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|   | Maryland                                                      | 001-13100               | 56-1871668                             |   |
|--------|---------------------------------------------------------------|-------------------------|----------------------------------------|--------|
|   | (State or other jurisdictionof incorporation or organization) | (CommissionFile Number) | (I.R.S. EmployerIdentification Number) |   |

|   | North Carolina                                                | 000-21731               | 56-1869557                             |   |
|--------|---------------------------------------------------------------|-------------------------|----------------------------------------|--------|
|   | (State or other jurisdictionof incorporation or organization) | (CommissionFile Number) | (I.R.S. EmployerIdentification Number) |   |

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TABLE OF CONTENTS

| PART I – FINANCIAL INFORMATION                                                                                       |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|
| ITEM 1.   FINANCIAL STATEMENTS                                                                              | 2      |
| HIGHWOODS PROPERTIES, INC.:                                                                                                |   |
| Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008                             | 3      |
| Consolidated Statements of Income for the three and nine months ended September 30, 2009 and 2008                | 4      |
| Consolidated Statement of Equity for the nine months ended September 30, 2009                                    | 5      |
| Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008                      | 6      |
| Notes to Consolidated Financial Statements                                                                                 | 8      |
| HIGHWOODS REALTY LIMITED PARTNERSHIP:                                                                                      |   |
| Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008                             | 26     |
| Consolidated Statements of Income for the three and nine months ended September 30, 2009 and 2008                | 27     |
| Consolidated Statement of Equity for the nine months ended September 30, 2009                                    | 28     |
| Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008                      | 29     |
| Notes to Consolidated Financial Statements                                                                                 | 31     |
| ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 47     |
| Disclosure Regarding Forward-Looking Statements                                                                            | 47     |
| Results of Operations                                                                                                      | 48     |
| Liquidity and Capital Resources                                                                                            | 51     |
| Critical Accounting Estimates                                                                                              | 56     |
| Funds From Operations                                                                                                      | 56     |
| ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                        | 58     |
| ITEM 4.   CONTROLS AND PROCEDURES                                                                           | 58     |
| PART II – OTHER INFORMATION                                                                                          |   |
| ITEM 1A. RISK FACTORS                                                                                                 | 59     |
| ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                 | 64     |
| ITEM 6.    EXHIBITS                                                                                    | 64     |

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(Table of Contents)

ITEM 1.  FINANCIAL STATEMENTS

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(Table of Contents)

Consolidated Balance Sheets

|                                                                                                                                   |   | September 30,2009 |      |   | December 31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|-----------------------|--------|
| Assets:                                                                                                                                |   |                   |      |   |                  |   |
| Real estate assets, at cost:                                                                                                           |   |                   |      |   |                  |   |
| Land                                                                                                                                   |   | $                      | 344,052   |   |                  | $      | 346,889 |   |
| Buildings and tenant improvements                                                                                                      |   |                   | 2,815,800 |   |                  |   | 2,811,810 |   |
| Development in process                                                                                                                 |   |                   | 62,075    |   |                  |   | 61,938 |   |
| Land held for development                                                                                                              |   |                   | 99,206    |   |                  |   | 98,946 |   |
|                                                                                                                                   |   |                   | 3,321,133 |   |                  |   | 3,319,583 |   |
| Less-accumulated depreciation                                                                                                          |   |                   | (762,068  | )      |                  |   | (712,597 | ) |
| Net real estate assets                                                                                                                 |   |                   | 2,559,065 |   |                  |   | 2,606,986 |   |
| For-sale residential condominiums                                                                                                      |   |                   | 17,094    |   |                  |   | 24,284 |   |
| Real estate and other assets, net, held for sale                                                                                       |   |                   | 13,779    |   |                  |   | 14,447 |   |
| Cash and cash equivalents                                                                                                              |   |                   | 42,069    |   |                  |   | 13,757 |   |
| Restricted cash                                                                                                                        |   |                   | 17,995    |   |                  |   | 2,258 |   |
| Accounts receivable, net of allowance of $2,776 and $1,281, respectively                                                               |   |                   | 19,847    |   |                  |   | 23,687 |   |
| Notes receivable, net of allowance of $578 and $459, respectively                                                                      |   |                   | 3,246     |   |                  |   | 3,602 |   |
| Accrued straight-line rents receivable, net of allowance of $2,573 and $2,082, respectively                                            |   |                   | 81,896    |   |                  |   | 79,597 |   |
| Investment in unconsolidated affiliates                                                                                                |   |                   | 66,207    |   |                  |   | 67,723 |   |
| Deferred financing and leasing costs, net of accumulated amortization of $51,929 and $52,434, respectively                             |   |                   | 70,259    |   |                  |   | 72,783 |   |
| Prepaid expenses and other assets                                                                                                      |   |                   | 38,308    |   |                  |   | 37,046 |   |
| Total Assets                                                                                                                           |   | $                      | 2,929,765 |   |                  | $      | 2,946,170 |   |
|                                                                                                                                   |   |                   |      |   |                  |   |   |   |
| Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:                                                         |   |                   |      |   |                  |   |   |   |
| Mortgages and notes payable                                                                                                            |   | $                      | 1,472,585 |   |                  | $      | 1,604,685 |   |
| Accounts payable, accrued expenses and other liabilities                                                                               |   |                   | 129,477   |   |                  |   | 135,609 |   |
| Financing obligations                                                                                                                  |   |                   | 35,043    |   |                  |   | 34,174 |   |
| Total Liabilities                                                                                                                      |   |                   | 1,637,105 |   |                  |   | 1,774,468 |   |
| Commitments and contingencies                                                                                                          |   |                   |      |   |                  |   |   |   |
| Noncontrolling interests in the Operating Partnership                                                                                  |   |                   | 124,705   |   |                  |   | 111,278 |   |
| Equity:                                                                                                                                |   |                   |      |   |                  |   |   |   |
| Preferred Stock, $.01 par value, 50,000,000 authorized shares;                                                                         |   |                   |      |   |                  |   |   |   |
| 8.625% Series A Cumulative Redeemable Preferred Shares (liquidation preference $1,000 per share), 29,092 shares issued and outstanding |   |                   | 29,092    |   |                  |   | 29,092 |   |
| 8.000% Series B Cumulative Redeemable Preferred Shares (liquidation preference $25 per share), 2,100,000 shares issued and outstanding |   |                   | 52,500    |   |                  |   | 52,500 |   |
| Common stock, $.01 par value, 200,000,000 authorized shares;                                                                           |   |                   |      |   |                  |   |   |   |
| 71,070,583 and 63,571,705 shares issued and outstanding, respectively                                                                  |   |                   | 711       |   |                  |   | 636 |   |
| Additional paid-in capital                                                                                                             |   |                   | 1,753,276 |   |                  |   | 1,616,093 |   |
| Distributions in excess of net income available for common stockholders                                                                |   |                   | (669,183  | )      |                  |   | (639,281 | ) |
| Accumulated other comprehensive loss                                                                                                   |   |                   | (3,979    | )      |                  |   | (4,792 | ) |
| Total Stockholders' Equity                                                                                                             |   |                   | 1,162,417 |   |                  |   | 1,054,248 |   |
| Noncontrolling interests in consolidated affiliates                                                                                    |   |                   | 5,538     |   |                  |   | 6,176 |   |
| Total Equity                                                                                                                           |   |                   | 1,167,955 |   |                  |   | 1,060,424 |   |
| Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity                                                    |   | $                      | 2,929,765 |   |                  | $      | 2,946,170 |   |

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Consolidated Statements of Income

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Rental and other revenues                                                                                            |   | $                                    | 114,229 |   |                                | $      | 112,755 |   |   | $ | 340,508 |   |   | $ | 336,054 |   |
| Operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Rental property and other expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 42,939  |   |                                |   | 40,911 |   |   |   | 123,114 |   |   |   | 118,976 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 32,637  |   |                                |   | 31,458 |   |   |   | 98,443 |   |   |   | 92,405 |   |
| General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | 9,485   |   |                                |   | 8,885 |   |   |   | 27,286 |   |   |   | 29,362 |   |
| Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 85,061  |   |                                |   | 81,254 |   |   |   | 248,843 |   |   |   | 240,743 |   |
| Interest expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Contractual                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 20,001  |   |                                |   | 22,995 |   |   |   | 60,525 |   |   |   | 69,803 |   |
| Amortization of deferred financing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 627     |   |                                |   | 714 |   |   |   | 1,978 |   |   |   | 2,038 |   |
| Financing obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | 706     |   |                                |   | 783 |   |   |   | 2,151 |   |   |   | 2,287 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 21,334  |   |                                |   | 24,492 |   |   |   | 64,654 |   |   |   | 74,128 |   |
| Other income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest and other income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 | 3,324   |   |                                |   | 1,017 |   |   |   | 6,615 |   |   |   | 3,406 |   |
| Gains on debt extinguishments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 657     |   |                                |   | — |   |   |   | 1,287 |   |   |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 3,981   |   |                                |   | 1,017 |   |   |   | 7,902 |   |   |   | 3,406 |   |
| Income from continuing operations before disposition of property and                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| condominiums and equity in earnings of unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 11,815  |   |                                |   | 8,026 |   |   |   | 34,913 |   |   |   | 24,589 |   |
| Gains on disposition of property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 34      |   |                                |   | 1,745 |   |   |   | 247 |   |   |   | 1,852 |   |
| Gains on for-sale residential condominiums                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | 187     |   |                                |   | — |   |   |   | 823 |   |   |   | — |   |
| Equity in earnings of unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 682     |   |                                |   | 1,214 |   |   |   | 3,844 |   |   |   | 4,723 |   |
| Income from continuing operations                                                                                    |   |                                 | 12,718  |   |                                |   | 10,985 |   |   |   | 39,827 |   |   |   | 31,164 |   |
| Discontinued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | 232     |   |                                |   | 1,602 |   |   |   | 2,381 |   |   |   | 5,417 |   |
| Net gains/(losses) from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | (377    | )      |                                |   | 3,137 |   |   |   | 20,639 |   |   |   | 11,890 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | (145    | )      |                                |   | 4,739 |   |   |   | 23,020 |   |   |   | 17,307 |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 12,573  |   |                                |   | 15,724 |   |   |   | 62,847 |   |   |   | 48,471 |   |
| Net (income) attributable to noncontrolling interests in the Operating Partnership                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | (591    | )      |                                |   | (812 | ) |   |   | (3,339 | ) |   |   | (2,544 | ) |
| Net (income) attributable to noncontrolling interests in consolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | (24     | )      |                                |   | (201 | ) |   |   | (158 | ) |   |   | (590 | ) |
| Dividends on preferred stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                 | (1,677  | )      |                                |   | (2,451 | ) |   |   | (5,031 | ) |   |   | (8,127 | ) |
| Excess of preferred stock redemption/repurchase cost over carrying value                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | — |   |                                |   | (108 | ) |   |   | — |   |   |   | (108 | ) |
| Net income available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                    | 10,281  |   |                                | $      | 12,152 |   |   | $ | 54,319 |   |   | $ | 37,102 |   |
| Earnings per common share - basic:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                    | 0.15    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.32 |   |   |   | 0.28 |   |
| Net income available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                    | 0.15    |   |                                | $      | 0.21 |   |   | $ | 0.81 |   |   | $ | 0.64 |   |
| Weighted average common shares outstanding - basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 70,902  |   |                                |   | 58,998 |   |   |   | 66,912 |   |   |   | 57,893 |   |
| Earnings per common share - diluted:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                    | 0.14    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.32 |   |   |   | 0.28 |   |
| Net income available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                    | 0.14    |   |                                | $      | 0.21 |   |   | $ | 0.81 |   |   | $ | 0.64 |   |
| Weighted average common shares outstanding - diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 75,072  |   |                                |   | 63,228 |   |   |   | 71,024 |   |   |   | 62,176 |   |
| Dividends declared per common share                                                                                  |   | $                                    | 0.425   |   |                                | $      | 0.425 |   |   | $ | 1.275 |   |   | $ | 1.275 |   |
| Net income available for common stockholders:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                    | 10,418  |   |                                | $      | 7,711 |   |   | $ | 32,642 |   |   | $ | 20,910 |   |
| Income/(loss) from discontinued operations available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                 | (137    | )      |                                |   | 4,441 |   |   |   | 21,677 |   |   |   | 16,192 |   |
| Net income available for common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                    | 10,281  |   |                                | $      | 12,152 |   |   | $ | 54,319 |   |   | $ | 37,102 |   |

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Consolidated Statement of Equity

|                                                                               |   | Number of Common Shares |       |   | Common Stock |   |    | Series A Preferred |   |   | Series B Preferred |   |   | Additional Paid-In Capital |    |   | Accumulated Other Comprehensive Loss |   |      | Non-Controlling Interests inConsolidated Affiliates |   |   | Distributions in Excess of Net Earnings |   |   | Total  |    |
|------------------------------------------------------------------------------------|--------|------------------------------|------------|--------|--------------|--------|---------|--------------------|--------|--------|--------------------|--------|--------|----------------------------|---------|--------|--------------------------------------|--------|-----------|-----------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|--------|---------|
| Balance at December 31, 2008                                             |   |                         | 63,571,705 |   |         | $      | 636     |               |   | $      | 29,092             |   |   | $                          | 52,500  |   |                                 | $      | 1,616,093 |                                                |   | $      | (4,792                                  | )      |   | $      | 6,176   |   |   | $ | (639,281 | ) |   | $ | 1,060,424 |   |
| Issuances of Common Stock, net                                                     |   |                         | 7,156,203  |   |         |   | 72      |               |   |   | —            |   |   |                       | — |   |                                 |   | 147,238   |                                                |   |   | —                                 |   |   |   | — |   |   |   | — |   |   |   | 147,310 |   |
| Conversion of Common Units to Common Stock                                         |   |                         | 101,935    |   |         |   | 1       |               |   |   | —            |   |   |                       | — |   |                                 |   | 3,240     |                                                |   |   | —                                 |   |   |   | — |   |   |   | — |   |   |   | 3,241 |   |
| Dividends on Common Stock                                                          |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | —                                 |   |   |   | — |   |   |   | (84,221 | ) |   |   | (84,221 | ) |
| Dividends on Preferred Stock                                                       |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | —                                 |   |   |   | — |   |   |   | (5,031 | ) |   |   | (5,031 | ) |
| Adjustment to noncontrolling interests in the Operating Partnership                |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | (18,497   | )                                                   |   |   | —                                 |   |   |   | — |   |   |   | — |   |   |   | (18,497 | ) |
| Distributions to noncontrolling interests in consolidated affiliates               |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | —                                 |   |   |   | (796    | ) |   |   | — |   |   |   | (796 | ) |
| Issuances of restricted stock, net                                                 |   |                         | 240,740    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | —                                 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Amortization of restricted stock and stock options                                 |   |                         | —    |   |         |   | 2       |               |   |   | —            |   |   |                       | — |   |                                 |   | 5,202     |                                                |   |   | —                                 |   |   |   | — |   |   |   | — |   |   |   | 5,204 |   |
| Net (income) attributable to noncontrolling interests in the Operating Partnership |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | —                                 |   |   |   | — |   |   |   | (3,339 | ) |   |   | (3,339 | ) |
| Net (income) attributable to noncontrolling interests in consolidated affiliates   |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | —                                 |   |   |   | 158     |   |   |   | (158 | ) |   |   | — |   |
| Comprehensive income:                                                              |   |                         |       |   |         |   |    |               |   |   |               |   |   |                       |    |   |                                 |   |      |                                                |   |   |                                    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Net income                                                                         |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | —                                 |   |   |   | — |   |   |   | 62,847 |   |   |   | 62,847 |   |
| Other comprehensive income                                                         |   |                         | —    |   |         |   | — |               |   |   | —            |   |   |                       | — |   |                                 |   | —   |                                                |   |   | 813                                     |   |   |   | — |   |   |   | — |   |   |   | 813 |   |
| Total comprehensive income                                                         |   |                         |       |   |         |   |    |               |   |   |               |   |   |                       |    |   |                                 |   |      |                                                |   |   |                                    |   |   |   |    |   |   |   |   |   |   |   | 63,660 |   |
| Balance at September 30, 2009                                            |   |                         | 71,070,583 |   |         | $      | 711     |               |   | $      | 29,092             |   |   | $                          | 52,500  |   |                                 | $      | 1,753,276 |                                                |   | $      | (3,979                                  | )      |   | $      | 5,538   |   |   | $ | (669,183 | ) |   | $ | 1,167,955 |   |

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Consolidated Statements of Cash Flows

|                                                                              |   | Nine Months Ended September 30, |     |
|-----------------------------------------------------------------------------------|--------|--------------------------------------|----------|
|                                                                              |   | 2009                                 |     |   | 2008 |   |
| Operating activities:                                                             |   |                                 |     |   |   |   |
| Net income                                                                        |   | $                                    | 62,847   |   |   | $ | 48,471 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                                 |     |   |   |   |   |   |
| Depreciation                                                                      |   |                                 | 87,600   |   |   |   | 83,151 |   |
| Amortization of lease commissions                                                 |   |                                 | 11,599   |   |   |   | 11,441 |   |
| Amortization of lease incentives                                                  |   |                                 | 866      |   |   |   | 783 |   |
| Amortization of restricted stock and stock options                                |   |                                 | 5,204    |   |   |   | 5,285 |   |
| Amortization of deferred financing costs                                          |   |                                 | 1,978    |   |   |   | 2,038 |   |
| Amortization of accumulated other comprehensive loss                              |   |                                 | (229     | ) |   |   | 174 |   |
| Gains on extinguishment of debt                                                   |   |                                 | (1,287   | ) |   |   | — |   |
| Net gains on disposition of properties                                            |   |                                 | (20,886  | ) |   |   | (13,742 | ) |
| Net gains on disposition of for-sale residential condominiums                     |   |                                 | (823     | ) |   |   | — |   |
| Equity in earnings of unconsolidated affiliates                                   |   |                                 | (3,844   | ) |   |   | (4,723 | ) |
| Change in financing obligations                                                   |   |                                 | 869      |   |   |   | 124 |   |
| Distributions of earnings from unconsolidated affiliates                          |   |                                 | 3,076    |   |   |   | 4,561 |   |
| Changes in operating assets and liabilities:                                      |   |                                 |     |   |   |   |   |   |
| Accounts receivable                                                               |   |                                 | 1,725    |   |   |   | (747 | ) |
| Prepaid expenses and other assets                                                 |   |                                 | (1,627   | ) |   |   | (1,429 | ) |
| Accrued straight-line rents receivable                                            |   |                                 | (2,787   | ) |   |   | (5,263 | ) |
| Accounts payable, accrued expenses and other liabilities                          |   |                                 | 10,548   |   |   |   | (1,983 | ) |
| Net cash provided by operating activities                                         |   |                                 | 154,829  |   |   |   | 128,141 |   |
| Investing activities:                                                             |   |                                 |     |   |   |   |   |   |
| Additions to real estate assets and deferred leasing costs                        |   |                                 | (101,675 | ) |   |   | (165,722 | ) |
| Net proceeds from disposition of real estate assets                               |   |                                 | 61,926   |   |   |   | 37,258 |   |
| Net proceeds from disposition of for-sale residential condominiums                |   |                                 | 7,940    |   |   |   | — |   |
| Distributions of capital from unconsolidated affiliates                           |   |                                 | 3,257    |   |   |   | 2,343 |   |
| Net repayments of notes receivable                                                |   |                                 | 356      |   |   |   | 1,566 |   |
| Contributions to unconsolidated affiliates                                        |   |                                 | (922     | ) |   |   | (12,341 | ) |
| Changes in restricted cash and other investing activities                         |   |                                 | (15,506  | ) |   |   | 8,295 |   |
| Net cash used in investing activities                                             |   |                                 | (44,624  | ) |   |   | (128,601 | ) |
| Financing activities:                                                             |   |                                 |     |   |   |   |   |   |
| Dividends on Common Stock                                                         |   |                                 | (84,221  | ) |   |   | (73,263 | ) |
| Redemptions/repurchase of Preferred Stock                                         |   |                                 | —  |   |   |   | (52,499 | ) |
| Dividends on Preferred Stock                                                      |   |                                 | (5,031   | ) |   |   | (8,127 | ) |
| Distributions to noncontrolling interests in the Operating Partnership            |   |                                 | (5,168   | ) |   |   | (5,027 | ) |
| Distributions to noncontrolling interests in consolidated affiliates              |   |                                 | (796     | ) |   |   | (3,247 | ) |
| Net proceeds from the issuances of Common Stock                                   |   |                                 | 147,310  |   |   |   | 209,784 |   |
| Repurchase of Common Units from noncontrolling interests                          |   |                                 | —  |   |   |   | (3,293 | ) |
| Borrowings on revolving credit facility                                           |   |                                 | 128,000  |   |   |   | 350,650 |   |
| Repayments of revolving credit facility                                           |   |                                 | (291,000 | ) |   |   | (445,950 | ) |
| Borrowings on mortgages and notes payable                                         |   |                                 | 217,215  |   |   |   | 177,918 |   |
| Repayments of mortgages and notes payable                                         |   |                                 | (185,084 | ) |   |   | (135,742 | ) |
| Contributions from noncontrolling interests in consolidated affiliates            |   |                                 | —  |   |   |   | 625 |   |
| Additions to deferred financing costs                                             |   |                                 | (3,118   | ) |   |   | (842 | ) |
| Net cash (used in)/provided by financing activities                               |   |                                 | (81,893  | ) |   |   | 10,987 |   |
| Net increase in cash and cash equivalents                                         |   |                                 | 28,312   |   |   |   | 10,527 |   |
| Cash and cash equivalents at beginning of the period                              |   |                                 | 13,757   |   |   |   | 3,140 |   |
| Cash and cash equivalents at end of the period                                    |   | $                                    | 42,069   |   |   | $ | 13,667 |   |

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|                                                                                                                                                                       |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                                                       |   | 2009                                |   |   | 2008 |   |
| Cash paid for interest, net of amounts capitalized (excludes cash distributions to owners of sold properties accounted for as financings of $396 and $1,219, respectively) |   | $                                   | 64,734 |   |   | $ | 77,198 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Nine Months EndedSeptember 30, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2009                                |   |   | 2008 |   |
| Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                |   |   |   |   |
| Prepaid expenses and other assets                                                                                                       |   | $                                   | 451    |   |   | $ | (1,553 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                   | 451    |   |   | $ | (1,553 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                |   |   |   |   |   |   |
| Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                |   |   |   |   |   |   |
| Accounts payable, accrued expenses and other liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                   | (591   | ) |   | $ | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                   | (591   | ) |   | $ | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                |   |   |   |   |   |   |
| Noncontrolling Interests in the Operating Partnership and Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                   | 1,042  |   |   | $ | (1,553 | ) |

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Notes To Consolidated Financial Statements

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|   | · | We have reclassified the noncontrolling interests in consolidated affiliates from the mezzanine section of our Consolidated Balance Sheet to equity. This reclassification totaled $6.2 million as of December 31, 2008. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We no longer deduct net income attributable to noncontrolling interests in consolidated affiliates and the Operating Partnership when determining net income. As a result, net income for the three and nine months ended September 30, 2008 increased $1.0 million and $3.1 million from the previously reported amounts, respectively. The adoption of these requirements had no effect on our net income availablefor common stockholders or our earnings per common share. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We have adjusted noncontrolling interests in the Operating Partnership so that the carrying value equals the greater of historical cost or redemption value and continue to present it in the mezzanine section of our Consolidated Balance Sheets due to its redemption feature, as previously disclosed. As a result, noncontrolling interests in the Operating Partnership as of December 31, 2008 increased$45.6 million from the previously reported amount, with a corresponding decrease to additional paid in capital. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                               |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                               |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Beginning noncontrolling interests in the Operating Partnership                    |   | $                                    | 90,796  |   |                                | $      | 123,571 |   |   | $ | 111,278 |   |   | $ | 119,195 |   |
| Mark-to-market adjustment to noncontrolling interests in the Operating Partnership |   |                                 | 38,095  |   |                                |   | 17,103 |   |   |   | 18,497 |   |   |   | 26,987 |   |
| Redemptions/conversions of noncontrolling interest partnership units               |   |                                 | (3,052  | )      |                                |   | (933 | ) |   |   | (3,241 | ) |   |   | (4,817 | ) |
| Net income attributable to noncontrolling interests in the Operating Partnership   |   |                                 | 591     |   |                                |   | 812 |   |   |   | 3,339 |   |   |   | 2,544 |   |
| Distributions to noncontrolling interests in the Operating Partnership             |   |                                 | (1,725  | )      |                                |   | (1,671 | ) |   |   | (5,168 | ) |   |   | (5,027 | ) |
| Total noncontrolling interests in the Operating Partnership                        |   | $                                    | 124,705 |   |                                | $      | 138,882 |   |   | $ | 124,705 |   |   | $ | 138,882 |   |

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|                                                                                                 |   | Three Months EndedSeptember 30, |   |   |  Nine Months EndedSeptember 30, |   |
|------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------------|--------|
|                                                                                                 |   |  2009                           |   |   | 2008                                      |   |   | 2009 |   |   | 2008 |   |
| Net income available for common stockholders                                                         |   | $                                    | 10,281 |   |                                      | $      | 12,152 |   |   | $ | 54,319 |   |   | $ | 37,102 |   |
| Increase in additional paid in capital from conversion of Common Units to Common Stock               |   |                                 | 3,052  |   |                                      |   | 933 |   |   |   | 3,241 |   |   |   | 1,524 |   |
| Change from net income available for common stockholders and transfers from noncontrolling interests |   | $                                    | 13,333 |   |                                      | $      | 13,085 |   |   | $ | 57,560 |   |   | $ | 38,626 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2009                                 |   |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Income Statements:                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 |   |   |                                |   |   |   |   |   |   |   |
| Revenues                                                                       |   | $                                    | 36,152 |   |                                | $      | 40,949 |   |   | $ | 112,368 |   |   | $ | 120,677 |   |
| Expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Rental property and other expenses                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 17,805 |   |                                |   | 20,492 |   |   |   | 54,510 |   |   |   | 58,955 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | 9,092  |   |                                |   | 9,079 |   |   |   | 26,817 |   |   |   | 25,707 |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 8,743  |   |                                |   | 9,258 |   |   |   | 26,584 |   |   |   | 26,950 |   |
| Total expenses                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 35,640 |   |                                |   | 38,829 |   |   |   | 107,911 |   |   |   | 111,612 |   |
| Income before disposition of property                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 512    |   |                                |   | 2,120 |   |   |   | 4,457 |   |   |   | 9,065 |   |
| Gains/(losses) on disposition of property                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (463   | )      |                                |   | — |   |   |   | 2,963 |   |   |   | — |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                                    | 49     |   |                                | $      | 2,120 |   |   | $ | 7,420 |   |   | $ | 9,065 |   |
| Our share of:                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net income (1)                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                    | 682    |   |                                | $      | 1,214 |   |   | $ | 3,844 |   |   | $ | 4,723 |   |
| Depreciation and amortization of real estate assets                                                                                                                                                                                                                                                                                                                                                                                          |   | $                                    | 3,352  |   |                                | $      | 3,136 |   |   | $ | 9,825 |   |   | $ | 9,466 |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                    | 3,491  |   |                                | $      | 3,704 |   |   | $ | 10,611 |   |   | $ | 10,924 |   |
| Gains/(losses) on disposition of depreciable properties                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                    | (199   | )      |                                | $      | — |   |   | $ | 582 |   |   | $ | — |   |

| (1) | Our share of net income differs from our weighted average ownership percentage in the joint ventures’ net income due to our purchase accounting and other adjustments related to management and leasing fees. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| October 1, 2009 through December 31, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | 4,291  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|--------|--------|
| 2010                                                                                 |   | $ | 14,436 |   |
| 2011                                                                                 |   | $ | 11,419 |   |
| 2012                                                                                 |   | $ | 10,946 |   |
| 2013                                                                                 |   | $ | 7,565  |   |
| 2014                                                                                 |   | $ | 5,099  |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | September 30,2009 |      |   | December 31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|------------------|--------|
| Secured mortgage loans                                                                                                       |   | $                      | 724,187   |   |             | $      | 655,186 |   |
| Unsecured loans                                                                                                              |   |                   | 748,398   |   |             |   | 949,499 |   |
| Total                                                                                                                                                      |   | $                      | 1,472,585 |   |             | $      | 1,604,685 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2009                                 |   |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Net income                                                                              |   | $                                    | 12,573 |   |                                | $      | 15,724 |   |   | $ | 62,847 |   |   | $ | 48,471 |   |
| Other comprehensive income/(loss):                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gain/(loss) on tax increment financing bonds                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 259    |   |                                |   | (1,751 | ) |   |   | 451 |   |   |   | (2,126 | ) |
| Unrealized derivative net gains on cash-flow hedges                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 177    |   |                                |   | 49 |   |   |   | 591 |   |   |   | 573 |   |
| Amortization of past cash flow hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (89    | )      |                                |   | 47 |   |   |   | (229 | ) |   |   | 174 |   |
| Total other comprehensive income/(loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 347    |   |                                |   | (1,655 | ) |   |   | 813 |   |   |   | (1,379 | ) |
| Total comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                    | 12,920 |   |                                | $      | 14,069 |   |   | $ | 63,660 |   |   | $ | 47,092 |   |

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|                                                                                |   |                   |    |   | Level 1                                           |   |    | Level 2                          |   |   | Level 3                       |   |
|-------------------------------------------------------------------------------------|--------|------------------------|---------|--------|---------------------------------------------------|--------|---------|----------------------------------|--------|--------|-------------------------------|--------|
|                                                                                |   | September 30,2009 |    |   | Quoted Prices inActive Marketsfor IdenticalAssets |   |    | SignificantOtherObservableInputs |   |   | SignificantUnobservableInputs |   |
| Assets:                                                                             |   |                   |    |   |                                              |   |    |                             |   |   |                          |   |
| Marketable securities (in prepaid and other assets) (1)                             |   | $                      | 5,904   |   |                                              | $      | 5,904   |                             |   | $      | —                       |   |   | $ | — |   |
| Tax increment financing bond (in prepaid expenses and other assets)                 |   |                   | 17,919  |   |                                              |   | — |                             |   |   | —                       |   |   |   | 17,919 |   |
| Total Assets                                                                        |   | $                      | 23,823  |   |                                              | $      | 5,904   |                             |   | $      | —                       |   |   | $ | 17,919 |   |
|                                                                                |   |                   |    |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Noncontrolling Interests in the Operating Partnership                               |   | $                      | 124,705 |   |                                              | $      | 124,705 |                             |   | $      | —                       |   |   | $ | — |   |
|                                                                                |   |                   |    |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Liabilities:                                                                        |   |                   |    |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)   |   | $                      | 673     |   |                                              | $      | — |                             |   | $      | 673                           |   |   | $ | — |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities) |   |                   | 6,612   |   |                                              |   | 6,612   |                             |   |   | —                       |   |   |   | — |   |
| SF-Harborview Plaza, LP financing obligation                                        |   |                   | 17,445  |   |                                              |   | — |                             |   |   | —                       |   |   |   | 17,445 |   |
| Total Liabilities                                                                   |   | $                      | 24,730  |   |                                              | $      | 6,612   |                             |   | $      | 673                           |   |   | $ | 17,445 |   |

|                                                                                |   |                  |   |   | Level 1                                           |   |    | Level 2                          |   |   | Level 3                       |   |
|-------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|---------------------------------------------------|--------|---------|----------------------------------|--------|--------|-------------------------------|--------|
|                                                                                |   | December 31,2008 |   |   | Quoted Prices inActive Marketsfor IdenticalAssets |   |    | SignificantOtherObservableInputs |   |   | SignificantUnobservableInputs |   |
| Assets                                                                              |   |                  |   |   |                                              |   |    |                             |   |   |                          |   |
| Marketable securities (in prepaid and other assets) (1)                             |   | $                     | 5,422  |   |                                              | $      | 5,422   |                             |   | $      | —                       |   |   | $ | — |   |
| Tax increment financing bond (in prepaid expenses and other assets)                 |   |                  | 17,468 |   |                                              |   | — |                             |   |   | —                       |   |   |   | 17,468 |   |
| Total Assets                                                                        |   | $                     | 22,890 |   |                                              | $      | 5,422   |                             |   | $      | —                       |   |   | $ | 17,468 |   |
|                                                                                |   |                  |   |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Liabilities                                                                         |   |                  |   |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)   |   | $                     | 1,376  |   |                                              | $      | — |                             |   | $      | 1,376                         |   |   | $ | — |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities) |   |                  | 6,522  |   |                                              |   | 6,522   |                             |   |   | —                       |   |   |   | — |   |
| SF-Harborview Plaza, LP financing obligation                                        |   |                  | 16,604 |   |                                              |   | — |                             |   |   | —                       |   |   |   | 16,604 |   |
| Total Liabilities                                                                   |   | $                     | 24,502 |   |                                              | $      | 6,522   |                             |   | $      | 1,376                         |   |   | $ | 16,604 |   |

| (1) | The marketable securities are held through our officer deferred compensation plans. |
|-----|-------------------------------------------------------------------------------------|

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|                                         |   | Three MonthsEndedSeptember 30,2009 |   |   | Nine MonthsEndedSeptember 30,2009 |   |
|----------------------------------------------|--------|-----------------------------------------|--------|--------|----------------------------------------|--------|
| Asset:                                       |   |                                    |   |   |                                   |   |
| Tax Increment Financing Bond                 |   |                                    |   |   |                                   |   |
| Beginning balance                            |   | $                                       | 17,660 |   |                                   | $      | 17,468 |   |
| Unrealized gain (in AOCL)                    |   |                                    | 259    |   |                                   |   | 451 |   |
| Ending balance                               |   | $                                       | 17,919 |   |                                   | $      | 17,919 |   |
|                                         |   |                                    |   |   |                                   |   |   |   |
| Liability:                                   |   |                                    |   |   |                                   |   |   |   |
| SF-Harborview Plaza, LP Financing Obligation |   |                                    |   |   |                                   |   |   |   |
| Beginning balance                            |   | $                                       | 17,172 |   |                                   | $      | 16,604 |   |
| Payments on financing obligation             |   |                                    | (124   | )      |                                   |   | (396 | ) |
| Interest expense on financing obligation     |   |                                    | 397    |   |                                   |   | 1,237 |   |
| Ending balance                               |   | $                                       | 17,445 |   |                                   | $      | 17,445 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | CarryingAmount |      |   | Fair Value |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|------------|--------|
| September 30, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |           |      |   |       |   |
| Cash and cash equivalents                                                                                                     |   | $              | 42,069    |   |       | $      | 42,069 |   |
| Restricted cash                                                                                                               |   | $              | 17,995    |   |       | $      | 17,995 |   |
| Accounts and notes receivable                                                                                                 |   | $              | 23,093    |   |       | $      | 23,093 |   |
| Marketable securities (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $              | 5,904     |   |       | $      | 5,904 |   |
| Tax increment financing bond (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 17,919    |   |       | $      | 17,919 |   |
| Mortgages and notes payable                                                                                                   |   | $              | 1,472,585 |   |       | $      | 1,444,085 |   |
| Financing obligations                                                                                                         |   | $              | 35,043    |   |       | $      | 35,142 |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $              | 673       |   |       | $      | 673 |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 6,612     |   |       | $      | 6,612 |   |
| Noncontrolling interests in the Operating Partnership                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $              | 124,705   |   |       | $      | 124,705 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |           |      |   |       |   |   |   |
| December 31, 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |      |   |       |   |   |   |
| Cash and cash equivalents                                                                                                     |   | $              | 13,757    |   |       | $      | 13,757 |   |
| Restricted cash                                                                                                               |   | $              | 2,258     |   |       | $      | 2,258 |   |
| Accounts and notes receivable                                                                                                 |   | $              | 27,289    |   |       | $      | 27,289 |   |
| Marketable securities (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $              | 5,422     |   |       | $      | 5,422 |   |
| Tax increment financing bond (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 17,468    |   |       | $      | 17,468 |   |
| Mortgages and notes payable                                                                                                   |   | $              | 1,604,685 |   |       | $      | 1,330,899 |   |
| Financing obligations                                                                                                         |   | $              | 34,174    |   |       | $      | 32,219 |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $              | 1,376     |   |       | $      | 1,376 |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 6,522     |   |       | $      | 6,522 |   |
| Noncontrolling interests in the Operating Partnership                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $              | 111,278   |   |       | $      | 111,278 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2009                                 |   |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Rental and other revenues                                                                                          |   | $                                    | 395    |   |                                | $      | 3,524 |   |   | $ | 4,775 |   |   | $ | 12,039 |   |
| Operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Rental property and other expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 112    |   |                                |   | 1,273 |   |   |   | 1,639 |   |   |   | 4,457 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 52     |   |                                |   | 652 |   |   |   | 756 |   |   |   | 2,187 |   |
| Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 164    |   |                                |   | 1,925 |   |   |   | 2,395 |   |   |   | 6,644 |   |
| Other income                                                                                                       |   |                                 | 1      |   |                                |   | 3 |   |   |   | 1 |   |   |   | 22 |   |
| Income before gains/(losses) from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | 232    |   |                                |   | 1,602 |   |   |   | 2,381 |   |   |   | 5,417 |   |
| Net gains/(losses) from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | (377   | )      |                                |   | 3,137 |   |   |   | 20,639 |   |   |   | 11,890 |   |
| Total discontinued operations                                                                                      |   | $                                    | (145   | )      |                                | $      | 4,739 |   |   | $ | 23,020 |   |   | $ | 17,307 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | September 30,2009 |   |   | December 31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|------------------|--------|
| Land                                                                                                                                         |   | $                      | 5,877  |   |             | $      | 5,983 |   |
| Land held for development                                                                                                                    |   |                   | 1,197  |   |             |   | 1,197 |   |
| Buildings and tenant improvements                                                                                                            |   |                   | 7,656  |   |             |   | 8,033 |   |
| Accumulated depreciation                                                                                                                     |   |                   | (1,802 | )      |             |   | (1,627 | ) |
| Net real estate assets                                                                                                                       |   |                   | 12,928 |   |             |   | 13,586 |   |
| Deferred leasing costs, net                                                                                                                  |   |                   | 401    |   |             |   | 434 |   |
| Accrued straight line rents receivable                                                                                                       |   |                   | 403    |   |             |   | 382 |   |
| Prepaid expenses and other                                                                                                                   |   |                   | 47     |   |             |   | 45 |   |
| Total assets                                                                                                                                 |   | $                      | 13,779 |   |             | $      | 14,447 |   |
| Tenant security deposits, deferred rents and accrued costs (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                      | 12     |   |             | $      | 9 |   |

| (1) | Included in accounts payable, accrued expenses and other liabilities. |
|-----|-----------------------------------------------------------------------|

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(Table of Contents)

|                                                                                                                             |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                             |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Earnings per common share - basic:                                                                                               |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Numerator:                                                                                                                       |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Income from continuing operations                                                                                                |   | $                                    | 12,718  |   |                                | $      | 10,985 |   |   | $ | 39,827 |   |   | $ | 31,164 |   |
| Noncontrolling interests in the Operating Partnership from continuing operations                                                 |   |                                 | (599    | )      |                                |   | (514 | ) |   |   | (1,996 | ) |   |   | (1,429 | ) |
| Noncontrolling interests in consolidated affiliates from continuing operations                                                   |   |                                 | (24     | )      |                                |   | (201 | ) |   |   | (158 | ) |   |   | (590 | ) |
| Dividends on preferred stock                                                                                                     |   |                                 | (1,677  | )      |                                |   | (2,451 | ) |   |   | (5,031 | ) |   |   | (8,127 | ) |
| Excess of preferred stock redemption/repurchase cost over carrying value                                                         |   |                                 | — |   |                                |   | (108 | ) |   |   | — |   |   |   | (108 | ) |
| Income from continuing operations available for common stockholders                                                              |   |                                 | 10,418  |   |                                |   | 7,711 |   |   |   | 32,642 |   |   |   | 20,910 |   |
| Income/(loss) from discontinued operations                                                                                       |   |                                 | (145    | )      |                                |   | 4,739 |   |   |   | 23,020 |   |   |   | 17,307 |   |
| Noncontrolling interests in the Operating Partnership from discontinued operations                                               |   |                                 | 8       |   |                                |   | (298 | ) |   |   | (1,343 | ) |   |   | (1,115 | ) |
| Income/(loss) from discontinued operations available for common stockholders                                                     |   |                                 | (137    | )      |                                |   | 4,441 |   |   |   | 21,677 |   |   |   | 16,192 |   |
| Net income available for common stockholders                                                                                     |   | $                                    | 10,281  |   |                                | $      | 12,152 |   |   | $ | 54,319 |   |   | $ | 37,102 |   |
| Denominator:                                                                                                                     |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic earnings per common share – weighted average shares                                                  |   |                                 | 70,902  |   |                                |   | 58,998 |   |   |   | 66,912 |   |   |   | 57,893 |   |
| Earnings per common share - basic:                                                                                               |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common stockholders                                                              |   | $                                    | 0.15    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common stockholders                                                            |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.32 |   |   |   | 0.28 |   |
| Net income available for common stockholders                                                                                     |   | $                                    | 0.15    |   |                                | $      | 0.21 |   |   | $ | 0.81 |   |   | $ | 0.64 |   |
| Earnings per common share - diluted:                                                                                             |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                       |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations                                                                                                |   | $                                    | 12,718  |   |                                | $      | 10,985 |   |   | $ | 39,827 |   |   | $ | 31,164 |   |
| Noncontrolling interests in consolidated affiliates from continuing operations                                                   |   |                                 | (24     | )      |                                |   | (201 | ) |   |   | (158 | ) |   |   | (590 | ) |
| Dividends on preferred stock                                                                                                     |   |                                 | (1,677  | )      |                                |   | (2,451 | ) |   |   | (5,031 | ) |   |   | (8,127 | ) |
| Excess of preferred stock redemption/repurchase cost over carrying value                                                         |   |                                 | — |   |                                |   | (108 | ) |   |   | — |   |   |   | (108 | ) |
| Income from continuing operations available for common stockholders before noncontrolling interests in the Operating Partnership |   |                                 | 11,017  |   |                                |   | 8,225 |   |   |   | 34,638 |   |   |   | 22,339 |   |
| Income/(loss) from discontinued operations                                                                                       |   |                                 | (145    | )      |                                |   | 4,739 |   |   |   | 23,020 |   |   |   | 17,307 |   |
| Net income available for common stockholders before noncontrolling interests in the Operating Partnership                        |   | $                                    | 10,872  |   |                                | $      | 12,964 |   |   | $ | 57,658 |   |   | $ | 39,646 |   |
| Denominator:                                                                                                                     |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic earnings per common share –weighted average shares                                                   |   |                                 | 70,902  |   |                                |   | 58,998 |   |   |   | 66,912 |   |   |   | 57,893 |   |
| Add:                                                                                                                             |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Employee and director stock options and warrants                                                                                 |   |                                 | 121     |   |                                |   | 302 |   |   |   | 52 |   |   |   | 336 |   |
| Noncontrolling Common Units                                                                                                      |   |                                 | 4,049   |   |                                |   | 3,928 |   |   |   | 4,060 |   |   |   | 3,947 |   |
| Denominator for diluted earnings per common share – adjusted weighted average shares and assumed conversions (1)           |   |                                 | 75,072  |   |                                |   | 63,228 |   |   |   | 71,024 |   |   |   | 62,176 |   |
| Earnings per common share - diluted:                                                                                             |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common stockholders                                                              |   | $                                    | 0.14    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common stockholders                                                            |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.32 |   |   |   | 0.28 |   |
| Net income available for common stockholders                                                                                     |   | $                                    | 0.14    |   |                                | $      | 0.21 |   |   | $ | 0.81 |   |   | $ | 0.64 |   |

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| (1) | Options and warrants aggregating 935,494 and 327,747 shares were outstanding during the three months ended September 30, 2009 and 2008, respectively, and 1,191,900 and 174,709 shares were outstanding during the nine months ended September 30, 2009 and 2008, respectively but were not included in the treasury method calculation for diluted earnings per common share because the exercise pricesof the options and warrants were higher than the average market price of Common Stock during these periods. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Rental and Other Revenues: (1) (2) (3)                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Office:                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                    | 12,618  |   |                                | $      | 11,854 |   |   | $ | 36,215 |   |   | $ | 35,143 |   |
| Greenville, SC                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 3,428   |   |                                |   | 3,522 |   |   |   | 10,669 |   |   |   | 10,281 |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 | 3,742   |   |                                |   | 3,959 |   |   |   | 11,201 |   |   |   | 11,477 |   |
| Memphis, TN                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 8,187   |   |                                |   | 6,331 |   |   |   | 22,617 |   |   |   | 18,839 |   |
| Nashville, TN                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 15,175  |   |                                |   | 15,384 |   |   |   | 46,202 |   |   |   | 45,572 |   |
| Orlando, FL                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 3,112   |   |                                |   | 2,939 |   |   |   | 8,906 |   |   |   | 8,115 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 6,230   |   |                                |   | 6,259 |   |   |   | 19,066 |   |   |   | 19,383 |   |
| Raleigh, NC                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 18,204  |   |                                |   | 17,284 |   |   |   | 54,512 |   |   |   | 52,030 |   |
| Richmond, VA                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 | 12,174  |   |                                |   | 11,925 |   |   |   | 35,117 |   |   |   | 36,341 |   |
| Tampa, FL                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 17,477  |   |                                |   | 16,844 |   |   |   | 50,618 |   |   |   | 49,695 |   |
| Total Office Segment                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 100,347 |   |                                |   | 96,301 |   |   |   | 295,123 |   |   |   | 286,876 |   |
| Industrial:                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 3,904   |   |                                |   | 3,800 |   |   |   | 11,776 |   |   |   | 11,702 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 3,182   |   |                                |   | 3,695 |   |   |   | 10,865 |   |   |   | 10,980 |   |
| Total Industrial Segment                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | 7,086   |   |                                |   | 7,495 |   |   |   | 22,641 |   |   |   | 22,682 |   |
| Retail:                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 | 6,463   |   |                                |   | 8,663 |   |   |   | 21,756 |   |   |   | 25,598 |   |
| Raleigh, NC                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 30      |   |                                |   | — |   |   |   | 90 |   |   |   | — |   |
| Total Retail Segment                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 6,493   |   |                                |   | 8,663 |   |   |   | 21,846 |   |   |   | 25,598 |   |
| Residential:                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Kansas City, MO                                                                                                                                            |   |                                 | 303     |   |                                |   | 296 |   |   |   | 898 |   |   |   | 898 |   |
| Total Residential Segment                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 303     |   |                                |   | 296 |   |   |   | 898 |   |   |   | 898 |   |
| Total Rental and Other Revenues                                                                     |   | $                                    | 114,229 |   |                                | $      | 112,755 |   |   | $ | 340,508 |   |   | $ | 336,054 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Net Operating Income: (1) (2) (3)                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Office:                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                    | 7,891   |   |                                | $      | 6,764 |   |   | $ | 22,896 |   |   | $ | 21,737 |   |
| Greenville, SC                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | 2,011   |   |                                |   | 2,184 |   |   |   | 6,640 |   |   |   | 6,424 |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 2,340   |   |                                |   | 2,420 |   |   |   | 6,843 |   |   |   | 6,902 |   |
| Memphis, TN                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 4,841   |   |                                |   | 3,852 |   |   |   | 12,886 |   |   |   | 11,176 |   |
| Nashville, TN                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 9,940   |   |                                |   | 10,209 |   |   |   | 30,078 |   |   |   | 30,153 |   |
| Orlando, FL                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 1,638   |   |                                |   | 1,638 |   |   |   | 4,666 |   |   |   | 4,534 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 | 3,872   |   |                                |   | 3,843 |   |   |   | 12,188 |   |   |   | 12,315 |   |
| Raleigh, NC                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 11,942  |   |                                |   | 11,638 |   |   |   | 36,734 |   |   |   | 34,748 |   |
| Richmond, VA                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | 7,835   |   |                                |   | 7,818 |   |   |   | 23,893 |   |   |   | 24,373 |   |
| Tampa, FL                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 10,184  |   |                                |   | 9,985 |   |   |   | 29,587 |   |   |   | 29,776 |   |
| Total Office Segment                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 62,494  |   |                                |   | 60,351 |   |   |   | 186,411 |   |   |   | 182,138 |   |
| Industrial:                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 2,904   |   |                                |   | 2,892 |   |   |   | 8,906 |   |   |   | 8,943 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 | 2,322   |   |                                |   | 2,864 |   |   |   | 8,331 |   |   |   | 8,606 |   |
| Total Industrial Segment                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 5,226   |   |                                |   | 5,756 |   |   |   | 17,237 |   |   |   | 17,549 |   |
| Retail:                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Atlanta, GA (4)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (6      | )      |                                |   | (6 | ) |   |   | (18 | ) |   |   | (20 | ) |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 3,486   |   |                                |   | 5,617 |   |   |   | 13,449 |   |   |   | 16,974 |   |
| Raleigh, NC (4)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (1      | )      |                                |   | (21 | ) |   |   | 9 |   |   |   | (69 | ) |
| Total Retail Segment                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 3,479   |   |                                |   | 5,590 |   |   |   | 13,440 |   |   |   | 16,885 |   |
| Residential:                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 163     |   |                                |   | 163 |   |   |   | 517 |   |   |   | 528 |   |
| Raleigh, NC (4)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (72     | )      |                                |   | (16 | ) |   |   | (211 | ) |   |   | (22 | ) |
| Total Residential Segment                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 91      |   |                                |   | 147 |   |   |   | 306 |   |   |   | 506 |   |
| Total Net Operating Income                                                                     |   |                                 | 71,290  |   |                                |   | 71,844 |   |   |   | 217,394 |   |   |   | 217,078 |   |
| Reconciliation to income from continuing operations before disposition of property and condominiums and equity in earnings of unconsolidated affiliates:                                                                                                                                                                                                                                                                                           |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | (32,637 | )      |                                |   | (31,458 | ) |   |   | (98,443 | ) |   |   | (92,405 | ) |
| General and administrative expense                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 | (9,485  | )      |                                |   | (8,885 | ) |   |   | (27,286 | ) |   |   | (29,362 | ) |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | (21,334 | )      |                                |   | (24,492 | ) |   |   | (64,654 | ) |   |   | (74,128 | ) |
| Interest and other income                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 3,981   |   |                                |   | 1,017 |   |   |   | 7,902 |   |   |   | 3,406 |   |
| Income from continuing operations before disposition of property and condominiums and equity in earnings of unconsolidated affiliates                                                                                                                                                                                                                                                                                                              |   | $                                    | 11,815  |   |                                | $      | 8,026 |   |   | $ | 34,913 |   |   | $ | 24,589 |   |

| (1) | Net of discontinued operations. |
|-----|---------------------------------|

| (2) | The Piedmont Triad market encompasses the Greensboro and Winston-Salem metropolitan area. |
|-----|-------------------------------------------------------------------------------------------|

| (3) | The Raleigh market encompasses the Raleigh, Durham, Cary and Research Triangle metropolitan area. |
|-----|---------------------------------------------------------------------------------------------------|

| (4) | Negative NOI with no corresponding revenues represents expensed real estate taxes and other carrying costs associated with land held for development that is currently zoned for retail and residential properties. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Consolidated Balance Sheets

|                                                                                                       |   | September 30,2009 |      |   | December 31,2008 |   |
|------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|-----------------------|--------|
| Assets:                                                                                                    |   |                   |      |   |                  |   |
| Real estate assets, at cost:                                                                               |   |                   |      |   |                  |   |
| Land                                                                                                       |   | $                      | 344,052   |   |                  | $      | 346,889 |   |
| Buildings and tenant improvements                                                                          |   |                   | 2,815,800 |   |                  |   | 2,811,810 |   |
| Development in process                                                                                     |   |                   | 62,075    |   |                  |   | 61,938 |   |
| Land held for development                                                                                  |   |                   | 99,206    |   |                  |   | 98,946 |   |
|                                                                                                       |   |                   | 3,321,133 |   |                  |   | 3,319,583 |   |
| Less-accumulated depreciation                                                                              |   |                   | (762,068  | )      |                  |   | (712,597 | ) |
| Net real estate assets                                                                                     |   |                   | 2,559,065 |   |                  |   | 2,606,986 |   |
| For-sale residential condominiums                                                                          |   |                   | 17,094    |   |                  |   | 24,284 |   |
| Real estate and other assets, net, held for sale                                                           |   |                   | 13,779    |   |                  |   | 14,447 |   |
| Cash and cash equivalents                                                                                  |   |                   | 41,899    |   |                  |   | 13,649 |   |
| Restricted cash                                                                                            |   |                   | 17,995    |   |                  |   | 2,258 |   |
| Accounts receivable, net of allowance of $2,776 and $1,281, respectively                                   |   |                   | 19,847    |   |                  |   | 23,687 |   |
| Notes receivable, net of allowance of $578 and $459, respectively                                          |   |                   | 3,246     |   |                  |   | 3,602 |   |
| Accrued straight-line rents receivable, net of allowance of $2,573 and $2,082, respectively                |   |                   | 81,896    |   |                  |   | 79,597 |   |
| Investment in unconsolidated affiliates                                                                    |   |                   | 64,986    |   |                  |   | 66,517 |   |
| Deferred financing and leasing costs, net of accumulated amortization of $51,929 and $52,434, respectively |   |                   | 70,259    |   |                  |   | 72,783 |   |
| Prepaid expenses and other assets                                                                          |   |                   | 38,287    |   |                  |   | 37,046 |   |
| Total Assets                                                                                               |   | $                      | 2,928,353 |   |                  | $      | 2,944,856 |   |
|                                                                                                       |   |                   |      |   |                  |   |   |   |
| Liabilities, Redeemable Operating Partnership Units and Equity:                                            |   |                   |      |   |                  |   |   |   |
| Mortgages and notes payable                                                                                |   | $                      | 1,472,585 |   |                  | $      | 1,604,685 |   |
| Accounts payable, accrued expenses and other liabilities                                                   |   |                   | 129,477   |   |                  |   | 135,606 |   |
| Financing obligations                                                                                      |   |                   | 35,043    |   |                  |   | 34,174 |   |
| Total Liabilities                                                                                          |   |                   | 1,637,105 |   |                  |   | 1,774,465 |   |
| Commitments and Contingencies                                                                              |   |                   |      |   |                  |   |   |   |
| Redeemable Operating Partnership Units:                                                                    |   |                   |      |   |                  |   |   |   |
| Common Units, 3,965,228 and 4,067,163 outstanding, respectively                                            |   |                   | 124,705   |   |                  |   | 111,278 |   |
| Series A Preferred Units (liquidation preference $1,000 per unit), 29,092 shares issued and outstanding    |   |                   | 29,092    |   |                  |   | 29,092 |   |
| Series B Preferred Units (liquidation preference $25 per unit), 2,100,000 shares issued and outstanding    |   |                   | 52,500    |   |                  |   | 52,500 |   |
| Total Redeemable Operating Partnership Units                                                               |   |                   | 206,297   |   |                  |   | 192,870 |   |
| Equity:                                                                                                    |   |                   |      |   |                  |   |   |   |
| Common Units:                                                                                              |   |                   |      |   |                  |   |   |   |
| General partner Common Units, 746,270 and 672,301 outstanding, respectively                                |   |                   | 10,832    |   |                  |   | 9,759 |   |
| Limited partner Common Units, 69,915,504 and 62,490,596 outstanding, respectively                          |   |                   | 1,072,560 |   |                  |   | 966,378 |   |
| Accumulated other comprehensive loss                                                                       |   |                   | (3,979    | )      |                  |   | (4,792 | ) |
| Noncontrolling interests in consolidated affiliates                                                        |   |                   | 5,538     |   |                  |   | 6,176 |   |
| Total Equity                                                                                               |   |                   | 1,084,951 |   |                  |   | 977,521 |   |
| Total Liabilities, Redeemable Operating Partnership Units and  Equity                            |   | $                      | 2,928,353 |   |                  | $      | 2,944,856 |   |

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Consolidated Statements of Income

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Rental and other revenues                                                                                              |   | $                                    | 114,229 |   |                                | $      | 112,755 |   |   | $ | 340,508 |   |   | $ | 336,054 |   |
| Operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Rental property and other expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | 42,939  |   |                                |   | 40,911 |   |   |   | 122,863 |   |   |   | 118,826 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 32,637  |   |                                |   | 31,458 |   |   |   | 98,443 |   |   |   | 92,405 |   |
| General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 9,485   |   |                                |   | 8,885 |   |   |   | 27,537 |   |   |   | 29,509 |   |
| Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 85,061  |   |                                |   | 81,254 |   |   |   | 248,843 |   |   |   | 240,740 |   |
| Interest expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Contractual                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 | 20,001  |   |                                |   | 22,995 |   |   |   | 60,525 |   |   |   | 69,803 |   |
| Amortization of deferred financing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 627     |   |                                |   | 714 |   |   |   | 1,978 |   |   |   | 2,038 |   |
| Financing obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 706     |   |                                |   | 783 |   |   |   | 2,151 |   |   |   | 2,287 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | 21,334  |   |                                |   | 24,492 |   |   |   | 64,654 |   |   |   | 74,128 |   |
| Other income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest and other income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                 | 3,324   |   |                                |   | 1,017 |   |   |   | 6,615 |   |   |   | 3,406 |   |
| Gain on debt extinguishments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 657     |   |                                |   | — |   |   |   | 1,287 |   |   |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | 3,981   |   |                                |   | 1,017 |   |   |   | 7,902 |   |   |   | 3,406 |   |
| Income from continuing operations before disposition of property and                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| condominiums and equity in earnings of unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | 11,815  |   |                                |   | 8,026 |   |   |   | 34,913 |   |   |   | 24,592 |   |
| Gains on disposition of property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | 34      |   |                                |   | 1,745 |   |   |   | 247 |   |   |   | 1,852 |   |
| Gains on for-sale residential condominiums                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 187     |   |                                |   | — |   |   |   | 823 |   |   |   | — |   |
| Equity in earnings of unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 669     |   |                                |   | 1,187 |   |   |   | 3,779 |   |   |   | 4,668 |   |
| Income from continuing operations                                                                                      |   |                                 | 12,705  |   |                                |   | 10,958 |   |   |   | 39,762 |   |   |   | 31,112 |   |
| Discontinued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 232     |   |                                |   | 1,602 |   |   |   | 2,381 |   |   |   | 5,417 |   |
| Net gains/(losses) from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | (377    | )      |                                |   | 3,137 |   |   |   | 20,639 |   |   |   | 11,890 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | (145    | )      |                                |   | 4,739 |   |   |   | 23,020 |   |   |   | 17,307 |   |
| Net income                                                                                                             |   |                                 | 12,560  |   |                                |   | 15,697 |   |   |   | 62,782 |   |   |   | 48,419 |   |
| Net (income) attributable to noncontrolling interests in consolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | (24     | )      |                                |   | (201 | ) |   |   | (158 | ) |   |   | (590 | ) |
| Distributions on preferred units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | (1,677  | )      |                                |   | (2,451 | ) |   |   | (5,031 | ) |   |   | (8,127 | ) |
| Excess of preferred unit redemption cost over carrying value                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | — |   |                                |   | (108 | ) |   |   | — |   |   |   | (108 | ) |
| Net income available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                                    | 10,859  |   |                                | $      | 12,937 |   |   | $ | 57,593 |   |   | $ | 39,594 |   |
| Earnings per common unit - basic:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                    | 0.15    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.33 |   |   |   | 0.28 |   |
| Net income available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                                    | 0.15    |   |                                | $      | 0.21 |   |   | $ | 0.82 |   |   | $ | 0.64 |   |
| Weighted average common units outstanding - basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 74,542  |   |                                |   | 62,517 |   |   |   | 70,563 |   |   |   | 61,431 |   |
| Earnings per common unit - diluted:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                    | 0.15    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.33 |   |   |   | 0.28 |   |
| Net income available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                                    | 0.15    |   |                                | $      | 0.21 |   |   | $ | 0.82 |   |   | $ | 0.64 |   |
| Weighted average common units outstanding - diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 74,663  |   |                                |   | 62,819 |   |   |   | 70,615 |   |   |   | 61,767 |   |
| Distributions declared per common unit                                                                                 |   | $                                    | 0.425   |   |                                | $      | 0.425 |   |   | $ | 1.275 |   |   | $ | 1.275 |   |
| Net income available for common unitholders:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                    | 11,004  |   |                                | $      | 8,198 |   |   | $ | 34,573 |   |   | $ | 22,287 |   |
| Income/(loss) from discontinued operations available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 | (145    | )      |                                |   | 4,739 |   |   |   | 23,020 |   |   |   | 17,307 |   |
| Net income available for common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                                    | 10,859  |   |                                | $      | 12,937 |   |   | $ | 57,593 |   |   | $ | 39,594 |   |

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Consolidated Statement of Equity

|                                                                             |   | Common Units   |    |   |           |   |      |                              |   |   |                                             |   |
|----------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------|--------|-----------|-----------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                                             |   | GeneralPartner |    |   | LimitedPartner |   |      | AccumulatedOtherComprehensiveLoss |   |   | NoncontrollingInterests inConsolidatedAffiliates |   |   | TotalCapital |   |
| Balance at December 31, 2008                                                     |   | $              | 9,759   |   |           | $      | 966,378   |                              |   | $      | (4,792                                           | )      |   | $ | 6,176 |   |   | $ | 977,521 |   |
| Issuance of Common Units, net                                                    |   |           | 1,473   |   |           |   | 145,837   |                              |   |   | —                                          |   |   |   | — |   |   |   | 147,310 |   |
| Distributions on Common Units                                                    |   |           | (889    | )      |           |   | (87,978   | )                                 |   |   | —                                          |   |   |   | — |   |   |   | (88,867 | ) |
| Distributions on Preferred Units                                                 |   |           | (50     | )      |           |   | (4,981    | )                                 |   |   | —                                          |   |   |   | — |   |   |   | (5,031 | ) |
| Amortization of restricted stock and stock options                               |   |           | 52      |   |           |   | 5,152     |                              |   |   | —                                          |   |   |   | — |   |   |   | 5,204 |   |
| Distribution to noncontrolling interests in consolidated affiliates              |   |           | — |   |           |   | —   |                              |   |   | —                                          |   |   |   | (796 | ) |   |   | (796 | ) |
| Adjustment of Redeemable Common Units to fair value                              |   |           | (139    | )      |           |   | (13,846   | )                                 |   |   | —                                          |   |   |   | — |   |   |   | (13,985 | ) |
| Net (income) attributable to noncontrolling interests in consolidated affiliates |   |           | (2      | )      |           |   | (156      | )                                 |   |   | —                                          |   |   |   | 158 |   |   |   | — |   |
| Comprehensive income:                                                            |   |           |    |   |           |   |      |                              |   |   |                                             |   |   |   |   |   |   |   |   |   |
| Net income                                                                       |   |           | 628     |   |           |   | 62,154    |                              |   |   | —                                          |   |   |   | — |   |   |   | 62,782 |   |
| Other comprehensive loss                                                         |   |           | — |   |           |   | —   |                              |   |   | 813                                              |   |   |   | — |   |   |   | 813 |   |
| Total comprehensive income                                                       |   |           |    |   |           |   |      |                              |   |   |                                             |   |   |   |   |   |   |   | 63,595 |   |
| Balance at September 30, 2009                                          |   | $              | 10,832  |   |           | $      | 1,072,560 |                              |   | $      | (3,979                                           | )      |   | $ | 5,538 |   |   | $ | 1,084,951 |   |

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Consolidated Statements of Cash Flows

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Nine Months EndedSeptember 30, |     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2009                                |     |   | 2008 |   |
| Operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                |     |   |   |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                                   | 62,782   |   |   | $ | 48,419 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                |     |   |   |   |   |   |
| Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                | 87,600   |   |   |   | 83,151 |   |
| Amortization of lease commissions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                | 11,599   |   |   |   | 11,441 |   |
| Amortization of lease incentives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                | 866      |   |   |   | 783 |   |
| Amortization of restricted stock and stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                | 5,204    |   |   |   | 5,285 |   |
| Amortization of deferred financing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                | 1,978    |   |   |   | 2,038 |   |
| Amortization of accumulated other comprehensive loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                | (229     | ) |   |   | 174 |   |
| Gains on extinguishment of debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                | (1,287   | ) |   |   | — |   |
| Net gains on disposition of properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                | (20,886  | ) |   |   | (13,742 | ) |
| Net gains on disposition of for-sale residential condominiums                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                | (823     | ) |   |   | — |   |
| Equity in earnings of unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                | (3,779   | ) |   |   | (4,668 | ) |
| Change in financing obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                | 869      |   |   |   | 124 |   |
| Distributions of earnings from unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                | 3,033    |   |   |   | 4,549 |   |
| Changes in operating assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                |     |   |   |   |   |   |
| Accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                | 1,725    |   |   |   | (747 | ) |
| Prepaid expenses and other assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                | (1,606   | ) |   |   | (1,414 | ) |
| Accrued straight-line rents receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                | (2,787   | ) |   |   | (5,263 | ) |
| Accounts payable, accrued expenses and other liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                | 10,551   |   |   |   | (1,942 | ) |
| Net cash provided by operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                | 154,810  |   |   |   | 128,188 |   |
| Investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                |     |   |   |   |   |   |
| Additions to real estate assets and deferred leasing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                | (101,675 | ) |   |   | (165,722 | ) |
| Net proceeds from disposition of real estate assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                | 61,926   |   |   |   | 37,258 |   |
| Net proceeds from disposition of for-sale residential condominiums                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                | 7,940    |   |   |   | — |   |
| Distributions of capital from unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                | 3,257    |   |   |   | 2,343 |   |
| Net repayments of notes receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                | 356      |   |   |   | 1,566 |   |
| Contributions to unconsolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                | (922     | ) |   |   | (12,341 | ) |
| Changes in restricted cash and other investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                | (15,514  | ) |   |   | 8,295 |   |
| Net cash used in investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                | (44,632  | ) |   |   | (128,601 | ) |
| Financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                |     |   |   |   |   |   |
| Distributions on Common Units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                | (88,867  | ) |   |   | (77,769 | ) |
| Redemption/repurchase of Preferred Units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                | —  |   |   |   | (52,499 | ) |
| Distributions on Preferred Units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                | (5,031   | ) |   |   | (8,127 | ) |
| Distributions to noncontrolling interests in consolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                | (796     | ) |   |   | (3,247 | ) |
| Net proceeds from the issuances of Common Units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                | 147,310  |   |   |   | 209,784 |   |
| Repurchase of Common Units from noncontrolling interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                | —  |   |   |   | (3,293 | ) |
| Borrowings on revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                | 128,000  |   |   |   | 350,650 |   |
| Repayments of revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                | (291,000 | ) |   |   | (445,950 | ) |
| Borrowings on mortgages and notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                | 217,215  |   |   |   | 177,918 |   |
| Repayments of mortgages and notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                | (185,084 | ) |   |   | (135,742 | ) |
| Contributions from noncontrolling interests in consolidated affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                | —  |   |   |   | 625 |   |
| Additions to deferred financing costs and other financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                | (3,675   | ) |   |   | (1,570 | ) |
| Net cash (used in)/provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                | (81,928  | ) |   |   | 10,780 |   |
| Net increase in cash and cash equivalents                                                                                                            |   |                                | 28,250   |   |   |   | 10,367 |   |
| Cash and cash equivalents at beginning of the period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                | 13,649   |   |   |   | 3,144 |   |
| Cash and cash equivalents at end of the period                                                                                                       |   | $                                   | 41,899   |   |   | $ | 13,511 |   |

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|                                                                                                                                                                       |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                                                       |   | 2009                                |   |   | 2008 |   |
| Cash paid for interest, net of amounts capitalized (excludes cash distributions to owners of sold properties accounted for as financings of $396 and $1,219, respectively) |   | $                                   | 64,734 |   |   | $ | 77,198 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Nine Months EndedSeptember 30, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2009                                |   |   | 2008 |   |
| Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                |   |   |   |   |
| Prepaid expenses and other assets                                                                                                       |   | $                                   | 451    |   |   | $ | (1,553 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                   | 451    |   |   | $ | (1,553 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                |   |   |   |   |   |   |
| Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                |   |   |   |   |   |   |
| Accounts payable, accrued expenses and other liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                   | (591   | ) |   | $ | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                   | (591   | ) |   | $ | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                |   |   |   |   |   |   |
| Redeemable Operating Partnership Units and Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                   | 1,042  |   |   | $ | (1,553 | ) |

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Notes To Consolidated Financial Statements

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|   | · | We have reclassified the noncontrolling interests in consolidated affiliates from the mezzanine section of our Consolidated Balance Sheet to equity. This reclassification totaled $6.2 million as of December 31, 2008. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We no longer deduct net income attributable to noncontrolling interests in consolidated affiliates when determining net income. As a result, net income for the three and nine months ended September 30, 2008 increased $0.2 million and $0.6 million from the previously reported amounts, respectively. The adoption of these requirements had no effect on our net income available for common unitholdersor our earnings per common unit. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2009                                 |   |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Income Statements:                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 |   |   |                                |   |   |   |   |   |   |   |
| Revenues                                                                       |   | $                                    | 35,150 |   |                                | $      | 39,665 |   |   | $ | 108,614 |   |   | $ | 116,899 |   |
| Expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Rental property and other expenses                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 17,283 |   |                                |   | 19,939 |   |   |   | 52,851 |   |   |   | 57,227 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | 8,657  |   |                                |   | 8,680 |   |   |   | 25,508 |   |   |   | 24,505 |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 8,535  |   |                                |   | 9,034 |   |   |   | 25,947 |   |   |   | 26,258 |   |
| Total expenses                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 34,475 |   |                                |   | 37,653 |   |   |   | 104,306 |   |   |   | 107,990 |   |
| Income before disposition of property                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 675    |   |                                |   | 2,012 |   |   |   | 4,308 |   |   |   | 8,909 |   |
| Gains/(losses) on disposition of property                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (463   | )      |                                |   | — |   |   |   | 2,963 |   |   |   | — |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                                    | 212    |   |                                | $      | 2,012 |   |   | $ | 7,271 |   |   | $ | 8,909 |   |
| Our share of:                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net income (1)                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                    | 669    |   |                                | $      | 1,187 |   |   | $ | 3,779 |   |   | $ | 4,668 |   |
| Depreciation and amortization of real estate assets                                                                                                                                                                                                                                                                                                                                                                                          |   | $                                    | 3,311  |   |                                | $      | 3,097 |   |   | $ | 8,906 |   |   | $ | 9,342 |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                    | 3,465  |   |                                | $      | 3,676 |   |   | $ | 10,531 |   |   | $ | 10,837 |   |
| Gains/(losses) on disposition of depreciable properties                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                    | (199   | )      |                                | $      | — |   |   | $ | 582 |   |   | $ | — |   |

| (1) | Our share of net income differs from our weighted average ownership percentage in the joint ventures’ net income due to our purchase accounting and other adjustments related to management and leasing fees. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| October 1, 2009 through December 31, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | 4,291  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|--------|--------|
| 2010                                                                                 |   | $ | 14,436 |   |
| 2011                                                                                 |   | $ | 11,419 |   |
| 2012                                                                                 |   | $ | 10,946 |   |
| 2013                                                                                 |   | $ | 7,565  |   |
| 2014                                                                                 |   | $ | 5,099  |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | September 30,2009 |      |   | December 31,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|------------------|--------|
| Secured mortgage loans                                                                                                       |   | $                      | 724,187   |   |             | $      | 655,186 |   |
| Unsecured loans                                                                                                              |   |                   | 748,398   |   |             |   | 949,499 |   |
| Total                                                                                                                                                      |   | $                      | 1,472,585 |   |             | $      | 1,604,685 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2009                                 |   |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Net income                                                                              |   | $                                    | 12,560 |   |                                | $      | 15,697 |   |   | $ | 62,782 |   |   | $ | 48,419 |   |
| Other comprehensive income/(loss):                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gain/(loss) on tax increment financing bonds                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 259    |   |                                |   | (1,751 | ) |   |   | 451 |   |   |   | (2,126 | ) |
| Unrealized derivative net gains on cash-flow hedges                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 177    |   |                                |   | 49 |   |   |   | 591 |   |   |   | 573 |   |
| Amortization of past cash flow hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (89    | )      |                                |   | 47 |   |   |   | (229 | ) |   |   | 174 |   |
| Total other comprehensive income/(loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | 347    |   |                                |   | (1,655 | ) |   |   | 813 |   |   |   | (1,379 | ) |
| Total comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                    | 12,907 |   |                                | $      | 14,042 |   |   | $ | 63,595 |   |   | $ | 47,040 |   |

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|                                                                                |   |                   |   |   | Level 1                                           |   |    | Level 2                          |   |   | Level 3                       |   |
|-------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------------------------------------------|--------|---------|----------------------------------|--------|--------|-------------------------------|--------|
|                                                                                |   | September 30,2009 |   |   | Quoted Prices inActive Marketsfor IdenticalAssets |   |    | SignificantOtherObservableInputs |   |   | SignificantUnobservableInputs |   |
| Assets:                                                                             |   |                   |   |   |                                              |   |    |                             |   |   |                          |   |
| Marketable securities (in prepaid and other assets) (1)                             |   | $                      | 5,904  |   |                                              | $      | 5,904   |                             |   | $      | —                       |   |   | $ | — |   |
| Tax increment financing bond (in prepaid expenses and other assets)                 |   |                   | 17,919 |   |                                              |   | — |                             |   |   | —                       |   |   |   | 17,919 |   |
| Total Assets                                                                        |   | $                      | 23,823 |   |                                              | $      | 5,904   |                             |   | $      | —                       |   |   | $ | 17,919 |   |
|                                                                                |   |                   |   |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Liabilities:                                                                        |   |                   |   |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)   |   | $                      | 673    |   |                                              | $      | — |                             |   | $      | 673                           |   |   | $ | — |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities) |   |                   | 6,612  |   |                                              |   | 6,612   |                             |   |   | —                       |   |   |   | — |   |
| SF-Harborview Plaza, LP financing obligation                                        |   |                   | 17,445 |   |                                              |   | — |                             |   |   | —                       |   |   |   | 17,445 |   |
| Total Liabilities                                                                   |   | $                      | 24,730 |   |                                              | $      | 6,612   |                             |   | $      | 673                           |   |   | $ | 17,445 |   |

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|                                                                                |   |                  |   |   | Level 1                                           |   |    | Level 2                          |   |   | Level 3                       |   |
|-------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|---------------------------------------------------|--------|---------|----------------------------------|--------|--------|-------------------------------|--------|
|                                                                                |   | December 31,2008 |   |   | Quoted Prices inActive Marketsfor IdenticalAssets |   |    | SignificantOtherObservableInputs |   |   | SignificantUnobservableInputs |   |
| Assets                                                                              |   |                  |   |   |                                              |   |    |                             |   |   |                          |   |
| Marketable securities (in prepaid and other assets) (1)                             |   | $                     | 5,422  |   |                                              | $      | 5,422   |                             |   | $      | —                       |   |   | $ | — |   |
| Tax increment financing bond (in prepaid expenses and other assets)                 |   |                  | 17,468 |   |                                              |   | — |                             |   |   | —                       |   |   |   | 17,468 |   |
| Total Assets                                                                        |   | $                     | 22,890 |   |                                              | $      | 5,422   |                             |   | $      | —                       |   |   | $ | 17,468 |   |
|                                                                                |   |                  |   |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Liabilities                                                                         |   |                  |   |   |                                              |   |    |                             |   |   |                          |   |   |   |   |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)   |   | $                     | 1,376  |   |                                              | $      | — |                             |   | $      | 1,376                         |   |   | $ | — |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities) |   |                  | 6,522  |   |                                              |   | 6,522   |                             |   |   | —                       |   |   |   | — |   |
| SF-Harborview Plaza, LP financing obligation                                        |   |                  | 16,604 |   |                                              |   | — |                             |   |   | —                       |   |   |   | 16,604 |   |
| Total Liabilities                                                                   |   | $                     | 24,502 |   |                                              | $      | 6,522   |                             |   | $      | 1,376                         |   |   | $ | 16,604 |   |

| (1) | The marketable securities are held through our officer deferred compensation plans. |
|-----|-------------------------------------------------------------------------------------|

|                                         |   | Three MonthsEndedSeptember 30,2009 |   |   | Nine MonthsEndedSeptember 30,2009 |   |
|----------------------------------------------|--------|-----------------------------------------|--------|--------|----------------------------------------|--------|
| Asset:                                       |   |                                    |   |   |                                   |   |
| Tax Increment Financing Bond                 |   |                                    |   |   |                                   |   |
| Beginning balance                            |   | $                                       | 17,660 |   |                                   | $      | 17,468 |   |
| Unrealized gain (in AOCL)                    |   |                                    | 259    |   |                                   |   | 451 |   |
| Ending balance                               |   | $                                       | 17,919 |   |                                   | $      | 17,919 |   |
|                                         |   |                                    |   |   |                                   |   |   |   |
| Liability:                                   |   |                                    |   |   |                                   |   |   |   |
| SF-Harborview Plaza, LP Financing Obligation |   |                                    |   |   |                                   |   |   |   |
| Beginning balance                            |   | $                                       | 17,172 |   |                                   | $      | 16,604 |   |
| Payments on financing obligation             |   |                                    | (124   | )      |                                   |   | (396 | ) |
| Interest expense on financing obligation     |   |                                    | 397    |   |                                   |   | 1,237 |   |
| Ending balance                               |   | $                                       | 17,445 |   |                                   | $      | 17,445 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | CarryingAmount |      |   | Fair Value |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|------------|--------|
| September 30, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |           |      |   |       |   |
| Cash and cash equivalents                                                                                                     |   | $              | 41,899    |   |       | $      | 41,899 |   |
| Restricted cash                                                                                                               |   | $              | 17,995    |   |       | $      | 17,995 |   |
| Accounts and notes receivable                                                                                                 |   | $              | 23,093    |   |       | $      | 23,093 |   |
| Marketable securities (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $              | 5,904     |   |       | $      | 5,904 |   |
| Tax increment financing bond (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 17,919    |   |       | $      | 17,919 |   |
| Mortgages and notes payable                                                                                                   |   | $              | 1,472,585 |   |       | $      | 1,444,085 |   |
| Financing obligations                                                                                                         |   | $              | 35,043    |   |       | $      | 35,142 |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $              | 673       |   |       | $      | 673 |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 6,612     |   |       | $      | 6,612 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |           |      |   |       |   |   |   |
| December 31, 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |      |   |       |   |   |   |
| Cash and cash equivalents                                                                                                     |   | $              | 13,649    |   |       | $      | 13,649 |   |
| Restricted cash                                                                                                               |   | $              | 2,258     |   |       | $      | 2,258 |   |
| Accounts and notes receivable                                                                                                 |   | $              | 27,289    |   |       | $      | 27,289 |   |
| Marketable securities (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $              | 5,422     |   |       | $      | 5,422 |   |
| Tax increment financing bond (in prepaid expenses and other assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 17,468    |   |       | $      | 17,468 |   |
| Mortgages and notes payable                                                                                                   |   | $              | 1,604,685 |   |       | $      | 1,330,899 |   |
| Financing obligations                                                                                                         |   | $              | 34,174    |   |       | $      | 32,219 |   |
| Interest rate swaps (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $              | 1,376     |   |       | $      | 1,376 |   |
| Deferred compensation (in accounts payable, accrued expenses and other liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $              | 6,522     |   |       | $      | 6,522 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2009                                 |   |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Rental and other revenues                                                                                          |   | $                                    | 395    |   |                                | $      | 3,524 |   |   | $ | 4,775 |   |   | $ | 12,039 |   |
| Operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Rental property and other expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 112    |   |                                |   | 1,273 |   |   |   | 1,639 |   |   |   | 4,457 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 52     |   |                                |   | 652 |   |   |   | 756 |   |   |   | 2,187 |   |
| Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 164    |   |                                |   | 1,925 |   |   |   | 2,395 |   |   |   | 6,644 |   |
| Other income                                                                                                       |   |                                 | 1      |   |                                |   | 3 |   |   |   | 1 |   |   |   | 22 |   |
| Income before gains/(losses) from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | 232    |   |                                |   | 1,602 |   |   |   | 2,381 |   |   |   | 5,417 |   |
| Net gains/(losses) from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | (377   | )      |                                |   | 3,137 |   |   |   | 20,639 |   |   |   | 11,890 |   |
| Total discontinued operations                                                                                      |   | $                                    | (145   | )      |                                | $      | 4,739 |   |   | $ | 23,020 |   |   | $ | 17,307 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | September 30,2009 |   |   | December 31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|------------------|--------|
| Land                                                                                                                                         |   | $                      | 5,877  |   |             | $      | 5,983 |   |
| Land held for development                                                                                                                    |   |                   | 1,197  |   |             |   | 1,197 |   |
| Buildings and tenant improvements                                                                                                            |   |                   | 7,656  |   |             |   | 8,033 |   |
| Accumulated depreciation                                                                                                                     |   |                   | (1,802 | )      |             |   | (1,627 | ) |
| Net real estate assets                                                                                                                       |   |                   | 12,928 |   |             |   | 13,586 |   |
| Deferred leasing costs, net                                                                                                                  |   |                   | 401    |   |             |   | 434 |   |
| Accrued straight line rents receivable                                                                                                       |   |                   | 403    |   |             |   | 382 |   |
| Prepaid expenses and other                                                                                                                   |   |                   | 47     |   |             |   | 45 |   |
| Total assets                                                                                                                                 |   | $                      | 13,779 |   |             | $      | 14,447 |   |
| Tenant security deposits, deferred rents and accrued costs (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                      | 12     |   |             | $      | 9 |   |

| (1) | Included in accounts payable, accrued expenses and other liabilities. |
|-----|-----------------------------------------------------------------------|

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|                                                                                                                  |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                  |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Earnings per common unit - basic:                                                                                     |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Numerator:                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Income from continuing operations                                                                                     |   | $                                    | 12,705  |   |                                | $      | 10,958 |   |   | $ | 39,762 |   |   | $ | 31,112 |   |
| Noncontrolling interests in consolidated affiliates from continuing operations                                        |   |                                 | (24     | )      |                                |   | (201 | ) |   |   | (158 | ) |   |   | (590 | ) |
| Distributions on preferred units                                                                                      |   |                                 | (1,677  | )      |                                |   | (2,451 | ) |   |   | (5,031 | ) |   |   | (8,127 | ) |
| Excess of preferred unit redemption cost over carrying value                                                          |   |                                 | — |   |                                |   | (108 | ) |   |   | — |   |   |   | (108 | ) |
| Income from continuing operations available for common unitholders                                                    |   |                                 | 11,004  |   |                                |   | 8,198 |   |   |   | 34,573 |   |   |   | 22,287 |   |
| Income/(loss) from discontinued operations                                                                            |   |                                 | (145    | )      |                                |   | 4,739 |   |   |   | 23,020 |   |   |   | 17,307 |   |
| Net income available for common unitholders                                                                           |   | $                                    | 10,859  |   |                                | $      | 12,937 |   |   | $ | 57,593 |   |   | $ | 39,594 |   |
| Denominator:                                                                                                          |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic earnings per common unit – weighted average units                                         |   |                                 | 74,542  |   |                                |   | 62,517 |   |   |   | 70,563 |   |   |   | 61,431 |   |
| Earnings per common unit - basic:                                                                                     |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common unitholders                                                    |   | $                                    | 0.15    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common unitholders                                                  |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.33 |   |   |   | 0.28 |   |
| Net income available for common unitholders                                                                           |   | $                                    | 0.15    |   |                                | $      | 0.21 |   |   | $ | 0.82 |   |   | $ | 0.64 |   |
| Earnings per common unit - diluted:                                                                                   |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations                                                                                     |   | $                                    | 12,705  |   |                                | $      | 10,958 |   |   | $ | 39,762 |   |   | $ | 31,112 |   |
| Noncontrolling interests in consolidated affiliates from continuing operations                                        |   |                                 | (24     | )      |                                |   | (201 | ) |   |   | (158 | ) |   |   | (590 | ) |
| Distributions on preferred units                                                                                      |   |                                 | (1,677  | )      |                                |   | (2,451 | ) |   |   | (5,031 | ) |   |   | (8,127 | ) |
| Excess of preferred unit redemption cost over carrying value                                                          |   |                                 | — |   |                                |   | (108 | ) |   |   | — |   |   |   | (108 | ) |
| Income from continuing operations available for common unitholders                                                    |   |                                 | 11,004  |   |                                |   | 8,198 |   |   |   | 34,573 |   |   |   | 22,287 |   |
| Income/(loss) from discontinued operations                                                                            |   |                                 | (145    | )      |                                |   | 4,739 |   |   |   | 23,020 |   |   |   | 17,307 |   |
| Net income available for common unitholders                                                                           |   | $                                    | 10,859  |   |                                | $      | 12,937 |   |   | $ | 57,593 |   |   | $ | 39,594 |   |
| Denominator:                                                                                                          |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic earnings per common units –weighted average units                                         |   |                                 | 74,542  |   |                                |   | 62,517 |   |   |   | 70,563 |   |   |   | 61,431 |   |
| Add:                                                                                                                  |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Employee and director stock options and warrants                                                                      |   |                                 | 121     |   |                                |   | 302 |   |   |   | 52 |   |   |   | 336 |   |
| Denominator for diluted earnings per common units – adjusted weighted average units and assumed conversions (1) |   |                                 | 74,663  |   |                                |   | 62,819 |   |   |   | 70,615 |   |   |   | 61,767 |   |
| Earnings per common unit - diluted:                                                                                   |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations available for common unitholders                                                    |   | $                                    | 0.15    |   |                                | $      | 0.13 |   |   | $ | 0.49 |   |   | $ | 0.36 |   |
| Income from discontinued operations available for common unitholders                                                  |   |                                 | — |   |                                |   | 0.08 |   |   |   | 0.33 |   |   |   | 0.28 |   |
| Net income available for common unitholders                                                                           |   | $                                    | 0.15    |   |                                | $      | 0.21 |   |   | $ | 0.82 |   |   | $ | 0.64 |   |

| (1) | Options and warrants aggregating 935,494 and 327,747 units were outstanding during the three months ended September 30, 2009 and 2008, respectively, and 1,191,900 and 174,709 units were outstanding during the nine months ended September 30, 2009 and 2008, respectively but were not included in the treasury method calculation for diluted earnings per common units because the exercise pricesof the options and warrants were higher than the average market price of Common Stock during these periods. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Rental and Other Revenues: (1) (2) (3)                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Office:                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                    | 12,618  |   |                                | $      | 11,854 |   |   | $ | 36,215 |   |   | $ | 35,143 |   |
| Greenville, SC                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 3,428   |   |                                |   | 3,522 |   |   |   | 10,669 |   |   |   | 10,281 |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 | 3,742   |   |                                |   | 3,959 |   |   |   | 11,200 |   |   |   | 11,477 |   |
| Memphis, TN                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 8,187   |   |                                |   | 6,331 |   |   |   | 22,617 |   |   |   | 18,839 |   |
| Nashville, TN                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 15,175  |   |                                |   | 15,384 |   |   |   | 46,202 |   |   |   | 45,572 |   |
| Orlando, FL                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 3,112   |   |                                |   | 2,939 |   |   |   | 8,906 |   |   |   | 8,115 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 6,230   |   |                                |   | 6,259 |   |   |   | 19,066 |   |   |   | 19,383 |   |
| Raleigh, NC                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 18,204  |   |                                |   | 17,284 |   |   |   | 54,513 |   |   |   | 52,030 |   |
| Richmond, VA                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 | 12,174  |   |                                |   | 11,925 |   |   |   | 35,117 |   |   |   | 36,341 |   |
| Tampa, FL                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 17,477  |   |                                |   | 16,844 |   |   |   | 50,618 |   |   |   | 49,695 |   |
| Total Office Segment                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 100,347 |   |                                |   | 96,301 |   |   |   | 295,123 |   |   |   | 286,876 |   |
| Industrial:                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 3,904   |   |                                |   | 3,800 |   |   |   | 11,776 |   |   |   | 11,702 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 3,182   |   |                                |   | 3,695 |   |   |   | 10,865 |   |   |   | 10,980 |   |
| Total Industrial Segment                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | 7,086   |   |                                |   | 7,495 |   |   |   | 22,641 |   |   |   | 22,682 |   |
| Retail:                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                 | 6,463   |   |                                |   | 8,663 |   |   |   | 21,756 |   |   |   | 25,598 |   |
| Raleigh, NC                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | 30      |   |                                |   | — |   |   |   | 90 |   |   |   | — |   |
| Total Retail Segment                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 6,493   |   |                                |   | 8,663 |   |   |   | 21,846 |   |   |   | 25,598 |   |
| Residential:                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Kansas City, MO                                                                                                                                            |   |                                 | 303     |   |                                |   | 296 |   |   |   | 898 |   |   |   | 898 |   |
| Total Residential Segment                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 303     |   |                                |   | 296 |   |   |   | 898 |   |   |   | 898 |   |
| Total Rental and Other Revenues                                                                     |   | $                                    | 114,229 |   |                                | $      | 112,755 |   |   | $ | 340,508 |   |   | $ | 336,054 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Three Months EndedSeptember 30, |    |   | Nine Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2009                                 |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Net Operating Income: (1) (2) (3)                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Office:                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                    | 7,891   |   |                                | $      | 6,764 |   |   | $ | 22,923 |   |   | $ | 21,752 |   |
| Greenville, SC                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | 2,011   |   |                                |   | 2,184 |   |   |   | 6,648 |   |   |   | 6,429 |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 2,340   |   |                                |   | 2,420 |   |   |   | 6,851 |   |   |   | 6,907 |   |
| Memphis, TN                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 4,841   |   |                                |   | 3,852 |   |   |   | 12,901 |   |   |   | 11,183 |   |
| Nashville, TN                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | 9,940   |   |                                |   | 10,209 |   |   |   | 30,113 |   |   |   | 30,173 |   |
| Orlando, FL                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 1,638   |   |                                |   | 1,638 |   |   |   | 4,671 |   |   |   | 4,538 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 | 3,872   |   |                                |   | 3,843 |   |   |   | 12,202 |   |   |   | 12,324 |   |
| Raleigh, NC                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 11,942  |   |                                |   | 11,638 |   |   |   | 36,776 |   |   |   | 34,773 |   |
| Richmond, VA                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | 7,835   |   |                                |   | 7,818 |   |   |   | 23,920 |   |   |   | 24,389 |   |
| Tampa, FL                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 10,184  |   |                                |   | 9,985 |   |   |   | 29,620 |   |   |   | 29,796 |   |
| Total Office Segment                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 62,494  |   |                                |   | 60,351 |   |   |   | 186,625 |   |   |   | 182,264 |   |
| Industrial:                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Atlanta, GA                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 2,904   |   |                                |   | 2,892 |   |   |   | 8,916 |   |   |   | 8,949 |   |
| Piedmont Triad, NC                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 | 2,322   |   |                                |   | 2,864 |   |   |   | 8,341 |   |   |   | 8,612 |   |
| Total Industrial Segment                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                 | 5,226   |   |                                |   | 5,756 |   |   |   | 17,257 |   |   |   | 17,561 |   |
| Retail:                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Atlanta, GA (4)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (6      | )      |                                |   | (6 | ) |   |   | (18 | ) |   |   | (20 | ) |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 3,486   |   |                                |   | 5,617 |   |   |   | 13,465 |   |   |   | 16,986 |   |
| Raleigh, NC (4)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (1      | )      |                                |   | (21 | ) |   |   | 9 |   |   |   | (69 | ) |
| Total Retail Segment                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 | 3,479   |   |                                |   | 5,590 |   |   |   | 13,456 |   |   |   | 16,897 |   |
| Residential:                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Kansas City, MO                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | 163     |   |                                |   | 163 |   |   |   | 518 |   |   |   | 528 |   |
| Raleigh, NC (4)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (72     | )      |                                |   | (16 | ) |   |   | (211 | ) |   |   | (22 | ) |
| Total Residential Segment                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 91      |   |                                |   | 147 |   |   |   | 307 |   |   |   | 506 |   |
| Total Net Operating Income                                                                     |   |                                 | 71,290  |   |                                |   | 71,844 |   |   |   | 217,645 |   |   |   | 217,228 |   |
| Reconciliation to income from continuing operations before disposition of property and condominiums and equity in earnings of unconsolidated affiliates:                                                                                                                                                                                                                                                                                           |   |                                 |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | (32,637 | )      |                                |   | (31,458 | ) |   |   | (98,443 | ) |   |   | (92,405 | ) |
| General and administrative expense                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                 | (9,485  | )      |                                |   | (8,885 | ) |   |   | (27,537 | ) |   |   | (29,509 | ) |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | (21,334 | )      |                                |   | (24,492 | ) |   |   | (64,654 | ) |   |   | (74,128 | ) |
| Interest and other income                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                 | 3,981   |   |                                |   | 1,017 |   |   |   | 7,902 |   |   |   | 3,406 |   |
| Income from continuing operations before disposition of property and condominiums and equity in earnings of unconsolidated affiliates                                                                                                                                                                                                                                                                                                              |   | $                                    | 11,815  |   |                                | $      | 8,026 |   |   | $ | 34,913 |   |   | $ | 24,592 |   |

| (1) | Net of discontinued operations. |
|-----|---------------------------------|

| (2) | The Piedmont Triad market encompasses the Greensboro and Winston-Salem metropolitan area. |
|-----|-------------------------------------------------------------------------------------------|

| (3) | The Raleigh market encompasses the Raleigh, Durham, Cary and Research Triangle metropolitan area. |
|-----|---------------------------------------------------------------------------------------------------|

| (4) | Negative NOI with no corresponding revenues represents expensed real estate taxes and other carrying costs associated with land held for development that is currently zoned for retail and residential properties. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 2.  MANAGEMENT’S DISCUSSION 

Disclosure Regarding Forward-

|   | · | the financial condition of our customers could deteriorate; |
|--------|--------|-------------------------------------------------------------|

|   | · | we may not be able to lease or release second generation space quickly or on as favorable terms as old leases; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | we may not be able to lease our newly constructed buildings as quickly or on as favorable terms as originally anticipated; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | we may not be able to complete development, acquisition, reinvestment, disposition or joint venture projects as quickly or on as favorable terms as anticipated; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | development activity by our competitors in our existing markets could result in an excessive supply of office, industrial and retail properties relative to customer demand; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our southeastern and midwestern markets may suffer declines in economic growth; |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | difficulties in obtaining additional capital to satisfy our future cash needs or increases in interest rates could adversely impact our ability to fund important business initiatives and increase our debt service costs; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we may not be able to meet our liquidity requirements or obtain capital on favorable terms to fund our working capital needs and growth initiatives or to repay or refinance outstanding debt upon maturity; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Company could lose key executive officers. |
|--------|--------|------------------------------------------------|

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Results of Operations

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Liquidity and Capital Resources

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Nine Months EndedSeptember 30, |    |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|--------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2009                                |    |   | 2008   |   |   | Change |   |
| Cash Provided By Operating Activities                                                                                           |   | $                                   | 154,829 |   |   | $      | 128,141 |   |   | $ | 26,688 |   |
| Cash (Used In) Investing Activities                                                                                             |   |                                | (44,624 | )      |   |   | (128,601 | ) |   |   | 83,977 |   |
| Cash (Used In)/Provided by Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                | (81,893 | )      |   |   | 10,987 |   |   |   | (92,880 | ) |
| Total Cash Flows                                                                                                                |   | $                                   | 28,312  |   |   | $      | 10,527 |   |   | $ | 17,785 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | September 30,2009 |      |   | December 31,2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|------------------|--------|
| Mortgages and notes payable, at recorded book value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                      | 1,472,585 |   |             | $      | 1,604,685 |   |
| Financing obligations                                                                                                                  |   | $                      | 35,043    |   |             | $      | 34,174 |   |
| Preferred Stock, at liquidation value                                                                                                  |   | $                      | 81,592    |   |             | $      | 81,592 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   |      |   |             |   |   |   |
| Common Stock outstanding                                                                                                               |   |                   | 71,071    |   |             |   | 63,572 |   |
| Noncontrolling interest partnership units                                                                                              |   |                   | 3,965     |   |             |   | 4,067 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   |      |   |             |   |   |   |
| Per share stock price at period end                                                                                                    |   | $                      | 31.45     |   |             | $      | 27.36 |   |
| Market value of Common Stock and Common Units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                      | 2,359,882 |   |             | $      | 1,850,603 |   |
| Total market capitalization with debt and obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                      | 3,949,102 |   |             | $      | 3,571,054 |   |

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|   | · | available cash and cash equivalents; |
|--------|--------|--------------------------------------|

|   | · | positive net cash flows from operating activities after payment of distributions and recurring capital expenditures; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | unsecured borrowings under our existing $450 million unsecured revolving credit facility or new financing arrangements that we may obtain; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | secured borrowings under existing construction facilities or new financing arrangements that we may obtain (as of September 30, 2009, we had approximately $2.1 billion of unencumbered real estate assets at undepreciated cost); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the disposition of non-core assets; |
|--------|--------|-------------------------------------|

|   | · | the issuance by the Operating Partnership of unsecured debt securities; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | the issuance of equity securities by the Company and the Operating Partnership; and |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | the sale or contribution of some of our Wholly Owned Properties, development projects and development land to strategic joint ventures to be formed with unrelated investors, which would have the net effect of generating additional capital through such sale or contributions. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Critical Accounting Estimates

Funds From Operations

|   | · | Net income (loss) computed in accordance with GAAP; |
|--------|--------|-----------------------------------------------------|

|   | · | Less dividends to holders of Preferred Stock and less excess of Preferred Stock redemption cost over carrying value; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | Less net income attributable to noncontrolling interests; |
|--------|--------|-----------------------------------------------------------|

|   | · | Plus depreciation and amortization of assets uniquely significant to the real estate industry; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | Less gains, or plus losses, from sales of depreciable operating properties (but excluding impairment losses) and excluding items that are classified as extraordinary items under GAAP; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Plus or minus adjustments for unconsolidated partnerships and joint ventures (to reflect funds from operations on the same basis); and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Plus or minus adjustments for depreciation and amortization and gains/(losses) on sales, related to discontinued operations. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|                                                                               |   | Three Months Ended September 30, |    |   | Nine Months Ended September 30, |   |
|------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|--------|
|                                                                               |   | 2009                                  |    |   | 2008                                 |   |   | 2009 |   |   | 2008 |   |
|                                                                               |   | Amount                                |    |   | PerShare                             |   |   | Amount |   |   | PerShare |   |   | Amount |   |   | PerShare |   |   | Amount |   |   | PerShare |   |
| Funds from operations:                                                             |   |                                  |    |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                         |   | $                                     | 12,573  |   |                                 |   |   |   | $ | 15,724 |   |   |   |   |   | $ | 62,847 |   |   |   |   |   | $ | 48,471 |   |   |   |   |
| Net (income) attributable to noncontrolling interests in the Operating Partnership |   |                                  | (591    | )      |                                 |   |   |   |   | (812 | ) |   |   |   |   |   | (3,339 | ) |   |   |   |   |   | (2,544 | ) |   |   |   |
| Net (income) attributable to noncontrolling interests in consolidated affiliates   |   |                                  | (24     | )      |                                 |   |   |   |   | (201 | ) |   |   |   |   |   | (158 | ) |   |   |   |   |   | (590 | ) |   |   |   |
| Dividends on preferred stock                                                       |   |                                  | (1,677  | )      |                                 |   |   |   |   | (2,451 | ) |   |   |   |   |   | (5,031 | ) |   |   |   |   |   | (8,127 | ) |   |   |   |
| Excess of preferred stock redemption/repurchase cost over carrying value           |   |                                  | — |   |                                 |   |   |   |   | (108 | ) |   |   |   |   |   | — |   |   |   |   |   |   | (108 | ) |   |   |   |
| Net income available for common stockholders                                       |   |                                  | 10,281  |   |                                 | $      | 0.14 |   |   |   | 12,152 |   |   | $ | 0.21 |   |   |   | 54,319 |   |   | $ | 0.81 |   |   |   | 37,102 |   |   | $ | 0.64 |   |
| Add/(Deduct):                                                                      |   |                                  |    |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization of real estate assets                                |   |                                  | 32,131  |   |                                 |   | 0.43 |   |   |   | 30,987 |   |   |   | 0.49 |   |   |   | 97,003 |   |   |   | 1.37 |   |   |   | 90,933 |   |   |   | 1.46 |   |
| (Gains) on disposition of depreciable properties                                   |   |                                  | (19     | )      |                                 |   | — |   |   |   | (18 | ) |   |   | — |   |   |   | (108 | ) |   |   | — |   |   |   | (36 | ) |   |   | — |   |
| Net (income) attributable to noncontrolling interests in the Operating Partnership |   |                                  | 591     |   |                                 |   | — |   |   |   | 812 |   |   |   | — |   |   |   | 3,339 |   |   |   | — |   |   |   | 2,544 |   |   |   | — |   |
| Unconsolidated affiliates:                                                         |   |                                  |    |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization of real estate assets                                |   |                                  | 3,352   |   |                                 |   | 0.05 |   |   |   | 3,136 |   |   |   | 0.05 |   |   |   | 9,825 |   |   |   | 0.14 |   |   |   | 9,466 |   |   |   | 0.15 |   |
| (Gains) on disposition of depreciable properties                                   |   |                                  | — |   |                                 |   | — |   |   |   | — |   |   |   | — |   |   |   | (781 | ) |   |   | (0.01 | ) |   |   | — |   |   |   | — |   |
| Discontinued operations:                                                           |   |                                  |    |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization of real estate assets                                |   |                                  | 52      |   |                                 |   | — |   |   |   | 652 |   |   |   | 0.01 |   |   |   | 756 |   |   |   | 0.01 |   |   |   | 2,187 |   |   |   | 0.04 |   |
| (Gains) on disposition of depreciable properties                                   |   |                                  | — |   |                                 |   | — |   |   |   | (3,137 | ) |   |   | (0.05 | ) |   |   | (21,016 | ) |   |   | (0.30 | ) |   |   | (11,890 | ) |   |   | (0.19 | ) |
| Funds from operations                                                              |   | $                                     | 46,388  |   |                                 | $      | 0.62 |   |   | $ | 44,584 |   |   | $ | 0.71 |   |   | $ | 143,337 |   |   | $ | 2.02 |   |   | $ | 130,306 |   |   | $ | 2.10 |   |
|                                                                               |   |                                  |    |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding (1) (2)                                        |   |                                  | 75,072  |   |                                 |   |   |   |   |   | 63,228 |   |   |   |   |   |   |   | 71,024 |   |   |   |   |   |   |   | 62,176 |   |   |   |   |   |

| (1) | Includes assumed conversion of all potentially dilutive Common Stock equivalents. |
|-----|-----------------------------------------------------------------------------------|

| (2) | Weighted average shares outstanding for the three and nine months ended September 30, 2008 have been revised from previously reported amounts to include our total number of restricted shares, as disclosed in Note 1 to the Consolidated Financial Statements. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 3.  QUANTITATIVE 

ITEM 4.  CONTROLS 

|   | · | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of assets; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepting accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. |
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ITEM 1A.  RISK 

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|   | · | the unavailability of favorable financing; |
|--------|--------|--------------------------------------------|

|   | · | construction costs exceeding original estimates; |
|--------|--------|--------------------------------------------------|

|   | · | construction and lease-up delays resulting in increased debt service expense and construction costs; and |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | lower than anticipated occupancy rates and rents at a newly completed property causing a property to be unprofitable or less profitable than originally estimated. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Ownership limit. The Company’s charter prohibits direct, indirect or constructive ownership by any person or entity of more than 9.8% of the Company’s outstanding capital stock. Any attempt to own or transfer shares of the Company’s capital stock in excess of the ownership limit without the consent of the Company’s Board of Directorswill be void. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Preferred Stock. The Company’s charter authorizes its Board of Directors to issue Preferred Stock in one or more classes and to establish the preferences and rights of any class of Preferred Stock issued. These actions can be taken without stockholder approval. The issuance of Preferred Stock could have the effect of delaying or preventing someonefrom taking control of the Company, even if a change in control were in our best interest. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Staggered board. Until the Company’s 2011 annual meeting of stockholders, the Company’s directors will continue to serve staggered terms. The staggering of the Company’s Board may discourage offers for the Company or make an acquisition of the Company more difficult, even when an acquisition is in the best interest of its stockholders. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Maryland control share acquisition statute. Maryland’s control share acquisition statute applies to the Company, which means that persons, entities or related groups that acquire more than 20% of the Common Stock may not be able to vote such excess shares under certain circumstances if such shares were acquired in one or more transactions not approvedby at least two-thirds of the outstanding Common Stock held by disinterested stockholders. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Maryland unsolicited takeover statute. Under Maryland law, the Company’s Board of Directors could adopt various anti-takeover provisions without the consent of stockholders. The adoption of such measures could discourage offers for the Company or make an acquisition of the Company more difficult, even when an acquisition is in the best interestof its stockholders. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Anti-takeover protections of Operating Partnership agreement. Upon a change in control of the Company, the limited partnership agreement of the Operating Partnership requires certain acquirers to maintain an umbrella partnership real estate investment trust (“UPREIT”) structure with terms at least as favorable to the limited partners as arecurrently in place. For instance, the acquirer would be required to preserve the limited partner’s right to continue to hold tax-deferred partnership interests that are redeemable for capital stock of the acquirer. Exceptions would require the approval of two-thirds of the limited partners of the Operating Partnership (other than the Company). These provisions may make a change of control transaction involving the Company more complicated and therefore might decrease the likelihood of such a transactionoccurring, even if such a transaction would be in the best interest of the Company’s stockholders. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 2.  UNREGISTERED 

ITEM 6.  EXHIBITS

| ExhibitNumber | Description                                                     |
|---------------|-----------------------------------------------------------------|
|          |                                                            |
| 31.1          | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act |
|          |                                                            |
| 31.2          | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act |
|          |                                                            |
| 31.3          | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act |
|          |                                                            |
| 31.4          | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act |
|          |                                                            |
| 32.1          | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |
|          |                                                            |
| 32.2          | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |
|          |                                                            |
| 32.3          | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |
|          |                                                            |
| 32.4          | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |

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|   |   | Highwoods Properties, Inc.  |
|--------|--------|----------------------------------|
|   |   | By:                         |  /s/ Terry L. Stevens |
|   |   |                             | Terry L. Stevens |
|   |   |                             | Senior Vice President and Chief Financial Officer |
|   |   |                             |   |

|   |   | Highwoods Realty Limited Partnership                      |
|--------|--------|----------------------------------------------------------------|
|   |   | By: Highwoods Properties, Inc., its sole general partner  |
|   |   | By:                                                       |  /s/ Terry L. Stevens |
|   |   |                                                           | Terry L. Stevens |
|   |   |                                                           | Senior Vice President and Chief Financial Officer |
|   |   |                                                           |   |