UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





FORM 10 - Q





(Mark One)[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2010OR[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _________ to __________.





Commission File Number:  000-51940




FSP Galleria North Corp.


(Exact name of registrant as specified in its charter)





Delaware
20-1641289(State or other jurisdiction of
(I.R.S. Employerincorporation or organization)
Identification No.)





401 Edgewater Place


Wakefield, MA 01880


(Address of principal executive offices)(Zip Code)




(781) 557-1300


(Registrant’s telephone number, including area code)




N/A


(Former name, former address and former fiscal year, if changed since last report)





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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
 YES    |_|                                                                            NO    |_|
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer |_|

Accelerated filer |_|Non-accelerated filer   |_|   (Do not check if a smaller reporting company)
Smaller reporting company |X|
 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 YES    |_|                                                                            NO    |X|




The number of shares of common stock outstanding was 1 and the number of shares of preferred stock outstanding was 860, each as of July 31, 2010.














FSP Galleria North Corp.





Form 10-Q





Quarterly Report


June 30, 2010





Table of Contents


PagePart I.
Financial InformationItem 1.
Financial StatementsConsolidated Balance Sheets as of June 30, 2010 and December 31, 2009
2Consolidated Statements of Operations for the three and six months ended  June 30, 2010 and 2009
3Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009
4Notes to Consolidated Financial Statements
5-7Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
8-11Item 3.
Quantitative and Qualitative Disclosures About Market Risk
12Item 4.
Controls and Procedures
12Part II.
Other InformationItem 1.
Legal Proceedings
13Item 1A.
Risk Factors
13Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
13Item 3.
Defaults Upon Senior Securities
13Item 4.
Removed and Reserved
13Item 5.
Other Information
13Item 6.
Exhibits
13Signatures


14





1


PART I – FINANCIAL INFORMATION





Item 1.     Financial Statements.




FSP Galleria North Corp. Consolidated Balance Sheets
 (Unaudited)





June 30,


December 31,(in thousands, except shares and par value amounts)

2010


2009Assets:Real estate investments, at cost:Land

$
5,535


$
5,535Building and improvements


58,562



58,491Fixtures and equipment


69



6964,166



64,095Less accumulated depreciation


8,575



7,820Real estate investments, net


55,591



56,275Cash and cash equivalents


6,798



9,480Tenant rent and other receivable, less allowance fordoubtful accounts of $209 and $196, respectively


26



77Step rent receivable


1



-Prepaid expenses and other assets


40



31Total assets

$
62,456


$
65,863Liabilities and Stockholders’ Equity:Liabilities:Accounts payable and accrued expenses

$
569


$
2,028Total liabilities


569



2,028Commitments and ContingenciesStockholders’ Equity:Preferred Stock, $.01 par value, 860 sharesauthorized, issued and outstanding,aggregate liquidation preference $86,000at June 30, 2010 and December 31, 2009


-



-Common Stock, $.01 par value, 1 shareauthorized, issued and outstanding


-



-Additional paid-in capital


78,956



78,956Distributions in excess of retained earnings


(17,069
)


(15,121
)Total Stockholders’ Equity


61,887



63,835Total Liabilities and Stockholders’ Equity

$
62,456


$
65,863See accompanying notes to consolidated financial statements.





2





FSP Galleria North Corp.

Consolidated Statements of Operations

(Unaudited)
  For the


For theThree Months Ended


Six Months EndedJune 30,


June 30,(in thousands, except shares and per share amounts)

2010


2009


2010


2009Revenues:Rental

$
24


$
2,251


$
24


$
5,022Total revenue


24



2,251



24



5,022Expenses:Rental operating expenses


362



734



737



1,506Real estate taxes and insurance


261



80



494



525Depreciation and amortization


377



549



755



1,098Total expenses


1,000



1,363



1,986



3,129Income (loss) before interest income


(976
)


888



(1,962
)


1,893Interest income


7



10



14



23Net income (loss) attributable to preferred stockholders

$
(969
)

$
898


$
(1,948
)

$
1,916Weighted average number of preferred shares outstanding,basic and diluted


860



860



860



860Net income (loss) per preferred share, basic and diluted

$
(1,127
)

$
1,044


$
(2,265
)

$
2,228See accompanying notes to consolidated financial statements.





3





FSP Galleria North Corp.

Consolidated Statements of Cash Flows

(Unaudited)





For the

Six Months Ended

June 30,(in thousands)

2010


2009Cash flows from operating activities:Net income (loss)

$
(1,948
)

$
1,916Adjustments to reconcile net income (loss) to net cashprovided by (used for) operating activities:Depreciation and amortization


755



1,098Amortization of favorable real estate leases


-



150Increase in bad debt reserve


13



-Changes in operating assets and liabilities:Tenant rent receivable


38



110Step rent receivable


(1
)


16Prepaid expenses and other assets


(9
)


(392
)Accounts payable and accrued expenses


(1,459
)


(1,705
)Net cash provided by (used for) operating activities


(2,611
)


1,193Cash flows from investing activities:Purchase of real estate assets


(71
)


-Net cash used for investing activities


(71
)


-Cash flows from financing activities:Distributions to stockholders


-



(2,700
)Net cash used for financing activities


-



(2,700
)Net decrease in cash and cash equivalents


(2,682
)


(1,507
)Cash and cash equivalents, beginning of period


9,480



9,265Cash and cash equivalents, end of period

$
6,798


$
7,758See accompanying notes to consolidated financial statements.




4


FSP Galleria North Corp.


Notes to Consolidated Financial Statements


(Unaudited)





1.
Organization, Basis of Presentation, Real Estate and Depreciation, Financial Instruments, and Recent Accounting Pronouncement





Organization





FSP Galleria North Corp. (the “Company”) was organized on September 21, 2004 as a corporation under the laws of the State of Delaware to purchase, own and operate a sixteen-story Class “A” office tower containing approximately 379,518 rentable square feet of space located on approximately 4.8 acres of land in Dallas, Texas (the “Property”).  The Company acquired the Property on October 14, 2004.  Franklin Street Properties Corp. (“Franklin Street”) (NYSE Amex: FSP) holds the sole share of the Company’s common stock, $.01 par value per share (the “Common Stock”).  Between December 2004 and August 2005, FSP Investments LLC (member, FINRA and SIPC), a wholly-owned subsidiary of Franklin Street, completed the sale on a best efforts basis of 860 shares of preferred stock, $.01 par value per share (the “Preferred Stock”) in the Company.  FSP Investments LLC sold the Preferred Stock in a private placement offering to “accredited investors” within the meaning of Regulation D under the Securities Act of 1933.





All references to the Company refer to FSP Galleria North Corp. and its consolidated subsidiaries, collectively, unless the context otherwise requires.




Basis of Presentation





The unaudited consolidated financial statements of the Company include all the accounts of the Company and its wholly owned subsidiaries.  These financial statements should be read in conjunction with the Company's financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission (the “SEC”).





The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial information and in conjunction with the rules and regulations of the SEC.  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.  Operating results for the three and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010 or for any other period.




Real Estate and Depreciation
  Real estate assets are stated at the lower of cost or fair value, as appropriate, less accumulated depreciation.
  Costs related to property acquisition and improvements are capitalized.  Typical capital items include new roofs, site improvements, various exterior building improvements and major interior renovations.  Funding for capital improvements typically is provided by cash set aside at the time the Property was purchased.
  Routine replacements and ordinary maintenance and repairs that do not extend the life of the asset are expensed as incurred.  Funding for repairs and maintenance items typically is provided by cash flows from operating activities.
  Depreciation is computed using the straight-line method over the assets’ estimated useful lives as follows:
  Category

YearsBuilding - Commercial

39Building Improvements

15-39Furniture and Fixtures

5-7
 
 The Company reviews the Property to determine if the carrying amount will be recovered from future cash flows if certain indicators of impairment are identified at the Property.  The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods.  When indicators of impairment are present and the sum of the undiscounted future cash flows is less than the carrying value of such asset, an impairment loss is recorded equal to the difference between the asset’s current carrying value and its fair value based on discounting its estimated future cash flows.  At June 30, 2010 and December 31, 2009, no impairment charges were recorded.


5


FSP Galleria North Corp.


Notes to Consolidated Financial Statements


(Unaudited)




1.   Organization, Basis of Presentation, Real Estate and Depreciation, Financial Instruments, and Recent Accounting Pronouncement (continued)
 
 Financial Instruments
 
 The Company estimates that the carrying value of cash and cash equivalents approximate their fair values based on their short-term maturity and prevailing interest rates.
 
 Recent Accounting Pronouncement
 
 In May 2009, the Financial Accounting Standards Board issued a pronouncement which sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This pronouncement requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. This disclosure should alert all users of financials statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. The Company is adhering to the requirements of this pronouncement which was effective for financial periods ending after June 15, 2009.


2.
Income Taxes





The Company has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the "Code").  As a REIT, the Company generally is entitled to a tax deduction for dividends paid to its stockholders, thereby effectively subjecting the distributed net income of the Company to taxation at the shareholder level only.  The Company must comply with a variety of restrictions to maintain its status as a REIT.  These restrictions include the type of income it can earn, the type of assets it can hold, the number of stockholders it can have and the concentration of their ownership, and the amount of the Company’s income that must be distributed annually.





Accrued interest and penalties will be recorded as income tax expense, if the Company records a liability in the future. The Company files income tax returns in the U.S. federal jurisdiction and State of Texas jurisdiction.  The statute of limitations for the Company’s income tax returns is generally three years and as such, the Company’s returns that remain subject to examination would be primarily from 2006 and thereafter.





3.
Related Party Transactions





The Company has in the past engaged in and currently engages in transactions with a related party, Franklin Street, and its subsidiaries FSP Investments LLC and FSP Property Management LLC (collectively “FSP”).  The Company expects to continue to have related party transactions with FSP in the form of management fees paid to FSP to manage the Company on behalf of its stockholders.  FSP Property Management LLC currently provides the Company with asset management and financial reporting services.  The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the gross revenues of the Property.  The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice, effective at the end of the notice period.  For the six months ended June 30, 2010 and 2009, management fees paid were$0 and $56,000, respectively.





Franklin Street is the sole holder of our one share of Common Stock that is issued and outstanding.  Subsequent to the completion of the private placement of the Preferred Stock in August 2005, Franklin Street has not been entitled to share in earnings or any dividend related to the Common Stock of the Company.


6


FSP Galleria North Corp.


Notes to Consolidated Financial Statements


(Unaudited)


4.
Net Income Per Share
 
 Basic net income per share is computed by dividing net income by the weighted average number of shares of Preferred Stock outstanding during the period.  Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares.  There were no potential dilutive shares outstanding at June 30, 2010 and 2009.
 
 5.
Segment Reporting
 
 The Company operates in one industry segment, which is real estate ownership of commercial property.  The Company owned and operated the Property for all periods presented.


6.
Cash Distributions





The Company’s board of directors declared and paid cash distributions as follows:





Quarter Paid

Distributions Per

Preferred Share

Total 
DistributionsFirst quarter of 2010

$
-


$
-Second quarter of 2010

$
-


$
-First quarter of 2009

$
1,744


$
1,500,000Second quarter of 2009

$
1,395


$
1,200,000







7


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 and in our Annual Report on Form 10-K for the year ended December 31, 2009.  Historical results and percentage relationships set forth in the consolidated financial statements, including trends which might appear, should not be taken as necessarily indicative of future operations.  The following discussion and other parts of this Quarterly Report on Form 10-Q may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements.  Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.  Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States and in the market where we own the Property, the attractiveness of the Property to prospective tenants, our ability to find a replacement tenant or tenants for the space vacated by Tenet Hospitals Limited, continued disruptions in the debt markets, risks of a lessening of demand for the type of real estate owned by us, changes in government regulations, and expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.  Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  We may not update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.





Overview





We own and operate a sixteen-story Class A suburban office tower located in Dallas, Texas containing approximately 379,518 square feet of rentable space located on approximately 4.8 acres of land, which we refer to as the Property.  The Property was previously 100% leased to a single tenant, Tenet Hospitals Limited, which we refer to as Tenet Hospitals, whose lease expired on December 31, 2009.  The Property is currently vacant.




We operate in one business segment, which is real estate operations, and own a single property.  Our real estate operations involve real estate rental operations, leasing services and property management services.  The main factor that affects our real estate operations is the broad economic market conditions in the United States and, more specifically, the economic conditions in Dallas, Texas, the relevant submarket.  These market conditions affect the occupancy levels and the rent levels on both a national and local level.  We have no influence on national or local market conditions.




Trends and Uncertainties





Economic Conditions





The economy in the United States is continuing to experience significant disruptions, including high levels of unemployment, the failure and near failure of a number of large financial institutions, reduced liquidity and increased credit risk premiums for a number of market participants.  Economic conditions may be affected by numerous factors, including but not limited to, inflation and employment levels, energy prices, recessionary concerns, changes in currency exchange rates, the availability of debt and interest rate fluctuations.  The current disruptions in the U.S. economy have affected real estate values, occupancy levels and property income levels and may continue or worsen in the future.  We believe that the current disruptions in the U.S. economy have negatively impacted our ability to re-lease the space vacated by Tenet Hospitals on December 31, 2009.  At this time, we cannot predict the extent or duration of any negative impact that the current disruptions in the U.S. economy will have on our business and, more specifically, on our efforts to find a replacement tenant (or tenants) for Tenet Hospitals.





Real Estate Operations





On December 31, 2009, our lease with Tenet Hospitals expired and the Property is currently vacant.  Management had planned for this vacancy and is aggressively working with its local leasing team to re-lease the Property.  However, we may not be able to re-lease all of the space and any space that is re-leased may be at a rate that is significantly lower than the rate paid by Tenet Hospitals.




It is difficult for management to predict what will happen to occupancy and rents at the Property in the future because the need for space and the price tenants are willing to pay are tied to both the local economy and to the larger trends in the national economy, such as job growth, interest rates, the availability of credit and corporate earnings, which in turn are tied to even larger macroeconomic and political factors, such as recessionary concerns, volatility in energy pricing and the risk of terrorism.  In addition to the difficulty of predicting macroeconomic factors, it is difficult to predict how our local market or potential replacement tenants will suffer or benefit from changes in the larger economy.  In addition, because the Property is in a single geographical market, these macroeconomic trends may have a different effect on the Property and on potential replacement tenants, some of which may operate on a national level.


8


For the three months ended June 30, 2010, we believe that vacancy rates continued to increase and that rental rates continued to decrease for Class A buildings in the Lower Tollway portion of the Far North Dallas submarket.  This trend may continue or improve in the future.  Management believes that the property is very well positioned as compared to other existing buildings in Far North Dallas, but management believes that the Property is competing primarily with potential build-to-suit projects for larger prospective users.  Continuing economic turmoil has slowed the pace of leasing activity in the Dallas office market and will likely prolong the amount of time it takes to re-lease the Property.





Management believes that the Property will continue to attract prospective tenants seeking quality office suites in Class A office buildings in the Lower Tollway submarket of Far North Dallas.  In order to maintain the Property’s position in the marketplace, management has hired an architect and begun the process of repositioning the Property to attract a wide variety of prospective tenants.  Although subject to change, management is planning to feature a large conference center and a brand new fitness center that could be viewed as highly-desirable amenities for prospective tenants.  In addition, during the fourth quarter of 2009, management successfully led the effort to cause the Property to achieve LEED® Gold Certification by the U.S. Green Building Council in the Leadership in Energy and Environmental Design for Existing Buildings: Operations and Maintenance, which we refer to as LEED-EB: O&M.  In fact, the Property was the first commercial building in Dallas, Texas to be awarded the highly-esteemed Gold Certification for LEED-EB: O&M.




In anticipation of the current vacancy and the increasing possibility of a prolonged economic downturn, we reduced the amount of our dividend distributions for calendar year 2009 and suspended dividend distributions for 2010 and the foreseeable future in order to build up a reserve that could be utilized to fund operating and/or leasing costs.  In addition, the majority of the approximately $4.8 million operating/capital reserve from the original private placement offering of our Preferred Stock is available to help fund operating and/or leasing costs.




Given the amount of space that needs to be re-leased with the departure of Tenet Hospitals and the potential for significant tenant improvement allowances and leasing commissions, it is possible that we may need to borrow funds in the future.  We may, without the consent of any holder of shares of our Preferred Stock, obtain a revolving line of credit of up to $27,400,000 on commercially reasonable terms to be used for capital improvements or to pay operating expenses of the Property, if needed.  As of August 12, 2010, the Company had neither sought nor obtained a line of credit.




In light of the current economic downturn, the potential for tenants to default on their leases or to seek the protection of bankruptcy laws has increased.  If any of our future tenants defaults on its lease, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment.  In addition, at any time, a tenant may seek the protection of bankruptcy laws, which could result in the rejection and termination of such tenant’s lease and thereby cause a reduction in cash available for distribution to our stockholders.  Bankruptcy or a material adverse change in the financial condition of a material tenant would likely have a material adverse effect on our results of operations.





Critical Accounting Policies





We have certain critical accounting policies that are subject to judgments and estimates by our management and uncertainties of outcome that affect the application of these policies.  We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances.  On an on-going basis, we evaluate our estimates.  In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information.  The accounting policies that we believe are most critical to the understanding of our financial position and results of operations, and that require significant management estimates and judgments, are discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2009.





Critical accounting policies are those that have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates.  We believe that our judgments and assessments are consistently applied and produce financial information that fairly presents our results of operations.





No changes to our critical accounting policies have occurred since the filing of our Annual Report on Form 10-K for the year ended December 31, 2009.


9




Results of Operations





The Property was leased in its entirety (100%) through December 31, 2009 to Tenet Hospitals and is currently vacant.




Comparison of the three months ended June 30, 2010 to the three months ended June 30, 2009.





Revenue





Total revenue decreased by approximately $2.3 million to $24,000 for the three months ended June 30, 2010, as compared to $2.3 million for the same period in 2009.  The decrease was due to the Property being vacant.





Expenses





Total expenses decreased approximately by $0.4 million to $1 million for the three months ended June 30, 2010 as compared to $1.4 million for the same period in 2009.  This decrease was primarily attributable to a decrease in rental operating expenses.





Comparison of the six months ended June 30, 2010 to the six months ended June 30, 2009.





Revenue





Total revenue decreased by approximately $5 million to $24,000 for the six months ended June 30, 2010, as compared to $5 million for the same period in 2009.  The decrease was due to the Property being vacant.





Expenses





Total expenses decreased approximately by $1.1 million to $2.0 million for the six months ended June 30, 2010 as compared to $3.1 million for the same period in 2009.  This decrease was primarily attributable to a decrease in rental operating expenses.





Liquidity and Capital Resources





Cash and cash equivalents were $6.8 million at June 30, 2010 and $9.5 million at December 31, 2009. The $2.7 million decrease for the six months ended June 30, 2010 is attributable to approximately $2.6 million used for operating activities and $0.1 million used for investing activities.





Management believes that the existing cash and cash equivalents as of June 30, 2010 of $6.8 million will be sufficient to meet operational needs, working capital requirements, distributions and anticipated capital expenditures for at least the next 12 months.





Operating Activities





The cash used by operating activities of $2.6 million for the six months ended June 30, 2010 is primarily attributable to net loss of approximately $1.9 million plus the add-back of $.8 million of depreciation and amortization, which was partially offset by a $1.5 million decrease in accounts payable and accrued expenses.  The decrease in accounts payable and accrued expenses was primarily a result of the timing of real estate tax payments compared to the accrual of the related expenses.





Investing Activities





Cash used for investing activities of approximately $0.1 million for the six months ended June 30, 2010 was for capital expenditures.




Financing Activities





None.


10


Sources and Uses of Funds





The Company’s principal demand on liquidity is cash for operations.  As of June 30, 2010, we had approximately $0.6 million in accrued liabilities and no long-term debt.





Contingencies





We may be subject to various legal proceedings and claims that arise in the ordinary course of our business.  Although occasional adverse decisions (or settlements) may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position or results of operations.





Related Party Transactions





We have in the past engaged in and currently engage in transactions with a related party, Franklin Street Properties Corp., which we refer to as Franklin Street, and its subsidiaries FSP Investments LLC and FSP Property Management LLC, which we collectively refer to as FSP.  We expect to continue to have related party transactions with FSP in the form of management fees paid to FSP to manage us on behalf of our stockholders.  FSP Property Management LLC currently provides us with asset management and financial reporting services.  The asset management agreement between the Company and FSP Property Management LLC requires us to pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the gross revenues of the Property.  The asset management agreement may be terminated by either party without cause at any time, upon at least thirty (30) days written notice, effective at the end of the notice period.  For the six months ended June 30, 2010 and 2009, management fees paid were$0 and $56,000, respectively.





Franklin Street is the sole holder of our one share of common stock that is issued and outstanding.  Subsequent to the completion of the private placement of our preferred stock in August 2005, Franklin Street has not been entitled to share in earnings or any dividend related to our common stock.







11


Item 3.  Quantitative and Qualitative Disclosures About Market Risk.





Not applicable.





Item 4.  Controls and Procedures.





Disclosure Controls and Procedures




Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2010. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Based on the evaluation of our disclosure controls and procedures as of June 30, 2010, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.





Changes in Internal Control Over Financial Reporting





No change in our internal control over financial reporting occurred during the quarter ended June 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.










12


PART II – OTHER INFORMATION





Item 1.  Legal Proceedings.





From time to time, we may be subject to legal proceedings and claims that arise in the ordinary course of our business.  Although occasional adverse decisions (or settlements) may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position, cash flows or results of operations.





Item 1A.  Risk Factors.





Not applicable.




Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.





None.




Item 3.  Defaults Upon Senior Securities.





None.




Item 4.  Removed and Reserved.





Item 5.  Other Information.





None.




Item 6.  Exhibits.





See Exhibit Index attached hereto, which is incorporated herein by reference.




13


SIGNATURES





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





FSP GALLERIA NORTH CORP.














Date
Signature

TitleDate:  August 12, 2010
/s/ George J. Carter

PresidentGeorge J. Carter

(Principal Executive Officer)Date:  August 12, 2010
/s/ Barbara J. Fournier

Chief Operating OfficerBarbara J. Fournier

(Principal Financial Officer)








14


EXHIBIT INDEX





Exhibit No.
Description31.1
Certification of FSP Galleria North Corp.'s principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
Certification of FSP Galleria North Corp.'s principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
Certification of FSP Galleria North Corp.'s principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
Certification of FSP Galleria North Corp.'s principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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