Use these links to rapidly review the documentDividend Capital Trust Inc. and Subsidiaries Index to Form 10-Q



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

|(Mark One)                                                                         |  |                                                                                         
|---------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|ý                                                                                  |  | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|For the quarterly period ended March 31, 2005                                     
|or                                                                                
|o                                                                                  |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|For the transition period
from                        to                
        .

Commission File No. 000-50724

DIVIDEND CAPITAL TRUST INC.(Exact name of registrant as specified in its charter)

Maryland(State or other jurisdiction of
incorporation or organization)

82-0538520(I.R.S. Employer Identification No.)518 Seventeenth Street, Suite 1700
Denver, CO(Address of principal executive offices)

80202(Zip Code)


Registrant's
telephone number, including area code:(303) 228-2200

Indicate
by a 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 ý    No o

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act). Yes ý    No o

As of April 29, 2005, 85,962,102 shares of common stock of Dividend Capital Trust Inc., par value $0.01 per share, were outstanding.



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Dividend Capital Trust Inc. and Subsidiaries        Index to Form 10-Q



|           |         |                                                                                                                                                     
|---------- | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|PART I.    |         | FINANCIAL INFORMATION                                                                                                                               
|           | Item 1. |                                                                                                                                                     
|           |         | Condensed Consolidated Balance Sheets as of March 31, 2005 (Unaudited) and December 31, 2004                                                        
|           |         | Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2004 (Unaudited)                                      
|           |         | Condensed Consolidated Statement of Shareholders' Equity and Other Comprehensive Income (Loss) for the Three Months Ended March 31, 2005 (Unaudited)
|           |         | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004 (Unaudited)                                      
|           |         | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                                    
|           | Item 2. |                                                                                                                                                     
|           | Item 3. |                                                                                                                                                     
|           | Item 4. |                                                                                                                                                     
|PART II.   |         | OTHER INFORMATION                                                                                                                                   
|           | Item 1. |                                                                                                                                                     
|           | Item 2. |                                                                                                                                                     
|           | Item 3. |                                                                                                                                                     
|           | Item 4. |                                                                                                                                                     
|           | Item 5. |                                                                                                                                                     
|           | Item 6. |                                                                                                                                                     
|SIGNATURES

2

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Dividend Capital Trust Inc. and Subsidiaries        Condensed Consolidated Balance Sheets

|                                   |                                                                                                                                                                                 | As of
March 31,
2005          |                                            | As of
December 31,
2004 |            
|---------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------------------------------------------ | ----------------------- | -----------
|
|ASSETS                             |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   | Land                                                                                                                                                                            |                               | $                                          | 134,763,015             |            
|                                   | Buildings and improvements                                                                                                                                                      |                               |                                            | 646,484,879             |            
|                                   | Intangible lease asset                                                                                                                                                          |                               |                                            | 74,022,096              |            
|                                   | Less accumulated depreciation and amortization                                                                                                                                  |                               |                                            | (34,980,397             | )          
|                                   |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   |                                                                                                                                                                                 | Net Investment in Real Estate |                                            |                         | 820,289,593
|                                   | Cash and cash equivalents                                                                                                                                                       |                               |                                            | 146,294,961             |            
|                                   | Restricted cash                                                                                                                                                                 |                               |                                            | 4,854,224               |            
|                                   | Notes receivable                                                                                                                                                                |                               |                                            | 8,178,700               |            
|                                   | Deferred loan costs, net                                                                                                                                                        |                               |                                            | 8,766,087               |            
|                                   | Deferred acquisition costs and deposits                                                                                                                                         |                               |                                            | 4,062,413               |            
|                                   | Straight line rent and other receivables                                                                                                                                        |                               |                                            | 7,250,054               |            
|                                   | Other assets, net                                                                                                                                                               |                               |                                            | 3,238,850               |            
|                                   |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   |                                                                                                                                                                                 |                               | Total Assets                               |                         | $          
|                                   |                                                                                                                                                                                 |                               |                                            |                         |            
|LIABILITIES & SHAREHOLDERS' EQUITY |                                                                                                                                                                                 |                               |                                            |                         |            
|Liabilities:                       |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   | Accounts payable and accrued expenses                                                                                                                                           |                               | $                                          | 7,151,587               |            
|                                   | Dividends payable                                                                                                                                                               |                               |                                            | 11,743,700              |            
|                                   | Tenant prepaids and security deposits                                                                                                                                           |                               |                                            | 4,316,005               |            
|                                   | Other liabilities                                                                                                                                                               |                               |                                            | 1,768,495               |            
|                                   | Intangible lease liability, net                                                                                                                                                 |                               |                                            | 7,095,937               |            
|                                   | Line of credit                                                                                                                                                                  |                               |                                            | 8,000                   |            
|                                   | Mortgage notes                                                                                                                                                                  |                               |                                            | 223,122,178             |            
|                                   | Financing obligations                                                                                                                                                           |                               |                                            | 50,094,047              |            
|                                   |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   |                                                                                                                                                                                 | Total Liabilities             |                                            |                         | 305,299,949
|Minority Interest                  |                                                                                                                                                                                 |                               | 1,000                                      |                         |            
|Shareholders' Equity:              |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   | Preferred shares, 50,000,000 shares authorized, none outstanding                                                                                                                |                               |                                            |                        |            
|                                   | Shares-in-trust, 100,000,000 shares authorized, none outstanding                                                                                                                |                               |                                            |                        |            
|                                   | Common shares, $0.01 par value, 350,000,000 shares authorized, 81,319,720 and 67,719,883 shares issued and outstanding as of March 31, 2005 and December 31, 2004, respectively |                               |                                            | 813,197                 |            
|                                   | Additional paid-in capital                                                                                                                                                      |                               |                                            | 739,804,605             |            
|                                   | Distributions in excess of earnings                                                                                                                                             |                               |                                            | (40,961,055             | )          
|                                   | Accumulated other comprehensive income (loss)                                                                                                                                   |                               |                                            | (2,022,814              | )          
|                                   |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   |                                                                                                                                                                                 | Total Shareholders' Equity    |                                            |                         | 697,633,933
|                                   |                                                                                                                                                                                 |                               |                                            |                         |            
|                                   |                                                                                                                                                                                 |                               | Total Liabilities and Shareholders' Equity |                         | $          
|                                   |                                                                                                                                                                                 |                               |                                            |                         |            

The
accompanying notes are an integral part of these condensed consolidated financial statements.

3

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Dividend Capital Trust Inc. and Subsidiaries        Condensed Consolidated Statements of Operations        (Unaudited)

|                                                     |                                       | Three Months Ended
March 31,
|---------------------------------------------------- | ------------------------------------- | ----------------------------
|
|REVENUE:                                             |                                       |                             
|                                                     | Rental revenue                        |                             
|                                                     | Other real estate income              |                             
|                                                     | Interest income                       |                             
|                                                     |                                       |                             
|                                                     |                                       | Total Revenue               
|EXPENSES:                                            |                                       |                             
|                                                     | Real estate taxes                     |                             
|                                                     | Operating expenses                    |                             
|                                                     | Depreciation and amortization expense |                             
|                                                     | Interest expense                      |                             
|                                                     | General and administrative expenses   |                             
|                                                     | Asset management fees, related party  |                             
|                                                     |                                       |                             
|                                                     |                                       | Total Expenses              
|NET INCOME (LOSS)                                    |                                       | $                           
|                                                     |                                       |                             
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |                                       |                             
|                                                     | Basic                                 |                             
|                                                     |                                       |                             
|                                                     | Diluted                               |                             
|                                                     |                                       |                             
|NET INCOME (LOSS) PER COMMON SHARE                   |                                       |                             
|                                                     | Basic                                 |                             
|                                                     |                                       |                             
|                                                     | Diluted                               |                             
|                                                     |                                       |                             

The
accompanying notes are an integral part of these condensed consolidated financial statements.

4

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Dividend Capital Trust Inc. and Subsidiaries        Condensed Consolidated Statement of Shareholders' Equity  and Other Comprehensive Income (Loss)        For the Three Months Ended
March 31, 2005        (Unaudited)

|                                                 |                                                        | Common Shares |   |   |         |   |   | Accumulated
Other
Comprehensive
Income (Loss) |   |   |            
|------------------------------------------------ | ------------------------------------------------------ | ------------- | - | - | ------- | - | - | --------------------------------------------- | - | - | -----------
|
|
|Balances, December 31, 2004                      |                                                        | 67,719,883    |   | $ | 677,199 |   | $ | 611,440,163                                   |   | $ | (26,635,877
|Comprehensive income (loss):                     |                                                        |               |   |   |         |   |   |                                               |   |   |            
|                                                 | Net loss                                               |               |  |   |         |  |   |                                               |  |   |            
|                                                 | Net unrealized change in cash flow hedging derivatives |               |  |   |         |  |   |                                               |  |   |            
|                                                 | Amortization of cash flow hedging derivatives          |               |  |   |         |  |   |                                               |  |   |            
|                                                 |                                                        |               |   |   |         |   |   |                                               |   |   |            
|Comprehensive loss                               |                                                        |               |   |   |         |   |   |                                               |   |   |            
|Issuance of common shares, net of offering costs |                                                        | 13,719,787    |   |   | 137,198 |   |   | 129,544,954                                   |   |   |           
|Redemption of common shares                      |                                                        | (119,950      | ) |   | (1,200  | ) |   | (1,187,227                                    | ) |   |           
|Amortization of stock options                    |                                                        |              |   |   |        |   |   | 6,715                                         |   |   |           
|Dividends on common shares                       |                                                        |              |   |   |        |   |   |                                              |   |   | (11,743,700
|                                                 |                                                        |               |   |   |         |   |   |                                               |   |   |            
|Balances, March 31, 2005                         |                                                        | 81,319,720    |   | $ | 813,197 |   | $ | 739,804,605                                   |   | $ | (40,961,055
|                                                 |                                                        |               |   |   |         |   |   |                                               |   |   |            

The
accompanying notes are an integral part of these condensed consolidated financial statements.

5

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Dividend Capital Trust Inc. and Subsidiaries        Condensed Consolidated Statements of Cash Flows        (Unaudited)

|                                                  |                                                                                          | For the Three Months Ended March 31,                                 |                                          
|------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -----------------------------------------
|
|OPERATING ACTIVITIES:                             |                                                                                          |                                                                      |                                          
|                                                  | Net income (loss)                                                                        |                                                                      | $                                        
|                                                  | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                                                      |                                          
|                                                  |                                                                                          | Real estate depreciation and amortization                            |                                          
|                                                  |                                                                                          | Other depreciation and amortization                                  |                                          
|                                                  |                                                                                          | (Increase) decrease in other assets                                  |                                          
|                                                  |                                                                                          | Increase in accounts payable, accrued expenses and other liabilities |                                          
|                                                  |                                                                                          |                                                                      |                                          
|                                                  |                                                                                          |                                                                      | Net cash provided by operating activities
|                                                  |                                                                                          |                                                                      |                                          
|INVESTING ACTIVITIES:                             |                                                                                          |                                                                      |                                          
|                                                  | Real estate investments                                                                  |                                                                      |                                          
|                                                  | (Increase) decrease in deferred acquisition costs                                        |                                                                      |                                          
|                                                  | Increase in notes receivable                                                             |                                                                      |                                          
|                                                  | Master lease payments                                                                    |                                                                      |                                          
|                                                  |                                                                                          |                                                                      |                                          
|                                                  |                                                                                          |                                                                      | Net cash used in investing activities    
|                                                  |                                                                                          |                                                                      |                                          
|FINANCING ACTIVITIES:                             |                                                                                          |                                                                      |                                          
|                                                  | Proceeds from line of credit                                                             |                                                                      |                                          
|                                                  | Payments on line of credit                                                               |                                                                      |                                          
|                                                  | Proceeds from mortgage notes                                                             |                                                                      |                                          
|                                                  | Principal payments on mortgage notes                                                     |                                                                      |                                          
|                                                  | Proceeds from financing obligations                                                      |                                                                      |                                          
|                                                  | Principal payments on financing obligations                                              |                                                                      |                                          
|                                                  | Increase in deferred loan costs                                                          |                                                                      |                                          
|                                                  | Proceeds from subscription of common shares                                              |                                                                      |                                          
|                                                  | Proceeds from sale of common shares                                                      |                                                                      |                                          
|                                                  | Offering costs for issuance of common shares, related party                              |                                                                      |                                          
|                                                  | Redemption of common shares                                                              |                                                                      |                                          
|                                                  | Decrease in restricted cash                                                              |                                                                      |                                          
|                                                  | Settlement of cash flow hedging derivative                                               |                                                                      |                                          
|                                                  | Distributions to common shareholders                                                     |                                                                      |                                          
|                                                  |                                                                                          |                                                                      |                                          
|                                                  |                                                                                          |                                                                      | Net cash provided by financing activities
|                                                  |                                                                                          |                                                                      |                                          
|NET INCREASE IN CASH AND CASH EQUIVALENTS         |                                                                                          | $                                                                    | 122,774,694                              
|CASH AND CASH EQUIVALENTS, beginning of period    |                                                                                          | $                                                                    | 23,520,267                               
|                                                  |                                                                                          |                                                                      |                                          
|CASH AND CASH EQUIVALENTS, end of period          |                                                                                          | $                                                                    | 146,294,961                              
|                                                  |                                                                                          |                                                                      |                                          
|Supplemental Disclosures of Cash Flow Information |                                                                                          |                                                                      |                                          
|                                                  | Cash paid for interest expense                                                           |                                                                      | $                                        
|                                                  | Assumption of secured debt in connection with real estate acquired                       |                                                                      | $                                        
|                                                  | Amount issued pursuant to the distribution reinvestment plan                             |                                                                      | $                                        

The
accompanying notes are an integral part of these condensed consolidated financial statements.

6

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Dividend Capital Trust Inc. and Subsidiaries        Notes to Condensed Consolidated Financial Statements        (Unaudited)

Note 1Organization and Summary of Significant Accounting Policies

Organization

Dividend Capital Trust Inc. was formed as a Maryland corporation in April 2002 in order to invest in commercial real estate properties, consisting
primarily of high-quality, generic distribution warehouses and light industrial properties net leased to creditworthy corporate customers. We have qualified as a real estate investment
trust ("REIT") for federal tax purposes commencing with our taxable year ended December 31, 2003. We are structured as an umbrella partnership REIT ("UPREIT") under which substantially all of
our current and future business is and will be conducted through a majority owned subsidiary, Dividend Capital Operating Partnership LP (our partnership), a Delaware limited partnership, and certain
wholly owned subsidiaries of our partnership. As used herein, "Dividend Capital", "we" and "us" refer to Dividend Capital Trust Inc. and its consolidated subsidiaries except where the context
otherwise requires.

Our
day to day activities are managed by Dividend Capital Advisors LLC (our advisor), an affiliate, under the terms and conditions of an advisory agreement. Our advisor is currently
majority owned and/or controlled by three of our directors and certain officers and/or their affiliates and other third parties. In addition, under the terms of a dealer manager agreement, Dividend
Capital Securities LLC (the "Dealer Manager") serves as the dealer manager of our public and private offerings. The Dealer Manager is currently majority owned and/or controlled by three of our
directors and certain officers
and/or their affiliates and other third parties. Our advisor and the Dealer Manager receive compensation and fees for services relating to our offerings and for the investment and management of our
assets (see "Note 8Related Party Transactions").

Summary of Significant Accounting Policies

Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America ("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 condensed 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, 2004,
and related notes thereto.

Principles of Consolidation

Our financial statements and the financial statements of our subsidiaries are consolidated in the accompanying condensed consolidated financial statements. All
significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions relating to the
reported amounts of assets and

7

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liabilities
and 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. Estimates and assumptions are reviewed periodically and the effects of revision are reflected in the period they are determined to be necessary.

Investment in Real Estate

We capitalize direct costs associated with the acquisition, development or improvement of real estate, including acquisition fees paid to our advisor. Costs
associated with acquisition or development pursuits are capitalized as incurred and if the pursuit is abandoned, these costs are expensed in the period in which the pursuit is abandoned.

Upon
acquisition, the total estimated cost of a property is allocated to land, building, land improvements, tenant improvements and intangible lease assets and liabilities pursuant to
Statement of Financial Accounting Standards ("SFAS") No. 141,"Business Combinations"("SFAS No. 141"). The allocation of the total
estimated cost to land, building, land improvements and tenant improvements is based on our estimate of their fair value based on all available information such as appraisals, property condition
reports and other related information. Pursuant to SFAS No. 141, the difference between the fair value and the face value of debt assumed in an acquisition should be 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 estimated cost of a property to an intangible lease asset includes the value associated with the in-place leases which 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. This asset or liability will be amortized over the life of the remaining in-place leases as an adjustment to rental revenue.

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 is computed on a straight-line basis over the estimated useful lives as follows:

Description

Standard Depreciable LifeLand

Not depreciatedBuilding

40 yearsBuilding and land improvements

10 to 20 yearsTenant improvements and leasing costs

Term of leaseIntangible lease assets and liabilities

Average term of leases for buildingAbove/below market rent assets/liabilities

Term of lease


The
table above reflects the standard depreciable lives typically used to compute depreciation and amortization. However, such depreciable lives may be shorter based on
the estimated useful life of such assets or liabilities. Maintenance and repair expenditures are expensed as incurred and improvements are capitalized. The cost of assets sold or retired and the
related accumulated depreciation and/or amortization will be removed from the accounts and the resulting gain or loss will be reflected in operations in the period in which such sale or retirement
occurs.

8

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Cash and Cash Equivalents

Cash and cash equivalents include cash held in financial institutions and other highly liquid short-term investments with original maturities of three
months or less.

Restricted Cash

Restricted cash includes certain cash held in escrow in connection with property acquisitions, utility deposits, real estate tax payments and issuance of mortgage
debt.

Long-lived Assets

Long-lived assets to be held and used will be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. We periodically evaluate the recoverability of our long-lived assets based on estimated future cash flows and the estimated liquidation value of such
long-lived assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived asset. If impaired, the
long-lived asset will be written down to its estimated fair value.

Debt

Debt consists of fixed rate secured mortgage debt and our senior secured revolving credit facility. The fixed rate secured mortgage debt includes a premium, net
of accumulated amortization, of $3.8 million as of March 31, 2005.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net loss, net unrealized gain in cash flow hedging derivatives and amortization of hedging derivatives, which were
approximately $(2.6) million, $2.1 million and $112,000, respectively, as of March 31, 2005. We report comprehensive income (loss) in our condensed consolidated statement of shareholders'
equity and other comprehensive income (loss). Amounts reported in accumulated other comprehensive income (loss) related to settled and assigned hedging transactions will be amortized to interest
expense over the life of our hedged debt issuance(s). Changes in the fair value of unsettled hedging transactions are reflected in accumulated other comprehensive income. Any ineffectiveness, as
defined by SFAS No. 133 (defined below), related to our hedging transactions are reported on our condensed consolidated statements of operations. During the three months ended March 31,
2005, and 2004, there were no gains or losses recognized related to ineffectiveness on our hedging activities (see "Note 4Hedging Activities").

Derivative Instruments and Hedging Activities

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"("SFAS No. 133"), as
amended and interpreted, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As
required by SFAS No. 133, we record all derivatives on the balance sheet at fair value. Accounting for changes in the fair value of derivatives depends on the intended use of the derivative and
the designation of the derivative. Derivatives used to hedge exposure to changes in the fair value of an asset, liability, or firm commitments attributable to a particular risk are considered "fair
value" hedges. Derivatives used to hedge exposure to variability in expected future interest payments, or other types of

9

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forecasted
transactions, are considered "cash flow" hedges. As of March 31, 2005, none of our derivatives were designated as fair value hedges.

For
derivatives designated as cash flow hedges, the changes in the fair value of the derivative that represent changes in expected future cash flows that are effectively hedged by the
derivative are initially reported in other comprehensive income (loss) on the balance sheet (i.e., not included in earnings) until the derivative is settled. Upon settlement, the effective portion of
the derivative, or cash flow hedge, is recognized in other comprehensive income and amortized over the term of designated cash flow or transaction the derivative was intended to hedge. Any change in
value of the derivative that is deemed to be ineffective is charged directly to earnings when the determination of ineffectiveness is made. We assess the effectiveness of each cash flow hedge
relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. We do
not use derivatives for trading or speculative purposes and currently all of our derivatives are designated as cash flow hedges.

Our
objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use treasury
locks in our cash flow hedging strategy. A treasury lock is 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 three months ended March 31, 2005, such derivatives were used to hedge the variability in future interest expense associated with
forecasted issuances of debt.

Revenue Recognition

We record rental revenue for the full term of each lease on a straight-line basis. Certain properties have leases that provide for customer occupancy
during periods that no rent is due or where minimum rent payments increase during the term of the lease. Accordingly, we record a receivable from customers that we expect to collect over the remaining
lease term rather than currently, which will be recorded as deferred rents receivable. When we acquire a property, the term of existing leases is considered to commence as of the acquisition date for
the purposes of this calculation. For the three months ended March 31, 2005, and 2004, the total increase to rental revenues due to straight line rent adjustments was $800,501 and $117,994,
respectively.

In
connection with property acquisitions, we may acquire leases with rental rates above and/or below the market rental rates measured at the date of acquisition. Such differences are
recorded as an intangible asset or liability pursuant to SFAS No. 141 and amortized to rental revenues over the life of the respective leases. For the three months ended March 31, 2005,
and 2004, the total net decrease to rental revenues due to the amortization of above and below market rents was $443,037 and $14,008, respectively.

In
connection with certain property acquisitions, we have entered into master lease agreements with various sellers whereby the sellers are obligated to pay monthly rent until the
earlier of the expiration of the master lease agreement or commencement of rent from a new customer. For financial reporting purposes, rental payments under master lease agreements are reflected as a
reduction of the basis of the underlying property rather than rental revenue. For the three months ended March 31, 2005, and 2004, the total master lease payments received were approximately
$1.1 million and $271,000, respectively.

10

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Stock-Based Compensation

We have a stock-based employee compensation plan and an independent director compensation plan. We account for these plans under the fair value recognition
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," and its related interpretations. As of March 31, 2005, and
December 31, 2004, we had 60,000 options outstanding under the Director Stock Option Plan. As of March 31, 2005, and December 31, 2004, 107,500 options had been granted under the
Employee Stock Option Plan. Options granted under both the Director Stock Option Plan and the Employee Stock Option Plan are valued using the Black-Scholes option-pricing model and are amortized to
salary expense on a straight-line basis over the period during which the right to exercise such options fully
vests. Such expense is included in general and administrative expenses on the accompanying condensed consolidated statements of operations.

In
December 2004, the Financial Accounting Standards Board issued SFAS No. 123R,Share-Based Payment("SFAS 123R"). This
statement is a revision of SFAS No. 123. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It
also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the
issuance of those equity instruments. Management is still assessing the impact of SFAS 123R which we are required to adopt no later than January 1, 2006, although early adoption is
permitted.

Basic and Diluted Net Income per Common Share

Basic net income per common share is determined by dividing net income attributable to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted net income per common share includes the effects of potentially issuable common stock, but only if dilutive, including the presumed exchange of limited
partnership units for common shares (see "Note 7-Minority Interest").

Note 2Real Estate

Acquisitions

During the three months ended March 31, 2005, we acquired six properties located in three different target markets for a total estimated cost of
approximately $100.3 million, including acquisition fees paid to our advisor. These properties were acquired using net proceeds from our public and private offerings and the assumption of
approximately $22.5 million in mortgage debt, excluding a premium of approximately $1.5 million (see "Note 3Debt").

Wickes Distribution CenterChicago, Illinois

On January 5, 2005, we acquired a distribution facility ("Wickes") comprising 440,000 square feet located in Central DuPage County, a submarket of Chicago.
As of March 31, 2005, Wickes was 100% leased. Wickes was acquired for a total estimated cost of approximately $21.7 million, including acquisition fees paid to our advisor.

11

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Technicolor II, Shelby 4, Shelby 5 and Shelby 19 Distribution FacilitiesMemphis, Tennessee

In connection with our purchase agreement with Panattoni Development Company LLC, an unrelated third party, we acquired the Technicolor II Distribution Facility
("Technicolor"), Shelby 4 Distribution Facility ("Shelby 4"), Shelby 5 Distribution Facility ("Shelby 5") and the Shelby 19 Distribution Facility ("Shelby 19") on February 2,
February 16, March 7 and March 18, 2005, respectively. These properties are located in Memphis, Tennessee and combined for approximately 2.0 million total rentable square
feet. As of March 31, 2005, the aforementioned facilities were collectively 100% leased. We purchased these facilities for a total estimated cost of approximately $73.4 million,
including acquisition fees paid to our advisor. We assumed mortgage debt of approximately $22.5 million, which excludes a premium of approximately $1.5 million, associated with the
acquisition of these properties (see "Note 3Debt").

Iron Run Corporate CenterPhiladelphia, Pennsylvania

On March 21, 2005, we purchased a distribution facility ("Iron Run") comprising 100,000 square feet located in the Lehigh Valley, a submarket of
Philadelphia. As of March 31, 2005, Iron Run was 100% leased. We purchased Iron Run for a total estimated cost of approximately $5.2 million, including acquisition fees paid to our
advisor.

Note 3Debt

As of March 31, 2005, and December 31, 2004, our debt consisted of the following:

|                                          |                                  |                         |       |       |       |       |                | Outstanding Balance as of
|----------------------------------------- | -------------------------------- | ----------------------- | ----- | ----- | ----- | ----- | -------------- | -------------------------
|
|Secured Mortgage Debt:                    |                                  |                         |       |       |       |       |                |                          
|                                          | ING Investment Management(2)     |                         | 4.40% |       | 5.42% |       | January 2010   |                          
|                                          | ING Investment Management(2)     |                         | 5.31% |       | 5.34% |       | January 2015   |                          
|                                          | New York Life                    |                         | 5.00% |       | 5.00% |       | March 2011     |                          
|                                          |                                  |                         |       |       |       |       |                |                          
|Assumed Secured Mortgage Debt:            |                                  |                         |       |       |       |       |                |                          
|                                          | Principal(1)                     |                         | 7.08% |       | 4.81% |       | July 2008      |                          
|                                          | State Farm(1)                    |                         | 6.72% |       | 5.62% |       | November 2022  |                          
|                                          | Prudential(1)                    |                         | 6.40% |       | 6.09% |       | November 2012  |                          
|                                          | Principal(1)                     |                         | 7.21% |       | 4.81% |       | July 2008      |                          
|                                          | Prudential(1)                    |                         | 5.69% |       | 5.22% |       | December 2013  |                          
|                                          | Principal(1)                     |                         | 6.22% |       | 4.18% |       | September 2012 |                          
|                                          | Legacy(1)                        |                         | 7.40% |       | 5.21% |       | December 2017  |                          
|                                          |                                  |                         |       |       |       |       |                |                          
|                                          |                                  | Weighted Avg./Totals(3) |       | 5.44% |       | 5.26% |                |                          
|                                          | Premiums, Net of Amortization(1) |                         |       |       |       |       |                |                          
|                                          |                                  |                         |       |       |       |       |                |                          
|                                          |                                  | Carrying Value of Debt  |       |       |       |       |                |                          
|                                          |                                  |                         |       |       |       |       |                |                          
|Senior Secured Revolving Credit Facility: |                                  |                         |       |       |       |       |                |                          
|                                          | JP Morgan                        |                         | 5.75% |       | 5.75% |       | February 2007  |                          
|                                          |                                  |                         |       |       |       |       |                |                          

12

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---

In
January 2005, we entered into $57.0 million of secured, non-recourse debt with a stated fixed interest rate of 4.40% which matures in 2010.
The underlying notes require monthly payments of interest only until January 1, 2006 at which time monthly payments of principal and interest will be required. During the three months ended
March 31, 2005, we assumed three secured, non-recourse notes, totaling $22.5 million, excluding premiums, in conjunction with the acquisition of three properties (see
"Note 2Real Estate"). These assumed notes bear fixed interest rates ranging from 5.69% to 7.40% and require monthly payments of principal and interest. The maturity dates of such
assumed notes range from December 2013 to November 2022. Pursuant to SFAS No. 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 $1.5 million, which will be amortized to interest expense over the remaining life of the underlying notes.

We
have a senior secured revolving credit facility with a current capacity of $225 million with a syndicated group led by JP Morgan Securities (formerly BankOne). The credit
facility currently bears interest at either LIBOR plus 1.125% to 1.500%, or, at our election, the prime rate and is subject to an annual 0.250% facility fee. This credit facility contains various
covenants including financial covenants regarding net worth, interest and fixed charge coverage and consolidated leverage.

As
of March 31, 2005, the gross book value of all our properties was approximately $855.3 million and the total gross book value of all properties securing our fixed rate
mortgage debt and secured credit facility was approximately $353.4 million and $282.4 million, respectively. Our debt has various covenants and management believes we were in compliance
with all of these covenants as of March 31, 2005.

Note 4Hedging Activities

We continue to enter into forward treasury locks in anticipation of issuing future fixed rate debt to fund future property acquisitions. We are entering into such
treasury locks to hedge our exposure to the variability in interest rates and are therefore mitigating the risk of changes in future payments of interest for anticipated fixed rate debt issuances over
a maximum period of 12 months (excluding forecasted transactions related to the payment of variable interest on our existing senior secured revolving credit facility). As required by
SFAS 133, we record all derivatives on the balance sheet at fair value. These forward treasury lock hedges have been designated as cash flow hedges for accounting purposes.

13

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As
of March 31, 2005, we had entered into a total of six cash flow hedging transactions, of which three have been settled. Of the three settled hedges, two have been attributed to
fixed rate debt and the balances of such hedges are being amortized to interest expense over the life of the assigned debt, and the third hedge was re-hedged on the date of settlement. The
three unsettled hedges are recorded in other comprehensive income (loss) at their fair value. As of March 31, 2005, these outstanding derivatives with a fair value of $2.4 million were
included in other assets. Unrealized gains of $2.1 million and $150,000 were recorded during the first quarter of 2005 and 2004, respectively, to shareholders' equity and comprehensive income
as a result of the change in fair value of the outstanding hedges.

As
of March 31, 2005, the total accumulated other comprehensive income (loss) balance pertaining to the cash flow hedges was approximately $2.0 million. Amounts reported in
accumulated other comprehensive income (loss) related to cash flow hedges will be amortized to interest expense as interest payments are made on our anticipated future debt issuance. During the next
12 months, we estimate that $528,000 will be amortized from other comprehensive income (loss) to interest expense resulting in an increase of our interest expense.

Note 5Public Offerings

On June 28, 2004, we filed our third registration statement with the Securities Exchange Commission ("SEC") covering a public offering of our common stock
and the registration statement was declared effective on October 18, 2004. The common stock is being offered at a price of $10.50 per share for a maximum of 40,000,000 shares. The registration
statement also covers up to 13,000,000 shares available pursuant to our distribution reinvestment plan. We will continue to sell shares under this offering and potential follow-on
offerings, providing capital primarily for acquisitions. As of March 31,
2005, we had sold 25,190,548 shares pursuant to our third public offering for gross proceeds of approximately $264.1 million.

On
January 24, 2005, we filed our fourth registration statement with the SEC covering one or more public offerings of our common stock with gross offering proceeds of up to
$1.0 billion, including proceeds from our distribution reinvestment plan. As of March 31, 2005, this registration statement had not been declared effective.

Note 6Our Partnership's Private Placement

Our partnership is currently offering undivided tenancy-in-common interests in our properties to accredited investors in a private
placement exempt from registration under the Securities Act. We anticipate that these tenancy-in-common interests may serve as replacement properties for investors seeking to
complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code. Additionally, the tenancy-in-common interests sold to investors
will be 100% leased by our partnership, and such leases will contain purchase options whereby our partnership will have the right, but not the obligation, to acquire the
tenancy-in-common interests from the investors at a later point in time in exchange for limited partnership units in our partnership under Section 721 of the Internal
Revenue Code.

Our
partnership will pay certain up-front fees and reimburse certain related expenses to our advisor, the Dealer Manager and Dividend Capital Exchange Facilitators LLC (the
"Facilitator") for raising capital through the private placement. Our advisor is obligated to pay all of the offering and marketing related costs associated with the private placement. However, our
partnership is obligated to

14

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pay
our advisor a non-accountable expense allowance which equals 2% of the gross equity proceeds raised through the private placement. In addition, our partnership is obligated to pay the
Dealer Manager a dealer manager fee of up to 1.5% of gross equity proceeds raised and a commission of up to 5% of gross equity proceeds raised through the private placement. The Dealer Manager may
re-allow such commissions and a portion of such dealer manager fee to participating broker dealers. Our partnership is also obligated to pay a transaction facilitation fee to the
Facilitator, an affiliate of our advisor, of up to 1.5% of gross equity proceeds raised through the private placement.

During
the three months ended March 31, 2005 and 2004, we raised approximately $18.0 and $1.9 million, respectively, from the sale of undivided tenancy-in-common
interests in our properties, which is included in financing obligations in the accompanying condensed consolidated balance sheets pursuant
to SFAS No. 98 "Accounting for Leases" ("SFAS No. 98"). In accordance with SFAS No. 98, a portion of the rental payments made by
our partnership to owners of tenancy-in-common interests will be recognized by our partnership as interest expense using the interest method.

During
the three months ended March 31, 2005, and 2004, our partnership incurred upfront costs of approximately $1.6 million and $190,000, respectively, payable to our
advisor and other affiliates for affecting these transactions which are recorded as deferred loan costs. Such deferred loan costs are amortized to interest expense over the life of the financing
obligation. If our partnership elects to exercise any purchase option as described above and issue limited partnership units, the unamortized portion of the up-front fees and expense
reimbursements paid to affiliates with respect to such transactions will be recorded against shareholders' equity as a selling cost of the limited partnership units. If our partnership does not elect
to exercise any such purchase option, the remaining unamortized portion of the up-front fees and expense reimbursements paid to affiliates with respect to such transactions will be
considered in the calculation of a gain or loss on the sale of real estate. On April 8, 2005, our partnership issued approximately $4.45 million of limited partnership units in
conjunction with the exercise of a purchase option for a property in which it had sold tenancy-in-common interests (see "Note 9Subsequent Events").

Note 7Minority Interest

Minority interest consists of the following as of:

Partnership Units

March 31,
2005

December 31,
2004Limited partnership units

$


$
Limited partnership Special Units


1,000


1,000Total

$
1,000

$
1,000


Limited Partnership Units

At March 31, 2005, our partnership was approximately 99.9% owned by Dividend Capital and 0.1% by our advisor. Limited partnership units are redeemable at
the option of the unit holder. We, as the general partner of our partnership, have the option of redeeming the limited partnership units with cash or with common shares. At inception (April 12,
2002), our partnership issued 20,000 limited partnership units to our advisor for gross proceeds of $200,000. The allocation of net loss to the limited partnership unit holders for the period ended
December 31, 2002, had reduced the minority interest

15

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balance
to zero. The excess loss attributable to the minority interest will be applied to future income attributable to the minority interest.

Limited Partnership Special Units

During 2002, our partnership issued 10,000 Special Units to an affiliate of our advisor for consideration of $1,000. The holder of the Special Units does not
participate in the profits and losses of our partnership. Amounts distributable to the holder of the Special Units will depend on operations and the amount of net sales proceeds received from property
dispositions or upon other events. In general, after holders of regular partnership interests in aggregate have received cumulative distributions equal to their capital contributions plus a 7%
cumulative non-compounded annual pre-tax return on their net contributions, the holder of the Special Units and the holders of regular partnership interests will receive 15%
and 85%, respectively, of the net sales proceeds received by our partnership upon the disposition of our partnership's assets.

Note 8Related Party Transactions

Advisory Agreement

We have entered into an Advisory Agreement with our advisor pursuant to which we will pay certain acquisition and asset management fees to our advisor. Our
advisor is considered a related party as certain indirect owners and employees of our advisor serve as our executives. The amount of such acquisition fees is equal to 1% of the aggregate purchase
price of properties we acquire. During the three months ended March 31, 2005, and 2004, our advisor earned approximately $965,000 and $775,000, respectively, for acquisition fees which are
accounted for as part of the basis of the acquired properties.

We
pay our advisor an asset management fee equal to 0.75% per annum of the total undepreciated cost of the properties we own in excess of $170 million. During the three months
ended March 31, 2005, we incurred asset management fees of $1.2 million. We did not incur any asset management fees during the three months ended March 31, 2004, as the total
undepreciated cost of our properties did not exceed the aforementioned threshold of $170 million.

Pursuant
to the Advisory Agreement, our advisor is obligated to advance all of our organization and 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. Such organization and offering costs include, but are not limited to, actual legal, accounting, printing and other expenses attributable to
organizing Dividend Capital, preparing the SEC registration statement, qualification of the shares for sale in the states and filing fees incurred by our 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 (see below). During the three
months ended March 31, 2005, and 2004, our advisor incurred approximately $2.1 and $1.9 million of organization and offering costs, respectively. During the three months ended
March 31, 2005, and 2004, we reimbursed our advisor approximately $2.8 and $1.9 million, respectively. As of March 31, 2005, the net un-reimbursed amount of
organization and offering costs incurred by our advisor, since inception (April 12, 2002), was approximately $4.2 million. If we are not successful in raising additional amounts of
equity proceeds, no additional amounts will be payable by us to our advisor for reimbursement of organization and offering costs.

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Our
advisor is obligated to pay all of the offering and marketing related costs associated with our partnership's private placement. However, our partnership is obligated to pay our
advisor a non-accountable expense allowance which equals 2% of the gross proceeds raised through our partnership's private placement. During the three months ended March 31, 2005,
and 2004, our partnership incurred approximately $321,000 and $57,000, respectively, payable to our advisor for such expense allowance.

In
accordance with the Advisory Agreement we are obligated, subject to certain limitations, to reimburse our advisor for certain other expenses incurred on our behalf for providing
services contemplated in the Advisory Agreement, provided that our advisor does not receive a specific fee for the activities which generate the expenses to be reimbursed. For the three months ended
March 31, 2005, and 2004, we have reimbursed $92,644 and $49,766, respectively, of such expenses. Such amounts are recorded as general and administrative expenses in the accompanying condensed
consolidated statements of operations.

As
of March 31, 2005, and December 31, 2004, we owed our advisor approximately $609,000 and $576,000, respectively, which is included in other liabilities on the
accompanying condensed consolidated balance sheets.

Dealer Manager Agreement

We have entered into a Dealer Manager Agreement with the Dealer Manager pursuant to which we will pay a dealer manager fee of up to 2.0% of gross offering
proceeds raised pursuant to our public offerings to the Dealer Manager as compensation for managing the offering. The Dealer Manager may re-allow a portion of such fees to broker-dealers
who participate in the offering. We will also pay up to a 6% sales commission of gross offering proceeds raised pursuant to our public offerings. As of March 31, 2005, all sales commissions had
been re-allowed to participating broker-dealers. For the three months ended March 31, 2005, and 2004, we incurred approximately $10.8 million and $8.0 million,
respectively, payable to the Dealer Manager for dealer manager fees and sales commissions. Such amounts are included as a reduction of additional paid-in capital on the accompanying
condensed consolidated balance sheets.

We
have also entered into a dealer manager agreement with the Dealer Manager pursuant to which we will pay a dealer manager fee of up to 1.5% of the gross proceeds raised through our
partnership's private placement. We will also pay the Dealer Manager a sales commission up to 5.0% of the gross proceeds raised through our partnership's private placement. As of March 31,
2005, substantially all of the sales commissions were re-allowed to participating broker-dealers who are responsible for affecting sales. For the three months ended March 31, 2005,
and 2004, we incurred up front fees of approximately $1.0 million and $85,000, respectively, payable to the Dealer Manager for dealer manager fees and sales commissions. Such amounts are
included in deferred loan costs on the accompanying condensed consolidated balance sheets and are being amortized to interest expense over the life of the financing obligation (see
"Note 6Our Partnership's Private Placement").

Pursuant
to our first and second public offerings, the Dealer Manager earned one soliciting dealer warrant for every 25 shares sold. The holder of a soliciting dealer warrant has the
right to purchase one share of common stock for $12. No warrants are being offered in our third public offering. During the three months ended March 31, 2005, the Dealer Manager did not earn
any soliciting dealer warrants as all shares sold during such period were in connection with our third public offering (see "Note 5Public Offerings"). During the three months ended
March 31, 2004, the Dealer Manager earned

17

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approximately
410,000 soliciting dealer warrants in connection with our first public offering. As of March 31, 2005, the Dealer Manager had earned a total of approximately 2,200,000 warrants
and using the fair value provisions of SFAS No. 123, the estimated fair value of the warrants earned as of March 31, 2005, was approximately $1,613,000. These warrants do not have an
impact on our condensed consolidated statement of operations as the value of these warrants is a cost of raising capital and therefore deducted from additional paid-in capital within
shareholder's equity.

As
of March 31, 2005, and December 31, 2004, we owed the Dealer Manager approximately $709,000 and $828,000, respectively, in relation to the fees described above which is
included in other liabilities on the accompanying condensed consolidated balance sheets.

Facilitator Agreement

We have entered into an agreement with the Facilitator whereby we will pay a transaction facilitation fee associated with our partnership's private placement. We
will pay the Facilitator up to 1.5% of the gross equity proceeds raised through our partnership's private placement for the transaction facilitation fee. For the three months ended March 31,
2005, and 2004, we incurred approximately $241,000 and $29,000, respectively, payable to the Facilitator.

Note 9Subsequent Events

Private Placement Transaction

In connection with our partnership's private placement (see "Note 6Our Partnership's Private Placement"), on April 8, 2005, our
partnership exercised its right to acquire a previously identified replacement property from seven individual investors in exchange for limited partnership units in our partnership. The exchange
resulted in the issuance of 424,352 limited partnership units with a total value of approximately $4.5 million.

Purchase of Baltimore Portfolio

On April 12, 2005, we acquired a portfolio consisting of seven distribution facilities and comprising 874,701 square feet located in Baltimore, Maryland.
Upon acquisition, the portfolio was 100% leased to 15 customers. We purchased the portfolio for a total estimated cost of approximately $43.2 million, which includes an acquisition fee of
$425,000 paid to our advisor.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Information

This report includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, or the Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such forward-looking statements relate to, without limitation, our future
capital expenditures, distributions and acquisitions (including the amount and nature thereof), other development trends of the real estate industry, business strategies, and the expansion and growth
of our operations. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future
developments and other factors we believe are appropriate. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in
Section 27A of the Act and Section 21E of the Exchange Act. Such statements are subject to a number of assumptions, risks and uncertainties which may cause our actual results,
performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements are
generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar
words or terms. Readers are cautioned not to place undue reliance on these forward-looking statements. Among the factors about which we have made assumptions are general economic and business
(particularly real estate) conditions being less favorable than expected, the potential impact of terrorist attacks on the national, regional and local economies, the business opportunities that may
be presented to and pursued by us, changes in laws or regulations (including changes to laws governing the taxation of REITs), risk of acquisitions, availability and creditworthiness of prospective
customers, availability of capital (debt and equity), interest rate fluctuations, competition, supply and demand for properties in our current and any proposed market areas, customers' ability to pay
rent at current or increased levels, accounting principles, policies and guidelines applicable to REITs, environmental, regulatory and/or safety requirements, customer bankruptcies and defaults, the
availability and cost of comprehensive insurance, including coverage for terrorist acts, and other factors, many of which are beyond our control. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of future events, new information or otherwise.

Overview

Dividend Capital was formed as a Maryland corporation in April 2002 in order to invest in commercial real estate properties consisting primarily of
high-quality, generic distribution warehouses and light industrial properties net leased to creditworthy corporate customers. In order to provide capital for these investments, we are
selling our common stock through public offerings. We intend to continue raising significant amounts of capital through our third offering and potential follow-on offerings, through our
partnership's private placement more fully described below and through the issuance of debt.

A
primary focus of ours is to build a diversified portfolio of properties in terms of geography and the industry group of our customers that will satisfy our corporate objectives of
maximizing cash available for distributions to investors, preserving our capital, and realizing growth in the value of our portfolio over time.

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Liquidity and Capital Resources

Overview

Other than national economic conditions affecting real estate in general, our management is not currently aware of any material trends or uncertainties, favorable
or unfavorable that may have a material impact on either capital resources or the revenues or income to be derived from the operation of real estate properties.

Management
currently expects that our principal sources of working capital and funding for acquisitions and potential capital requirements for expansion and renovation of properties will
include:



Over
the short term, we believe that our sources of capital, specifically our cash flow from operations, borrowings under our credit facility and our ability to raise capital through
public offerings and our partnership's private placement, are adequate and will continue to be adequate to meet our liquidity requirements and capital commitments. These liquidity requirements and
capital commitments include the payment of distributions, capital expenditures at our properties, forward purchase commitments (as more fully described below) and the acquisition of 28 buildings which
are currently under contract or have closed since March 31, 2005. These buildings total approximately 4.1 million square feet and have an aggregate purchase price of approximately
$190.0 million. We anticipate that the acquisitions that have not yet closed will close over the next several months. However, the contracts related to such acquisitions are subject to a number
of contingencies and there are no assurances that these acquisitions will transpire.

Over
the longer term, we anticipate we will continue to utilize the same sources of capital we rely on to meet our short term liquidity requirements; however, we also expect to utilize
additional secured and unsecured financings and capital from co-investment partners. We expect these resources will be adequate to fund our operating activities and distributions, which we
presently anticipate will grow over time, and will be sufficient to fund our ongoing acquisition activities as well as providing capital for investment in future development and other joint ventures
along with additional potential forward purchase commitments.

During
the three months ended March 31, 2005, and 2004, cash generated from financing activities was approximately $190.0 million and $91.5 million, respectively.
This increase was generally comprised of an increase in gross proceeds generated by our public offerings and our partnership's private placement of approximately $53.5 million compared to the
same period in 2004. Additionally, cash provided by operating activities increased to approximately $10.8 million for the three months ended March 31, 2005, from approximately
$3.1 million for the same period ended March 31, 2004, due to the additional properties owned during the 2005 period. These sources of capital were primarily utilized to fund
approximately $76.5 million and $29.7 million of cash invested in real estate during the three months ended March 31, 2005, and 2004, respectively. Our management anticipates that
over time, cash provided by operating activities, debt proceeds and cash from co-investment partners will become a larger portion of our capital resources.

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Public Offering

On June 28, 2004, we filed our third registration statement with the SEC covering our third public offering of our common stock and the registration
statement was declared effective on October 18, 2004. The common stock is being offered at a price of $10.50 per share for a maximum of 40,000,000 shares. The registration statement also covers
up to 13,000,000 shares available pursuant to our distribution reinvestment plan. We will continue to sell shares under this offering and potential follow-on offerings, providing capital
primarily for acquisitions. For the three months ended March 31, 2005, we raised gross proceeds of approximately $137.7 million and as of March 31, 2005, we had sold 25,190,548
shares pursuant to our third public offering for total gross proceeds of approximately $264.1 million.

Our Partnership's Private Placement

Our partnership is currently offering undivided tenancy-in-common interests in our properties to accredited investors in a private
placement exempt from registration under the Securities Act. We anticipate that these tenancy-in-common interests may serve as replacement properties for investors seeking to
complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code. Additionally, the tenancy-in-common interests sold to investors
will be 100% leased by our partnership, and such leases will contain purchase options whereby our partnership will have the right to acquire the tenancy-in-common interests
from the investors commencing at the beginning of the 15th month and terminating at the end of the 18th month of the lease in exchange for limited partnership units in our partnership
under Section 721 of the Internal Revenue Code. During the three months ended March 31, 2005, we raised approximately $18.0 million and as of March 31, 2005, we have raised
a total of approximately $50.6 million from the sale of
undivided tenancy-in-common interests in our properties pursuant to our partnership's private placement.

Forward Capital Commitment Agreement

In October 2004, we entered into a forward capital commitment with Wachovia Bank National Association ("Wachovia") in connection with our commitment to
acquire two buildings located in Atlanta, Georgia, comprising 677,667 square feet from an unrelated third-party developer. We have entered into this binding agreement with Wachovia, the construction
lender, to purchase the two buildings at a price of up to $29.0 million. Our obligation to acquire the buildings from the developer upon completion can be satisfied under a variety of
scenarios, mostly dependent upon leasing, with a minimum purchase price equal to actual development costs. In order to provide security to Wachovia under this capital commitment, we were required to
place $4.9 million in escrow in lieu of a letter of credit, which is included in restricted cash on the condensed consolidated balance sheet. We anticipate funding this commitment in 2006 with
proceeds from our public offerings and debt.

Distributions

The payment of distributions is determined by our Board of Directors and may be adjusted at its discretion at any time. In December 2004, our Board of
Directors set the 2005 distribution level at an annualized $0.64 per share. The distribution was set by our Board of Directors at a level we believe to be appropriate and sustainable based upon the
evaluation of existing assets within our portfolio, anticipated acquisitions and projected levels of additional capital to be raised, debt to be incurred in the future and the anticipated results of
operations. During the three months ended March 31, 2005, our board of directors declared distributions totaling approximately $11.7 million and we paid the fourth quarter 2004
distributions totaling approximately $9.7 million. To fund total distributions, we utilized both funds from operations and debt proceeds.

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The
short term dilution of operating results brought upon by the pace of raising capital meeting or exceeding the pace at which we have deployed such capital during the initial stages of
our existence was anticipated and is a byproduct of our continued effort to build a high-quality portfolio. It is our objective to add accretive leverage to the balance sheet and to
conservatively fund our distributions from funds from operations over time.

Distribution Reinvestment Plan

Pursuant to our distribution reinvestment plan, $6.3 million and $1.4 million of the distributions declared during the three months ended
March 31, 2005, and 2004, respectively, was satisfied through the issuance of our common stock. For the same period in 2005 and 2004, 631,077 and 148,799 shares, respectively were issued
pursuant to our distribution reinvestment plan at a 5.0% discount from our then current public offering share price for a discounted purchase price of $9.975 and $9.50 per share, respectively.

Debt Service Requirements

As of March 31, 2005, we had total outstanding debt, excluding financing obligations (see "Note 6Our Partnership's Private Placement"
to the condensed consolidated financial statements), of approximately $219 million, exclusive of premiums, consisting primarily of secured, fixed-rate, non-recourse
mortgage notes. All of these notes require monthly payments of interest and require, or will ultimately require, monthly repayments of principal (see "Note 3Debt" to the condensed
consolidated financial statements). Currently, cash flow from operations is sufficient to satisfy these debt service requirements and we anticipate that they will continue to be sufficient to satisfy
these requirements over time.

As
of March 31, 2005, the gross book value of all of our properties was approximately $855.3 million and the gross book value of all properties securing our fixed rate
mortgage debt and secured credit facility was approximately $353.4 million and $282.4 million, respectively. Our debt has various covenants and management believes we were in compliance
with all of these covenants at March 31, 2005.

Results of Operations

Summary

As of March 31, 2005, we owned 112 properties located in 17 markets across the United States, 97 of which were acquired after March 31, 2004. As a
result of the acquisition of 97 properties subsequent to March 31, 2004, the revenues and expenses from our operations for the three months ended March 31, 2005, reflect a significant
increase compared to the revenues and expenses from our

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operations
for the three months ended March 31, 2004. The following table describes our portfolio as of March 31, 2005, and 2004, respectively:

|              |       | As of March 31, |    
|------------- | ----- | --------------- | ---
|
|
|Atlanta       |       | 18              |    
|Boston        |       | 5               |    
|Chicago       |       | 2               |    
|Cincinnati    |       | 7               |    
|Dallas        |       | 18              |    
|Denver        |       | 1               |    
|Houston       |       | 21              |    
|Indianapolis  |       | 1               |    
|Los Angeles   |       | 4               |    
|Louisville    |       | 2               |    
|Memphis       |       | 7               |    
|Nashville     |       | 3               |    
|Orlando       |       | 2               |    
|Philadelphia  |       | 1               |    
|Phoenix       |       | 13              |    
|San Antonio   |       | 2               |    
|San Francisco |       | 5               |    
|              |       |                 |    
|              | Total |                 | 112
|              |       |                 |    

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Three months ended March 31, 2005, compared to the three months ended March 31, 2004

Although we recognized a net loss for the three months ended March 31, 2005 compared to net income for the three months ended March 31, 2004, our
cash provided by operating activities increased from approximately $3.1 million for the three months ended March 31, 2004, to approximately $10.8 million for the three months
ended March 31, 2005. This increase is primarily a result of the acquisitions noted above. The fact that we recognized a net loss despite an increase in operating activities as described above,
is primarily a result of depreciation. Depreciation as a percent of revenues for the three months ended March 31, 2005, and 2004, was 61.1% and 45.8%, respectively. This difference was
primarily a result of proportionately more value being attributed to tenant improvements and intangible assets, pursuant to the SFAS No. 141, associated with in-place leases. The
acquisitions made subsequent to March 31, 2004, have proportionately higher tenant improvements associated with smaller demised spaces and thus higher rental rates causing in-place
leases to have a greater value. This in turn resulted in proportionately greater depreciation and amortization expense recognized for the first quarter of the 2005 as the remaining life of such assets
is significantly shorter than other long-lived assets such as building and building improvements (see "Note 1Organization and Summary

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of
Significant Accounting Policies" to the condensed consolidated financial statements). The following table illustrates the relative allocation of the costs of our properties as of March 31,
2005, and 2004.

As of March 31,2005

2004Balance

% of Total

Balance

% of TotalLand

134,763,015

15.9
%
20,968,862

11.6
%Land Improvements

63,617,720

7.5
%
10,933,561

6.1
%Building

508,141,044

60.0
%
124,131,386

68.7
%Lease Related Assets(1)

140,735,535

16.6
%
24,521,838

13.6
%Total

847,257,314

100.0
%
180,555,647

100.0
%


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The
components of the increase in operating activities are reflected in the changes in rental revenues, interest and other income, property operating expenses and other
expenses as more fully described below.

Three Months Ended
March 31,Rental Revenues and
Other Real Estate Income2005

2004

$ ChangeBase rental revenue:Same store

$
3,021,924

$
2,820,028

$
201,8962005 acquisitions


970,687





970,6872004 acquisitions


11,582,649


57,644


11,525,005Other real estate income


3,669,321


600,253


3,069,068Straight-line rents


800,501


117,994


682,507Above and below market rents, net


(443,037
)

(14,008
)

(429,029
)Total

$
19,602,045

$
3,581,911


16,020,134


Rental
revenues and other real estate income were higher in the three months ended March 31, 2005, than in the three months ended March 31, 2004, primarily
due to the operations of 97 properties acquired subsequent to March 31, 2004. As of March 31, 2005, and 2004, we owned 112 and 15 properties, respectively. The increase in
straight-line rents over the same periods is mainly attributable to the revenue generated by newly acquired leases resulting from the 97 aforementioned property acquisitions. The decrease
in above and below market rents is due to the majority of the properties acquired subsequent to March 31, 2004, having leases with rental rates proportionately higher than market rental rates
measured at the time of acquisition.

Three Months Ended
March 31,Interest and Other Income2005

2004

$ ChangeInterest and other income

$
610,390

$
13,324

$
597,066


Interest
and other income consist primarily of interest income on cash balances and notes receivable. The increase in interest income is due to higher cash balances held
in interest bearing bank accounts during the three months ended March 31, 2005, as compared to the three months ended March 31, 2004. In addition, we have $8.2 million in notes
receivable outstanding as of March 31, 2005, $7.5 million of which was issued subsequent to March 31, 2004, to a third-party national real estate

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developer.
Collectively, these notes earned interest income of approximately $133,000 for the three months ended March 31, 2005, as compared to $2,000 for the three months ended March 31
2004.

Three Months Ended
March 31,Property Operating Expenses2005

2004

$ ChangeProperties:Same store

$
823,088

$
796,900

$
26,1882005 acquisitions


71,268





71,2682004 acquisitions


3,924,428


950


3,923,478Total

$
4,818,784

$
797,850

$
4,020,934


Property
operating expenses were higher in the three months ended March 31, 2005, than in the three months ended March 31, 2004, primarily due to the
operations of 97 properties acquired subsequent to March 31, 2004. As of March 31, 2005, and 2004, we owned 112 and 15 properties, respectively.

Three Months Ended
March 31,Other Expenses2005

2004

$ ChangeDepreciation and amortization

$
12,350,161

$
1,646,277

$
10,703,884Interest


3,717,621


650,588


3,067,033General and administrative


727,875


328,074


399,801Asset management fees, related party


1,179,473





1,179,473Total

$
17,975,130

$
2,624,939

$
15,350,191


The
increase in interest expense is attributable to higher mortgage note balances and higher financing obligation balances that were outstanding during the three months
ended March 31, 2005, compared to the three months ended March 31, 2004. Depreciation and amortization expense was higher during the three months ended March 31, 2005, than in the
three months ended March 31, 2004, primarily due to the acquisition of 97 additional properties with a gross book value of $674.7 million. General and administrative expenses were
higher during the three months ended March 31, 2005, than in the three months ended March 31, 2004, as a result of increased compliance costs associated with the Sarbanes-Oxley Act of
2002 and an increase in general business activities. The increase in asset management fees payable to our advisor (see "Note 8Related Party Transactions" to the condensed
consolidated financial statements) was attributable to the aforementioned acquisition of additional properties.

Off-Balance Sheet Arrangements

As of March 31, 2005, December 31, 2004, and March 31, 2004, respectively, we had no material 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.

Critical Accounting Policies

General

In our Form 10-K filed for the year ended December 31, 2004, we discuss the critical accounting policies which management believes are
most "critical" to the presentation of our financial condition and results of operations which require our management's most difficult, subjective or complex judgments. These judgments often result
from the need to make estimates about the effect of matters that are inherently uncertain. The discussion addresses judgments known to management pertaining to

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trends,
events or uncertainties which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into
consideration different conditions and assumptions. As of March 31, 2005, no additional critical accounting policies had been identified other than those set forth in our
Form 10-K filed for the year ended December 31, 2004.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market conditions such as prices 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 shareholders and unitholders, and other cash requirements. The majority of our outstanding debt has fixed interest rates, which minimizes our risk
related to fluctuating interest rates.

Our
exposure to market risk includes interest rate fluctuations in connection with our credit facilities 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 as part of our cash flow hedging
strategy. A treasury lock is 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 first quarter of 2005, such derivatives were used to hedge the variable cash flows associated with $150 million of forecasted issuances of debt. 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 March 31, 2005, we had three treasury lock hedges which had not been settled and were, therefore, subject to variability based upon market interest rates. We estimate the
fair value of our treasury lock agreements by calculating the present value of the difference between the corresponding locked treasury rates and the expected yield on the specific treasury
obligations referenced in the treasury lock agreement. Based upon this calculation, the assets associated with these hedges would become a liability of $2.1 million if the market interest rate
of the referenced treasury obligation were to decrease 10% (0.45)%, based upon the prevailing market rate at March 31, 2005). Similarly, our variable rate debt is subject to risk based upon
prevailing market interest rates. If the prevailing market interest rates relevant to our variable rate debt as of March 31, 2005, were to increase 10% (.575)%, based upon prevailing market
rates at March 31, 2005), it would not have a material effect on the results of our operations.

As
of March 31, 2005, the estimated fair value of our debt was $220.7 million based on our estimate of the then current market interest rates.

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 March 31, 2005, the end
of the period covered by this quarterly report. Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures
or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met. Further, the design of a control system

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must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Dividend Capital have been detected. Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2005.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting identified in connection with the evaluation of such internal controls that occurred
during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

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

Share Redemption Program

As long as our common stock is not listed on a national securities exchange or traded on an over-the-counter market, shareholders of
Dividend Capital who have held their shares for at least one year may be able to redeem all or any portion of their shares in accordance with the procedures outlined in the prospectus relating to the
shares they purchased. At that time, we may, subject to certain conditions and limitations, redeem the shares presented for redemption for cash to the extent that we have sufficient funds available to
us to fund such redemption. The amount received from the redemption of shares will be equal to the lesser of the price actually paid for the shares or the redemption price, which is dependent on the
number of years the shares are held. For shares purchased in our third offering, the redemption price is as described in the following table.

Share Purchase Anniversary

Redemption Price as a
Percentage of
Purchase Price(1)Less than 1

No Redemption Allowed1

92.5
%2

95.0
%3

97.5
%4

100.0
%


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We
expect to fund the redemption price of any share redemptions with proceeds received from the sale of shares pursuant to the distribution reinvestment plan. Our board
of directors may, at its sole discretion, choose to use other sources of funds to redeem shares. The table below sets forth information regarding our redemption of common stock from our shareholders
for the quarter ended March 31, 2005.

Period

Total Number
of Shares
Repurchased(1)

Average Price
per ShareJanuary 2005

$


$
February 2005





March 2005


119,950


9.91Total

$
119,950

$
9.91


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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

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ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



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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.

|                   |  | DIVIDEND CAPITAL TRUST INC.                                    
|------------------ |  | ---------------------------------------------------------------
|Date: May 10, 2005 |  | /s/EVAN H. ZUCKEREvan H. Zucker Chief Executive Officer        
|Date: May 10, 2005 |  | /s/JAMES R. MULVIHILLJames R. Mulvihill Chief Financial Officer

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EXHIBIT INDEX

|Exhibit Number |  | Exhibit Description                                        
|-------------- |  | -----------------------------------------------------------
|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  

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