Exhibit
99.1






































MACK-GREEN-GALE
LLC AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS AT DECEMBER 31, 2008 AND 2007 AND


CONSOLIDATED
STATEMENTS OF OPERATIONS,


CHANGES
IN MEMBERS’ CAPITAL AND


CASH
FLOWS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007


AND
FOR THE PERIOD FROM MAY 9, 2006 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31, 2006





























MACK-GREEN-GALE
LLC AND SUBSIDIARIES


CONSOLIDATED
FINANCIAL STATEMENTS


TABLE
OF CONTENTS








Page
      No.Report
      of Independent Registered Public Accounting Firm
                1Consolidated
      Balance Sheets
                2Consolidated
      Statements of Operations
                3Consolidated
      Statements of Changes in Members’ Capital
                4Consolidated
      Statements of Cash Flows
                5Notes
      to Consolidated Financial Statements
                6 -
      18














REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














To the
Members of


Mack-Green-Gale
LLC








We have
audited the accompanying consolidated balance sheets of Mack-Green-Gale LLC and
Subsidiaries (the “Company”) as of December 31, 2008 and 2007 and the
related consolidated statements of operations, changes in members’ capital and
cash flows for the years ended December 31, 2008 and 2007, and for the period
May 9, 2006 (commencement of operations) through December 31,
2006.  These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.





We
conducted our audits in accordance with auditing standards generally accepted in
the United States of America.  Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement.  An audit includes consideration of internal control
over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of
December 31, 2008 and 2007, and the results of their operations and their
cash flows for the years ended December 31, 2008, 2007, and for the period May
9, 2006 (commencement of operations) through December 31, 2006, in conformity
with accounting principles generally accepted in the United States of
America.











/s/Cornerstone Accounting
Group LLP


New York,
New York


February
9, 2009




















MACK-GREEN-GALE
LLC AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(Dollar
amounts in thousands)








December
      31,ASSETS
              2008
              2007Investment
      in real estate, net of accumulated depreciation of $34,332 and
      $21,612
              $   326,912
              $368,028Cash
      and cash equivalents
              2,184
              10,794Restricted
      cash
              10,932
              9,141Accounts
      receivable, net of allowance for doubtful accounts of $412 and
      $1,216
              367
              560Other
      assets, net of accumulated amortization of $2,429 and
    $1,484
              14,967
              10,751Acquired
      favorable lease intangibles, net of accumulated amortization of $18,877
      and $12,582
              16,941
              24,434$   372,303
              $423,708LIABILITIES
      AND MEMBERS’ CAPITALLiabilitiesMortgage
      notes payable
              $   276,752
              $281,746Accounts
      payable and accrued expenses
              8,403
              8,469Tenant
      security deposits
              789
              677Prepaid
      rent
              1,701
              2,047Acquired
      unfavorable lease intangibles, net of accumulated amortization of $7,057
      and $4,415
              12,912
              15,554300,557
              308,493Minority
      Interest
              2,384
              3,865Commitments
      and ContingenciesMembers’
      Capital
              69,362
              111,350$   372,303
              $423,708





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




















2


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Dollar
amounts in thousands)











Year
      ended December 31,
            Period
      from
              May
      9, 2006 (commencement of operations) throughRevenues:
            2008
            2007
            December
      31, 2006Base
      Rents
            $    47,055
            $   47,708
            $    29,538Escalations
      and other tenant recoveries
            2,703
            3,475
            1,653Other
      income
            1,527
            422
            2,14451,285
            51,605
            33,335Expenses:Real
      estate taxes
            5,384
            6,246
            3,871Other
      operating expenses
            15,081
            15,763
            9,791Interest
            17,381
            21,218
            13,527Depreciation
      and amortization
            20,433
            19,437
            14,243Selling,
      general and administrative
            811
            1,768
            517Impairment
      charge
            32,294
            ---
            ---91,384
            64,432
            41,949Gain
      on sale of investment in joint venture
            ---
            1,054
            ---Minority
      interest
            1,357
            415
            298Loss
      from continuing operations
            (38,742)
            (11,358)
            (8,316)Discontinued
      operations (net of minority interest):Loss
      from operations of properties
            ---
            (3,261)
            (4,775)(Loss)/Gain
      from sale of real estate
            ---
            (21,559)
            422Net
      Loss
            $
      (38,742)
            $
      (36,178)
            $
      (12,669)














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








3


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL


(Dollar
amounts in thousands)














Mack-Cali
      Ventures
              L.L.C.
            Gale
      SLG NJ LLC
            TotalInitial
      Capital Contributions
            $  110,802
            $    62,343
            $  173,145Distributions
            (84)
            (7,992)
            (8,076)Net
      loss
            (4,917)
            (7,752)
            (12,669)Members’
      Capital, December 31, 2006
            $  105,801
            $    46,599
            $  152,400Distributions
            (51)
            (4,821)
            (4,872)Net
      loss
            (6,222)
            (29,956)
            (36,178)Members’
      Capital, December 31, 2007
            $    99,528
            $    11,822
            $  111,350Distributions
            (32)
            (3,214)
            (3,246)Net
      loss
            (25,374)
            (13,368)
            (38,742)Members’
      Capital, December 31, 2008
            $    74,122
            $   (4,760)
            $    69,362



























































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








4


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Dollar
amounts in thousands)





Year
      ended December 31,
            Period
      from
              May
      9, 2006 through December 31,2008
            2007
            2006Cash
      Flows from Operating Activities:Net
      Loss
            $
      (38,742)
            $
      (36,178)
            $
      (12,669)Adjustments to reconcile net
      loss to net cash provided by (used in) operating
      activities:Depreciation
      and amortization
            20,433
            24,751
            21,129Amortization
      of deferred loan cost
            264
            1,437
            725Amortization
      of acquired above and below market lease intangibles
            (2,181)
            (2,651)
            (2,124)Minority
      interest in loss
            (1,357)
            (1,289)
            (451)Impairment
      charge
            32,294
            ---
            ---Gain
      on sale of investment in joint venture
            ---
            (1,054)
            ---Loss
      (gain) on sale of real estate
            ---
            22,318
            (437)Restricted
      cash
            (1,791)
            4,501
            (13,642)Accounts
      receivable, net
            193
            (142)
            (418)Unbilled
      rents receivable
            (1,319)
            (4,252)
            (4,128)Deferred
      lease costs
            (4,029)
            (645)
            (3,164)Other
      assets
            187
            661
            (2,002)Accounts
      payable and accrued expenses
            332
            (4,752)
            9,494Tenant
      security deposits
            112
            69
            609Prepaid
      rent
            (346)
            (374)
            2,421Due
      to affiliates
            (398)
            ---
            3,727Net
      cash provided by (used in) operating activities
            3,652
            2,400
            (930)Cash
      Flows (Used In) Provided by Investing Activities:Net
      proceeds from sale of real estate
            ---
            81,864
            559Net
      proceeds from sale of investment in joint venture
            ---
            9,787
            ---Investment
      in joint venture
            ---
            446
            (9,180)Return
      of purchase price
            358
            459
            334Additions
      to real estate and intangible assets
            (4,256)
            (4,022)
            (515,127)Net
      cash (used in) provided by investing activities
            (3,898)
            88,534
            (523,414)Cash
      Flows (Used In) Provided by Financing Activities:Increase
      in deferred financing costs
            ---
            ---
            (3,344)Contributions
      from members
            ---
            ---
            173,145Contributions
      from minority interest
            ---
            ---
            6,128Mortgage
      notes payable
            ---
            3,275
            527,000Principal
      repayments on mortgage notes payable
            (4,994)
            (84,892)
            (163,637)Distributions
      to members
            (3,246)
            (4,872)
            (8,076)Distributions
      to minority interest
            (114)
            (171)
            (287)Redemptions
            (10)
            (55)
            (10)Net
      cash (used in) provided by financing activities
            (8,364)
            (86,715)
            530,919Net
      change in cash and cash equivalents
            (8,610)
            4,219
            6,575Cash
      and cash equivalents, beginning of period
            10,794
            6,575
            ---Cash
      and cash equivalents, end of period
            $      2,184
            $    10,794
            $     6,575Supplemental
      Disclosure of Cash Flow Information:
              Cash
      paid during the period for interest
            $    17,306
            $    25,635
            $   14,930


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





5


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





1.
            ORGANIZATION
      AND RELATED MATTERS





Mack-Green-Gale
LLC, together with its subsidiaries, (the “Company”), a Delaware limited
liability company, was established as a joint venture between Mack-Cali Ventures
L.L.C. (the “CLI Member”) and Gale SLG NJ LLC (the “Gale/SLG Member”) to acquire
100% of the membership interests in Gale SLG NJ GP LLC, a Delaware limited
liability company and the 0.9600% general and 95.6025% limited partnership
interests in the Gale SLG NJ Operating Partnership, L.P.








a.      Significant
Transactions





On
December 18, 2007, eight properties located in Troy, Michigan were sold for
$83,500.  Third-party debt allocated to the properties in the amount
of $78,886 was repaid and a net loss of $21,559 (net of $759 in minority
interest) was recognized on the sale.





On July
16, 2007, the membership interest in Transwestern SL Gale Naperville, LLC, a
joint venture, was sold for $9,956 and the note payable of $5,350 was
repaid.  A net gain of $1,054 was recognized on the sale.





On August
3, 2006, a parcel of land located at 5600 New King Street in Troy, Michigan was
sold for $559 and a net gain of $422 (net of $15 in minority interest) was
recognized on the sale.





b.      Other
Matters


At
December 31, 2008, a summary of the real estate by regional market/park where
the Company’s assets are located are as follows:





Aggregate
              Square
      Feet
            Number
      of
              Properties(Unaudited)
            (Unaudited)New
      Jersey:Lyndhurst
            242,517
            2Parsippany
            456,514
            3Roseland
            862,972
            6Bridgewater
            198,376
            1Princeton
            293,761
            3Warren
            120,528
            1Branchburg
            63,213
            1Total
            2,237,881
            17

















6


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





2.      SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





a.
            Principles
      of Consolidation





The
accompanying consolidated financial statements include the consolidated accounts
of the Company.  All significant inter-company accounts and
transactions have been eliminated.





b.
            Reclassifications





Certain
prior year balances have been reclassified in order to conform to the current
year presentation.





c.
            Use
      of Estimates





The
preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes.  Actual
results could differ from those estimates.





d.
            Cash
      Equivalents





Cash
equivalents consist of short-term, highly liquid investments, which are readily
convertible into cash, and have original maturity dates of three months or less
at the time of purchase.




e.
            Accounts
      Receivable







The
Company periodically performs a detailed review of amounts due from tenants and
clients to determine if accounts receivable balances are impaired based on
factors affecting the collectibility of those balances.  The Company’s
estimate of the allowance for doubtful accounts requires the Company to exercise
significant judgment about the timing, frequency and severity of collection
losses, which affects the allowance and net income.





f.
            Restricted
      Cash





Restricted
cash is comprised of tenant security deposits and escrow and reserve funds for
debt service, real estate taxes, property insurance, operating expenses, capital
improvements, tenant improvements and leasing costs, established pursuant to
certain mortgage financing arrangements and is comprised of the
following:





December
      31,2008
            2007Security
      deposits
            $       866
            $     741Escrow
      and other reserve funds
            10,066
            8,400$  10,932
            $  9,141











7


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)








2.  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





g.
            Rental
      Properties and Intangible Assets





The
Company assesses the fair value of acquired assets (including land, buildings
and improvements, and identified intangibles such as above and below market
leases and acquired in-place leases) and acquired liabilities in accordance with
SFAS No. 141: Business Combinations and allocates the purchase price based on
these assessments.  The Company assesses fair value based on estimated
cash flow projections that utilize appropriate discount and capitalization rates
and available market information.  Estimates of future cash flows are
based on a number of factors including the historical operating results, known
trends, and market/economic conditions that may affect the
property.





The cost
of maintenance and repairs is charged to expense as incurred. Depreciation is
computed on a straight-line basis over the estimated useful lives of the assets
as follows:








Buildings
      and improvements
            40
      yearsLand
      improvements
            15 yearsTenant
      improvements
            Lesser
      of lease term or estimated useful lifeFurniture,
      fixtures and equipment
            5-7
      years








Above and
below market lease values for acquired properties are recorded based on the
present value (using a discount rate which reflects the risks associated with
the leases acquired) of the difference between (i) the contractual amounts to be
paid pursuant to each in place lease and (ii) management’s estimate of the fair
market lease rates for each corresponding in-place lease, measured over a period
equal to the remaining term of the lease.  The capitalized above and
below market lease values are amortized as a reduction or addition to base
rental revenue over the remaining term of the respective leases.





Other
intangible assets acquired include amounts for the in-place lease values which
are based on management’s evaluation of the specific characteristics of each
tenant’s lease. Factors considered by management in its analysis of in-place
lease values include an estimate of carrying costs during the hypothetical
expected time it would take management to find a tenant to lease the space for
the existing lease term (a “lease-up period”) considering current market
conditions, and costs to execute similar leases.  Management estimates
carrying costs, including such factors as real estate taxes, insurance and other
operating expenses during the expected lease-up period, considering current
market conditions.  In estimating costs to execute similar leases,
management considers leasing commissions, legal and other related
expenses.  The value of in-place leases is amortized to expense over
the remaining initial terms of the respective leases.














8


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





2.  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





g.      Rental
Properties and Intangible Assets (continued)





The
Company reviews real estate and the related intangible assets for impairment
whenever events or changes in circumstances indicate that the carrying value of
assets to be held and used may not be recoverable. In performing the review for
recoverability of carrying value of property held for use, estimates are made of
the future undiscounted cash flows from each of the properties during the period
the property will be held and upon its eventual disposition.  If the
expected future undiscounted cash flows are less than the carrying value of such
property, an impairment charge is recognized resulting in a write-down of the
carrying value of the property to an amount based on its fair
value.





Property
held for sale is reported at the lower of its carrying amount or its estimated
fair value less costs to sell.  Once property is held for sale,
depreciation expense is no longer recorded.  The operations of the
property held for sale or property which has been sold are reported in
discontinued operations in the accompanying consolidated statements of
operations and assets and liabilities attributable to property held for sale are
classified separately in the consolidated balance sheets for all periods
presented.





For
property to be disposed of, an impairment charge is recognized when the fair
value of the property, less the estimated costs to sell, is less than the
carrying amount of the property measured at the time the Company makes a
commitment to sell the property.





h.      Other
Assets





Deferred
lease costs consist of commissions paid on leases, inducements paid to tenants
and other costs directly attributable to acquiring and effectuating lease
agreements, all of which are capitalized and amortized using the straight-line
method over the lives of the related lease terms.





Deferred
financing costs consist of fees and costs incurred to obtain financing and are
amortized over the terms of the respective agreement. Unamortized deferred
financing costs are expensed when the associated debt is retired prior to
maturity.





i.      Revenue
and Profit Recognition





Rental
revenue is recognized on a straight-line basis over the non-cancelable term of
the lease. The excess of rents so recognized over amounts contractually due
pursuant to the underlying leases is included in other assets on the
accompanying consolidated balance sheets.





Sales of
real estate assets are recognized at closing subject to the receipt of adequate
down payment and the meeting of other requirements in accordance with applicable
accounting guidelines.





Gains and
losses recognized on sales of real estate in which the Company has no continuing
involvement are classified as discontinued operations in the consolidated
statements of operations.





9


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





2.   SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





j.      Income
Taxes





The
Company is organized as limited partnerships and limited liability companies
and, accordingly, no provision is made for federal or state income taxes, since
income or loss of the Company must be reported by the respective Members on
their individual tax returns.





The tax
reporting entity’s tax return is subject to examination by federal and state
taxing authorities.  Because many types of transactions are
susceptible to varying interpretations under federal and state income tax laws
and regulations, the amounts reported in the accompanying consolidated
financials statements may be subject to change at a later date upon final
determination by the respective taxing authorities.





In July
2006, the FASB issued FIN 48, ”Accounting for Uncertainty in Income Taxes” - an
interpretation of FASB Statement No. 109, “Accounting for Income
Taxes”.  This interpretation addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements.  Under FIN 48, the Company may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the
position.  The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a
greater than 50% likelihood of being realized upon ultimate
settlement.  FIN 48 also provides guidance on de-recognition,
classification, interest and penalties on income taxes, accounting in interim
periods and requires increased disclosures.





The
adoption of FIN 48 did not have an impact on the Company’s consolidated
financial statements.





k.      Concentration
of Tenant and Credit Risk





Management
of the Company performs ongoing evaluations of its tenants and requires certain
tenants to provide security deposits.  Credit risk is dependent on the
economic conditions in the respective markets and the financial condition of the
tenant.





The
Company maintains its cash and cash equivalents in financial
institutions.  The combined balances at each institution periodically
exceed FDIC insurance coverage limits.  The Company believes the risk
is not significant.























10


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





2.   SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





l.      Advertising
and Marketing Costs





Advertising
and marketing costs were $160, $95 and $53 for the years ended December 31,
2008, 2007 and the period from May 9, 2006 (commencement of operations) through
December 31, 2006, respectively, and are included in selling, general and
administrative expense.  These costs are expensed as
incurred.





m.      Minority
Interest





Minority
interest represents investors’ interests of 3.4% at December 31, 2008 and 2007
which, under certain conditions, are redeemable for cash at a redemption price
determined by using a formula which is tied to the trading prices of shares of
common stock of four leading Real Estate Investment Trusts specializing in the
ownership and management of office properties.  The amount the Company
would be required to pay to redeem the interests at December 31, 2008 and 2007
is $1,958 and $3,331, respectively.








3.      IMPACT
OF RECENTLY ISSUED ACCOUNTING STANDARDS





Fair Value Measurements –
SFAS 157 & The Fair Value Option for Financial Assets and Financial
Liabilities – SFAS 159





Effective
January 1, 2008, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 157, “Fair Value Measurements” (SFAS 157) and SFAS No. 159 “The Fair
Value Option for Financial Assets and Financial Liabilities” (SFAS
159).  SFAS 157 defines fair value, establishes a framework for
measuring fair value under accounting principles generally accepted in the
United States (GAAP) and enhances disclosures about fair value
measurements.  Fair value is defined under SFAS 157 as the exchange
price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the
measurement date.  SFAS 159 allows an entity the irrevocable option to
elect fair value for the initial and subsequent measurement for certain
financial assets and liabilities on a contract-by-contract basis.  The
impact of adopting both SFAS 157 and SFAS 159 was immaterial to the
Company.





In
February 2008, the FASB deferred the effective date of SFAS 157 for one-year for
non-financial assets and non-financial liabilities that are recognized or
disclosed at fair value on a nonrecurring basis.  SFAS 157 is now
effective for those assets and liabilities for years beginning after November
15, 2008.














11


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





3.      IMPACT
OF RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)





FASB
Statement No. 160 (“FASB No. 160”),Non-controlling Interests in
Consolidated Financial Statements – an Amendment of ARB No.
51





In
December 2007, the FASB issued No. 160, which establishes and expands accounting
and reporting standards for minority interests, which will be re-characterized
as non-controlling interests, in a subsidiary and the deconsolidation of a
subsidiary.  This statement is effective for fiscal years beginning on
or after December 15, 2008.  The Company is currently assessing the
potential impact that the adoption of FASB No. 160 will have on its financial
position and results of operations.





4.      FAIR
VALUE OF FINANCIAL INSTRUMENTS





The
techniques used to value financial instruments where quoted market prices are
not available are significantly affected by the assumptions used, including the
discount rates and the estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instrument.





The
methods and assumptions used to estimate the fair value of financial instruments
are as follows:





a.
            The
      carrying value of cash and cash equivalents, restricted cash, accounts
      receivable, accounts payable and accrued expenses, and tenant security
      deposits, approximates their fair value due to the short maturities of
      these items.





b.
            At
      December 31, 2008, the fair values of mortgage notes payable are estimated
      as the value of the discounted cash flow required to service the
      loan.  The rate used to discount the cash flow is based upon the
      yield as of December 31, 2008 for a U.S. Treasury with a similar maturity
      date as the loan, adjusted for risk factors.  The $186,465
      carrying value of fixed rate mortgage notes payable have an approximate
      fair value of $140,405 at December 31, 2008.  At December 31,
      2008, fair values of variable rate mortgage notes payable approximate
      their carrying values because such mortgages re-price
      frequently.























12


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





5.      INVESTMENT
IN REAL ESTATE





a.      Investment
in real estate consists of the following:





December
      31,2008
            2007Land
            $    53,917
            $    61,864Building
      and improvements
            307,327
            327,776361,244
            389,640Accumulated
      depreciation
            (34,332)
            (21,612)$  326,912
            $  368,028





b.      Discontinued
operations





There
were no discontinued operations during the year ended December 31,
2008.





For the
year ended December 31, 2007, revenue and net loss attributable to discontinued
operations which were operations from properties sold in 2007 were $15,976 and
$3,261 (net of $115 in minority interest), respectively which include interest
expense attributable to the mortgage notes payable secured by the sold
properties in the amount of $5,488.





For the
period from May 9, 2006 (commencement of operations) through December 31, 2006,
revenue and net loss attributable to discontinued operations which were
operations from properties sold in 2007 were $10,928 and $4,775 (net of $168 in
minority interest), respectively which include interest expense attributable to
the mortgage notes payable secured by the sold properties in the amount of
$3,590.





6.      OTHER
ASSETS





Other
assets are comprised of the following:





December
      31,2008
            2007Deferred
      financing costs
            $    1,733
            $    1,733Deferred
      lease costs
            7,024
            2,995Unbilled
      rents receivable
            7,902
            6,583Prepaid
      other
            737
            92417,396
            12,235Accumulated
      amortization
            (2,429)
            (1,484)$  14,967
            $  10,751




















13


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





7.      ACQUIRED
FAVORABLE AND UNFAVORABLE LEASE INTANGIBLES





In
accordance with SFAS No. 141: Business Combinations, intangible lease costs and
in-place lease obligations are comprised of the following:





December
      31,2008
            2007Above
      market lease value
            $    2,520
            $    2,520In-place
      lease value
            33,298
            34,49635,818
            37,016Accumulated
      amortization
            (18,877)
            (12,582)$  16,941
            $  24,434





The
acquired unfavorable lease intangibles are $12,912 and $15,554, net of $7,057
and $4,415 in accumulated amortization, at December 31, 2008 and 2007,
respectively. The net amortization of the acquired above and below market lease
intangibles of $2,181, $2,651 and $2,124 for the years ended December 31, 2008,
2007 and the period from May 9, 2006 (commencement of operations) through
December 31, 2006, respectively, is reflected as an increase to rental revenue
in the accompanying consolidated statements of operations.





The
estimated annual amortization of acquired below market value leases net of
acquired above market value leases for each of the succeeding five years and
thereafter is as follows:





2009
            $    1,8952010
            1,7062011
            1,7442012
            1,7782013
            1,609Thereafter
            3,084$  11,816








Amortization
of acquired in-place lease value of $7,032, $8,687 and $9,003 for the years
ended December 31, 2008, 2007 and the period from May 9, 2006 (commencement of
operations) through December 31, 2006, respectively, is included in depreciation
and amortization in the accompanying consolidated statements of operations. The
estimated annual amortization of acquired in-place lease value for each of the
succeeding five years and thereafter is as follows:





2009
            $    6,1372010
            4,5082011
            2,5972012
            1,8942013
            592Thereafter
            117$  15,845








14


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





8.      MORTGAGE
NOTES PAYABLE





Mortgage
notes payable at December 31, 2008 and 2007 consisted of the
following:





December
      31,Lender
            2008
            2007
            Interest
      Rate
            MaturityI.  Wachovia Bank,
      N.A.2014
      Loans
            $  107,691
            $  109,261
            6.26%
            August
      11, 20142016
      Loans
            78,774
            78,923
            6.27%
            May
      11, 2016II.
      Gramercy Warehouse Funding I LLC
            90,287
            90,287
            LIBOR
      + 2.75%*
            May
      9, 2009III.
      Mack-Cali Realty, L.P.
            ---
            3,275
            LIBOR
      + 4.00%*
            January
      17, 2009$   276,752
            $  281,746








* London
Interbank Offered Rate (LIBOR) at December 31, 2008 was 0.44%.











I.
            The
      fixed rate loans require monthly payments of principal and interest, and
      tax, insurance and replacement escrows.  The loans may be
      prepaid subject to usual and customary yield maintenance provisions, and
      are secured by ten properties located in New
  Jersey.





II.
            The
      cross-collateralized, cross-defaulted, interest-only loan is secured by
      six properties and a pledge of distributions from excess cash flows on
      another property.  The loan has two remaining one-year extension
      options subject to satisfying the following conditions: (i) the Debt
      Service Coverage Ratio as of the payment date which is immediately prior
      to the effective maturity date (i.e. without giving effect to such
      extension) is 1.10 to 1.00 or greater, and (ii) a rate cap agreement with
      a term of not less than one year.  Extension and pay-off of this
      loan is subject to a 25 basis point exit
fee.





III.
            Secured
      by one property, this interest-only loan had a maximum borrowing capacity
      of $7,000.








The
Company’s real estate and related leases collateralized the mortgage notes
payable noted above.




















15


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar amounts in
thousands)





8.      MORTGAGE
NOTES PAYABLE (Continued)





The
aggregate principal payments and maturities of mortgage notes payable for each
of the next five years and thereafter at December 31, 2008 are as
follows:





2009
            $    92,2152010
            2,0552011
            2,5412012
            2,9522013
            3,177Thereafter
            173,812$  276,752





9.      BASE
RENTS





The
Company, as lessor, leases commercial space under operating leases. Leased
properties include both single and multi-tenant facilities. The future minimum
rental receipts due on non-cancelable operating leases for the next five years
and thereafter at December 31, 2008 are as follows:





2009
            $    44,5712010
            42,3422011
            38,6952012
            36,2112013
            32,294Thereafter
            89,781$  283,894








Substantially
all of these lease agreements contain provisions which provide for the
reimbursement of real estate taxes and operating expenses over the base year
amounts and rental increases tied to increases in, among other factors, the
consumer price index.





In 2006,
the Company received $2,000 from one tenant for early termination of their
lease.  This amount is included in other income.


























16


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





10.         RELATED
PARTY TRANSACTIONS





The
Company, which does not employ any personnel, designated The Gale Management
Company, L.L.C. (a subsidiary of Mack-Cali Realty, L.P.) and/or its affiliates
(“Gale”) to be the administrator of the Company pursuant to a one-year
Management Agreement (the “Management Agreement”) which is automatically
renewable for successive one year periods.  Under the Management
Agreement, Gale provides the Company’s property management, construction,
leasing, accounting and other services as needed.





The
Company incurred $8,712, $8,515 and $5,476 for management fees, leasing fees,
tenant improvements, other operating costs and direct expenses relating to
building operations, and improvements made to the properties for the years ended
December 31, 2008, 2007 and the period from May 9, 2006 (commencement of
operations) through December 31, 2006, respectively.  Included in
accounts payable and accrued expenses in the accompanying consolidated balance
sheets, are amounts due to Gale at December 31, 2008 and 2007 aggregating $520
and $523, respectively, attributable to the above-referenced costs.





Included
in accounts payable and accrued expenses at December 31, 2008 and 2007 is $2,318
and $2,939, respectively, due to the members.  This amount does not
bear interest and is expected to be repaid in the normal course of
business.





The
Company paid interest expense of $5,308, $7,377 and $4,309 to Gramercy Warehouse
Funding I LLC, an affiliate of SL Green Realty Corp, Inc., a related party, and
$61, $216 and $0 to Mack-Cali Realty, L.P., a related party, for the years ended
December 31, 2008, 2007 and the period from May 9, 2006 (commencement of
operations) through December 31, 2006, respectively (see Note 8).





11.         COMMITMENTS
AND CONTINGENCIES





The
Company, as an owner of real estate, is subject to various environmental laws of
federal and local governments.  Compliance by the Company with
existing laws has not had a material adverse effect on the Company’s financial
condition and results of operations, and management does not believe it will
have such an impact in the future. However, the Company cannot predict the
impact of new or changed laws or regulations on its current properties or on its
properties that it may acquire in the future.





The
Company is not aware of any litigation threatened against the Company other than
routine litigation arising out of the normal course of business, some of which
is expected to be covered by insurance, none of which is expected to have a
material adverse effect on the Company’s financial condition.

















17


MACK-GREEN-GALE
LLC AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollar
amounts in thousands)





11.         COMMITMENTS
AND CONTINGENCIES (Continued)





The
Company has entered into certain commitments to tenants regarding improvements
and fix-up allowances.  The estimated potential commitment as of
December 31, 2008 total $6,232.





12.         IMPAIRMENT
CHARGE





Due to
the downturn in the economy and, in particular, the Company’s anticipated
holding period pertaining to six properties encumbered under the Gramercy
Warehouse Funding I LLC loan that matures on May 9, 2009 (see Note 8),
management believes that this is an indicator that these properties’ carrying
amounts may not be recoverable at December 31, 2008.  In accordance
with Statement of Financial Accounting Standards No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”, the Company prepared an analysis
to estimate the sum of the undiscounted cash flows expected to result from the
use and eventual disposition of these properties.  Management
determined that the estimate of the aggregate future cash flows to be generated
by these properties are less than the book values of the total net rental
properties.  The book values of the total net rental properties exceed
its fair values by approximately $32,294, and the Company has recorded this
amount on their consolidated financial statements as an impairment charge for
the year ended December 31, 2008.  Fair values were estimated by using
a discounted cash flow technique, which considered the cash flows expected to
result from the use and eventual disposition of the properties discounted at an
appropriate rate.

































































18