|   | [      X ] | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|------------|---------------------------------------------------------------------------------------------------|

|   | [   ] | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------|----------------------------------------------------------------------------------------------------|

| Maryland                                           | 04-3578653                                |
|----------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation | (I.R.S.      Employer Identification No.) |
| or      organization)                              |                                      |

|   | YES  [      X ] | NO  [  ] |
|--------|---------------------------|------------------------------|

|   | YES  [  ] | NO  [  ] |
|--------|-------------------------------|------------------------------|

|   | Large      accelerated filer  [ X ]                                                                       | Accelerated      filer [  ]         |
|--------|---------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|
|   |                                                                                                                |                                          |
|   | Non-accelerated      filer    [  ] (Do not check if a smaller      reporting company) | Smaller      reporting company [  ] |

----

|   | YES  [  ] | NO  [ X      ] |
|--------|-------------------------------|-------------------------------|

----

| Part      I.  | Financial      Information |                                                                                                                                      |
|---------------|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|          |                       |                                                                                                                                      | Page |
|          | Item      1.               | Financial      Statements                                                                                                                 |   |
|          |                       |                                                                                                                                      |   |
|          |                       | Condensed      Consolidated Balance Sheets as of September 30, 2009 and December 31,      2008                                            | 4 |
|          |                       |                                                                                                                                      |   |
|          |                       | Condensed      Consolidated Statements of Income for the three and nine months ended      September 30, 2009 and 2008                     | 5 |
|          |                       |                                                                                                                                      |   |
|          |                       | Condensed      Consolidated Statements of Cash Flows for the nine months ended September      30, 2009 and 2008                           | 6 |
|          |                       |                                                                                                                                      |   |
|          |                       | Condensed      Consolidated Statements of Other Comprehensive Income for the three and      nine months ended September 30, 2009 and 2008 | 7 |
|          |                       |                                                                                                                                      |   |
|          |                       | Notes      to Condensed Consolidated Financial Statements                                                                                 | 8-21 |
|          |                       |                                                                                                                                      |   |
|          | Item      2.               | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                                     | 22-32 |
|          |                       |                                                                                                                                      |   |
|          | Item      3.               | Quantitative      and Qualitative Disclosures About Market Risk                                                                           | 32 |
|          |                       |                                                                                                                                      |   |
|          | Item      4.               | Controls      and Procedures                                                                                                              | 33 |
|          |                       |                                                                                                                                      |   |
| Part II. | Other      Information     |                                                                                                                                      |
|          |                       |                                                                                                                                      |   |
|          | Item      1.               | Legal      Proceedings                                                                                                                    | 34 |
|          |                       |                                                                                                                                      |   |
|          | Item 1A.              | Risk      Factors                                                                                                                         | 34 |
|          |                       |                                                                                                                                      |   |
|          | Item      2.               | Unregistered      Sales of Equity Securities and Use of Proceeds                                                                          | 34 |
|          |                       |                                                                                                                                      |   |
|          | Item      3.               | Defaults      Upon Senior Securities                                                                                                      | 35 |
|          |                       |                                                                                                                                      |   |
|          | Item      4.               | Submission      of Matters to a Vote of Security Holders                                                                                  | 35 |
|          |                       |                                                                                                                                      |   |
|          | Item      5.               | Other      Information                                                                                                                    | 35 |
|          |                       |                                                                                                                                      |   |
|          | Item      6.               | Exhibits                                                                                                                                  | 35 |
|          |                       |                                                                                                                                      |   |
| Signatures    |                       | 36                                                                                                                                        |

----

| Item      1. | Financial      Statements |
|--------------|---------------------------|

|                                                                                                                                                                  |   | September 30, |      |   | December 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
| (in      thousands, except share and par value amounts)                                                                                                               |   | 2009               |      |   | 2008              |   |
| Assets:                                                                                                                                                               |   |               |      |   |              |   |
| Real      estate assets:                                                                                                                                              |   |               |      |   |              |   |
| Land                                                                                                                                                                  |   | $                  | 126,695   |   |              | $      | 107,153 |   |
| Buildings      and improvements                                                                                                                                       |   |               | 891,918   |   |              |   | 810,732 |   |
| Fixtures      and equipment                                                                                                                                           |   |               | 310       |   |              |   | 299 |   |
|                                                                                                                                                                  |   |               | 1,018,923 |   |              |   | 918,184 |   |
| Less      accumulated depreciation                                                                                                                                    |   |               | 92,368    |   |              |   | 74,126 |   |
| Real      estate assets, net                                                                                                                                          |   |               | 926,555   |   |              |   | 844,058 |   |
| Acquired      real estate leases, less accumulated amortization                                                                                                       |   |               |      |   |              |   |   |   |
|    of      $35,106 and $29,200, respectively                                                                                                           |   |               | 48,003    |   |              |   | 28,518 |   |
| Investment      in non-consolidated REITs                                                                                                                             |   |               | 93,936    |   |              |   | 83,046 |   |
| Assets      held for syndication, net                                                                                                                                 |   |               | -         |   |              |   | 13,254 |   |
| Cash      and cash equivalents                                                                                                                                        |   |               | 26,385    |   |              |   | 29,244 |   |
| Restricted      cash                                                                                                                                                  |   |               | 331       |   |              |   | 336 |   |
| Tenant      rent receivables, less allowance for doubtful accounts                                                                                                    |   |               |      |   |              |   |   |   |
|    of      $620 and $509, respectively                                                                                                                 |   |               | 1,400     |   |              |   | 1,329 |   |
| Straight-line      rent receivable, less allowance for doubtful accounts                                                                                              |   |               |      |   |              |   |   |   |
|    of      $100 and $261, respectively                                                                                                                 |   |               | 9,724     |   |              |   | 8,816 |   |
| Prepaid      expenses                                                                                                                                                 |   |               | 3,430     |   |              |   | 2,206 |   |
| Related      party mortgage loan receivable                                                                                                                           |   |               | 23,264    |   |              |   | 1,125 |   |
| Other      assets                                                                                                                                                     |   |               | 1,452     |   |              |   | 2,406 |   |
| Office      computers and furniture, net of accumulated depreciation                                                                                                  |   |               |      |   |              |   |   |   |
|    of      $1,194 and $1,108, respectively                                                                                                             |   |               | 408       |   |              |   | 281 |   |
| Deferred      leasing commissions, net of accumulated amortization                                                                                                    |   |               |      |   |              |   |   |   |
|    of      $4,820, and $3,416, respectively                                                                                                            |   |               | 10,887    |   |              |   | 10,814 |   |
|              Total      assets                                                                       |   | $                  | 1,145,775 |   |              | $      | 1,025,433 |   |
|                                                                                                                                                                  |   |               |      |   |              |   |   |   |
| Liabilities      and Stockholders’ Equity:                                                                                                                      |   |               |      |   |              |   |   |   |
| Liabilities:                                                                                                                                                          |   |               |      |   |              |   |   |   |
| Bank      note payable                                                                                                                                                |   | $                  | 91,008    |   |              | $      | 67,468 |   |
| Term      loan payable                                                                                                                                                |   |               | 75,000    |   |              |   | 75,000 |   |
| Accounts      payable and accrued expenses                                                                                                                            |   |               | 25,351    |   |              |   | 22,297 |   |
| Accrued      compensation                                                                                                                                             |   |               | 750       |   |              |   | 1,654 |   |
| Tenant      security deposits                                                                                                                                         |   |               | 1,757     |   |              |   | 1,874 |   |
| Other      liabilities: derivative termination value                                                                                                                  |   |               | 2,269     |   |              |   | 3,099 |   |
| Acquired      unfavorable real estate leases, less accumulated    amortization                                                                                        |   |               |      |   |              |   |   |   |
|       of      $2,440, and $1,779, respectively                                                                                          |   |               | 5,661     |   |              |   | 5,044 |   |
|              Total      liabilities                                                                  |   |               | 201,796   |   |              |   | 176,436 |   |
|                                                                                                                                                                  |   |               |      |   |              |   |   |   |
| Commitments      and contingencies                                                                                                                                    |   |               |      |   |              |   |   |   |
|                                                                                                                                                                  |   |               |      |   |              |   |   |   |
| Stockholders’      Equity:                                                                                                                                      |   |               |      |   |              |   |   |   |
| Preferred      stock, $.0001 par value, 20,000,000 shares authorized, none issued or      outstanding                                                                 |   |               | -         |   |              |   | - |   |
| Common      stock, $.0001 par value, 180,000,000 shares authorized,    79,680,705      and 70,480,705 shares issued and outstanding, respectively |   |               | 8         |   |              |   | 7 |   |
| Additional      paid-in capital                                                                                                                                       |   |               | 1,003,729 |   |              |   | 889,019 |   |
| Accumulated      other comprehensive loss                                                                                                                             |   |               | (2,269    | )      |              |   | (3,099 | ) |
| Accumulated      distributions in excess of accumulated earnings                                                                                                      |   |               | (57,489   | )      |              |   | (36,930 | ) |
|     Total      stockholders’ equity                                                                                                         |   |               | 943,979   |   |              |   | 848,997 |   |
|     Total      liabilities and stockholders’ equity                                                                                         |   | $                  | 1,145,775 |   |              | $      | 1,025,433 |   |
|                                                                                                                                                                  |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements.                                                           |   |

----

|                                                                                                        |   | For      theThree      Months EndedSeptember      30, |   |   | For      theNine      Months EndedSeptember      30, |   |
|-------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
| (in      thousands, except per share amounts)                                                               |   | 2009                                                  |   |   | 2008                                                 |   |   | 2009 |   |   | 2008 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |
| Revenue:                                                                                                    |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |
|      Rental                                                                        |   | $                                                     | 31,702 |   |                                                 | $      | 27,927 |   |   | $ | 90,774 |   |   | $ | 82,283 |   |
| Related      party revenue:                                                                                 |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Syndication      fees                                                                                       |   |                                                  | -      |   |                                                 |   | 304 |   |   |   | 39 |   |   |   | 3,766 |   |
| Transaction      fees                                                                                       |   |                                                  | 1      |   |                                                 |   | 300 |   |   |   | 543 |   |   |   | 3,606 |   |
| Management      fees and interest income from loans                                                         |   |                                                  | 370    |   |                                                 |   | 380 |   |   |   | 1,232 |   |   |   | 1,364 |   |
| Other                                                                                                       |   |                                                  | 19     |   |                                                 |   | 13 |   |   |   | 55 |   |   |   | 52 |   |
|         Total      revenue                                          |   |                                                  | 32,092 |   |                                                 |   | 28,924 |   |   |   | 92,643 |   |   |   | 91,071 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                                   |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Real      estate operating expenses                                                                         |   |                                                  | 7,752  |   |                                                 |   | 7,159 |   |   |   | 22,176 |   |   |   | 20,973 |   |
| Real      estate taxes and insurance                                                                        |   |                                                  | 5,364  |   |                                                 |   | 4,590 |   |   |   | 14,879 |   |   |   | 13,375 |   |
| Depreciation      and amortization                                                                          |   |                                                  | 8,801  |   |                                                 |   | 7,666 |   |   |   | 26,940 |   |   |   | 22,616 |   |
| Selling,      general and administrative                                                                    |   |                                                  | 2,243  |   |                                                 |   | 1,927 |   |   |   | 6,378 |   |   |   | 6,557 |   |
| Commissions                                                                                                 |   |                                                  | 8      |   |                                                 |   | 208 |   |   |   | 178 |   |   |   | 2,020 |   |
| Interest                                                                                                    |   |                                                  | 1,744  |   |                                                 |   | 1,108 |   |   |   | 4,920 |   |   |   | 3,351 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|         Total      expenses                                         |   |                                                  | 25,912 |   |                                                 |   | 22,658 |   |   |   | 75,471 |   |   |   | 68,892 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      before interest income, equity in earnings of                                                   |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|    non-consolidated      REITs and taxes                                                     |   |                                                  | 6,180  |   |                                                 |   | 6,266 |   |   |   | 17,172 |   |   |   | 22,179 |   |
| Interest      income                                                                                        |   |                                                  | 16     |   |                                                 |   | 177 |   |   |   | 88 |   |   |   | 657 |   |
| Equity      in earnings of non-consolidated REITs                                                           |   |                                                  | 475    |   |                                                 |   | 679 |   |   |   | 1,710 |   |   |   | 2,167 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      before taxes                                                                                    |   |                                                  | 6,671  |   |                                                 |   | 7,122 |   |   |   | 18,970 |   |   |   | 25,003 |   |
| Income      tax benefit                                                                                     |   |                                                  | (270   | )      |                                                 |   | (297 | ) |   |   | (644 | ) |   |   | (337 | ) |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                             |   | $                                                     | 6,941  |   |                                                 | $      | 7,419 |   |   | $ | 19,614 |   |   | $ | 25,340 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding,                                                         |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|      basic      and diluted                                                        |   |                                                  | 71,281 |   |                                                 |   | 70,481 |   |   |   | 70,750 |   |   |   | 70,481 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Net      income per share, basic and diluted                                                                |   | $                                                     | 0.10   |   |                                                 | $      | 0.11 |   |   | $ | 0.28 |   |   | $ | 0.36 |   |
|                                                                                                        |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements. |   |

----

|                                                                                                                                                                 |   | For      theNine      Months EndedSeptember      30, |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|----------|
| (in      thousands)                                                                                                                                                  |   | 2009                                                 |     |   | 2008 |   |
| Cash      flows from operating activities:                                                                                                                           |   |                                                 |     |   |   |   |
| Net      income                                                                                                                                                      |   | $                                                    | 19,614   |   |   | $ | 25,340 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities:                                                                          |   |                                                 |     |   |   |   |   |   |
| Depreciation      and amortization expense                                                                                                                           |   |                                                 | 27,141   |   |   |   | 22,649 |   |
| Amortization      of above market lease                                                                                                                              |   |                                                 | 2,544    |   |   |   | 3,376 |   |
| Equity      in earnings of non-consolidated REITs                                                                                                                    |   |                                                 | (1,710   | ) |   |   | (2,167 | ) |
| Distributions      from non-consolidated REITs                                                                                                                       |   |                                                 | 4,257    |   |   |   | 3,838 |   |
| Increase      in bad debt reserve                                                                                                                                    |   |                                                 | 111      |   |   |   | 79 |   |
| Changes      in operating assets and liabilities:                                                                                                                    |   |                                                 |     |   |   |   |   |   |
| Restricted      cash                                                                                                                                                 |   |                                                 | 5        |   |   |   | - |   |
| Tenant      rent receivables, net                                                                                                                                    |   |                                                 | (182     | ) |   |   | 219 |   |
| Straight-line      rents, net                                                                                                                                        |   |                                                 | (849     | ) |   |   | (854 | ) |
| Prepaid      expenses and other assets, net                                                                                                                          |   |                                                 | (472     | ) |   |   | (1,474 | ) |
| Accounts      payable, accrued expenses                                                                                                                              |   |                                                 | 4,294    |   |   |   | 3,863 |   |
| Accrued      compensation                                                                                                                                            |   |                                                 | (904     | ) |   |   | 88 |   |
| Tenant      security deposits                                                                                                                                        |   |                                                 | (117     | ) |   |   | (51 | ) |
| Payment      of deferred leasing commissions                                                                                                                         |   |                                                 | (2,202   | ) |   |   | (2,434 | ) |
| Net      cash provided by operating activities                                                                                                                       |   |                                                 | 51,530   |   |   |   | 52,472 |   |
| Cash      flows from investing activities:                                                                                                                           |   |                                                 |     |   |   |   |   |   |
| Purchase      of real estate assets, office computers and furniture,          capitalized merger costs and acquired real estate      leases |   |                                                 | (130,819 | ) |   |   | (39,282 | ) |
| Investment      in non-consolidated REITs                                                                                                                            |   |                                                 | (13,200  | ) |   |   | (10 | ) |
| Investment      in related party mortgage loan receivable                                                                                                            |   |                                                 | (22,139  | ) |   |   | (1,125 | ) |
| Investment      in assets held for syndication                                                                                                                       |   |                                                 | 13,017   |   |   |   | 12,235 |   |
| Net      cash used in investing activities                                                                                                                           |   |                                                 | (153,141 | ) |   |   | (28,182 | ) |
| Cash      flows from financing activities:                                                                                                                           |   |                                                 |     |   |   |   |   |   |
| Distributions      to stockholders                                                                                                                                   |   |                                                 | (40,173  | ) |   |   | (57,089 | ) |
| Proceeds      from equity offering, net                                                                                                                              |   |                                                 | 115,385  |   |   |   | - |   |
| Borrowings      under bank note payable                                                                                                                              |   |                                                 | 23,540   |   |   |   | 20,368 |   |
| Deferred      financing costs                                                                                                                                        |   |                                                 | -        |   |   |   | (30 | ) |
| Net      cash provided by (used in) financing activities                                                                                                             |   |                                                 | 98,752   |   |   |   | (36,751 | ) |
| Net      decrease in cash and cash equivalents                                                                                                                       |   |                                                 | (2,859   | ) |   |   | (12,461 | ) |
| Cash      and cash equivalents, beginning of period                                                                                                                  |   |                                                 | 29,244   |   |   |   | 46,988 |   |
| Cash      and cash equivalents, end of period                                                                                                                        |   | $                                                    | 26,385   |   |   | $ | 34,527 |   |
|                                                                                                                                                                 |   |                                                 |     |   |   |   |   |   |
| Non-cash      investing and financing activities:                                                                                                                    |   |                                                 |     |   |   |   |   |   |
| Accrued      costs for purchase of real estate assets                                                                                                                |   | $                                                    | -        |   |   | $ | 2,027 |   |
| Accrued      costs for equity offering                                                                                                                               |   | $                                                    | 674      |   |   | $ | - |   |
| Investment      in non-consolidated REITs converted to real estate assets                                                                                            |   |                                                 |     |   |   |   |   |   |
|   and      acquired real estate leases in conjunction with merger                                                                                          |   | $                                                    | -        |   |   | $ | 1,162 |   |
|                                                                                                                                                                 |   |                                                 |     |   |   |   |   |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements.                                                          |   |

----

|                                                                                                              |   | For      theThree      Months EndedSeptember      30, |   |   | For      theNine      Months EndedSeptember      30, |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
| (in      thousands)                                                                                               |   | 2009                                                  |   |   | 2008                                                 |   |   | 2009 |   |   | 2008 |   |
|                                                                                                              |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |
| Net      income                                                                                                   |   | $                                                     | 6,941  |   |                                                 | $      | 7,419 |   |   | $ | 19,614 |   |   | $ | 25,340 |   |
|                                                                                                              |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|    Other      comprehensive income:                                                                |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|       Unrealized      gain on derivative financial instruments                      |   |                                                  | 125    |   |                                                 |   | - |   |   |   | 830 |   |   |   | - |   |
|    Total      other comprehensive income                                                           |   |                                                  | 125    |   |                                                 |   | - |   |   |   | 830 |   |   |   | - |   |
|                                                                                                              |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income                                                                                         |   | $                                                     | 7,066  |   |                                                 | $      | 7,419 |   |   | $ | 20,444 |   |   | $ | 25,340 |   |
|                                                                                                              |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                              |   |
|  The      accompanying notes are an integral part of these condensed consolidated      financial statements. |   |

----

| 1. | Organization,      Properties, Basis of Presentation, Financial Instruments and Recent      Accounting Standards |
|----|------------------------------------------------------------------------------------------------------------------|

|                         | As      of September 30, |
|------------------------------|--------------------------|
|                         | 2009                     |   | 2008 |
| Commercial      real estate: |                     |   |   |
| Number      of properties    | 32                       |   | 27 |
| Rentable      square feet    | 5,934,624                |   | 5,066,813 |

----

| 1. | Organization,      Properties, Basis of Presentation, Financial Instruments and Recent      Accounting Standards (continued) |
|----|------------------------------------------------------------------------------------------------------------------------------|

----

| 2. | Investment      Banking/Investment ServicesActivity |
|----|-----------------------------------------------------|

| Sponsored      REIT                        | Property      Location    |   | Gross      Proceeds (1) |   |
|--------------------------------------------|---------------------------|--------|-------------------------|--------|
|                                       |                      |   | (in thousands)     |   |
| FSP      Grand Boulevard Corp.             | Kansas      City, MO      |   | $                       | 350    |   |
| FSP      385 Interlocken Development Corp. | Broomfield,      CO       |   |                    | 200    |   |
| FSP      Lakeside Crossing II Corp.        | Maryland      Heights, MO |   |                    | -      |   |
|                                       | Total                     |   | $                       | 550    |   |

| 3. | Related      Party Transactions and Investments in Non-Consolidated      Entities |
|----|-----------------------------------------------------------------------------------|

|                                            |   | Nine      Months Ended |   |
|-------------------------------------------------|--------|------------------------|--------|
|                                            |   | September      30,     |   |
| (in      thousands)                             |   | 2009                   |   |   | 2008 |   |
|                                            |   |                   |   |   |   |   |
| Equity      in earnings of Sponsored REITs      |   | $                      | 141    |   |   | $ | 133 |   |
| Equity      in earnings of Park Ten Development |   |                   | -      |   |   |   | 10 |   |
| Equity      in earnings of Phoenix Tower        |   |                   | 11     |   |   |   | 18 |   |
| Equity      in earnings of East Wacker          |   |                   | 1,441  |   |   |   | 2,006 |   |
| Equity      in earnings of Grand Boulevard      |   |                   | 117    |   |   |   | - |   |
|                                            |   | $                      | 1,710  |   |   | $ | 2,167 |   |

----

| 3. | Related      Party Transactions and Investments in Non-consolidated Entities      (continued) |
|----|-----------------------------------------------------------------------------------------------|

|                                 |   | September 30, |     |   | December 31, |   |
|--------------------------------------|--------|--------------------|----------|--------|-------------------|--------|
| (in      thousands)                  |   | 2009               |     |   | 2008              |   |
|                                 |   |               |     |   |              |   |
| Balance Sheet Data      (unaudited): |   |               |     |   |              |   |
| Real      estate, net                |   | $                  | 675,950  |   |              | $      | 683,218 |   |
| Other      assets                    |   |               | 103,825  |   |              |   | 114,015 |   |
| Total      liabilities               |   |               | (199,269 | )      |              |   | (189,435 | ) |
| Shareholders'      equity            |   | $                  | 580,506  |   |              | $      | 607,798 |   |

|                                               |   | For the Nine Months Ended |    |
|----------------------------------------------------|--------|-----------------------------------------------|---------|
|                                               |   | September      30,                            |    |
| (in      thousands)                                |   | 2009                                          |    |   | 2008 |   |
|                                               |   |                                          |    |   |   |   |
| Operating Data      (unaudited):                   |   |                                          |    |   |   |   |
| Rental      revenues                               |   | $                                             | 71,966  |   |   | $ | 76,023 |   |
| Other      revenues                                |   |                                          | 327     |   |   |   | 1,638 |   |
| Operating      and maintenance  expenses |   |                                          | (38,178 | ) |   |   | (40,303 | ) |
| Depreciation      and amortization                 |   |                                          | (18,330 | ) |   |   | (17,805 | ) |
| Interest      expense                              |   |                                          | (6,225  | ) |   |   | (7,970 | ) |
| Net      income                                    |   | $                                             | 9,560   |   |   | $ | 11,583 |   |

----

| 3. | Related      Party Transactions and Investments in Non-consolidated Entities      (continued) |
|----|-----------------------------------------------------------------------------------------------|

----

| 3. | Related      Party Transactions and Investments in Non-consolidated Entities      (continued) |
|----|-----------------------------------------------------------------------------------------------|

| (dollars      in 000's)                                                                                                                                                                                                                                                                                                                                                                                                                                        |      | Maximum                  | Amount                   |          |         | Rate      in   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------------------------|--------------------------|---------------|--------------|----------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Maturity  | Amount                   | Drawn      at            | Interest      | Draw         | Effect      at |
| Sponsored      REIT                                                                                                                                                                                                                                                                                                                                                                                                                                            | Date      | of      Loan             | 30-Sep-09                | Rate      (1) | Fee      (2) | 30-Sep-09      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
| Revolving      lines of credit                                                                                                                                                                                                                                                                                                                                                                                                                                 |      |                     |                     |          |         |           |
| FSP      Highland Place I Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                | 31-Dec-10 | $   5,500 | $   1,125 | L+2%          | n/a          | 2.26%          |
| FSP      Satellite Place Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                 | 31-Mar-12 | 5,500                    | 1,302                    | L+3%          | 0.5%         | 3.26%          |
| FSP      1441 Main Street Corp.(a)                                                                                                                                                                                                                                                                                                                                                                                                                             | 31-Mar-12 | 10,800                   | 1,250                    | L+3%          | 0.5%         | 3.26%          |
| FSP      505 Waterford Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                   | 30-Nov-11 | 7,000                    | -                        | L+3%          | 0.5%         |           |
| FSP      Phoenix Tower Corp.  (b)                                                                                                                                                                                                                                                                                                                                                                                                                    | 30-Nov-11 | 15,000                   | 3,600                    | L+3%          | 0.5%         | 3.26%          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
| Construction      loan                                                                                                                                                                                                                                                                                                                                                                                                                                         |      |                     |                     |          |         |           |
| FSP      385 Interlocken                                                                                                                                                                                                                                                                                                                                                                                                                                       |      |                     |                     |          |         |           |
|    Development      Corp. (c)                                                                                                                                                                                                                                                                                                                                                                                                                   | 30-Apr-12 | 42,000                   | 15,987                   | L+3%          | n/a          | 3.26%          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      | $  85,800      | $  23,264      |          |         |           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
| (1)      The interest rate is 30-Day LIBOR rate plus the additional rate      indicated(2)      The draw fee is a percentage of each new advance, and is paid at the time      of each new draw(a)      The Borrower is FSP 1441 Main Street LLC, a wholly-owned      subsidiary(b)      The Borrower is FSP Phoenix Tower Limited Partnership, a wholly-owned      subsidiary(c)      The Borrower is FSP 385 Interlocken LLC, a wholly-owned      subsidiary |

| 4. | Bank      note payable and term note payable |
|----|----------------------------------------------|

----

| 4. | Bank      note payable and term note payable(continued) |
|----|---------------------------------------------------------|

| 5. | Net      Income Per Share |
|----|---------------------------|

| 6. | Financial      Instruments: Derivatives andHedging |
|----|----------------------------------------------------|

|                    |   | NotionalValue                   |   | StrikeRate | EffectiveDate |   | ExpirationDate |   | FairValue                        |   |
|-------------------------|--------|---------------------------------|--------|------------|---------------|--------|----------------|--------|----------------------------------|--------|
| Interest      Rate Swap |   | $    75,000 |   | 5.840%     | 10/2008       |   | 10/2011        |   | $    (2,269) |   |

----

| 6. | Financial      Instruments: Derivatives and Hedging(continued) |
|----|----------------------------------------------------------------|

| 7. | Stockholders'      Equity |
|----|---------------------------|

| Quarter      Paid           |   | DividendsPer      Share                                                 |   | Total      Dividends |
|-----------------------------|--------|-------------------------------------------------------------------------|--------|----------------------|
|                        |   |                                                                    |   |                 |
| First      quarter of 2009  |   |  $          0.19 |   |  $13,391        |
| Second      quarter of 2009 |   |  $          0.19 |   |  $13,391        |
| Third      quarter of 2009  |   |  $          0.19 |   |  $13,391        |
|                        |   |                                                                    |   |                 |
| First      quarter of 2008  |   |  $          0.31 |   |  $21,849        |
| Second      quarter of 2008 |   |  $          0.31 |   |  $21,849        |
| Third      quarter of 2008  |   |  $          0.19 |   |  $13,391        |

----

| 8. | Business      Segments |
|----|------------------------|

----

| 8. | Business      Segments (continued) |
|----|------------------------------------|

| (in      thousands)                             |   | Real      EstateOperations |   |   | InvestmentBanking/InvestmentServices |   |   | Total  |   |
|-------------------------------------------------|--------|----------------------------|--------|--------|--------------------------------------|--------|--------|--------|--------|
| Three      Months Ended March 31, 2009          |   |                       |   |   |                                 |   |   |   |   |
| Net      Income (loss)                          |   | $                          | 8,586  |   |                                 | $      | (778   | )      |   | $ | 7,808 |   |
| Equity      in income of non-consolidated REITs |   |                       | (792   | )      |                                 |   | -      |   |   |   | (792 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 1,615  |   |                                 |   | -      |   |   |   | 1,615 |   |
| Depreciation      and amortization              |   |                       | 8,680  |   |                                 |   | 27     |   |   |   | 8,707 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 18,089 |   |                                 | $      | (751   | )      |   | $ | 17,338 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Three      Months Ended June 30, 2009           |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income (loss)                          |   | $                          | 5,212  |   |                                 | $      | (347   | )      |   | $ | 4,865 |   |
| Equity      in income of non-consolidated REITs |   |                       | (443   | )      |                                 |   | -      |   |   |   | (443 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 1,523  |   |                                 |   | -      |   |   |   | 1,523 |   |
| Acquisition      costs                          |   |                       | 248    |   |                                 |   | -      |   |   |   | 248 |   |
| Depreciation      and amortization              |   |                       | 11,191 |   |                                 |   | 25     |   |   |   | 11,216 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 17,731 |   |                                 | $      | (322   | )      |   | $ | 17,409 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Six      Months Ended June 30, 2009             |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income (loss)                          |   | $                          | 13,798 |   |                                 | $      | (1,125 | )      |   | $ | 12,673 |   |
| Equity      in income of non-consolidated REITs |   |                       | (1,235 | )      |                                 |   | -      |   |   |   | (1,235 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 3,138  |   |                                 |   | -      |   |   |   | 3,138 |   |
| Acquisition      costs                          |   |                       | 248    |   |                                 |   | -      |   |   |   | 248 |   |
| Depreciation      and amortization              |   |                       | 19,871 |   |                                 |   | 52     |   |   |   | 19,923 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 35,820 |   |                                 | $      | (1,073 | )      |   | $ | 34,747 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Three      Months Ended September 30, 2009      |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income (loss)                          |   | $                          | 7,566  |   |                                 | $      | (625   | )      |   | $ | 6,941 |   |
| Equity      in income of non-consolidated REITs |   |                       | (475   | )      |                                 |   | -      |   |   |   | (475 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 1,119  |   |                                 |   | -      |   |   |   | 1,119 |   |
| Acquisition      costs                          |   |                       | 391    |   |                                 |   | -      |   |   |   | 391 |   |
| Depreciation      and amortization              |   |                       | 9,528  |   |                                 |   | 33     |   |   |   | 9,561 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 18,129 |   |                                 | $      | (592   | )      |   | $ | 17,537 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009       |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income (loss)                          |   | $                          | 21,364 |   |                                 | $      | (1,750 | )      |   | $ | 19,614 |   |
| Equity      in income of non-consolidated REITs |   |                       | (1,710 | )      |                                 |   | -      |   |   |   | (1,710 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 4,257  |   |                                 |   | -      |   |   |   | 4,257 |   |
| Acquisition      costs                          |   |                       | 639    |   |                                 |   | -      |   |   |   | 639 |   |
| Depreciation      and amortization              |   |                       | 29,399 |   |                                 |   | 85     |   |   |   | 29,484 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 53,949 |   |                                 | $      | (1,665 | )      |   | $ | 52,284 |   |

----

| 8. | Business      Segments (continued) |
|----|------------------------------------|

| (in thousands)                                  |   | Real      EstateOperations |   |   | InvestmentBanking/InvestmentServices |   |   | Total  |   |
|-------------------------------------------------|--------|----------------------------|--------|--------|--------------------------------------|--------|--------|--------|--------|
| Three      Months Ended March 31, 2008          |   |                       |   |   |                                 |   |   |   |   |
| Net      Income (loss)                          |   | $                          | 7,874  |   |                                 | $      | (488   | )      |   | $ | 7,386 |   |
| Equity      in income of non-consolidated REITs |   |                       | (793   | )      |                                 |   | -      |   |   |   | (793 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 546    |   |                                 |   | -      |   |   |   | 546 |   |
| Depreciation      and amortization              |   |                       | 8,464  |   |                                 |   | 34     |   |   |   | 8,498 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 16,091 |   |                                 | $      | (454   | )      |   | $ | 15,637 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Three      Months Ended June 30, 2008           |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income                                 |   | $                          | 7,182  |   |                                 | $      | 3,352  |   |   | $ | 10,534 |   |
| Equity      in income of non-consolidated REITs |   |                       | (694   | )      |                                 |   | -      |   |   |   | (694 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 1,731  |   |                                 |   | -      |   |   |   | 1,731 |   |
| Depreciation      and amortization              |   |                       | 8,677  |   |                                 |   | 35     |   |   |   | 8,712 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 16,896 |   |                                 | $      | 3,387  |   |   | $ | 20,283 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Six      Months Ended June 30, 2008             |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income                                 |   | $                          | 15,056 |   |                                 | $      | 2,864  |   |   | $ | 17,920 |   |
| Equity      in income of non-consolidated REITs |   |                       | (1,487 | )      |                                 |   | -      |   |   |   | (1,487 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 2,277  |   |                                 |   | -      |   |   |   | 2,277 |   |
| Depreciation      and amortization              |   |                       | 17,141 |   |                                 |   | 69     |   |   |   | 17,210 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 32,987 |   |                                 | $      | 2,933  |   |   | $ | 35,920 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Three      Months Ended September 30, 2008      |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income (loss)                          |   | $                          | 7,672  |   |                                 | $      | (253   | )      |   | $ | 7,419 |   |
| Equity      in losses of non-consolidated REITs |   |                       | (679   | )      |                                 |   | -      |   |   |   | (679 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 1,561  |   |                                 |   | -      |   |   |   | 1,561 |   |
| Depreciation      and amortization              |   |                       | 8,747  |   |                                 |   | 37     |   |   |   | 8,784 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 17,301 |   |                                 | $      | (216   | )      |   | $ | 17,085 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2008       |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Net      Income                                 |   | $                          | 22,729 |   |                                 | $      | 2,611  |   |   | $ | 25,340 |   |
| Equity      in losses of non-consolidated REITs |   |                       | (2,167 | )      |                                 |   | -      |   |   |   | (2,167 | ) |
| Distributions      from non-consolidated REITs  |   |                       | 3,838  |   |                                 |   | -      |   |   |   | 3,838 |   |
| Depreciation      and amortization              |   |                       | 25,888 |   |                                 |   | 106    |   |   |   | 25,994 |   |
|                                            |   |                       |   |   |                                 |   |   |   |   |   |   |   |
| Funds      From Operations                      |   | $                          | 50,288 |   |                                 | $      | 2,717  |   |   | $ | 53,005 |   |

----

| 8. | Business      Segments (continued) |
|----|------------------------------------|

| (in thousands)                                    |   | Real      EstateOperations |      |   | InvestmentBanking/InvestmentServices |   |   | Total  |   |
|---------------------------------------------------|--------|----------------------------|-----------|--------|--------------------------------------|--------|--------|--------|--------|
| Three      Months Ended September 30, 2009        |   |                       |      |   |                                 |   |   |   |   |
| Revenue                                           |   | $                          | 32,091    |   |                                 | $      | 1      |   |   | $ | 32,092 |   |
| Interest      income                              |   |                       | 16        |   |                                 |   | -      |   |   |   | 16 |   |
| Interest      expense                             |   |                       | 1,744     |   |                                 |   | -      |   |   |   | 1,744 |   |
| Capital      expenditures                         |   |                       | 1,818     |   |                                 |   | 23     |   |   |   | 1,841 |   |
|                                              |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009         |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Revenue                                           |   | $                          | 92,061    |   |                                 | $      | 582    |   |   | $ | 92,643 |   |
| Interest      income                              |   |                       | 85        |   |                                 |   | 3      |   |   |   | 88 |   |
| Interest      expense                             |   |                       | 4,920     |   |                                 |   | -      |   |   |   | 4,920 |   |
| Investment      in non-consolidated REITs         |   |                       | 93,936    |   |                                 |   | -      |   |   |   | 93,936 |   |
| Capital      expenditures                         |   |                       | 6,053     |   |                                 |   | 212    |   |   |   | 6,265 |   |
|                                              |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Identifiable      assets as of September 30, 2009 |   | $                          | 1,142,459 |   |                                 | $      | 3,316  |   |   | $ | 1,145,775 |   |
|                                              |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Three      Months Ended September 30, 2008        |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Revenue                                           |   | $                          | 28,320    |   |                                 | $      | 604    |   |   | $ | 28,924 |   |
| Interest      income                              |   |                       | 167       |   |                                 |   | 10     |   |   |   | 177 |   |
| Interest      expense                             |   |                       | 1,108     |   |                                 |   | -      |   |   |   | 1,108 |   |
| Capital      expenditures                         |   |                       | 2,407     |   |                                 |   | -      |   |   |   | 2,407 |   |
|                                              |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2008         |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Revenue                                           |   | $                          | 83,699    |   |                                 | $      | 7,372  |   |   | $ | 91,071 |   |
| Interest      income                              |   |                       | 629       |   |                                 |   | 28     |   |   |   | 657 |   |
| Interest      expense                             |   |                       | 3,351     |   |                                 |   | -      |   |   |   | 3,351 |   |
| Investment      in non-consolidated REITs         |   |                       | 83,896    |   |                                 |   | -      |   |   |   | 83,896 |   |
| Capital      expenditures                         |   |                       | 5,874     |   |                                 |   | -      |   |   |   | 5,874 |   |
|                                              |   |                       |      |   |                                 |   |   |   |   |   |   |   |
| Identifiable      Assets as of September 30, 2008 |   | $                          | 991,487   |   |                                 | $      | 5,573  |   |   | $ | 997,060 |   |

----

| 9. | Income      Taxes |
|----|-------------------|

|                                                 |   | For      the           |   |
|------------------------------------------------------|--------|------------------------|--------|
|                                                 |   | Nine      Months Ended |   |
|                                                 |   | September      30,     |   |
| (in      thousands)                                  |   | 2009                   |   |   | 2008 |   |
|                                                 |   |                   |   |   |   |   |
| Federal      income tax benefit                      |   | $                      | (830   | ) |   | $ | (438 | ) |
| Increase      (decrease) in taxes resulting from:    |   |                   |   |   |   |   |   |   |
| State      income tax benefit, net of federal impact |   |                   | (158   | ) |   |   | (81 | ) |
| Valuation      allowance on state tax benefit        |   |                   | 158    |   |   |   |   |   |
| Revised      Texas franchise tax                     |   |                   | 186    |   |   |   | 182 |   |
| Income      tax benefit                              |   | $                      | (644   | ) |   | $ | (337 | ) |

----

| 9. | Income      Taxes (continued) |
|----|-------------------------------|

| 10. | Subsequent      Events |
|-----|------------------------|

----

| Item      2. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations |
|--------------|-------------------------------------------------------------------------------------------------------|

----

----

----

| (in      thousands)                                                                                                    |   |                                  |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                   |   | Three      months ended September 30, |   |
| Revenue:                                                                                                               |   | 2009                                  |   |   | 2008   |   |   | Change |   |
|    Rental                                                                                               |   | $                                     | 31,702 |   |   | $      | 27,927 |   |   | $ | 3,775 |   |
|    Related      party revenue:                                                                          |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Syndication      fees                                                                                                  |   |                                  | -      |   |   |   | 304    |   |   |   | (304 | ) |
| Transaction      fees                                                                                                  |   |                                  | 1      |   |   |   | 300    |   |   |   | (299 | ) |
| Management      fees and interest income from loans                                                                    |   |                                  | 370    |   |   |   | 380    |   |   |   | (10 | ) |
|    Other                                                                                                |   |                                  | 19     |   |   |   | 13     |   |   |   | 6 |   |
| Total      revenue                                                                                                     |   |                                  | 32,092 |   |   |   | 28,924 |   |   |   | 3,168 |   |
|                                                                                                                   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                                              |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Real      estate operating expenses                                                                                    |   |                                  | 7,752  |   |   |   | 7,159  |   |   |   | 593 |   |
| Real      estate taxes and insurance                                                                                   |   |                                  | 5,364  |   |   |   | 4,590  |   |   |   | 774 |   |
| Depreciation      and amortization                                                                                     |   |                                  | 8,801  |   |   |   | 7,666  |   |   |   | 1,135 |   |
| Selling,      general and administrative                                                                               |   |                                  | 2,243  |   |   |   | 1,927  |   |   |   | 316 |   |
| Commissions                                                                                                            |   |                                  | 8      |   |   |   | 208    |   |   |   | (200 | ) |
| Interest                                                                                                               |   |                                  | 1,744  |   |   |   | 1,108  |   |   |   | 636 |   |
| Total      expenses                                                                                                    |   |                                  | 25,912 |   |   |   | 22,658 |   |   |   | 3,254 |   |
|                                                                                                                   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Income      before interest income, equity in earnings in    non-consolidated      REITs and taxes |   |                                  | 6,180  |   |   |   | 6,266  |   |   |   | (86 | ) |
| Interest      income                                                                                                   |   |                                  | 16     |   |   |   | 177    |   |   |   | (161 | ) |
| Equity      in earnings of non-consolidated REITs                                                                      |   |                                  | 475    |   |   |   | 679    |   |   |   | (204 | ) |
|                                                                                                                   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Income      before taxes                                                                                               |   |                                  | 6,671  |   |   |   | 7,122  |   |   |   | (451 | ) |
| Income      tax expense (benefit)                                                                                      |   |                                  | (270   | )      |   |   | (297   | )      |   |   | 27 |   |
|                                                                                                                   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                        |   | $                                     | 6,941  |   |   | $      | 7,419  |   |   | $ | (478 | ) |

|   | o | An      increase in rental revenue of approximately $3.8 million arising primarily      from the acquisition of four properties, which were located in Virginia      and Missouri that were acquired in December 2008, and in Virginia and      Minnesota that were acquired in June 2009, and to a lesser extent, early      termination fees of $0.4 million received during the three months ended      September 30, 2009. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | A      $0.6 million decrease in syndication fees and transaction (loan      commitment) fees, which was principally a result of the decrease in gross      syndication proceeds for the quarter ended September 30, 2009 compared to      the same period in 2008. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | o | An      increase in real estate operating expenses and real estate taxes and      insurance of approximately $1.4 million, and depreciation of $1.1 million,      which were primarily from the acquisition of four properties, which were      located in Virginia and Missouri that were acquired in December 2008, and      in Virginia and Minnesota that were acquired in June  2009. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | An      increase in interest expense of approximately $0.6 million primarily as a      result of the addition of the Term Loan, which was borrowed in October      2008; and was partially offset by lower average interest rates during the      three months ended September 30, 2009 compared to the three months ended      September 30, 2008. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | An      increase in general and administrative expenses of $0.3 million, which was      primarily the result of acquisition costs of $0.4 million that were      recorded in the three months ended September 30, 2009 related to the      acquisition of a property in Virginia completed in September 2009. We had      41 and 40 employees as of September 30, 2009 and 2008, respectively, at      our headquarters in Wakefield. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | A      decrease in commission expense of $0.2 million, which was principally a      result of the decrease in gross syndication proceeds in the three months      ended September 30, 2009 as compared to the three months ended September      30, 2008. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in      thousands)                                                                                                             |   |                                 |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                            |   | Nine      months ended September 30, |   |
| Revenue:                                                                                                                        |   | 2009                                 |   |   | 2008   |   |   | Change |   |
|    Rental                                                                                                        |   | $                                    | 90,774 |   |   | $      | 82,283 |   |   | $ | 8,491 |   |
|    Related      party revenue:                                                                                   |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Syndication      fees                                                                                                           |   |                                 | 39     |   |   |   | 3,766  |   |   |   | (3,727 | ) |
| Transaction      fees                                                                                                           |   |                                 | 543    |   |   |   | 3,606  |   |   |   | (3,063 | ) |
| Management      fees and interest income from loans                                                                             |   |                                 | 1,232  |   |   |   | 1,364  |   |   |   | (132 | ) |
|    Other                                                                                                         |   |                                 | 55     |   |   |   | 52     |   |   |   | 3 |   |
| Total      revenue                                                                                                              |   |                                 | 92,643 |   |   |   | 91,071 |   |   |   | 1,572 |   |
|                                                                                                                            |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                                                       |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Real      estate operating expenses                                                                                             |   |                                 | 22,176 |   |   |   | 20,973 |   |   |   | 1,203 |   |
| Real      estate taxes and insurance                                                                                            |   |                                 | 14,879 |   |   |   | 13,375 |   |   |   | 1,504 |   |
| Depreciation      and amortization                                                                                              |   |                                 | 26,940 |   |   |   | 22,616 |   |   |   | 4,324 |   |
| Selling,      general and administrative                                                                                        |   |                                 | 6,378  |   |   |   | 6,557  |   |   |   | (179 | ) |
| Commissions                                                                                                                     |   |                                 | 178    |   |   |   | 2,020  |   |   |   | (1,842 | ) |
| Interest                                                                                                                        |   |                                 | 4,920  |   |   |   | 3,351  |   |   |   | 1,569 |   |
| Total      expenses                                                                                                             |   |                                 | 75,471 |   |   |   | 68,892 |   |   |   | 6,579 |   |
|                                                                                                                            |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Income      before interest income, equity in earnings (losses) in    non-consolidated      REITs and taxes |   |                                 | 17,172 |   |   |   | 22,179 |   |   |   | (5,007 | ) |
| Interest      income                                                                                                            |   |                                 | 88     |   |   |   | 657    |   |   |   | (569 | ) |
| Equity      in earnings in non-consolidated REITs                                                                               |   |                                 | 1,710  |   |   |   | 2,167  |   |   |   | (457 | ) |
|                                                                                                                            |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Income      before taxes                                                                                                        |   |                                 | 18,970 |   |   |   | 25,003 |   |   |   | (6,033 | ) |
| Income      tax benefit                                                                                                         |   |                                 | (644   | )      |   |   | (337   | )      |   |   | (307 | ) |
|                                                                                                                            |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                                 |   | $                                    | 19,614 |   |   | $      | 25,340 |   |   | $ | (5,726 | ) |

|   | o | An      increase to rental revenue of approximately $8.5 million arising primarily      from the acquisition of a property in Texas in May 2008, the acquisition      of two properties located in Virginia and Missouri in December 2008, and      the acquisition of two properties located in Virginia and Minnesota that      were acquired in June 2009, and early termination fees of $0.8 million      received during the nine months ended September 30,  2009. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | A      $6.8 million decrease in syndication fees and transaction (loan      commitment) fees, which was principally a result of the decrease in gross      syndication proceeds for the nine months ended September 30, 2009 compared      to the same period in 2008. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | A      decrease in loan interest income of approximately $0.1 million, which was      principally a result of lower interest rates charged during the nine      months ended September 30, 2009 as compared the nine months ended      September 30, 2008, from which interest income is derived. Interest rates      charged are primarily based on our borrowing costs, which are at floating      rates and were also lower during the periods in 2009 than      2008. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | o | An      increase in real estate operating expenses and real estate taxes and      insurance of approximately $2.7 million, and depreciation and amortization      of $4.3 million, which were primarily from the acquisition of a property      in Texas in May 2008, the acquisition of two properties located in      Virginia and Missouri in December 2008, and the acquisition of two      properties located in Virginia and Minnesota that were acquired in June      2009. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | An      increase in interest expense of approximately $1.6 million primarily as a      result of the addition of the Term Loan, which was borrowed in October      2008; and was partially offset by lower average interest rates during the      nine months ended September 30, 2009 compared to the nine months ended      September 30, 2008. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | A      decrease in general and administrative expenses of $0.2 million, which was      primarily the result of a net decrease in discretionary and other      compensation costs of $0.7 million, which was partially offset by an      increase from acquisition costs of $0.6 million that were recorded in the      nine months ended September 30, 2009 related to the acquisition of two      properties in June 2009 and the acquisition of a property in September      2009. We had 41 and 40 employees as of September 30, 2009 and 2008,      respectively, at our headquarters inWakefield. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | A      decrease in commission expense of $1.8 million, which was principally a      result of the decrease in gross syndication proceeds in the nine months      ended September 30, 2009 compared to the same period in    2008. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| (dollars      in 000's)                                                                                                                                                                                                                                                                                                                                                                                                                                        |      | Maximum                  | Amount                   |          |         | Rate      in   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------------------------|--------------------------|---------------|--------------|----------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Maturity  | Amount                   | Drawn      at            | Interest      | Draw         | Effect      at |
| Sponsored      REIT                                                                                                                                                                                                                                                                                                                                                                                                                                            | Date      | of      Loan             | 30-Sep-09                | Rate      (1) | Fee      (2) | 30-Sep-09      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
| Revolving      lines of credit                                                                                                                                                                                                                                                                                                                                                                                                                                 |      |                     |                     |          |         |           |
| FSP      Highland Place I Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                | 31-Dec-10 | $   5,500 | $   1,125 | L+2%          | n/a          | 2.26%          |
| FSP      Satellite Place Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                 | 31-Mar-12 | 5,500                    | 1,302                    | L+3%          | 0.5%         | 3.26%          |
| FSP      1441 Main Street Corp.(a)                                                                                                                                                                                                                                                                                                                                                                                                                             | 31-Mar-12 | 10,800                   | 1,250                    | L+3%          | 0.5%         | 3.26%          |
| FSP      505 Waterford Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                   | 30-Nov-11 | 7,000                    | -                        | L+3%          | 0.5%         |           |
| FSP      Phoenix Tower Corp.  (b)                                                                                                                                                                                                                                                                                                                                                                                                                    | 30-Nov-11 | 15,000                   | 3,600                    | L+3%          | 0.5%         | 3.26%          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
| Construction      loan                                                                                                                                                                                                                                                                                                                                                                                                                                         |      |                     |                     |          |         |           |
| FSP      385 Interlocken                                                                                                                                                                                                                                                                                                                                                                                                                                       |      |                     |                     |          |         |           |
|    Development      Corp. (c)                                                                                                                                                                                                                                                                                                                                                                                                                   | 30-Apr-12 | 42,000                   | 15,987                   | L+3%          | n/a          | 3.26%          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      | $  85,800      | $  23,264      |          |         |           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |      |                     |                     |          |         |           |
| (1)      The interest rate is 30-Day LIBOR rate plus the additional rate      indicated(2)      The draw fee is a percentage of each new advance, and is paid at the time      of each new draw(a)      The Borrower is FSP 1441 Main Street LLC, a wholly-owned      subsidiary(b)      The Borrower is FSP Phoenix Tower Limited Partnership, a wholly-owned      subsidiary(c)      The Borrower is FSP 385 Interlocken LLC, a wholly-owned      subsidiary |

----

| Item      3. | Quantitative      and Qualitative Disclosures About MarketRisk |
|--------------|----------------------------------------------------------------|

Market Rate Risk

|                    |   | NotionalValue |   | StrikeRate | EffectiveDate |   | ExpirationDate |   | FairValue      |   |
|-------------------------|--------|---------------|--------|------------|---------------|--------|----------------|--------|----------------|--------|
| Interest      Rate Swap |   | $      75,000 |   | 5.840%     | 10/2008       |   | 10/2011        |   | $      (2,269) |   |

----

|                                                                                                                                                                             | Payment      due by period                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|
|                                                                                                                                                                             | (in      thousands)                              |
|                                                                                                                                                                             | Total                                            | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| Revolver      (1)                                                                                                                                                                | $     91,008            | $             - | $                 - | $    91,008 | $           - | $           - | $           - |
| Term      Loan                                                                                                                                                                   |        75,000 |               - |          150 |       74,850 |              - |              - |              - |
| Total                                                                                                                                                                            | $   166,008                       | $             - | $       150 | $  165,858 | $           - | $           - | $           - |
|                                                                                                                                                                             |                                             |   |   |   |   |   |   |
| (1)        The Revolver maturity is in 2011, however borrowings made thereunder are      with 30-Day LIBOR advances, which are due or can be renewed at      maturity. |

| Item      4. | Controls      and Procedures |
|--------------|------------------------------|

----

| Item      1. | Legal      Proceedings |
|--------------|------------------------|

| Item      1A. | Risk      Factors |
|---------------|-------------------|

| Item      2. | Unregistered      Sales of Equity Securities and Use ofProceeds |
|--------------|-----------------------------------------------------------------|

----

|         Period  | (a)     Total      Number ofShares      (or Units)Purchased      (1) (2) | (b)     Average      PricePaid      per Share(or      Unit) | (c) Total      Number ofShares      (or Units)Purchased      as Partof      PubliclyAnnounced      Plansor      Programs(1)      (2)  | (d) Maximum      Number (orApproximate      DollarValue)      of Shares (orUnits)      that May Yet BePurchased      Under thePlans      or Programs(1)      (2) |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 07/01/09-07/31/09                                       | 0                                                                                                 | N/A                                                                                  | 0                                                                                                                                               | $31,240,465                                                                                                                                                           |
| 08/01/09-08/31/09                                       | 0                                                                                                 | N/A                                                                                  | 0                                                                                                                                               | $31,240,465                                                                                                                                                           |
| 09/01/09-09/30/09                                       | 0                                                                                                 | N/A                                                                                  | 0                                                                                                                                               | $31,240,465                                                                                                                                                           |
| Total:                                                  | 0                                                                                                 | N/A                                                                                  | 0                                                                                                                                               | $31,240,465                                                                                                                                                           |

| Item      3. | Defaults      Upon Senior Securities |
|--------------|--------------------------------------|

| Item      4. | Submission      of Matters to a Vote of SecurityHolders |
|--------------|---------------------------------------------------------|

| Item      5. | Other      Information |
|--------------|------------------------|

| Item      6. | Exhibits |
|--------------|----------|

----

| Date                                         | Signature                                                              | Title                                                                        |
|----------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------------|
|                                         |                                                                   |                                                                         |
| Date:  November      3, 2009  | /s/ George J.      Carter   George      J. Carter  | Chief      Executive Officer and Director (Principal Executive      Officer) |
|                                         |                                                                   |                                                                         |
| Date:  November      3, 2009  | /s/ John G.      Demeritt   John      G. Demeritt  | Chief      Financial Officer(Principal      Financial Officer)               |

----

| Exhibit No. | Description                                                                                                                                                                                       |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                              |
| 3.1      (1)     | Articles      of Incorporation.                                                                                                                                                                   |
|             |                                                                                                                                                                                              |
| 3.2      (2)     | Amended      and Restated By-laws.                                                                                                                                                                |
|             |                                                                                                                                                                                              |
| 10.1      (3)    | Underwriting      Agreement dated September 17, 2009 by and between FSP Corp. and Robert W.      Baird & Co. Incorporated.                                                                    |
|             |                                                                                                                                                                                              |
| 31.1*            | Certification      of FSP Corp.’s President and Chief Executive Officer pursuant to Section      302 of the Sarbanes-Oxley Act of 2002.                                                     |
|             |                                                                                                                                                                                              |
| 31.2*            | Certification      of FSP Corp.’s Chief Financial Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002.                                                                   |
|             |                                                                                                                                                                                              |
| 32.1*            | Certification      of FSP Corp.’s President and Chief Executive Officer pursuant to 18 U.S.C.      Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act      of 2002. |
|             |                                                                                                                                                                                              |
| 32.2*            | Certification      of FSP Corp.’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350,      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.               |

|   |                                                                                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | Incorporated      by reference to FSP Corp.’s Form 8-A, filed on April 5, 2005 (File No.      001-32470).                        |
|   |                                                                                                                                   |
| (2)    | Incorporated      by reference to FSP Corp.’s Current Report on Form 8-K, filed on May 15,      2006 (File No. 001-32470).       |
|   |                                                                                                                                   |
| (3)    | Incorporated      by reference to FSP Corp.’s Current Report on Form 8-K, filed on September      23, 2009 (File No. 001-32470). |
|   |                                                                                                                                   |
| *      | Filed      herewith.                                                                                                                   |
|   |                                                                                                                                   |

----