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 1934




For
the quarterly period ended September 30, 2009.





OR





[   ]
            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:  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, Suite 200


Wakefield,
MA 01880-6210


(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 October 31, 2009.













FSP
Galleria North Corp.





Form
10-Q





Quarterly
Report


September
30, 2009





Table
of Contents





PagePart
      I.
            Financial
      InformationItem
      1.
            Financial
      StatementsConsolidated
      Balance Sheets as of September 30, 2009 and December 31,
    2008
            2Consolidated
      Statements of Operations for the three and nine months ended September 30,
      2009 and 2008
            3Consolidated
      Statements of Cash Flows for the nine months ended September 30, 2009 and
      2008
            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
            12Item 4T.
            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.
            Submission
      of Matters to a Vote of Security Holders
            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)





September 30,
            
            
            December 31,(in
      thousands, except shares and par value amounts)
            
            2009
            
            
            2008Assets:Real
      estate investments, at cost:Land
            
            $
            5,535
            
            
            $
            5,535Buildings
      and improvements
            
            
            58,483
            
            
            
            58,483Fixtures
      and equipment
            
            
            52
            
            
            
            5264,070
            
            
            
            64,070Less
      accumulated depreciation
            
            
            7,443
            
            
            
            6,312Real
      estate investments, net
            
            
            56,627
            
            
            
            57,758Acquired
      real estate leases, net of accumulated amortization
              of
      $3,414 and $2,898, respectively
            
            
            200
            
            
            
            716Acquired
      favorable real estate leases, net of accumulated
              amortization
      of $1,471 and $1,248, respectively
            
            
            86
            
            
            
            309Cash
      and cash equivalents
            
            
            9,922
            
            
            
            9,265Tenant
      rent receivable
            
            
            51
            
            
            
            156Step
      rent receivable
            
            
            7
            
            
            
            31Prepaid
      expenses and other assets
            
            
            198
            
            
            
            169Total
      assets
            
            $
            67,091
            
            
            $
            68,404Liabilities
      and Stockholders’ Equity:Liabilities:Accounts
      payable and accrued expenses
            
            $
            2,775
            
            
            $
            3,128Total
      liabilities
            
            
            2,775
            
            
            
            3,128Commitments
      and Contingencies:
            
            
            -
            
            
            
            -Stockholders’
      Equity:Preferred
      Stock, $.01 par value, 860 sharesauthorized, issued and outstanding,aggregate liquidation preference $86,000at September 30, 2009 and December 31, 2008
            
            
            -
            
            
            
            -Common
      Stock, $.01 par value, 1 shareauthorized, issued and outstanding
            
            
            -
            
            
            
            -Additional
      paid-in capital
            
            
            78,956
            
            
            
            78,956Distributions
      in excess of retained earnings
            
            
            (14,640
            )
            
            
            (13,680
            )Total
      Stockholders’ Equity
            
            
            64,316
            
            
            
            65,276Total
      Liabilities and Stockholders’ Equity
            
            $
            67,091
            
            
            $
            68,404See
      accompanying notes to consolidated financial statements.




2




FSP
      Galleria North Corp.
              Consolidated
      Statements of Operations
              (Unaudited)





For
      the
                
                
                For
      theThree
      Months Ended
                
                
                Nine
      Months EndedSeptember
      30,
                
                
                September
      30,(in
      thousands, except shares and per share amounts)
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Revenues:Rental
                
                $
                2,733
                
                
                $
                2,756
                
                
                $
                7,755
                
                
                $
                7,947Total
      revenue
                
                
                2,733
                
                
                
                2,756
                
                
                
                7,755
                
                
                
                7,947Expenses:Rental
      operating expenses
                
                
                693
                
                
                
                828
                
                
                
                2,199
                
                
                
                2,258Real
      estate taxes and insurance
                
                
                475
                
                
                
                439
                
                
                
                1,000
                
                
                
                1,126Depreciation
      and amortization
                
                
                549
                
                
                
                548
                
                
                
                1,647
                
                
                
                1,642Total
      expenses
                
                
                1,717
                
                
                
                1,815
                
                
                
                4,846
                
                
                
                5,026Income
      before interest income
                
                
                1,016
                
                
                
                941
                
                
                
                2,909
                
                
                
                2,921Interest
      income
                
                
                7
                
                
                
                51
                
                
                
                30
                
                
                
                153Net
      income attributable to preferred stockholders
                
                $
                1,023
                
                
                $
                992
                
                
                $
                2,939
                
                
                $
                3,074Weighted
      average number of preferred shares outstanding,basic
      and diluted
                
                
                860
                
                
                
                860
                
                
                
                860
                
                
                
                860Net
      income per preferred share, basic and diluted
                
                $
                1,190
                
                
                $
                1,153
                
                
                $
                3,417
                
                
                $
                3,574See
      accompanying notes to consolidated financial statements.





3





FSP
      Galleria North Corp.
              Consolidated
      Statements of Cash Flows
              (Unaudited)





For
      the
                Nine
      Months Ended
                September
      30,(in
      thousands)
              
              2009
              
              
              2008Cash
      flows from operating activities:Net
      income
              
              $
              2,939
              
              
              $
              3,074Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
              
              
              1,647
              
              
              
              1,642Amortization
      of favorable real estate leases
              
              
              223
              
              
              
              222Changes
      in operating assets and liabilities:Tenant
      rent receivable
              
              
              105
              
              
              
              150Step
      rent receivable
              
              
              24
              
              
              
              24Prepaid
      expenses and other assets
              
              
              (29
              )
              
              
              2Accounts
      payable and accrued expenses
              
              
              (353
              )
              
              
              (1,066
              )Net
      cash provided by operating activities
              
              
              4,556
              
              
              
              4,048Cash
      flows from investing activities:Purchase
      of real estate assets
              
              
              -
              
              
              
              (43
              )Net
      cash used for investing activities
              
              
              -
              
              
              
              (43
              )Cash
      flows from financing activities:Distributions
      to stockholders
              
              
              (3,899
              )
              
              
              (5,040
              )Net
      cash used for financing activities
              
              
              (3,899
              )
              
              
              (5,040
              )Net
      increase (decrease) in cash and cash equivalents
              
              
              657
              
              
              
              (1,035
              )Cash
      and cash equivalents, beginning of period
              
              
              9,265
              
              
              
              8,908Cash
      and cash equivalents, end of period
              
              $
              9,922
              
              
              $
              7,873Supplemental
      disclosure of cash flow information:Disclosure
      of non-cash investing activities:Accrued
      costs for purchase of real estate assets
              
              $
              -
              
              
              $
              28See
      accompanying notes to consolidated financial statements.





4




FSP
Galleria North Corp.


Notes
to Consolidated Financial Statements


(Unaudited)





1.     Organization,
Basis of Presentation, Financial Instruments and Recent Accounting
Pronouncements





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, 2008, 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 nine
months ended September 30, 2009 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2009 or for any other
period.





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 Pronouncements




In June
2009, the Financial Accounting Standards Board (“FASB”) issued a pronouncement
establishing the FASB Accounting Standards Codification as the source of
authoritative accounting principles recognized by the FASB to be applied in the
preparation of financial statements in conformity with GAAP. The standard
explicitly recognizes rules and interpretive releases of the SEC under federal
securities laws as authoritative GAAP for SEC registrants. This standard is
effective for financial statements issued for fiscal years and interim periods
ending after September 15, 2009. The Company has adopted this standard in
accordance with GAAP.




In
May 2009, the FASB 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.





5


FSP
Galleria North Corp.


Notes
to Consolidated Financial Statements


(Unaudited)





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.





The
Company adopted an accounting pronouncement related to uncertainty in income
taxes effective January 1, 2007, which did not result in recording a liability,
nor was any accrued interest and penalties recognized with the
adoption.  Accrued interest and penalties will be recorded as income
tax expense, if the Company records a liability in the future.  The
Company’s effective tax rate was not affected by the adoption.  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 nine months ended September 30, 2009 and 2008, management fees paid were
$74,000 and $82,000, 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.




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 September 30, 2009 and 2008.





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


FSP
Galleria North Corp.


Notes
to Consolidated Financial Statements


(Unaudited)





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 2009
            
            $
            1,744
            
            
            $
            1,500,000Second
      quarter of 2009
            
            $
            1,395
            
            
            $
            1,200,000Third
      quarter of 2009
            
            $
            1,395
            
            
            $
            1,200,000First
      quarter of 2008
            
            $
            1,995
            
            
            $
            1,716,000Second
      quarter of 2008
            
            $
            1,947
            
            
            $
            1,674,000Third
      quarter of 2008
            
            $
            1,919
            
            
            $
            1,650,000




7
            Subsequent
      Event





The
Company’s board of directors declared a cash distribution of $1,395 per share of
Preferred Stock on October 16, 2009 to the holders of record of the Company’s
Preferred Stock on October 30, 2009, payable on November 20, 2009.





The
Company has evaluated all subsequent events through November 6, 2009, the date
the consolidated financial statements were issued.


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, 2008.  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, continued disruptions in the debt markets, risks of a
lessening of demand for the type of real estate owned by us, changes in the
economic conditions of our sole tenant or its parent, the pending expiration of
our sole tenant’s lease on December 31, 2009, 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 is 100% leased to a single tenant, Tenet
Hospitals Limited, which we refer to as Tenet Hospitals, whose lease expires on
December 31, 2009.




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 unprecedented
disruptions, including increased 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.  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) following the expiration of Tenet Hospitals’ lease on December 31,
2009.





Real
Estate Operations





On
August 7, 2008, Tenet Hospitals announced that it will be relocating to a
different property location following the expiration of its lease on December
31, 2009.  Prior to Tenet Hospitals’ August 7, 2008 announcement,
management had assumed that a full re-tenanting of the Property would likely be
required.  As a result, management previously initiated a marketing
strategy to find, and is aggressively searching for, a replacement tenant (or
tenants).  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 expiring rate, possibly resulting in decreased cash flows.





It
is difficult for management to predict what will happen to occupancy and rents
after the expiration of our lease with Tenet Hospitals on December 31, 2009
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 September 30, 2009, 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. 
Continuing turmoil in the global financial markets has slowed the pace of
leasing activity in the Dallas office market and may prolong the amount of time
it takes to lease the Property after the expiration of our lease with Tenet
Hospitals on December 31, 2009.





Given
the amount of space that will need to be re-leased upon the expiration of Tenet
Hospitals’ lease on December 31, 2009 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 September 30, 2009, the Company had neither sought nor
obtained a line of credit.  In addition, our board of directors has
decided to reduce the amount of the dividend that it will distribute to the
holders of our Preferred Stock for 2009 in order to build up a reserve that will
be allocated to fund operating expenses in the event that the Property remains
vacant for an extended period of time





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 tenants (existing or future) 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, 2008.





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,
2008.





Results of
Operations





The
Property is currently 100% leased to one tenant pursuant to a lease that was in
place prior to the acquisition of the Property and that expires on December 31,
2009.





Comparison
of the three months ended September 30, 2009 to the three months ended September
30, 2008.





Revenue





Total
revenue decreased by $0.1 million to $2.7 million for the three months ended
September 30, 2009, as compared to $2.8 million for the same period in 2008. The
decrease was primarily due to a decrease in recovery of expenses. The majority
of the operating expenses, real estate taxes and insurance expenses represent
amounts recoverable by the Company.





Expenses





Total
expenses decreased approximately by $0.1 million to $1.7 million for the three
months ended September 30, 2009 as compared to $1.8 million for the same period
in 2008.  This decrease was primarily attributable to a decrease in
rental operating expenses.


9





Comparison
of the nine months ended September 30, 2009 to the nine months ended September
30, 2008.





Revenue





Total
revenue decreased by $0.2 million to approximately $7.7 million for the nine
months ended September 30, 2009, as compared to $7.9 million for the same period
in 2008. The decrease was primarily due to a decrease in recovery of expenses.
The majority of the operating expenses, real estate taxes and insurance expenses
represent amounts recoverable by the Company.





Expenses





Total
expenses decreased approximately by $0.2 million to $4.8 million for the nine
months ended September 30, 2009 as compared to $5.0 million for the same period
in 2008.  This decrease was primarily attributable to a decrease in
operating expenses of approximately $0.1 million and a decrease in real estate
taxes of approximately $0.1 million.





Liquidity and Capital
Resources





Cash
and cash equivalents were $9.9 million at September 30, 2009 and $9.3 million at
December 31, 2008. The $0.6 million increase for the nine months ended September
30, 2009 is attributable to approximately $4.6 million provided by operating
activities, which was offset by $3.9 million used for financing
activities.





Management
believes that existing cash and cash equivalents as of September 30, 2009 of
$9.9 million and cash anticipated to be generated internally by operations will
be sufficient to meet working capital requirements, distributions and
anticipated capital expenditures for at least the next 12 months.





Operating
Activities





The
cash provided by operating activities of $4.6 million for the nine months ended
September 30, 2009 is primarily attributable to net income of approximately $3.0
million plus the add-back of $1.9 million of depreciation and amortization, and
a $0.1 million decrease in operating assets, which was partially offset by a
$0.4 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.




Financing
Activities





Cash
used for financing activities of $3.9 million for the nine months ended
September 30, 2009 was attributable to distributions to
stockholders.




Sources
and Uses of Funds





Our
principal demands on liquidity are cash for operations and dividends paid to
equity holders.  As of September 30, 2009, we had approximately $2.8
million in accrued liabilities and no long-term debt.  In the near
term, liquidity is generated by cash from operations.





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 nine
months ended September 30, 2009 and 2008, management fees paid were$74,000 and
$82,000, respectively.


10





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.





Concentration
of Credit Risks





For
the nine months ended September 30, 2009 and 2008, 100% of the Property’s rental
income was derived from our lease with Tenet Hospitals, with the lease being
fully guaranteed by Tenet Healthcare Corporation (NYSE: THC).  We
refer to Tenet Hospitals and Tenet Healthcare Corporation collectively as
Tenet.  The Property has been designated as the worldwide headquarters
for Tenet.  As such, future receipts are dependent upon the financial
strength of the lessee and its ability to perform under the lease
agreement.  Tenet’s filings with the Securities and Exchange
Commission are publicly available.





Tenet
had total current assets of $2.5 billion and $2.7 billion, total assets of $7.9
billion and $8.2 billion, total current liabilities of $1.8 billion and $1.9
billion, total liabilities of $7.2 billion and $8.0 billion and total
shareholder’s equity of $626 million and $103 million at September 30, 2009 and
December 31, 2008, respectively.  Tenet had income from continuing
operations before income taxes of $7 million and $116 million for the three
months ended September 30, 2009 and 2008, respectively.  Tenet had net
income (losses) of $(1) million and $106 million for the three months ended
September 30, 2009 and 2008, respectively.   Tenet had income
from continuing operations before income taxes of $216 million and $62 million
for the nine months ended September 30, 2009 and 2008,
respectively.  Tenet had net income of $168 million and $61 million
for the nine months ended September 30, 2009 and 2008,
respectively.





All
of the information set forth above regarding Tenet comes from Tenet's filings
with the Securities and Exchange Commission and we have not independently
verified its accuracy.







11


Item
3.              Quantitative
and Qualitative Disclosures About Market Risk.





Not
applicable.





Item
4.              Controls
and Procedures.





Not
applicable.





Item
4T.            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 September 30, 2009. 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 September 30, 2009, 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 September 30, 2009 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.        Submission of Matters to a
Vote of Security Holders.





None.





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:  November
      6, 2009
            /s/ George J.
      Carter
              George
      J. Carter
            President
              (Principal
      Executive Officer)Date:  November
      6, 2009
            /s/ Barbara J.
      Fournier
              Barbara
      J. Fournier
            Chief
      Operating Officer
              (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.









15