 2007 and early 2008.



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##### Table of Contents

Distributions

The payment of quarterly distributions is determined by our board of directors and may be adjusted at its discretion at any time. We currently pay an annualized distribution rate of $0.64 per share or OP unit. We believe this level to be
appropriate and sustainable based upon the evaluation of existing assets within our portfolio, anticipated acquisitions and dispositions, projected levels of additional capital to be raised, debt to be incurred in the future and our anticipated
results of operations.

During the three and nine months ended September 30, 2007, our board of directors declared distributions to stockholders
totaling approximately $32.5 million and $96.3 million, respectively, including distributions to OP unitholders. During the same periods of 2006, our board of directors declared distributions to stockholders totaling approximately $25.0
million and $72.7 million, respectively, including distributions to OP unitholders. During the nine months ended September 30, 2007, we paid distributions of $30.8 million on January 8, 2007, for distributions declared in the fourth
quarter of 2006, $31.9 million on April 19, 2007, for distributions declared in the first quarter of 2007 and $31.9 million on July 20, 2007, for distributions declared in the second quarter of 2007, funded with existing cash balances.

Outstanding Indebtedness

Our outstanding indebtedness
consists of secured mortgage debt, unsecured notes and an unsecured revolving credit facility. As of September 30, 2007, outstanding indebtedness, excluding $65.1 million representing our proportionate share of debt associated with
unconsolidated joint ventures, totaled approximately $1.1 billion. As of December 31, 2006, outstanding indebtedness also totaled approximately $1.1 billion. As of September 30, 2007, the total historical cost of all our consolidated
properties was approximately $2.8 billion and the total historical cost of all properties securing our fixed rate mortgage debt was approximately $1.3 billion. As of December 31, 2006, the total historical cost of our properties, including
properties held for sale, was approximately $2.9 billion and the total historical cost of properties securing our fixed rate mortgage debt was approximately $1.3 billion. Our debt has various covenants and we were in compliance with all of these
covenants as of September 30, 2007 and December 31, 2006.

To manage interest rate risk for forecasted refinancing of fixed rate debt, we have
primarily used forward-starting swaps as part of our cash flow hedging strategy. These derivatives are designed to mitigate the risk of future interest rate fluctuations by providing a future fixed interest rate for a limited, pre-determined period
of time. As of September 30, 2007 such derivatives as described in the following table were in place to hedge the variability of cash flows associated with forecasted issuances of debt (dollar amounts in thousands):



|                      |  |                |        |                |       |   |               |        |              |       
|--------------------- |  | -------------- | ------ | -------------- | ----- | - | ------------- | ------ | ------------ | ------
|                      |  | NotionalAmount |        | SwapStrikeRate |       |   | EffectiveDate |        | MaturityDate
|Forward-starting swap |  | $              | 25,000 |                | 5.298 | % |               | 2/2008 |              | 2/2018
|Forward-starting swap |  | $              | 36,000 |                | 5.312 | % |               | 7/2008 |              | 7/2018
|Forward-starting swap |  | $              | 26,000 |                | 5.364 | % |               | 1/2010 |              | 1/2020
|Forward-starting swap |  | $              | 90,000 |                | 5.430 | % |               | 6/2012 |              | 6/2022

Line of Credit

In December 2006, we amended our senior unsecured revolving credit facility with a syndicated group of banks, increasing the total capacity from $250.0 million to $300.0 million and extending the maturity date from December 2008 to December
2010. The facility has provisions to increase its total capacity to $500.0 million. At our election, the facility bears interest either at LIBOR plus between 0.55% and 1.1%, depending upon our consolidated leverage, or at prime and is subject to an
annual facility fee. The facility contains various covenants, including financial covenants with respect to consolidated leverage, tangible net worth, fixed charge coverage, unsecured indebtedness, fixed charge coverage and secured indebtedness. As
of September 30, 2007 and December 31, 2006, we were in compliance with all of these covenants. There was no balance outstanding under this facility as of September 30, 2007 and $34.3 million was outstanding under this facility at
December 31, 2006.



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##### Table of Contents

Debt Issuances

There
were no new debt issuances during the nine months ended September 30, 2007. In June 2006, we issued, on a private basis, $275.0 million of senior unsecured notes requiring monthly interest-only payments at a variable interest rate of LIBOR plus
0.73% which mature in June 2008. In conjunction with this transaction, we entered into a $275.0 million swap to mitigate the effect of potential changes in LIBOR. This swap expired in February 2007. See Note 4 to our Consolidated Financial
Statements for additional information regarding our hedging transactions. In April 2006, we issued, on a private basis, $50.0 million of senior unsecured notes with a fixed interest rate of 5.53% which mature in April 2011, and $50.0 million of
senior unsecured notes with a fixed interest rate of 5.77% which mature in April 2016. The notes require quarterly interest-only payments until maturity at which time a lump sum payment is due. In January 2006, we issued, on a private basis, $50.0
million of senior unsecured notes requiring quarterly interest-only payments at a fixed interest rate of 5.68% which mature in January 2014. The proceeds from these note issuances were primarily used to fund acquisitions of properties.

Debt Assumptions

During the nine months ended September 30,
2007, we assumed a secured note of approximately $8.8 million in connection with one property acquisition. This note bears interest at a fixed rate of 5.75% and requires monthly payments of principal and interest and matures in August 2025. Pursuant
to the application of SFAS 141, the difference between the fair value and the face value of these assumed notes at the date of acquisitions resulted in a discount of approximately $0.4 million. During the nine months ended September 30, 2006,
we assumed secured notes of approximately $12.4 million in connection with three property acquisitions. These assumed notes bear interest at fixed and variable rates ranging from 5.79% to 7.48% and require monthly payments of either interest, or
principal and interest. The maturity dates of the assumed notes range from August 2011 to April 2013. Pursuant to the application of SFAS 141, the difference between the fair value and face value of these assumed notes at the date of acquisition
resulted in a premium of approximately $455,000, which is amortized to Interest expense over the remaining life of the underlying notes.

The
following table sets forth the scheduled maturities of our debt, excluding unamortized premiums, as of September 30, 2007 (amounts in thousands).



|                         |  |                      |         |                |   |                |  |       |   |  |   |          
|------------------------ |  | -------------------- | ------- | -------------- | - | -------------- |  | ----- | - |  | - | ---------
|Year Ending December 31, |  | SeniorUnsecuredNotes |         | Mortgage Notes |   | Line of Credit |  | Total
|Remainder of 2007        |  | $                    |        |                | $ | 2,249          |  | $     |  |  | $ | 2,249    
|2008                     |  |                      | 275,000 |                |   | 70,126         |  |       |  |  |   | 345,126  
|2009                     |  |                      |        |                |   | 7,652          |  |       |  |  |   | 7,652    
|2010                     |  |                      |        |                |   | 58,094         |  |       |  |  |   | 58,094   
|2011                     |  |                      | 50,000  |                |   | 233,541        |  |       |  |  |   | 283,541  
|2012                     |  |                      |        |                |   | 169,518        |  |       |  |  |   | 169,518  
|Thereafter               |  |                      | 100,000 |                |   | 99,313         |  |       |  |  |   | 199,313  
|                         |  |                      |         |                |   |                |  |       |   |  |   |          
|Total                    |  | $                    | 425,000 |                | $ | 640,493        |  | $     |  |  | $ | 1,065,493
|                         |  |                      |         |                |   |                |  |       |   |  |   |          



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##### Table of Contents

Financing Strategy

We do not have a formal policy limiting the amount of debt we incur, although we currently intend to operate so that our indebtedness will not exceed 60% of our total market capitalization at the time of incurrence. Our total market
capitalization is defined as the sum of the market value of our outstanding shares of common stock (which may decrease, thereby increasing our debt to total capitalization ratio), including shares of restricted stock that we will issue to certain of
our officers under our long-term incentive plan, plus the aggregate value of OP Units not owned by us, plus the book value of our total consolidated indebtedness and our pro rata share of debt related to unconsolidated joint ventures. Since this
ratio is based, in part, upon market values of equity, it will fluctuate with changes in the price of our shares of common stock; however, we believe that this ratio provides an appropriate indication of leverage for a company whose assets are
primarily real estate. As of September 30, 2007, our debt to total market capitalization ratio was 34.9%. Our charter and our bylaws do not limit the amount or percentage of indebtedness that we may incur. We are, however, subject to certain
leverage limitations pursuant to the restrictive covenants of our outstanding indebtedness. Our board of directors may from time to time modify our debt policy in light of then-current economic conditions, relative costs of debt and equity capital,
market values of our properties, general conditions in the market for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors.

Off-Balance Sheet Arrangements

As of September 30, 2007 and
December 31, 2006, respectively, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is material to investors. In addition to operating leases, we have $33.8 million of outstanding letters of credit and we own interests in unconsolidated joint ventures. Based on
the provisions of certain joint venture agreements, we are not deemed to have control of these joint ventures sufficient to require or permit consolidation for accounting purposes (for additional information, see Note 1 to our Consolidated Financial
Statements). There are no lines of credit, side agreements, or any other derivative financial instruments related to or between our unconsolidated joint ventures and us, and we believe we have no material exposure to financial guarantees, except for
during June 2007, a wholly owned, consolidated subsidiary issued a secured $16.0 million, 6.0% interest note, maturing on July 1, 2014 to TRT-DCT Industrial Joint Venture I. The note is guaranteed by us until all related obligations are
satisfied. Accordingly, our maximum risk of loss related to these unconsolidated joint ventures is generally limited to this note and the carrying amounts of our investments in the unconsolidated joint ventures, which were $67.2 million and
$42.3 million as of September 30, 2007 and December 31, 2006, respectively. We have, however, made certain non-recourse guarantees (referred to as standard non-recourse carve outs) with respect to certain debt issuances by these joint
ventures, which, under certain limited circumstances, may become full-recourse guarantees.



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##### Table of Contents

Funds From Operations

We believe that net income, as defined by GAAP, is the most appropriate earnings measure. However, we consider FFO as defined by the National Association of Real Estate Investment Trusts, or NAREIT, to be a useful supplemental measure of
our operating performance. NAREIT developed FFO as a relative measure of performance of an equity REIT in order to recognize that the value of income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is
generally defined as net income, calculated in accordance with GAAP, plus real estate-related depreciation and amortization, less gain (or loss) from dispositions of real estate held for investment purposes and adjustments to derive our pro rata
share of FFO of consolidated and unconsolidated joint ventures. Readers should note that FFO captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing
commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. Other REITs may not calculate FFO in accordance with the NAREIT definition
and, accordingly, our FFO may not be comparable to such other REITs FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance.

The following table presents the calculation of our FFO reconciled from net income for the periods indicated below on a historical basis (unaudited, amounts in thousands):



|                                                                                       |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                       |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                       |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|Net income (loss) attributable to common shares                                        |  | $                               | 11,249  |   |                                | $ | (10,165 | )    |  | $ | 34,441  |   |  | $ | (9,856  | )
|Adjustments:                                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Real estate related depreciation and amortization                                      |  |                                 | 29,761  |   |                                |   | 30,655  |      |  |   | 86,933  |   |  |   | 82,764  |  
|Equity in (income) losses of unconsolidated joint ventures, net                        |  |                                 | (56     | ) |                                |   | 72      |      |  |   | (99     | ) |  |   | 254     |  
|Equity in FFO of unconsolidated joint ventures                                         |  |                                 | 681     |   |                                |   | 174     |      |  |   | 1,492   |   |  |   | 324     |  
|(Gain) loss on disposition of real estate interests                                    |  |                                 | (14,045 | ) |                                |   | 482     |      |  |   | (31,062 | ) |  |   | (7,550  | )
|(Gain) loss on disposition of real estate interests related to discontinued operations |  |                                 | 58      |   |                                |   |        |      |  |   | (9,503  | ) |  |   |        |  
|Gain on dispositions of non-depreciated real estate                                    |  |                                 | 12      |   |                                |   | 9       |      |  |   | 12,737  |   |  |   | 4,074   |  
|Minority interest in the operating partnerships share of the above adjustments        |  |                                 | (2,731  | ) |                                |   | (873    | )    |  |   | (9,333  | ) |  |   | (2,815  | )
|                                                                                       |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Funds from operations attributable to common shares  basic                            |  |                                 | 24,929  |   |                                |   | 20,354  |      |  |   | 85,606  |   |  |   | 67,195  |  
|FFO attributable to dilutive OP Units                                                  |  |                                 | 4,972   |   |                                |   | 579     |      |  |   | 15,543  |   |  |   | 1,384   |  
|                                                                                       |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Funds from operations attributable to common shares  diluted                          |  | $                               | 29,901  |   |                                | $ | 20,933  |      |  | $ | 101,149 |   |  | $ | 68,579  |  
|                                                                                       |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Basic FFO per common share                                                             |  | $                               | 0.15    |   |                                | $ | 0.14    |      |  | $ | 0.51    |   |  | $ | 0.45    |  
|Diluted FFO per common share                                                           |  | $                               | 0.15    |   |                                | $ | 0.14    |      |  | $ | 0.51    |   |  | $ | 0.45    |  
|Weighted average common shares outstanding:                                            |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Basic                                                                                  |  |                                 | 168,355 |   |                                |   | 150,725 |      |  |   | 168,355 |   |  |   | 148,731 |  
|Dilutive OP Units                                                                      |  |                                 | 33,601  |   |                                |   | 4,290   |      |  |   | 30,780  |   |  |   | 3,106   |  
|                                                                                       |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Diluted                                                                                |  |                                 | 201,956 |   |                                |   | 155,015 |      |  |   | 199,135 |   |  |   | 151,837 |  
|                                                                                       |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



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##### Table of Contents

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

Market
risk is the risk of loss from adverse changes in market prices such as rental rates and interest rates. Our future earnings and cash flows are dependent upon prevailing market rates. Accordingly, we manage our market risk by matching projected cash
inflows from operating, investing and financing activities with projected cash outflows for debt service, acquisitions, capital expenditures, distributions to stockholders and OP unit holders, and other cash requirements. The majority of our
outstanding debt has fixed interest rates, which minimizes the risk of fluctuating interest rates.

Our exposure to market risk includes interest rate
fluctuations in connection with our credit facility and other variable rate borrowings and forecasted fixed rate debt issuances, including refinancing of existing fixed rate debt. Interest rate risk may result from many factors, including
governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control. To manage interest rate risk for forecasted issuances of fixed rate debt, we primarily use
treasury locks and forward-starting swaps as part of our cash flow hedging strategy. These derivatives are designed to mitigate the risk of future interest rate fluctuations by providing a future fixed interest rate for a limited, pre-determined
period of time. During the nine months ended September 30, 2007 and 2006, such derivatives were in place to hedge the variable cash flows associated with forecasted issuances of debt, which are expected to occur during the period from 2007
through 2012, and to mitigate fluctuations in certain variable rate borrowings. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on their credit rating and other
factors.

As of September 30, 2007, derivatives with a fair value of $1.6 million were included in Other assets, net, and derivatives
with a negative fair value of $0.4 million were included in Other liabilities. As of December 31, 2006, derivatives with a negative fair value of $9.3 million were included in Other liabilities. For the three months
ended September 30, 2007, no loss was recorded as a result of ineffectiveness and for the nine months ended September 30, 2007, a loss of $0.3 million was recorded as a result of ineffectiveness due to the change in estimated timing of the
anticipated debt issuances. There was no ineffectiveness recorded during the three and nine months ended September 30, 2006. The net assets associated with these derivatives would decrease approximately $6.8 million if the market interest
rate of the referenced swap index were to decrease 10% (or 55 basis points) based upon the prevailing market rate as of September 30, 2007.

Similarly, our variable rate debt is subject to risk based upon prevailing market interest rates. As of September 30, 2007, we had approximately $300.2 million of variable rate debt outstanding. If the prevailing market interest rates
relevant to our remaining variable rate debt were to increase 10% (or 66 basis points), our interest expense for the nine months ended September 30, 2007 would have increased by approximately $1.4 million.

As of September 30, 2007, the estimated fair value of our debt was approximately $1.1 billion based on our estimate of the then-current market interest rates.



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

Evaluation of Disclosure Controls and
Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) under the Exchange Act, as of September 30, 2007, the end of the period covered by this
report. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that our disclosure controls and procedures will detect or uncover every situation involving the failure of persons within
DCT Industrial Trust Inc. or its affiliates to disclose material information otherwise required to be set forth in our periodic reports. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our
disclosure controls and procedures were effective as of September 30, 2007 in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

Changes in Internal Control
over Financial Reporting

None.

PART II. OTHER
INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

None.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

There have been no material changes to the risk
factors set forth in Item 1A. to Part I of our Form 10-K filed on March 14, 2007.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

Recent Sales of Unregistered Securities

None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

None.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------

None.



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##### Table of Contents

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



|a. | Exhibits
|-- | --------



|      |  |                                                            
|----- |  | -----------------------------------------------------------
|+31.1 |  | Rule 13a-14(a) Certification of Principal Executive Officer
|      | 
|+31.2 |  | Rule 13a-14(a) Certification of Principal Financial Officer
|      | 
|+32.1 |  | Section 1350 Certification of Principal Executive Officer  
|      | 
|+32.2 |  | Section 1350 Certification of Principal Financial Officer  

| | 
| | 

| | + | Filed herewith.
| | - | ---------------



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                       |  |  |  |                          
|---------------------- |  |  |  | -------------------------
|                       |  |  |  | DCT INDUSTRIAL TRUST INC.
|                       |  | 
|Date: November 9, 2007 |  |  |  | /s/ Philip L. Hawkins    
|                       |  |  |  | Philip L. Hawkins        
|                       |  |  |  | Chief Executive Officer  
|                       |  | 
|Date: November 9, 2007 |  |  |  | /s/ Stuart B. Brown      
|                       |  |  |  | Stuart B. Brown          
|                       |  |  |  | Chief Financial Officer  



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##### Table of Contents

EXHIBIT INDEX



|      |  |                                                            
|----- |  | -----------------------------------------------------------
|+31.1 |  | Rule 13a-14(a) Certification of Principal Executive Officer
|      | 
|+31.2 |  | Rule 13a-14(a) Certification of Principal Financial Officer
|      | 
|+32.1 |  | Section 1350 Certification of Principal Executive Officer  
|      | 
|+32.2 |  | Section 1350 Certification of Principal Financial Officer  

| | 
| | 

| | + | Filed herewith.
| | - | ---------------



49