##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



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



For the quarterly period ended March 31, 2005.



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



For the Transition Period From
                     to                     .



Commission file number 0-50854



THOMAS PROPERTIES GROUP, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-0852352                          
|(State or other jurisdiction of Incorporation or organization) |  | (IRS employer identification number)
|                                                               | 
|515 South Flower Street, Sixth Floor Los Angeles, CA           |  | 90071                               
|(Address of principal executive offices)                       |  | Zip Code                            



Registrants
telephone number, including area code (213) 613-1900



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



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



Indicate the number of shares outstanding of
each of the issuers classes of common stock, as of the latest practicable date.



|                                       |  |                            
|-------------------------------------- |  | ---------------------------
|Class                                  |  | Outstanding at May 12, 2005
|Common Stock, $.01 par value per share |  | 14,342,841                 



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##### Table of Contents

THOMAS PROPERTIES GROUP, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2005



TABLE OF CONTENTS



|                              |  |                                                                                                                           |  |         
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                                                           |  | PAGE NO.
|PART I. FINANCIAL INFORMATION |  |                                                                                                                          
|                              |  |                                                                                                                          
|ITEM 1.                       |  | Consolidated/Combined Financial Statements of Thomas Properties Group, Inc. and Thomas Properties Group, Inc. Predecessor |  |         
|                              |  |                                                                                                                          
|                              |  | Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004                                        |  | 1       
|                              |  |                                                                                                                          
|                              |  | Consolidated/Combined Statements of Operations for the three months ended March 31, 2005 and 2004 (unaudited)             |  | 2       
|                              |  |                                                                                                                          
|                              |  | Consolidated/Combined Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited)             |  | 3       
|                              |  |                                                                                                                          
|                              |  | Notes to Consolidated/Combined Financial Statements (unaudited)                                                           |  | 4       
|                              |  |                                                                                                                          
|ITEM 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                     |  | 16      
|                              |  |                                                                                                                          
|ITEM 3.                       |  | Quantitative and Qualitative Disclosure about Market Risk                                                                 |  | 23      
|                              |  |                                                                                                                          
|ITEM 4.                       |  | Controls and Procedures                                                                                                   |  | 24      
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                          
|                              |  |                                                                                                                          
|ITEM 1.                       |  | Legal Proceedings                                                                                                         |  | 25      
|                              |  |                                                                                                                          
|ITEM 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                               |  | 25      
|                              |  |                                                                                                                          
|ITEM 3.                       |  | Defaults Upon Senior Securities                                                                                           |  | 25      
|                              |  |                                                                                                                          
|ITEM 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                       |  | 25      
|                              |  |                                                                                                                          
|ITEM 5.                       |  | Other Information                                                                                                         |  | 25      
|                              |  |                                                                                                                          
|ITEM 6.                       |  | Exhibits                                                                                                                  |  | 26      
|                              | 
|Signatures                    |  | 27                                                                                                                       



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | CONSOLIDATED/COMBINED FINANCIAL STATEMENTS
|------- | ------------------------------------------



THOMAS PROPERTIES GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                        |  | March 31,2005 |         |   | December 31,2004 |  
|                                                                                                                                                        |  | (Unaudited)   |         |   |                  |  
|ASSETS                                                                                                                                                  |  |               |         |   |                  |   |         |  
|Investments in real estate:                                                                                                                             |  |               |         |   |                  |   |         |  
|Land and improvements                                                                                                                                   |  | $             | 61,029  |   |                  | $ | 60,882  |  
|Buildings and improvements                                                                                                                              |  |               | 252,688 |   |                  |   | 252,009 |  
|Tenant improvements                                                                                                                                     |  |               | 65,281  |   |                  |   | 64,638  |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|                                                                                                                                                        |  |               | 378,998 |   |                  |   | 377,529 |  
|Less accumulated depreciation                                                                                                                           |  |               | (97,338 | ) |                  |   | (95,044 | )
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|                                                                                                                                                        |  |               | 281,660 |   |                  |   | 282,485 |  
|Investments in unconsolidated real estate entities                                                                                                      |  |               | 43,247  |   |                  |   | 31,624  |  
|Cash and cash equivalents                                                                                                                               |  |               | 54,547  |   |                  |   | 56,506  |  
|Restricted cash                                                                                                                                         |  |               | 9,442   |   |                  |   | 12,949  |  
|Short-term investments                                                                                                                                  |  |               |        |   |                  |   | 14,000  |  
|Rents and other receivables, net                                                                                                                        |  |               | 2,749   |   |                  |   | 2,731   |  
|Receivablesunconsolidated real estate entities                                                                                                         |  |               | 2,388   |   |                  |   | 381     |  
|Deferred rents                                                                                                                                          |  |               | 27,277  |   |                  |   | 28,453  |  
|Deferred leasing and loan costs, net                                                                                                                    |  |               | 16,286  |   |                  |   | 16,871  |  
|Deferred tax asset                                                                                                                                      |  |               | 40,663  |   |                  |   | 40,138  |  
|Other assets, net                                                                                                                                       |  |               | 9,779   |   |                  |   | 5,464   |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Total assets                                                                                                                                            |  | $             | 488,038 |   |                  | $ | 491,602 |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                    |  |               |         |   |                  |   |         |  
|Liabilities:                                                                                                                                            |  |               |         |   |                  |   |         |  
|Mortgage loans                                                                                                                                          |  | $             | 204,718 |   |                  | $ | 206,373 |  
|Other secured loans                                                                                                                                     |  |               | 89,560  |   |                  |   | 89,517  |  
|Accounts payable and other liabilities, net                                                                                                             |  |               | 8,960   |   |                  |   | 9,177   |  
|Dividends and distributions payable                                                                                                                     |  |               | 1,904   |   |                  |   |        |  
|Due to affiliate                                                                                                                                        |  |               | 343     |   |                  |   | 1,852   |  
|Prepaid rent                                                                                                                                            |  |               | 2,773   |   |                  |   | 841     |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                                                                       |  |               | 308,258 |   |                  |   | 307,760 |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Minority interests:                                                                                                                                     |  |               |         |   |                  |   |         |  
|Unitholders in the Operating Partnership                                                                                                                |  |               | 73,972  |   |                  |   | 76,458  |  
|Minority interests in consolidated real estate entities                                                                                                 |  |               | 1,451   |   |                  |   | 1,451   |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Total minority interests                                                                                                                                |  |               | 75,423  |   |                  |   | 77,909  |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Commitments and contingencies                                                                                                                           |  |               |         |   |                  |   |         |  
|                                                                                                                                                        |  |              
|Stockholders equity:                                                                                                                                   |  |               |         |   |                  |   |         |  
|Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued or outstanding as of March 31, 2005 and December 31,
2004                    |  |               |        |   |                  |   |        |  
|Common stock, $.01 par value, 75,000,000 shares authorized, 14,342,481 shares issued and outstanding as of March 31, 2005 and December 31,
2004         |  |               | 143     |   |                  |   | 143     |  
|Limited voting stock, $.01 par value, 20,000,000 shares authorized, 16,666,666 shares issued and outstanding as of March 31, 2005 and December
31, 2004 |  |               | 167     |   |                  |   | 167     |  
|Additional paid-in capital                                                                                                                              |  |               | 106,673 |   |                  |   | 106,673 |  
|Deficit and dividends                                                                                                                                   |  |               | (2,217  | ) |                  |   | (581    | )
|Unearned compensation, net                                                                                                                              |  |               | (409    | ) |                  |   | (469    | )
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Total stockholders equity                                                                                                                              |  |               | 104,357 |   |                  |   | 105,933 |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Total liabilities and stockholders equity                                                                                                              |  | $             | 488,038 |   |                  | $ | 491,602 |  
|                                                                                                                                                        |  |               |         |   |                  |   |         |  



See accompanying notes
to consolidated and combined financial statements.



1



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##### Table of Contents

THOMAS PROPERTIES GROUP, INC. AND THOMAS PROPERTIES GROUP, INC.

PREDECESSOR

CONSOLIDATED/COMBINED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)



|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | ---------- | - | --------------- | - | ------ | -
|                                                                                                                                                       |  | The Company                  |            |   | TPGIPredecessor |  
|                                                                                                                                                       |  | Three Months Ended March 31, |           
|                                                                                                                                                       |  | 2005                         |            |   | 2004            |  
|Revenues:                                                                                                                                              |  |                              |            |   |                 |   |        |  
|Rental                                                                                                                                                 |  | $                            | 8,280      |   |                 | $ | 5,051  |  
|Tenant reimbursements                                                                                                                                  |  |                              | 4,914      |   |                 |   | 2,591  |  
|Parking and other                                                                                                                                      |  |                              | 1,443      |   |                 |   | 496    |  
|Investment advisory, management, leasing, and development services                                                                                     |  |                              | 1,369      |   |                 |   | 1,465  |  
|Investment advisory, management, leasing and development servicesunconsolidated/uncombined real estate entities                                       |  |                              | 1,627      |   |                 |   | 989    |  
|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|Total revenues                                                                                                                                         |  |                              | 17,633     |   |                 |   | 10,592 |  
|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|Expenses:                                                                                                                                              |  |                              |            |   |                 |   |        |  
|Rental property operating and maintenance                                                                                                              |  |                              | 3,953      |   |                 |   | 1,879  |  
|Real estate taxes                                                                                                                                      |  |                              | 1,581      |   |                 |   | 816    |  
|Investment advisory, management, leasing, and development services                                                                                     |  |                              | 2,104      |   |                 |   | 2,535  |  
|Rentunconsolidated/uncombined real estate entities                                                                                                    |  |                              | 58         |   |                 |   | 71     |  
|Interest                                                                                                                                               |  |                              | 6,312      |   |                 |   | 5,288  |  
|Depreciation and amortization                                                                                                                          |  |                              | 3,317      |   |                 |   | 1,401  |  
|General and administrative                                                                                                                             |  |                              | 2,209      |   |                 |   |       |  
|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|Total expenses                                                                                                                                         |  |                              | 19,534     |   |                 |   | 11,990 |  
|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|Loss before gain on sale of real estate, interest income, equity in net loss of unconsolidated/uncombined real estate entities, and minority
interests |  |                              | (1,901     | ) |                 |   | (1,398 | )
|Gain on sale of real estate                                                                                                                            |  |                              |           |   |                 |   | 975    |  
|Interest income                                                                                                                                        |  |                              | 417        |   |                 |   |       |  
|Equity in net loss of unconsolidated/uncombined real estate entities                                                                                   |  |                              | (1,328     | ) |                 |   | (232   | )
|Minority interestsunitholders in the Operating Partnership                                                                                            |  |                              | 1,511      |   |                 |   |       |  
|Minority interests in consolidated real estate entities                                                                                                |  |                              |           |   |                 |   |       |  
|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|Loss before benefit for income taxes                                                                                                                   |  |                              | (1,301     | ) |                 |   | (655   | )
|Benefit for income taxes                                                                                                                               |  |                              | 525        |   |                 |   |       |  
|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|Net loss                                                                                                                                               |  | $                            | (776       | ) |                 | $ | (655   | )
|                                                                                                                                                       |  |                              |            |   |                 |   |        |  
|Loss per sharebasic and diluted                                                                                                                       |  | $                            | (0.05      | ) |                 |   |        |  
|Weighted average common shares outstandingbasic and diluted                                                                                           |  |                              | 14,295,236 |   |                 |   |        |  



See accompanying notes
to consolidated and combined financial statements.



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THOMAS PROPERTIES GROUP, INC. AND THOMAS PROPERTIES GROUP, INC.

PREDECESSOR

CONSOLIDATED/COMBINED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | ------ | - | --------------- | - | ------ | -
|                                                                                                                                     |  | The Company                  |        |   | TPGIPredecessor |  
|                                                                                                                                     |  | Three Months Ended March 31, |       
|                                                                                                                                     |  | 2005                         |        |   | 2004            |  
|Cash flows from operating activities:                                                                                                |  |                              |        |   |                 |   |        |  
|Net loss                                                                                                                             |  | $                            | (776   | ) |                 | $ | (655   | )
|Adjustments to reconcile net loss to net cash used in operating activities:                                                          |  |                              |        |   |                 |   |        |  
|Gain on sale of real estate                                                                                                          |  |                              |       |   |                 |   | (975   | )
|Equity in net loss of unconsolidated/uncombined real estate entities                                                                 |  |                              | 1,328  |   |                 |   | 232    |  
|Deferred rents                                                                                                                       |  |                              | 1,176  |   |                 |   | 1,444  |  
|Depreciation and amortization expense                                                                                                |  |                              | 3,317  |   |                 |   | 1,401  |  
|Bad debt expense                                                                                                                     |  |                              |       |   |                 |   | 10     |  
|Amortization of loan costs                                                                                                           |  |                              | 175    |   |                 |   | 59     |  
|Amortization of loan premium                                                                                                         |  |                              | (111   | ) |                 |   |       |  
|Amortization of above and below market leases, net                                                                                   |  |                              | (109   | ) |                 |   |       |  
|Vesting of stock options and restricted stock                                                                                        |  |                              | 132    |   |                 |   |       |  
|Minority interests                                                                                                                   |  |                              | (1,511 | ) |                 |   |       |  
|Changes in assets and liabilities:                                                                                                   |  |                              |        |   |                 |   |        |  
|Rents and other receivables                                                                                                          |  |                              | (18    | ) |                 |   | (814   | )
|Receivablesunconsolidated/uncombined real estate entities                                                                           |  |                              | (2,007 | ) |                 |   | (537   | )
|Deferred leasing and loan costs                                                                                                      |  |                              | (94    | ) |                 |   | (332   | )
|Deferred tax asset                                                                                                                   |  |                              | (525   | ) |                 |   |       |  
|Other assets                                                                                                                         |  |                              | (4,315 | ) |                 |   | (7,534 | )
|Deferred interest payable                                                                                                            |  |                              | 652    |   |                 |   | 847    |  
|Accounts payable and other liabilities                                                                                               |  |                              | (111   | ) |                 |   | 2,273  |  
|Due to affiliate                                                                                                                     |  |                              | (1,509 | ) |                 |   |       |  
|Prepaid rent                                                                                                                         |  |                              | 1,932  |   |                 |   | (257   | )
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Net cash used in operating activities                                                                                                |  |                              | (2,374 | ) |                 |   | (4,838 | )
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Cash flows from investing activities:                                                                                                |  |                              |        |   |                 |   |        |  
|Expenditures for improvements to real estate                                                                                         |  |                              | (1,988 | ) |                 |   | (428   | )
|Proceeds from sale of real estate                                                                                                    |  |                              |       |   |                 |   | 3,321  |  
|Purchases of real estate and additional interests in unconsolidated/uncombined real estate entities                                  |  |                              | (8,800 | ) |                 |   |       |  
|Distributions received from unconsolidated/uncombined real estate entities                                                           |  |                              | 179    |   |                 |   | 140    |  
|Contributions to unconsolidated/uncombined real estate entities                                                                      |  |                              | (4,330 | ) |                 |   | (27    | )
|Change in short-term investments                                                                                                     |  |                              | 14,000 |   |                 |   |       |  
|Change in restricted cash                                                                                                            |  |                              | 3,507  |   |                 |   | 1,945  |  
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Net cash provided by investing activities                                                                                            |  |                              | 2,568  |   |                 |   | 4,951  |  
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Cash flows from financing activities:                                                                                                |  |                              |        |   |                 |   |        |  
|Distributions to owners of TPGI Predecessor                                                                                          |  |                              |       |   |                 |   | (192   | )
|Principal payments on notes payable                                                                                                  |  |                              | (2,153 | ) |                 |   | (3,073 | )
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Net cash used in financing activities                                                                                                |  |                              | (2,153 | ) |                 |   | (3,265 | )
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Net decrease in cash and cash equivalents                                                                                            |  |                              | (1,959 | ) |                 |   | (3,152 | )
|Cash and cash equivalents at beginning of period                                                                                     |  |                              | 56,506 |   |                 |   | 3,590  |  
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Cash and cash equivalents at end of period                                                                                           |  | $                            | 54,547 |   |                 | $ | 438    |  
|                                                                                                                                     |  |                              |        |   |                 |   |        |  
|Supplemental disclosure of cash flow information:                                                                                    |  |                              |        |   |                 |   |        |  
|Cash paid for interest, net of capitalized interest of $293 and $60 for the three months ended March 31, 2005 and 2004,
respectively |  | $                            | 5,842  |   |                 | $ | 4,398  |  
|Supplemental disclosure of non cash investing and financing activities:                                                              |  |                              |        |   |                 |   |        |  
|Accrual for dividends and distributions declared                                                                                     |  | $                            | 1,904  |   |                 | $ |       |  



See accompanying notes
to consolidated and combined financial statements.



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



1. Organization and Description of Business



The terms Thomas Properties, us, we and our as used in this report refer to Thomas Properties Group, Inc. Through our general partnership interest in Thomas Properties
Group, L.P., or the Operating Partnership, and our other subsidiaries, we own, acquire, develop and manage office, retail and multi-family properties on a nationwide basis.



We were formed to succeed to certain businesses of the Thomas Properties predecessor, Thomas Properties Group, Inc.
Predecessor, also referred to herein as TPGI Predecessor, which was not a legal entity but rather a combination of real estate entities and operations, and was engaged in the business of owning, managing, leasing, acquiring and
developing real estate, consisting primarily of office properties and related parking garages, located in Southern California, Sacramento, California, Philadelphia, Pennsylvania, Northern Virginia and Austin, Texas. The ultimate owners of TPGI
Predecessor were Mr. James A. Thomas, our chairman, Chief Executive Officer, and President and certain others who had minor ownership interests.



We were incorporated in the State of Delaware on March 9, 2004. On October 13, 2004, we completed our initial public offering (the Offering),
which consisted of the sale of 14,285,714 shares of common stock at $12.00 per share, resulting in net proceeds of $151.9 million, after underwriting discounts and expenses of the Offering. Concurrent with the consummation of the Offering, Thomas
Properties and the Operating Partnership, together with the partners and members of the affiliated partnerships and limited liability companies of TPGI Predecessor and other parties which held direct or indirect ownership interests in the properties
engaged in certain formation transactions (the Formation Transactions). The Formation Transactions were designed to (i) continue the operations of TPGI Predecessor, (ii) enable us to raise the necessary capital to acquire increased
interests in certain of the properties and repay certain property level indebtedness, (iii) fund joint venture capital commitments, (iv) provide capital for future acquisitions, and (v) fund future development costs at our development properties.



Our operations are carried on through the Operating
Partnership. We are the sole general partner in the Operating Partnership. Pursuant to contribution agreements among the owners of TPGI Predecessor and the Operating Partnership, the Operating Partnership received a contribution of interests in the
real estate properties, as well as the investment advisory, property management, leasing and real estate development operations of TPGI Predecessor in exchange for limited partnership units (Units) in the Operating Partnership issued to
the contributors and the assumption of debt and other specified liabilities. As of March 31, 2005, we held a 46.3% interest in the Operating Partnership which we consolidated, as we have control over the major decisions of the Operating Partnership.



4



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##### Table of Contents

THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



As of March 31, 2005, we were invested in the following real estate entities:



|                                                  |  |                                                                                    |  |                                                              
|------------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | -------------------------------------------------------------
|Entity                                            |  | Type; Planned Development                                                          |  | Location                                                     
|Consolidated entities:                            |  |                                                                                    |  |                                                              
|                                                  |  |                                                                                   
|One Commerce Square                               |  | High-rise office                                                                   |  | Philadelphia Central Business District, Pennsylvania (PCBD)
|                                                  |  |                                                                                   
|Two Commerce Square                               |  | High-rise office                                                                   |  | PCBD                                                         
|                                                  |  |                                                                                   
|2101 Market Street                                |  | Undeveloped land;Residential/Office/Retail                                         |  | PCBD                                                         
|                                                  |  |                                                                                   
|Four Points Centre                                |  | Undeveloped land;Office/Retail/Research and Development/Hotel                      |  | Austin, Texas                                                
|                                                  |  |                                                                                   
|Campus El Segundo                                 |  | Contract to purchase undeveloped land;Office/Retail/Research and Development/Hotel |  | El Segundo, California                                       
|                                                  |  |                                                                                   
|Unconsolidated entities:                          |  |                                                                                    |  |                                                              
|                                                  |  |                                                                                   
|2121 Market Street and Harris Building Associates |  | Residential and Retail                                                             |  | PCBD                                                         
|                                                  |  |                                                                                   
|TPG/CalSTRS, LLC:                                 |  |                                                                                    |  |                                                              
|                                                  |  |                                                                                   
|City National Plaza                               |  | High-rise office                                                                   |  | Los Angeles Central Business District, California            
|                                                  |  |                                                                                   
|Reflections I                                     |  | Suburban office  single tenancy                                                   |  | Reston, Virginia                                             
|                                                  |  |                                                                                   
|Reflections II                                    |  | Suburban office  single tenancy                                                   |  | Reston, Virginia                                             
|                                                  |  |                                                                                   
|Four Falls Corporate Center                       |  | Suburban office                                                                    |  | Suburban Philadelphia, Pennsylvania                          
|                                                  |  |                                                                                   
|Oak Hill Plaza                                    |  | Suburban office                                                                    |  | Suburban Philadelphia, Pennsylvania                          
|                                                  |  |                                                                                   
|Walnut Hill Plaza                                 |  | Suburban office                                                                    |  | Suburban Philadelphia, Pennsylvania                          
|                                                  |  |                                                                                   
|Valley Square Office Park                         |  | Suburban office                                                                    |  | Suburban Philadelphia, Pennsylvania                          



2. Summary of Significant
Accounting Policies



Principles of Consolidation and
Combination



The accompanying consolidated financial
statements of our company include all the accounts of Thomas Properties Group, Inc., the Operating Partnership and the subsidiaries of the Operating Partnership. Property



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



interests contributed to the Operating Partnership by Mr. Thomas and entities majority owned by him in exchange for Units have been accounted for as a
reorganization of entities under common control in a manner similar to a pooling of interests. Accordingly, the contributed assets and assumed liabilities were recorded at TPGI Predecessors historical cost basis, except for the minority
owners share. The pooling-of-interests method of accounting also requires the reporting of results of operations, for the period in which the combination occurred as though the entities had been combined at either the beginning of the period
or inception. Prior to the Offering, Thomas Properties Group, Inc. and the Operating Partnership had no operations; therefore, the combined operations for periods prior to October 13, 2004 represent primarily the operations of TPGI Predecessor. The
combination did not require any material adjustments to conform the accounting policies of the separate entities. The remaining interests, which were acquired for cash and Units, have been accounted for as a purchase, and the excess of the purchase
price over the related historical cost basis has been allocated to the assets acquired and liabilities assumed.



The accompanying combined financial statements of TPGI Predecessor include interests in certain of our properties and the property management, leasing,
acquisition and real estate development business of Thomas Development Partners, Ltd.



The real estate entities included in the consolidated and combined financial statements have been consolidated or combined only for the periods that such entities were under control by us or TPGI Predecessor, or were
considered a variable interest entity. The equity method of accounting is utilized to account for investments in real estate entities over which we or TPGI Predecessor have significant influence, but not control over major decisions, including the
decision to sell or refinance the properties owned by such entities. All significant intercompany balances and transactions have been eliminated in the consolidated and combined financial statements.



The interests in One Commerce Square (beginning June 1, 2004), Two Commerce
Square (beginning October 13, 2004), and Campus El Segundo (for all periods presented), not owned by us or TPGI Predecessor are reflected as minority interest. For periods subsequent to October 13, 2004, no losses of One Commerce Square or Two
Commerce Square have been allocated to the minority partner, as no further contributions are required from the minority partner. At March 31, 2005 and December 31, 2004, Mr. Thomas owns an 11% ownership interest in each of One Commerce Square and
Two Commerce Square, and an unrelated party owns a 29% ownership interest in Campus El Segundo.



Loss per share



Loss per share is calculated based on the weighted average number of shares of our common stock outstanding during the period. The assumed exercise of
outstanding stock options and the effect of the vesting of unvested restricted stock that have been granted, all using the treasury stock method, are not dilutive for the three months ended March 31, 2005.



Reclassifications



Certain prior period amounts have been reclassified to conform to the
current period presentation.



Interim Financial Data



The accompanying interim financial statements are
unaudited, but have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and in conjunction



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for
complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of
operations for the interim periods are not necessarily indicative of the results to be obtained for the full fiscal year.



3. Uncombined Real Estate Entities



The unconsolidated/uncombined real estate entities include the entities that own One Commerce Square (through May 31, 2004, as this entity was considered
to be a variable interest entity on June 1, 2004), 2121 Market Street, Harris Building Associates, and TPG/CalSTRS, LLC, a joint venture with the California State Teachers Retirement System (CalSTRS). TPG/CalSTRS, LLC owns the following
properties:



City National Plaza, including
the off-site garage, which serves City National Plaza, known as J-2,

(purchased January 28, 2003)

Reflections I (purchased October 13,
2004)

Reflections II (purchased October 13, 2004)

Four Falls Corporate Center (purchased March 2, 2005)

Oak Hill Plaza (purchased March 2, 2005)

Walnut Hill Plaza (purchased March 2, 2005)

Valley Square Office Park (purchased March 2,
2005)



Capital contributions, distributions, and profits and
losses of the real estate entities are allocated in accordance with the terms of the applicable partnership and limited liability company agreements. Such allocations may differ from the stated ownership percentage interests in such entities as a
result of preferred returns and allocation formulas as described in the partnership and limited liability company agreements. Following are the stated ownership percentages, prior to any preferred or special allocation, as of May 31, 2004 for One
Commerce Square (after which date this entity was combined or consolidated) and as of March 31, 2005 for all other entities:



|                            |  |      |     
|--------------------------- |  | ---- | ----
|One Commerce Square         |  | 50.0 | %(1)
|2121 Market Street          |  | 50.0 | %   
|Harris Building Associates  |  | 0.1  | %(2)
|TPG/CalSTRS, LLC:           |  |      |     
|City National Plaza         |  | 21.3 | %(3)
|Reflections I               |  | 25.0 | %(4)
|Reflections II              |  | 25.0 | %(4)
|Four Falls Corporate Center |  | 25.0 | %(4)
|Oak Hill Plaza              |  | 25.0 | %(4)
|Walnut Hill Plaza           |  | 25.0 | %(4)
|Valley Square Office Park   |  | 25.0 | %(4)



| | (1) | Prior to October 13, 2004, TPGI Predecessor and an unaffiliated third party each owned 50.0% of the Series A preferred capital and non-preferred capital of the
partnership that owned One Commerce Square. In addition, an unaffiliated third party owned the $6.75 million Series B preferred capital. In accordance with the partnership agreement, the holder of the Series B preferred capital was entitled to
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



| | preferred cumulative distributions of 17.5% per annum, after the holders of the Series A preferred capital received their preferred cumulative distributions.
Thereafter, distributions went to the holders of the non-preferred capital.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In March 2004, TPGI Predecessor entered into an agreement to purchase the 50% partnership interest in One Commerce Square not owned by it for a purchase price of $24,000,000, subject to certain adjustments. Based on
the terms of the purchase agreement, TPGI Predecessor considered One Commerce Square to be a variable interest entity as of June 1, 2004, and had combined the accounts of that property with TPGI Predecessor beginning June 1, 2004.



On October 13, 2004, at the consummation of the Offering, we acquired the
50% ownership interest from the unaffiliated third party, and TPGI Predecessor contributed a 39% ownership interest in the property to us, resulting in an 89% ownership interest, and we have consolidated the accounts of that property.



| | (2) | The partnership that owns 2121 Market Street entered into a master lease with Harris Building Associates for the property designed to allow a third party investor to take advantage
of the historic tax credits for the property. The Operating Partnership and an unrelated party each hold a 0.05% general partnership interest in Harris Building Associates. The 99.9% limited partner of Harris Building Associates contributed $3.5
million and no further contributions are required. In addition, this partner is entitled to various distributions, fees, and priority returns. During 2004, the accumulated losses and distributions for this limited partner equaled their contribution
amount and priority return. As such, net income/loss is allocated equally to the general partners, resulting in an allocation of 50% net income/loss to us.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | On October 13, 2004, at the consummation of the Offering, we increased our ownership interest in the property from 4.3% to 21.3%.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------



In accordance with the limited liability agreement, the minority owner of
City National Plaza and the Operating Partnership are initially allocated depreciation expense of City National Plaza ahead of CalSTRS. This resulted in the allocation to us of 22.5% of City National Plazas depreciation expense and 4.3% of
City National Plazas net income/loss (excluding depreciation expense) for periods prior to October 12, 2004, and an allocation of 22.5% of City National Plazas depreciation expense and 21.3% of City National Plazas net income/loss
(excluding depreciation expense) for periods subsequent to October 13, 2004.



| | (4) | In accordance with the limited liability agreement, the Operating Partnership is initially allocated depreciation expense of the properties ahead of CalSTRS. This resulted in the
allocation to us of 100% of depreciation expense and 25% of net income (excluding depreciation expense) of the properties.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



Investments in unconsolidated real estate entities as of March 31, 2005 are as follows:



|                                                  |  |               |        |   |                  |   |        |  
|------------------------------------------------- |  | ------------- | ------ | - | ---------------- | - | ------ | -
|                                                  |  | March 31,2005 |        |   | December 31,2004 |  
|2121 Market Street and Harris Building Associates |  | $             | (688   | ) |                  | $ | (932   | )
|TPG/CalSTRS, LLC:                                 |  |               |        |   |                  |   |        |  
|City National Plaza                               |  |               | 22,735 |   |                  |   | 20,832 |  
|Reflections I                                     |  |               | 7,512  |   |                  |   | 7,492  |  
|Reflections II                                    |  |               | 4,227  |   |                  |   | 4,232  |  
|Four Falls Corporate Center                       |  |               | 3,918  |   |                  |   |       |  
|Oak Hill Plaza                                    |  |               | 1,768  |   |                  |   |       |  
|Walnut Hill Plaza                                 |  |               | 1,632  |   |                  |   |       |  
|Valley Square Office Park                         |  |               | 2,143  |   |                  |   |       |  
|                                                  |  |               |        |   |                  |   |        |  
|                                                  |  | $             | 43,247 |   |                  | $ | 31,624 |  
|                                                  |  |               |        |   |                  |   |        |  



The following is a
summary of the investments in unconsolidated real estate entities for the three months ended March 31, 2005:



|                                                                  |  |   |        |  
|----------------------------------------------------------------- |  | - | ------ | -
|Investment balance, December 31, 2004                             |  | $ | 31,624 |  
|Contributions, including $8,800 for acquisition of new properties |  |   | 13,130 |  
|Equity in net loss of unconsolidated real estate entities         |  |   | (1,328 | )
|Distributions                                                     |  |   | (179   | )
|                                                                  |  |   |        |  
|Investment balance, March 31, 2005                                |  | $ | 43,247 |  
|                                                                  |  |   |        |  



TPG/CalSTRS, LLC, was
formed in December 2002 to acquire office properties on a nationwide basis classified as moderate risk (core plus) and high risk (value add) properties. Core plus properties consist of under-performing properties that we believe can be brought to
market potential through improved management. Value-add properties are characterized by unstable net operating income for an extended period of time, occupancy less than 90% and/or physical or management problems which we believe can be positively
impacted by introduction of new capital and/or management. Under the joint venture agreement, we have an exclusive obligation until the earlier of May 1, 2007 and the date CalSTRS has contributed its full capital commitment to the joint venture to
first present all acquisition opportunities involving core plus and value-add properties to the joint venture before we may pursue them individually or in a joint venture with other parties. We are required to use diligent efforts to sell each joint
venture property within five years of that property reaching stabilization, except that for Reflections I and II, which are 100% leased, we are required to perform a hold/sell analysis at least annually, and make a recommendation to the management
committee regarding the appropriate holding period.



As of
March 31, 2005, the unfunded capital commitments of CalSTRS and the Company were $130,260,000 and $46,390,000, respectively.



Upon the earlier to occur of certain events or January 1, 2006, a buy-sell provision may be exercised by either CalSTRS or us. Under this provision, the
initiating party sets a price for its interest in the joint venture, and the other party has a specified time to either elect to buy the initiating partys interest, or to sell its own interest to the initiating party. Upon the occurrence of
certain events, CalSTRS also has a buy-out option to purchase our



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



interest in the joint venture. The buyout price is based upon a 3% discount to the appraised fair market value. Upon the earlier to occur of certain events
or January 1, 2006, the minority owners of City National Plaza have the option to require the joint venture to purchase its interest for an amount equal to what would be payable to them upon liquidation of the assets at fair market value.



Following is summarized financial information for the
unconsolidated/uncombined real estate entities as of March 31, 2005 and December 31, 2004 and the three months ended March 31, 2005 and 2004:



Summarized Balance Sheets



|                                                                                                            |  |               |         |   |                  |   |        
|----------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | -------
|                                                                                                            |  | March 31,2005 |         |   | December 31,2004
|ASSETS                                                                                                      |  |               |         |   |                  |   |        
|Investments in real estate                                                                                  |  | $             | 472,566 |   |                  | $ | 351,157
|Receivables including deferred rents                                                                        |  |               | 16,262  |   |                  |   | 14,397 
|Other assets                                                                                                |  |               | 114,074 |   |                  |   | 39,142 
|                                                                                                            |  |               |         |   |                  |   |        
|Total assets                                                                                                |  | $             | 602,902 |   |                  | $ | 404,696
|                                                                                                            |  |               |         |   |                  |   |        
|LIABILITIES AND OWNERS EQUITY                                                                              |  |               |         |   |                  |   |        
|Mortgage and other secured loans                                                                            |  | $             | 425,786 |   |                  | $ | 266,256
|Other liabilities                                                                                           |  |               | 28,544  |   |                  |   | 27,718 
|                                                                                                            |  |               |         |   |                  |   |        
|Total liabilities                                                                                           |  |               | 454,330 |   |                  |   | 293,974
|                                                                                                            |  |               |         |   |                  |   |        
|Minority interest                                                                                           |  |               | (220    | ) |                  |   | 1,566  
|                                                                                                            |  |              
|Owners equity:                                                                                             |  |               |         |   |                  |   |        
|Thomas Properties, including $8 and $(34) of other comprehensive gain (loss) in 2005 and 2004, respectively |  |               | 43,160  |   |                  |   | 31,728 
|Other owners, including $23 and $(342) of other comprehensive gain (loss) in 2005 and 2004, respectively    |  |               | 105,632 |   |                  |   | 77,428 
|                                                                                                            |  |               |         |   |                  |   |        
|Total owners equity                                                                                        |  |               | 148,792 |   |                  |   | 109,156
|                                                                                                            |  |               |         |   |                  |   |        
|Total liabilities and owners equity                                                                        |  | $             | 602,902 |   |                  | $ | 404,696
|                                                                                                            |  |               |         |   |                  |   |        



Summarized Statements
of Operations



|                                                         |  |      |        |   |      |   |        |  
|-------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                         |  | 2005 |        |   | 2004 |  
|Revenues                                                 |  | $    | 13,965 |   |      | $ | 18,323 |  
|                                                         |  |      |        |   |      |   |        |  
|Expenses:                                                |  |      |        |   |      |   |        |  
|Operating and other expenses                             |  |      | 9,843  |   |      |   | 10,836 |  
|Interest expense                                         |  |      | 4,558  |   |      |   | 3,599  |  
|Depreciation and amortization                            |  |      | 4,089  |   |      |   | 3,395  |  
|                                                         |  |      |        |   |      |   |        |  
|Total expenses                                           |  |      | 18,490 |   |      |   | 17,830 |  
|                                                         |  |      |        |   |      |   |        |  
|Net (loss) income                                        |  | $    | (4,525 | ) |      | $ | 493    |  
|                                                         |  |      |        |   |      |   |        |  
|Thomas Properties / TPGI Predecessors share of net loss |  | $    | (1,470 | ) |      | $ | (324   | )
|                                                         |  |      |        |   |      |   |        |  



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



Included in the preceding summarized balance sheets as of March 31, 2005 and December 31, 2004, are
the following balance sheets of TPG/CalSTRS, LLC:



|                                                                                                            |  |               |         |   |                  |   |        
|----------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | -------
|                                                                                                            |  | March 31,2005 |         |   | December 31,2004
|Investments in real estate                                                                                  |  | $             | 452,854 |   |                  | $ | 331,140
|Receivables including deferred rents                                                                        |  |               | 13,621  |   |                  |   | 9,530  
|Other assets                                                                                                |  |               | 111,825 |   |                  |   | 38,764 
|                                                                                                            |  |               |         |   |                  |   |        
|Total assets                                                                                                |  | $             | 578,300 |   |                  |   | 379,434
|                                                                                                            |  |               |         |   |                  |   |        
|Mortgage and other secured loans                                                                            |  | $             | 405,932 |   |                  |   | 246,338
|Other liabilities                                                                                           |  |               | 22,639  |   |                  |   | 20,410 
|                                                                                                            |  |               |         |   |                  |   |        
|Total liabilities                                                                                           |  |               | 428,571 |   |                  |   | 266,748
|                                                                                                            |  |               |         |   |                  |   |        
|Minority interest                                                                                           |  |               | (220    | ) |                  |   | 1,566  
|                                                                                                            |  |              
|Owners equity:                                                                                             |  |               |         |   |                  |   |        
|Thomas Properties, including $8 and $(34) of other comprehensive gain (loss) in 2005 and 2004, respectively |  |               | 43,804  |   |                  |   | 32,785 
|Other owners, including $23 and $(342) of other comprehensive gain (loss) in 2005 and 2004, respectively    |  |               | 106,145 |   |                  |   | 78,335 
|                                                                                                            |  |               |         |   |                  |   |        
|Total owners equity                                                                                        |  |               | 149,949 |   |                  |   | 111,120
|                                                                                                            |  |               |         |   |                  |   |        
|Total liabilities and owners equity                                                                        |  | $             | 578,300 |   |                  | $ | 379,434
|                                                                                                            |  |               |         |   |                  |   |        



Following is
summarized financial information by real estate entity for the three months ended March 31, 2005 and 2004:



|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|--------------------------------------------------------- |  | ----------------------------------------------- | ----- | - | --------------- | - | ------ | ----- |  | - | ------ | -
|                                                          |  | Three months ended March 31, 2005               |      
|                                                          |  | 2121 Market Streetand Harris BuildingAssociates |       |   | TPG/CalSTRS,LLC |   |        | Total | 
|Revenues                                                  |  | $                                               | 1,298 |   |                 | $ | 12,667 |       |  | $ | 13,965 |  
|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|Expenses:                                                 |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|Operating and other                                       |  |                                                 | 931   |   |                 |   | 8,912  |       |  |   | 9,843  |  
|Interest                                                  |  |                                                 | 301   |   |                 |   | 4,257  |       |  |   | 4,558  |  
|Depreciation and amortization                             |  |                                                 | 284   |   |                 |   | 3,805  |       |  |   | 4,089  |  
|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|Total expenses                                            |  |                                                 | 1,516 |   |                 |   | 16,974 |       |  |   | 18,490 |  
|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|Net loss                                                  |  | $                                               | (218  | ) |                 | $ | (4,307 | )     |  | $ | (4,525 | )
|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|Thomas Properties share of net loss                      |  | $                                               | (58   | ) |                 | $ | (1,412 | )     |  | $ | (1,470 | )
|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|Intercompany eliminations and other adjustments           |  |                                                 |       |   |                 |   |        |       |  |   | 142    |  
|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  
|Equity in net loss of unconsolidated real estate entities |  |                                                 |       |   |                 |   |        |       |  | $ | (1,328 | )
|                                                          |  |                                                 |       |   |                 |   |        |       |  |   |        |  



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|----------------------------------------------------- |  | --------------------------------- | ----- | ----------------------------------------------- | - | ----- | --------------- |  | - | ------ | - |  | - | ------ | -
|                                                      |  | Three months ended March 31, 2004 |      
|                                                      |  | OneCommerceSquare                 |       | 2121 Market Streetand Harris BuildingAssociates |   |       | TPG/CalSTRS,LLC |  |   | Total  |  
|Revenues                                              |  | $                                 | 5,810 |                                                 | $ | 1,246 |                 |  | $ | 11,267 |   |  | $ | 18,323 |  
|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|Expenses:                                             |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|Operating and other                                   |  |                                   | 2,687 |                                                 |   | 817   |                 |  |   | 7,332  |   |  |   | 10,836 |  
|Interest                                              |  |                                   | 1,421 |                                                 |   | 309   |                 |  |   | 1,869  |   |  |   | 3,599  |  
|Depreciation and amortization                         |  |                                   | 1,201 |                                                 |   | 282   |                 |  |   | 1,912  |   |  |   | 3,395  |  
|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|Total expenses                                        |  |                                   | 5,309 |                                                 |   | 1,408 |                 |  |   | 11,113 |   |  |   | 17,830 |  
|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|Net income (loss)                                     |  | $                                 | 501   |                                                 | $ | (162  | )               |  | $ | 154    |   |  | $ | 493    |  
|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|TPGI Predecessors share of net income (loss)         |  | $                                 | 32    |                                                 | $ | (31   | )               |  | $ | (325   | ) |  | $ | (324   | )
|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|Intercompany eliminations                             |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   | 92     |  
|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  
|Equity in net loss of uncombined real estate entities |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  | $ | (232   | )
|                                                      |  |                                   |       |                                                 |   |       |                 |  |   |        |   |  |   |        |  



Following is a
reconciliation of our share of owners equity of the unconsolidated real estate entities as shown above to amounts recorded by us as of March 31, 2005 and December 31, 2004:



|                                                                            |  |               |        |                  |   |        |  
|--------------------------------------------------------------------------- |  | ------------- | ------ | ---------------- | - | ------ | -
|                                                                            |  | March 31,2005 |        | December 31,2004 |  
|Our share of owners equity recorded by unconsolidated real estate entities |  | $             | 43,160 |                  | $ | 31,728 |  
|Intercompany eliminations and other adjustments                             |  |               | 87     |                  |   | (104   | )
|                                                                            |  |               |        |                  |   |        |  
|Investments in unconsolidated real estate entities                          |  | $             | 43,247 |                  | $ | 31,624 |  
|                                                                            |  |               |        |                  |   |        |  



4. Debt



A summary of the outstanding debt as of March 31, 2005 is as follows:



|                                     |  |                          |   |  |                  |         |              |        
|------------------------------------ |  | ------------------------ | - |  | ---------------- | ------- | ------------ | -------
|                                     |  | Interest rate            |   |  | Outstanding debt |         | Maturitydate
|One Commerce Square:                 |  |                          |   |  |                  |         |              |        
|Mortgage loan (1)                    |  | 7.0                      | % |  | $                | 73,161  |              | 4/11/28
|Mezzanine loan (2)                   |  | 17.5                     |   |  |                  | 10,354  |              | 3/16/11
|Two Commerce Square:                 |  |                          |   |  |                  |         |              |        
|Mortgage loan (3)                    |  | 6.3                      |   |  |                  | 124,057 |              | 5/09/13
|Senior mezzanine loan (4) (5)        |  | 17.2                     |   |  |                  | 45,686  |              | 1/09/10
|Junior A mezzanine loan (4) (6)      |  | 15.0                     |   |  |                  | 3,796   |              | 1/09/10
|Junior B mezzanine loan (4) (7)      |  | 9.2                      |   |  |                  | 28,277  |              | 1/09/10
|Four Points Centre mortgage loan (8) |  | Prime Rate               |   |  |                  | 4,000   |              | 8/28/05
|2101 Market Street mortgage loan (9) |  | Prime Rate orLIBOR + 2.5 | % |  |                  | 3,500   |              | 9/6/05 
|                                     |  |                          |   |  |                  |         |              |        
|Total principal outstanding          |  |                          |   |  |                  | 292,831 |              |        
|Loan premium (10)                    |  |                          |   |  |                  | 1,447   |              |        
|                                     |  |                          |   |  |                  |         |              |        
|Total debt                           |  |                          |   |  | $                | 294,278 |              |        
|                                     |  |                          |   |  |                  |         |              |        



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



| | (1) | The mortgage loan is prepayable without penalty after March 11, 2008, at which date the outstanding principal amount of this debt will be approximately $68.9 million. The interest
rate will increase by 2.0% on April 11, 2008, which additional amount may be deferred until maturity. Any deferred amounts are added to the principal balance of the loan and accrue interest at 9.0%. Provided there is no deferred interest, the loan
balance will be fully amortized on April 11, 2028, the maturity date of the loan.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Interest at a rate of 10% per annum is payable currently. Interest of 7.5% per annum may be deferred until cash is available for payment. Deferred amounts accrue interest at 17.5%
per annum. The loan is subject to yield maintenance payments for any prepayments prior to March 16, 2005. The loan is secured by our ownership interest in the real estate entities that own One Commerce Square.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | The mortgage loan may be defeased after October 2005, and may be prepaid after February 2013.
| | --- | ---------------------------------------------------------------------------------------------



| | (4) | These loans are guaranteed by Mr. Thomas up to an aggregate maximum of $7,500,000. We have agreed to indemnify Mr. Thomas in the event his guarantees are called upon.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | The senior mezzanine loan bears interest at a rate such that the weighted average of the rate on this loan and the rate on the mortgage loan secured by Two Commerce Square equals
9.2% per annum. The effective interest rate on this loan as of March 31, 2005 was 17.2% per annum. The loan may not be prepaid prior to August 9, 2009, and thereafter is subject to yield maintenance payments unless the loan is prepaid within 60 days
of maturity. The loan is secured by our ownership interest in the real estate entities that own Two Commerce Square.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Interest at a rate of 10% per annum is payable currently, and additional interest of 5% per annum is deferred until maturity. The loan is subject to the greater of 3% of the
principal amount or a yield maintenance premium for any prepayments. The loan is secured by our ownership interest in the real estate entities that own Two Commerce Square.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | The repayment of the mezzanine loan is in the form of a minority participation in net equity according to a formula. To the extent the net equity in the property is below the
thresholds of the formula, the $24.5 million in principal and accumulated deferred interest of $3.2 million will be forgiven by the lender. Under certain conditions, the lender has a right to extend the maturity date of this loan to July 2011, an
additional 18 months. The loan may not be prepaid. The loan is secured by our ownership interest in the real estate entities that own Two Commerce Square.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | The prime rate as of March 31, 2005 was 5.75% per annum.
| | --- | --------------------------------------------------------



| | (9) | The loan agreement provides that the interest rate will be the lenders prime rate or at our option, LIBOR plus 2.5% per annum. As of March 31, 2005, the interest rate was
5.75% per annum.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (10) | In connection with the acquisition of a 50% third-party interest in One Commerce Square, a premium was recorded to mark 50% of the assumed mortgage loan to market value.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



5. Loss per Share



The following is a summary of the elements used in calculating basic and diluted loss per share for the three months ended March 31, 2005 (in thousands
except share and per share amounts):



|                                                            |  |   |            |  
|----------------------------------------------------------- |  | - | ---------- | -
|Net loss attributable to common shares                      |  | $ | (776       | )
|                                                            |  |   |            |  
|Weighted average common shares outstandingbasic            |  |   | 14,295,236 |  
|Potentially dilutive common shares(1):                      |  |   |            |  
|Stock options                                               |  |   |           |  
|Unvested restricted stock                                   |  |   |           |  
|                                                            |  |   |            |  
|Adjusted weighted average common shares outstandingdiluted |  |   | 14,295,236 |  
|                                                            |  |   |            |  
|Net loss per sharebasic and diluted                        |  | $ | (0.05      | )
|                                                            |  |   |            |  



| | (1) | For the three months ended March 31, 2005, the potentially dilutive shares were not included in the loss per share calculation as their effect is antidilutive.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



6. Income Taxes



All operations are carried on through the Operating Partnership and its
subsidiaries. The Operating Partnership is not subject to income tax, and all of the taxable income, gains, losses, deductions and credits are passed through to its partners. We are responsible for our share of taxable income or loss of the
Operating Partnership allocated to us in accordance with the Operating Partnerships Agreement of Limited Partnership (LP Agreement). As of March 31, 2005, we held a 46.3% capital interest in the Operating Partnership. For the three
months ended March 31, 2005, we were allocated 46.3% of the losses from the Operating Partnership.



Our effective tax rate is 40.3% for the three months ended March 31, 2005. The higher effective tax rate compared to the federal statutory rate of 35% is
primarily due to state taxes, net of federal tax benefit.



The
benefit from income tax is based on reported loss before income taxes. Deferred income tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes
and the amount recognized for tax purposes, as measured by applying the currently enacted tax laws.



The deferred tax asset resulted primarily from the difference between the financial statement basis, which is at carryover basis, and the tax basis, which
represents the amount paid by the stockholders at fair value.



SFAS No. 109, Accounting for Income Taxes, requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized. Realization of the deferred tax
asset is dependent on us generating sufficient taxable income in future years as the deferred income tax charges become currently deductible for tax reporting purposes. Although realization is not assured, management believes that it is more likely
than not that the net deferred income tax asset will be realized.



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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES AND THOMAS PROPERTIES

GROUP, INC. PREDECESSOR

NOTES TO
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

(Tabular amounts in thousands)



7. Fair Value of Financial Instruments



SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires us to disclose fair value information about
all financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate fair value.



Our estimates of the fair value of financial instruments at March 31, 2005 were determined using available market information and appropriate valuation
methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts.



The carrying amounts for cash and cash equivalents, restricted cash, rents
and other receivables, due from affiliate, accounts payable and other liabilities approximate fair value because of the short-term nature of these instruments.



As of March 31, 2005, the fair value of our mortgage and other secured loans aggregates $274,110,000, compared to the aggregated carrying value of
$294,278,000.



8. Subsequent Events



On April 1, 2005, we purchased the Two Commerce Square Junior B mezzanine
loan from the lender for $2,500,000, which will result in a gain.



On April 11, 2005, we repaid the outstanding principal of the One Commerce Square mezzanine loan in the amount of $9,250,000 and the portion of accrued interest on the original principal balance for the period from March 11, 2005 to April
11, 2005.



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



The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere
in this report. Where appropriate, the following discussion includes analysis of the effects of our Offering, the formation transactions and certain other transactions. We make statements in this section that are forward-looking statements within
the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this report entitled Forward-Looking Statements. Certain risk factors may cause our actual results, performance or
achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in our Form 10-K, filed with the Securities and Exchange Commission for the year ended December 31,
2004, entitled Risk Factors.



When you read the
financial statements and the information included in this report, you should be aware that our operations are significantly affected by both macro and micro economic forces. Our operations are directly affected by actual and perceived trends in
various national and economic conditions that affect global and regional markets for commercial real estate services, including interest rates, the availability of credit to finance commercial real estate transactions, and the impact of tax laws
affecting real estate. Periods of economic slowdown or recession, rising interest rates, declining demand for real estate, or the public perception that any of these events may occur can adversely affect our business. These conditions could result
in a general decline in rents, which in turn would reduce revenue from property management fees and brokerage commissions derived from leases. In addition, these conditions could lead to a decline in property values as well as a decline in demand
for funds invested in commercial real estate and related assets, which in turn may reduce revenues from investment advisory, property management, leasing and development fees.



Forward-Looking Statements



This report contains statements that constitute forward-looking statements. Forward-looking statements involve numerous risks and uncertainties and you
should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those anticipated. Although the information is based on our current estimations, actual results could vary. You are cautioned not to place undue reliance on this information as
we cannot guarantee that any future expectations and events described will happen as described or that they will happen at all. You can identify forward-looking statements by the use of forward-looking terminology such as believes,
expects, may, will, should, seeks, approximately, intends, plans, pro forma, estimates or anticipates or the negative
of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions.



Overview and Background



We are a full-service real estate operating company that owns, acquires, develops and manages office, retail and multi-family properties on a nationwide
basis. We conduct our business through our Operating Partnership, of which we own 46.3% and have control over the major decisions of the Operating Partnership.



During the period from our formation until we commenced operations upon consummation of our Offering on October 13, 2004, we did not have any material
corporate activity. Because we believe that a discussion of the results of our company prior to the consummation of our Offering would not be meaningful, we have set forth below a discussion of our results of operations for the three months ended
March 31, 2005 and TPGI Predecessors historical results of operations for the three months ended March 31, 2004.



Results of Operations



The results of operations reflect the consolidation/combination of the affiliates that own One Commerce Square (beginning June 1, 2004), Two Commerce
Square, 2101 Market Street, Four Points Centre, Campus El



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##### Table of Contents

Segundo and our investment advisory, property management, leasing and real estate development operations. One Commerce Square (through May 31, 2004), 2121
Market Street (for all periods presented), City National Plaza (for all periods presented), Reflections I and II (as of October 13, 2004, the date of acquisition), and Four Falls Corporate Center, Oak Hill Plaza, Walnut Hill Plaza, and Valley Square
Office Park (as of March 2, 2005, the date of acquisition) are accounted for using the equity method of accounting.



Comparison of three months ended March 31, 2005 to three months ended March 31, 2004



Total Revenues. Total revenues increased by $7.5 million, or 70.4%, to $18.1 million for the three months ended March
31, 2005 compared to $10.6 million for the three months ended March 31, 2004. The significant components of revenue are discussed below.



Rental revenues. Rental revenue increased by $3.2 million, or 63.9%, to $8.3 million for the three months ended March 31, 2005 compared to $5.1
million for the three months ended March 31, 2004. This increase is primarily a result of the inclusion of $3.1 million in revenue for the three months ended March 31, 2005 due to the combination of the operating results of One Commerce Square as of
June 1, 2004.



Tenant reimbursements.Revenues from
tenant reimbursements increased by $2.3 million, or 89.7%, to $4.9 million for the three months ended March 31, 2005 compared to $2.6 million for the three months ended March 31, 2004. This increase was primarily a result of the inclusion of $2.4
million of tenant reimbursements for the three months ended March 31, 2005 due to the combination of the operating results of One Commerce Square as of June 1, 2004.



Parking and other revenues. Revenues from parking and other increased by $947,000, or 190.9%, to $1.4 million for the
three months ended March 31, 2005 compared to $496,000 for the three months ended March 31, 2004, primarily as a result of the inclusion of $465,000 in parking and other revenue for the three months ended March 31, 2005 due to the combination of the
operating results of One Commerce Square as of June 1, 2004, and a lease termination fee of $434,000 for a tenant in One Commerce Square in 2005.



Investment advisory, management, leasing and development services revenues.This caption represents revenues earned from services provided to
unaffiliated entities in which we have no ownership interest. Revenues from these services decreased by $96,000, or 6.6%, to $1.4 million for the three months ended March 31, 2005 compared to $1.5 million for the three months ended March 31, 2004,
primarily as a result of decreased leasing commissions of $81,000 related to unaffiliated properties.



Investment advisory, management, leasing and development services revenues  unconsolidated/uncombined real estate entities. This caption
represents revenues earned from services provided to entities in which we use the equity method to account for our ownership interest since we have significant influence, but not control over the entities. Revenues from these services for
unconsolidated/uncombined real estate entities increased by $638,000, or 64.5%, to $1.6 million for the three months ended March 31, 2005 compared to $989,000 for the three months ended March 31, 2004. This increase was primarily a result of fee
income related to the acquisition of four properties in suburban Philadelphia by our joint venture with CalSTRS in March 2005. We earned a one time acquisition fee of $663,000, and investment advisory and management fees during the first quarter of
2005 of $66,000 relating to these four properties. In addition, in October 2004, we increased our ownership interest in City National Plaza from 4.3% to 21.3%, which had the effect of reducing the investment advisory, management, leasing and
development services revenue recognized by us due to elimination of intercompany revenues. Investment advisory and management fees related to City National Plaza decreased $120,000 during the three months ended March 31, 2005, and was offset by an
increase in development services of $120,000. In addition, the increase was offset by a decrease of $141,000 in investment advisory, management and leasing services and reimbursed compensation costs related to One Commerce Square due to the
combination of the operating results of One Commerce Square as of June 1, 2004.



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##### Table of Contents

Total Expenses



Total Expenses. Total expenses increased by $7.5 million, or 62.9%, to $19.5 million for the three months ended March
31, 2005 compared to $12.0 million for the three months ended March 31, 2004. The significant components of expense are discussed below.



Rental property operating and maintenance expense.Rental property operating and maintenance expense increased by $2.1 million, or 110.4%, to $4.0
million for the three months ended March 31, 2005 as compared to $1.9 million for the three months ended March 31, 2004, primarily due to the combination of the operating results of One Commerce Square as of June 1, 2004, which represented expenses
of $2.2 million.



Real estate taxes.Real estate tax
expense increased by $765,000, or 93.8%, to $1.6 million for the three months ended March 31, 2005 compared to $816,000 for the three months ended March 31, 2004. This increase is primarily a result of the inclusion of $746,000 in real estate taxes
for the three months ended March 31, 2005 due to the combination of the operating results of One Commerce Square as of June 1, 2004.



Investment advisory, management, leasing and development services expenses.Expenses for these services decreased $431,000 or 17.0%, to $2.1
million for the three months ended March 31, 2005 compared to $2.5 million for the three months ended March 31, 2004. This decrease was primarily the result of how employment related costs and overhead costs were classified by TPGI Predecessor,
versus how these costs were classified between this expense caption and the general and administrative expense caption under our existing corporate structure.



Interest expense. Interest expense increased by $1.0 million or 19.4% to $6.3 million for the three months ended March 31, 2005 compared to $5.3
million for the three months ended March 31, 2004. This increase is primarily the result of the inclusion of $1.3 million in interest expense for the three months ended March 31, 2005 related to the One Commerce Square mortgage loan, with no
corresponding expense in the first quarter of 2004. This increase was offset by capitalized interest of $293,000 related to the Four Points Centre development property in 2005, and a decrease in interest expense of $206,000 relating to debt
obligations of Two Commerce Square for the three months ended March 31, 2005 as compared to the three months ended March 31, 2004, primarily due to an amortizing loan balance.



Depreciation and amortization expense. Depreciation and amortization expense increased by $1.9 million, or 136.8%, to
$3.3 million for the three months ended March 31, 2005 compared to $1.4 million for the three months ended March 31, 2004. This increase was primarily the result of the inclusion of $1.9 million of depreciation and amortization expense for the three
months ended March 31, 2005 resulting from the combination of One Commerce Square effective June 1, 2004.



General and administrative. General and administrative expense was $2.2 million for the three months ended March 31, 2005, which represents the
incremental salaries and employment related costs and incremental overhead of becoming a public company on October 13, 2004.



Gain on sale of real estate. Gain on sale of real estate was $975,000 for the three months ended March 31, 2004 due to the sale of a parcel of
development property at our Four Points Centre project in Austin, Texas, which was sold to an unaffiliated third party. There were no land sales for the three months ended March 31, 2005.



Interest income. Interest income was $417,000 for the three months ended March 31, 2005 primarily due to interest
income earned from the remaining cash from the Offering.



Equity in net loss of unconsolidated/uncombined real estate entities.Equity in net loss of unconsolidated/uncombined real estate entities increased by $1.1 million to a net loss of $1.3 million for the three months ended March 31,
2005 compared to a net loss of $232,000 for the three months ended March 31, 2004. Set forth below is a summary of the unconsolidated/uncombined condensed financial information for the unconsolidated/ uncombined real estate entities, consisting of
One Commerce Square (for the three months ended March 31, 2004



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##### Table of Contents

only), 2121 Market Street (for all periods presented), City National Plaza (for all periods presented), Reflections I and II (for the three months ended
March 31, 2005 only), and Four Falls Corporate Center, Oak Hill Plaza, Walnut Hill Plaza, and Valley Square Office Park (as of March 2, 2005, the date of acquisition) and our share of net loss and equity in net loss for the three months ended March
31, 2005 and 2004 (in thousands):



|                                                                     |  |                |        |   |                     |   |         |  
|-------------------------------------------------------------------- |  | -------------- | ------ | - | ------------------- | - | ------- | -
|                                                                     |  | TheCompany2005 |        |   | TPGIPredecessor2004 |  
|Revenue                                                              |  | $              | 13,965 |   |                     | $ | 18,323  |  
|Operating and other expenses                                         |  |                | (9,843 | ) |                     |   | (10,836 | )
|Interest expense                                                     |  |                | (4,558 | ) |                     |   | (3,599  | )
|Depreciation and amortization                                        |  |                | (4,089 | ) |                     |   | (3,395  | )
|                                                                     |  |                |        |   |                     |   |         |  
|Net loss                                                             |  | $              | (4,525 | ) |                     | $ | 493     |  
|                                                                     |  |                |        |   |                     |   |         |  
|Thomas Properties and TPGI Predecessors share of net loss          |  | $              | (1,470 | ) |                     | $ | (324    | )
|Intercompany eliminations                                            |  |                | 142    |   |                     |   | 92      |  
|                                                                     |  |                |        |   |                     |   |         |  
|Equity in net loss of unconsolidated/uncombined real estate entities |  | $              | (1,328 | ) |                     | $ | (232    | )
|                                                                     |  |                |        |   |                     |   |         |  



Aggregate revenue
attributable to, and operating and other expenses for unconsolidated/uncombined real estate entities for the three months ended March 31, 2005 compared to the three months ended March 31, 2004 decreased primarily due to the combination of One
Commerce Square effective June 1, 2004. As a result, there was a full three months of revenue and expenses in the three months ended March 31, 2004 for this property, with no corresponding revenue and expenses in the three months ended March 31,
2005. This decrease was offset by the acquisition of our interests in Reflections I and Reflections II on October 12, 2004 and the four properties in suburban Philadelphia on March 2, 2005.



Aggregate interest expense increased by $959,000, or 26.7%, to $4.6 million
for the three months ended March 31, 2005 compared to $3.6 million for the three months ended March 31, 2004 primarily as a result of an increase in interest expense of $1.9 million relating to the refinancing of the City National Plaza acquisition
loan and interest expense of $512,000 relating to the debt obligations of the four properties in suburban Philadelphia, offset by three months of interest expense in 2004 of $1.4 million relating to One Commerce Square.



Aggregate depreciation and amortization expense increased by $694,000, or
20.4%, to $4.1 million for the three months ended March 31, 2005 compared to $3.4 million for the three months ended March 31, 2004 primarily as a result of additional depreciation and amortization expense of $1.4 million due to the acquisition of
our interests in Reflections I and Reflections II on October 12, 2004 and the four properties in suburban Philadelphia on March 2, 2005, and an increase in depreciation and amortization expense in 2004 relating to City National Plaza, offset by
three months of depreciation and amortization expense in 2004 of $1.2 million relating to One Commerce Square.



Liquidity and Capital Resources



Analysis of liquidity and capital resources



We utilized a portion of the net proceeds from the Offering to acquire a 25% interest in Reflections I and Reflections II for a total of $11.8 million, increase our indirect ownership interest in City National Plaza from 4.3% to 21.3% for a
payment of $21 million, acquire the 50% interest in One Commerce Square owned by an unaffiliated third party for a purchase price of $24 million, plus the assumption of approximately $10 million of debt principal and interest repayment obligations,
repay aggregate indebtedness of $10.7 million relating to One Commerce Square, redeem preferred equity interests related to One Commerce Square held by an unaffiliated mezzanine debt lender on the property for $11.7 million, and fund a required
property level reserve of $2.1 million.



In March 2005, our
joint venture with CalSTRS acquired four properties in suburban Philadelphia for $136.0 million, of which we provided $8.8 million, and obtained financing of $33.2 million relating to the



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Reflections I and Reflections II properties, of which $8.3 million was distributed to us in April 2005. In addition, in April 2005, we repaid $9.4 million on
the One Commerce Square mezzanine loan, including deferred interest.



We intend to use the remaining net proceeds of the Offering to fund development costs associated with our development properties, and towards our co-investment obligation to our joint venture with CalSTRS or other future property
acquisitions.



Our management believes that our company will
have sufficient capital to satisfy our liquidity needs over the next 12 months though working capital and net cash provided by operations. We expect to meet our long-term liquidity requirements, including property and undeveloped land acquisitions
and additional future development and redevelopment activity, through cash flow from operations, additional secured and unsecured long-term borrowings, dispositions of non-strategic assets, the issuance of common units of our Operating Partnership,
and the potential issuance of additional debt or equity securities. We do not currently anticipate issuing any additional equity securities either of our company or our Operating Partnership other than pursuant to our equity incentive plan. We also
do not intend to reserve funds to retire existing debt upon maturity. We will instead seek to refinance this debt at maturity or retire the long-term debt through the issuance of equity securities, as market conditions permit.



As of March 31, 2005, we have an unfunded capital commitment to our joint
venture with CalSTRS of $46.4 million. Our requirement to fund all or a portion of this commitment is subject to our identifying properties to acquire that are mutually acceptable to us and CalSTRS.



We intend to declare and pay annual dividends on our common stock. The
availability of funds to pay dividends is impacted by property-level restrictions on cash flows. Both of our consolidated operating properties, One Commerce Square and Two Commerce Square, are subject to debt financing covenants containing lock-box
arrangements. For One Commerce Square, funds generated by the property can only be distributed to us after payment of property level debt and operating expenditures. As a result, there is limited cash available from One Commerce Square for
distribution to us. Funds generated by Two Commerce Square cannot be distributed to us under the terms of the lock-box arrangements established for the existing lenders for the property. In addition, our joint venture with CalSTRS is subject to debt
financing with a lockbox arrangement. With respect to our joint venture properties, we do not control decision making with respect to these properties, and may not be able to obtain monies from these properties even if funds are available for
distribution to us.



Development and Redevelopment Projects



We currently own interests in three development projects
and our joint venture with CalSTRS has one significant redevelopment project. We have considerable expertise in the completion of large-scale development and redevelopment projects. We anticipate developing these properties as market feasibility
permits. We also anticipate seeking to mitigate development risk, by obtaining significant pre-leasing and guaranteed maximum cost construction contracts. There can be no assurance we will be able to successfully implement these risk mitigation
measures.



The amount and timing of costs associated with our
development and redevelopment projects is inherently uncertain due to market and economic conditions. We presently intend to fund development and redevelopment expenditures primarily through construction or refurbishment financing. In July 2004 a
parent of the entity that owns City National Plaza refinanced the loan for City National Plaza, our sole significant redevelopment project at this time, which provides proceeds to cover the estimated future redevelopment costs. Presently, we have
not obtained construction financing for these three development projects. If we finance the development projects through construction loans and are unable to obtain permanent financing on advantageous terms or at all, we would need to fund these
obligations from cash flow from operations or seek alternative capital sources. If unsuccessful, this could adversely impact our financial condition and results of operations and impair our ability to satisfy our debt service obligations. If we are
successful in obtaining construction or refurbishment financing and permanent financing, we anticipate that the corresponding interest costs would represent both a significant use of our cash flow, and a material component of our results of
operations.



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Leasing, Tenant Improvement and Capital Needs



In addition to our development and redevelopment projects, our company also
owns majority interests in One Commerce Square and Two Commerce Square. These properties are substantially leased and have significant stabilized cash flows. These properties require routine capital maintenance in the ordinary course of business.
The properties also require that we incur expenses for leasing commissions and tenant improvement costs on an annual basis. The level of these expenses varies from year to year based on several factors, including lease expirations. Based upon
historical expenditure levels, the leasing activity for the properties and the current rent roll, we anticipate incurring expenses of approximately $8.3 million in capital improvements, tenant improvements, and leasing costs for the One Commerce
Square and Two Commerce Square properties collectively during the remainder of 2005. We do not anticipate incurring significant expenses for leasing costs, tenant improvements and capital improvements for the other properties.



Annual capital expenditures may fluctuate in response to the nature, extent
and timing of improvements required to maintain our properties. Tenant improvements and leasing costs may also fluctuate depending upon other factors, including the type of property involved, the existing tenant base, terms of leases, types of
leases, the involvement of leasing agents and overall market conditions.



Contractual Obligations



The following table provides information for our company with respect to the maturities and scheduled repayments of secured debt (which reflects the entire principal amount of our fixed and variable rate debt) and scheduled interest
payments of fixed and variable rate debt as of March 31, 2005 (in thousands). The following table also provides information with respect to capital expenditure commitments as of March 31, 2005 as well as future minimum lease payments on our
long-term operating lease for our corporate offices at City National Plaza. The table does not reflect available maturity extension options.



Capital commitments of our company, our operating partnership and other consolidated subsidiaries include approximately $2.6 million of tenant improvement
allowances and leasing commissions for certain tenants in One Commerce Square and Two Commerce Square. In addition, we have an unfunded capital commitment of $46.4 million to our joint venture with CalSTRS. This unfunded commitment is subject to the
approval of both us and CalSTRS to acquire properties not yet identified or other cash uses. As the identification, approval and successful closing of such acquisitions is uncertain, the timing and amount of capital to be contributed is not known.
We estimate, however, that we will fund approximately $35.0 million during 2005, and the remainder in 2006. Additionally, we entered into a joint venture agreement with Weingarten Realty Investors during 2004. Pursuant to this joint venture
agreement, we will contribute initial capital of $125,000 in 2005, which has been included in the capital commitments below:



|                                     |  |                         |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|------------------------------------ |  | ----------------------- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ---------- |  | ----- | ------ |  | - | ------- |  | - | -------
|                                     |  | Payments Due by Period 
|                                     |  | Throughremainderof 2005 |        | 2006 |   | 2007   |  | 2008 |        | 2009 |   | Thereafter |  | Total
|Principal PaymentsSecured Debt      |  | $                       | 13,923 |      | $ | 9,369  |  | $    | 10,361 |      | $ | 4,763      |  | $     | 2,192  |  | $ | 252,223 |  | $ | 292,831
|Interest PaymentsFixed Rate Debt    |  |                         | 15,951 |      |   | 20,461 |  |      | 19,574 |      |   | 18,931     |  |       | 18,580 |  |   | 90,018  |  |   | 183,515
|Interest PaymentsVariable Rate Debt |  |                         | 180    |      |   |       |  |      |       |      |   |           |  |       |       |  |   |        |  |   | 180    
|Capital Commitments                  |  |                         | 36,602 |      |   | 11,601 |  |      | 970    |      |   |           |  |       |       |  |   |        |  |   | 49,173 
|Operating Lease                      |  |                         | 95     |      |   | 127    |  |      | 127    |      |   | 127        |  |       | 53     |  |   |        |  |   | 529    
|                                     |  |                         |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Total                                |  | $                       | 66,751 |      | $ | 41,558 |  | $    | 31,032 |      | $ | 23,821     |  | $     | 20,825 |  | $ | 342,241 |  | $ | 526,228
|                                     |  |                         |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        



Capital commitments of
at least $20 million required under leases entered into at City National Plaza by City National Bank, Jones Day, and Fulbright & Jaworski are not included in the contractual obligations table above as City National Plaza is an unconsolidated
subsidiary. These capital expenditures must be completed by December 31, 2006 under the Jones Day lease and by December 31, 2008 under the City National Bank and Fulbright & Jaworski leases.



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Off-Balance Sheet Arrangements  Indebtedness of Unconsolidated Real Estate Entities



As of March 31, 2005, our company had investments in entities owning eight
unconsolidated properties with stated ownership percentages ranging from 21.3% to 50.0%. We do not have control of these entities, and none of the entities are considered variable interest entities. Therefore, we account for them using the equity
method of accounting. The table below summarizes the outstanding debt for the properties with outstanding debt as of March 31, 2005 (in thousands):



|                                 |  |               |     |  |                 |         |              |         |    
|-------------------------------- |  | ------------- | --- |  | --------------- | ------- | ------------ | ------- | ---
|                                 |  | Interest Rate |     |  | PrincipalAmount |         | MaturityDate |        
|City National Plaza (1)          |  |               |     |  |                 |         |              |         |    
|Senior mortgage loan (2)         |  | LIBOR + 1.75  | %   |  | $               | 200,000 |              | 7/11/06 |    
|Senior mezzanine loan (2)        |  | LIBOR + 4.50  |     |  |                 | 36,582  |              | 7/11/06 |    
|Junior mezzanine loan            |  | LIBOR + 6.15  |     |  |                 | 25,000  |              | 7/11/06 |    
|2121 Market Street               |  | 6.1           |     |  |                 | 19,854  |              | 8/1/33  | (3)
|Four Falls Corporate Center      |  |               |     |  |                 |         |              |         |    
|Note A                           |  | 5.31          |     |  |                 | 42,200  |              | 3/6/10  |    
|Note B (4)                       |  | LIBOR + 3.25  | (5) |  |                 | 1,600   |              | 3/6/10  |    
|Oak Hill Plaza/Walnut Hill Plaza |  |               |     |  |                 |         |              |         |    
|Note A                           |  | 5.31          |     |  |                 | 35,300  |              | 3/6/10  |    
|Note B (4)                       |  | LIBOR + 3.25  | (5) |  |                 | 2,200   |              | 3/6/10  |    
|Valley Square Office Park        |  |               |     |  |                 |         |              |         |    
|Note A (4)                       |  | LIBOR + 1.75  | (5) |  |                 | 27,500  |              | 3/1/07  |    
|Note B (4)                       |  | LIBOR + 3.25  | (5) |  |                 | 2,400   |              | 3/1/07  |    
|Reflections I                    |  | 5.23          |     |  |                 | 23,400  |              | 4/1/15  |    
|Reflections II                   |  | 5.22          |     |  |                 | 9,750   |              | 4/1/15  |    
|                                 |  |               |     |  |                 |         |              |         |    
|                                 |  |               |     |  | $               | 425,786 |              |         |    
|                                 |  |               |     |  |                 |         |              |         |    



|(1) | We have purchased interest rate cap agreements for the outstanding City National Plaza loans. We are also required to purchase interest rate cap agreements for each future advance
under the $125 million senior mezzanine loan.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The mortgage and senior mezzanine loans are subject to exit fees equal to .25% and .5%, respectively, of the loan amounts, however, under certain circumstances the exit fees shall
be waived.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | The 2121 Market Street mortgage loan is prepayable without penalty after May 1, 2013, at which date the outstanding principal amount of this debt will be approximately $17.2
million. The interest rate will increase to the greater of 8.1% or the treasury rate plus 2.0% on August 1, 2013. Any amounts over the initial interest rate may be deferred to the extent excess cash is not available to make such payments. Provided
there is no deferred interest, the loan balance will be fully amortized on August 1, 2033, the maturity date of the loan.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | These loans are subject to exit fees equal to 1% of the loan amounts, however, under certain circumstances the exit fees shall be waived.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------



|(5) | The loan bears interest at the greater of the one month LIBOR or 2.25%, plus the applicable margin. As of March 31, 2005, the one month LIBOR exceeds 2.25%.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



Cash Flows



Comparison of three months ended March 31, 2005 to three months ended
March 31, 2004



Cash and cash equivalents were $54.5
million as of March 31, 2005 and $438,000 as of March 31, 2004.



Net cash used in operating activities decreased by $2.4 million to $2.4 million for the three months ended March 31, 2005 compared to $4.8 million for the three months ended March 31, 2004. The decrease was



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primarily a result of an increase in non-cash items, including an increase in depreciation and amortization expense of $1.9 million resulting from the
combination of One Commerce Square effective June 1, 2004, an increase of $1.1 million in equity in net loss of unconsolidated/uncombined real estate entities and a decrease in gain on sale of real estate of $975,000. These increases were offset by
an increase in minority interest loss of $1.5 million. Further, net cash used in operations decreased due to a $3.2 million decrease in other assets, primarily as a result of a $3.0 million deposit in connection with the acquisition of the 50%
interest in One Commerce Square in 2004 and costs incurred related to the Offering, and a $2.2 million increase in prepaid rent at Two Commerce Square, a $796,000 increase in rents and other receivables, offset by a $2.4 million decrease in accounts
payable and other liabilities, a $1.5 million decrease in due to affiliate and a $1.5 million decrease in receivablesunconsolidated/uncombined real estate entities and a $525,000 increase in deferred tax asset.



Net cash provided by investing activities decreased by $2.4 million to $2.6
million for the three months ended March 31, 2005 compared to $5.0 million for the three months ended March 31, 2004. The decrease was primarily a result of the acquisition of the four properties in suburban Philadelphia by our joint venture with
CalSTRS in March 2005. The decrease was also a result of an increase in real estate improvements of $1.6 million, and an increase in net contributions to unconsolidated real estate entities of $4.3 million. These decreases were offset by a decrease
in short-term investments and restricted cash, and proceeds of $3.3 million from the sale of development property to an unaffiliated third party in 2004.



Net cash used in financing activities decreased by $1.1 million to $2.2 million for the three months ended March 31, 2005 compared to $3.3 million for the
three months ended March 31, 2004. The decrease was primarily a result of lower principal payments on the debt obligations of Two Commerce Square during the three months ended March 31, 2005 compared to the three months ended March 31, 2004.



Inflation



Substantially all of our office leases provide for tenants to reimburse us
for increases in real estate taxes and operating expenses related to the leased space at the applicable property. In addition, many of the leases provide for increases in fixed base rent. We believe that inflationary increases may be partially
offset by the contractual rent increases and expense reimbursements as described above. Our existing multi-family residential property and the planned multi-family residential property we are considering are both located in the Philadelphia central
business district. These residential properties are subject to short-term leases. As a result, inflation can often be offset by increased rental rates. However, a weak economic environment may restrict our ability to raise rental rates.



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



A primary market risk faced by our company is interest rate risk. We intend to mitigate this risk by seeking to maintain a target debt-to-gross assets
ratio of approximately 60%, while continuously evaluating all available debt and equity resources and following established risk management policies and procedures. Our strategy is to match as closely as possible the expected holding periods and
income streams of our assets with the terms of our debt. In general, we intend to use floating rate debt on assets with higher growth prospects and less stability to their income streams. Correspondingly, with respect to stabilized assets with lower
growth rates, we will generally use longer-term fixed-rate debt. As of March 31, 2005, our company had an insignificant level of outstanding consolidated floating rate debt.



City National Plaza is encumbered by a $200 million senior mortgage facility bearing interest at a floating rate of 1.75%
above LIBOR, which we have hedged by entering into an interest rate cap agreement. In addition, City National Plaza is encumbered by a $125 million senior mezzanine loan at a floating rate of 4.5% above LIBOR, of which $36.6 million has been funded
as of March 31, 2005, with respect to which we are required to purchase interest rate cap agreements as we borrow under this facility, and a $25 million junior mezzanine loan. The junior mezzanine loan bears interest at a floating rate of 6.2% above
LIBOR. We have purchased an interest



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rate cap for this loan. Four Falls Corporate Center, Oak Hill Plaza, Walnut Hill Plaza and Valley Square Office Park are encumbered by total debt of $111.2
million, $33.7 million of which bears interest at floating rates. The mortgage facilities for Reflections I and Reflections II bear interest at fixed rates.



Our fixed and variable rate long-term debt at March 31, 2005 consisted of the following (in thousands):



|                               |  |            |         |   |               |   |       |       |  |   |         |  
|------------------------------ |  | ---------- | ------- | - | ------------- | - | ----- | ----- |  | - | ------- | -
|Year of Maturity               |  | Fixed Rate |         |   | Variable Rate |   |       | Total | 
|2005                           |  | $          | 6,423   |   |               | $ | 7,500 |       |  | $ | 13,923  |  
|2006                           |  |            | 9,369   |   |               |   |      |       |  |   | 9,369   |  
|2007                           |  |            | 10,361  |   |               |   |      |       |  |   | 10,361  |  
|2008                           |  |            | 4,763   |   |               |   |      |       |  |   | 4,763   |  
|2009                           |  |            | 2,192   |   |               |   |      |       |  |   | 2,192   |  
|Thereafter                     |  |            | 252,223 |   |               |   |      |       |  |   | 252,223 |  
|                               |  |            |         |   |               |   |       |       |  |   |         |  
|Total                          |  | $          | 285,331 |   |               | $ | 7,500 |       |  | $ | 292,831 |  
|                               |  |            |         |   |               |   |       |       |  |   |         |  
|Weighted average interest rate |  |            | 9.0     | % |               |   | 5.8   | %     |  |   | 8.9     | %



We utilize sensitivity
analyses to assess the potential effect of our variable rate debt. At March 31, 2005, our variable rate long-term debt represents 2.6% of our total long-term debt. If interest rates were to increase by 50 basis points, or by approximately 10% of the
weighted average variable rate at March 31, 2005, the net impact would be increased costs of $38,000 per year.



As of March 31, 2005, the fair value of our mortgage and other secured loans aggregates $274.1 million, compared to the aggregated carrying value of
$294.3 million.



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



Evaluation of Disclosure Controls and Procedures



We have adopted and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that
we file or submit under the Securities Exchange Act, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission
(SEC) and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and
management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.



As required by Rule 13a-15(b), promulgated by the SEC under the Exchange Act, we have carried out an evaluation, under the supervision and with the
participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on
the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms.



There has been no change in our internal control over financial reporting that occurred during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION



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



None



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



Use of Proceeds



We completed our Offering on October 13, 2004. We sold 14,285,714 shares of common stock at a price to the public of $12.00 per share, resulting in net
proceeds of $151.9 million.



On March 2, 2005, we used $8.8
million of the remaining proceeds of the Offering to fund our co-investment obligation to our joint venture with CalSTRS for the acquisition of four properties in Philadelphia. In April 2005, we used a portion of the proceeds of the Offering to
repay the outstanding principal of $9.3 million on the One Commerce Square mezzanine loan.



We intend to use the remaining net proceeds to fund development costs associated with our development properties, and towards our co-investment obligation to our joint venture with CalSTRS or other future property
acquisitions.



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



None.



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



None.



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



None.



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



|                                                                                                                                                                                                                                                                           |  |                                                                                                    
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                           | 
|(a)                                                                                                                                                                                                                                                                        |  | Exhibits                                                                                           
|                                                                                                                                                                                                                                                                           | 
|31.1                                                                                                                                                                                                                                                                       |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|                                                                                                                                                                                                                                                                           | 
|31.2                                                                                                                                                                                                                                                                       |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|                                                                                                                                                                                                                                                                          
|In accordance with SEC Release 33-8212, the following exhibits are being furnished, and are not being filed aspart of this report or as a separate disclosure document, and are
not being incorporated by reference into anySecurities Act of 1933 registration statement.
|                                                                                                                                                                                                                                                                           | 
|32.1                                                                                                                                                                                                                                                                       |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|                                                                                                                                                                                                                                                                           | 
|32.2                                                                                                                                                                                                                                                                       |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES



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



Dated: May 13, 2005



THOMAS PROPERTIES GROUP, INC.By:

/s/    JAMES A.
THOMASJames A. ThomasChief Executive OfficerBy:

/s/    DIANA M.
LAINGDiana M. LaingChief Financial Officer




27