| R  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 |
|------------------------------------------------------------------------------------------------|

| £  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 |
|------------------------------------------------------------------------------------------------------|

| Maryland                                                       | 86-0602478                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

| Large accelerated filer £ |    Accelerated filer £ | Non-accelerated filer £(Do not check if a smaller reporting company) | Smaller Reporting Company R |
|--------------------------------|--------------------------------------------|---------------------------------------------------------------------------|-----------------------------|

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|                                                                                                | PAGE   |
|-----------------------------------------------------------------------------------------------------|--------|
| PART I – FINANCIAL INFORMATION                                                                |   |
| Item 1. Financial Statements (unaudited)                                                            | 1      |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31     |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                  | 45     |
| Item 4. Controls and Procedures                                                                     | 45     |
| PART II – OTHER INFORMATION                                                                   |   |
| Item 1. Legal Proceedings                                                                           | 46     |
| Item 1A. Risk Factors                                                                               | 46     |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                 | 46     |
| Item 3. Defaults Upon Senior Securities                                                             | 46     |
| Item 4. (Removed and Reserved)                                                                      | 46     |
| Item 5. Other Information                                                                           | 46     |
| Item 6. Exhibits                                                                                    | 47     |
| Certification of the Chief Executive Officer                                                        |   |
| Certification of the Chief Financial Officer                                                        |   |
| Certification of the Chief Executive Officer                                                        |   |
| Certification of the Chief Financial Officer                                                        |   |

----

PART I – FINANCIAL INFORMATION

Item 1.      

|                                                                                                              |   | June 30, 2010 |     |   | December 31, 2009 |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------|----------|--------|-------------------|--------|
| ASSETS                                                                                                            |   |          |     |   |              |   |
| Investments in real estate, net                                                                                   |   | $             | 380,702  |   |              | $      | 382,950 |   |
| Cash and cash equivalents                                                                                         |   |          | 3,845    |   |              |   | 2,354 |   |
| Restricted cash                                                                                                   |   |          | 7,067    |   |              |   | 7,348 |   |
| Rents and other receivables, net                                                                                  |   |          | 6,584    |   |              |   | 6,471 |   |
| Intangible assets, net                                                                                            |   |          | 30,241   |   |              |   | 33,228 |   |
| Other assets, net                                                                                                 |   |          | 6,213    |   |              |   | 5,055 |   |
| Goodwill                                                                                                          |   |          | 62,019   |   |              |   | 62,019 |   |
| Investment in unconsolidated joint ventures                                                                       |   |          | 9,898    |   |              |   | 10,911 |   |
| Total assets                                                                                                      |   | $             | 506,569  |   |              | $      | 510,336 |   |
|                                                                                                              |   |          |     |   |              |   |   |   |
| LIABILITIES AND EQUITY                                                                                            |   |          |     |   |              |   |   |   |
| Mortgage and other loans, net                                                                                     |   | $             | 413,793  |   |              | $      | 406,439 |   |
| Unsecured notes payable to related parties                                                                        |   |          | 21,104   |   |              |   | 21,104 |   |
| Accounts payable and other liabilities                                                                            |   |          | 23,831   |   |              |   | 22,000 |   |
| Acquired below market leases, net                                                                                 |   |          | 8,484    |   |              |   | 9,512 |   |
| Total liabilities                                                                                                 |   |          | 467,212  |   |              |   | 459,055 |   |
|                                                                                                              |   |          |     |   |              |   |   |   |
| Commitments and contingencies                                                                                     |   |          |     |   |              |   |   |   |
|                                                                                                              |   |          |     |   |              |   |   |   |
| Equity:                                                                                                           |   |          |     |   |              |   |   |   |
| Preferred Stock, $0.0001 par value, 100,000,000 shares authorized, one share of Proportionate                     |   |          |     |   |              |   |   |   |
| Voting Preferred Stock issued and outstanding at June 30, 2010 and December 31, 2009                              |   |          | -        |   |              |   | - |   |
| Senior Common Stock, $0.0001 par value (liquidation preference $10 per share),                                    |   |          |     |   |              |   |   |   |
| 40,000,000 shares authorized, 66,783 shares issued and outstanding at June 30, 2010;                              |   |          |     |   |              |   |   |   |
| 0 shares authorized, issued and outstanding at December 31, 2009                                                  |   |          | 594      |   |              |   | - |   |
| Listed Common Stock, $0.0001 par value, 599,999,900 shares authorized, 3,903,050 shares issued and outstanding at |   |          |     |   |              |
| June 30, 2010; 239,999,900 shares authorized, 3,850,420 shares issued and outstanding at December 31, 2009        |   |          | 185      |   |              |   | 185 |   |
| Class B Common Stock, $0.0001 par value, 100 shares authorized, issued and outstanding at June 30, 2010           |   |          |     |   |              |   |   |   |
| and December 31, 2009                                                                                             |   |          | -        |   |              |   | - |   |
| Additional paid-in capital                                                                                        |   |          | 100      |   |              |   | - |   |
| Cumulative deficit                                                                                                |   |          | (135,201 | )      |              |   | (132,511 | ) |
| Total stockholders' equity                                                                                        |   |          | (134,322 | )      |              |   | (132,326 | ) |
| Non-controlling interests:                                                                                        |   |          |     |   |              |   |   |   |
| Preferred unitholders in the Operating Partnership                                                                |   |          | 127,268  |   |              |   | 127,268 |   |
| Common unitholders in the Operating Partnership                                                                   |   |          | 46,411   |   |              |   | 56,339 |   |
| Total equity                                                                                                      |   |          | 39,357   |   |              |   | 51,281 |   |
| Total liabilities and equity                                                                                      |   | $             | 506,569  |   |              | $      | 510,336 |   |
|                                                                                                              |   |          |     |   |              |   |   |   |

----

|                                                         |   | For the three months ended June 30, |      |
|--------------------------------------------------------------|--------|-------------------------------------|-----------|
|                                                         |   | 2010                                |      |   | 2009 |   |
|                                                         |   |                                |      |   |   |   |
| Revenue:                                                     |   |                                |      |   |   |   |
| Rental                                                       |   | $                                   | 10,336    |   |   | $ | 10,607 |   |
| Tenant reimbursements                                        |   |                                | 6,010     |   |   |   | 5,299 |   |
| Parking                                                      |   |                                | 2,046     |   |   |   | 2,011 |   |
| Other                                                        |   |                                | 81        |   |   |   | 102 |   |
| Total revenue                                                |   |                                | 18,473    |   |   |   | 18,019 |   |
|                                                         |   |                                |      |   |   |   |   |   |
| Expenses:                                                    |   |                                |      |   |   |   |   |   |
| Rental property operating                                    |   |                                | 10,098    |   |   |   | 9,660 |   |
| General and administrative                                   |   |                                | 797       |   |   |   | 497 |   |
| Depreciation and amortization                                |   |                                | 5,757     |   |   |   | 7,030 |   |
| Interest                                                     |   |                                | 6,844     |   |   |   | 6,806 |   |
| Total expenses                                               |   |                                | 23,496    |   |   |   | 23,993 |   |
|                                                         |   |                                |      |   |   |   |   |   |
| Loss before equity in net earnings of unconsolidated         |   |                                |      |   |   |   |   |   |
| joint ventures and non-operating income                      |   |                                | (5,023    | ) |   |   | (5,974 | ) |
| Equity in net earnings of unconsolidated                     |   |                                |      |   |   |   |   |   |
| joint ventures                                               |   |                                | 33        |   |   |   | 163 |   |
| Non-operating income                                         |   |                                | -         |   |   |   | 1 |   |
| Net loss                                                     |   |                                | (4,990    | ) |   |   | (5,810 | ) |
|                                                         |   |                                |      |   |   |   |   |   |
| Net (income) loss attributable to non-controlling interests: |   |                                |      |   |   |   |   |   |
| Preferred unitholders in the Operating Partnership           |   |                                | (565      | ) |   |   | (565 | ) |
| Common unitholders in the Operating Partnership              |   |                                | 4,377     |   |   |   | 5,259 |   |
|                                                         |   |                                | 3,812     |   |   |   | 4,694 |   |
| Dividends on Senior Common Stock                             |   |                                | (4        | ) |   |   | - |   |
| Net loss attributable to common stockholders                 |   | $                                   | (1,182    | ) |   | $ | (1,116 | ) |
|                                                         |   |                                |      |   |   |   |   |   |
| Net loss per common share - basic and diluted                |   | $                                   | (0.31     | ) |   | $ | (0.37 | ) |
|                                                         |   |                                |      |   |   |   |   |   |
| Weighted average number of common shares                     |   |                                |      |   |   |   |   |   |
| outstanding - basic and diluted                              |   |                                | 3,855,725 |   |   |   | 3,034,122 |   |
|                                                         |   |                                |      |   |   |   |   |   |
|                                                         |   |                                |      |   |   |   |   |   |

----

|                                                         |   | For the six months ended June 30, |      |
|--------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                         |   | 2010                              |      |   | 2009 |   |
|                                                         |   |                              |      |   |   |   |
| Revenue:                                                     |   |                              |      |   |   |   |
| Rental                                                       |   | $                                 | 20,745    |   |   | $ | 21,513 |   |
| Tenant reimbursements                                        |   |                              | 11,418    |   |   |   | 11,021 |   |
| Parking                                                      |   |                              | 4,068     |   |   |   | 4,068 |   |
| Other                                                        |   |                              | 176       |   |   |   | 187 |   |
| Total revenue                                                |   |                              | 36,407    |   |   |   | 36,789 |   |
|                                                         |   |                              |      |   |   |   |   |   |
| Expenses:                                                    |   |                              |      |   |   |   |   |   |
| Rental property operating                                    |   |                              | 19,717    |   |   |   | 19,575 |   |
| General and administrative                                   |   |                              | 1,404     |   |   |   | 1,646 |   |
| Depreciation and amortization                                |   |                              | 11,529    |   |   |   | 13,557 |   |
| Interest                                                     |   |                              | 13,447    |   |   |   | 13,525 |   |
| Total expenses                                               |   |                              | 46,097    |   |   |   | 48,303 |   |
|                                                         |   |                              |      |   |   |   |   |   |
| Loss before equity in net earnings of unconsolidated         |   |                              |      |   |   |   |   |   |
| joint ventures and non-operating income                      |   |                              | (9,690    | ) |   |   | (11,514 | ) |
| Equity in net earnings of unconsolidated                     |   |                              |      |   |   |   |   |   |
| joint ventures                                               |   |                              | 44        |   |   |   | 217 |   |
| Non-operating income                                         |   |                              | -         |   |   |   | 4 |   |
| Net loss                                                     |   |                              | (9,646    | ) |   |   | (11,293 | ) |
|                                                         |   |                              |      |   |   |   |   |   |
| Net (income) loss attributable to non-controlling interests: |   |                              |      |   |   |   |   |   |
| Preferred unitholders in the Operating Partnership           |   |                              | (1,136    | ) |   |   | (1,136 | ) |
| Common unitholders in the Operating Partnership              |   |                              | 8,496     |   |   |   | 10,257 |   |
|                                                         |   |                              | 7,360     |   |   |   | 9,121 |   |
| Dividends on Senior Common Stock                             |   |                              | (4        | ) |   |   | - |   |
| Net loss attributable to common stockholders                 |   | $                                 | (2,290    | ) |   | $ | (2,172 | ) |
|                                                         |   |                              |      |   |   |   |   |   |
| Net loss per common share - basic and diluted                |   | $                                 | (0.59     | ) |   | $ | (0.72 | ) |
|                                                         |   |                              |      |   |   |   |   |   |
| Weighted average number of common shares                     |   |                              |      |   |   |   |   |   |
| outstanding - basic and diluted                              |   |                              | 3,853,137 |   |   |   | 3,032,632 |   |
|                                                         |   |                              |      |   |   |   |   |   |
|                                                         |   |                              |      |   |   |   |   |   |

----

|                                                                   |   | For the six months ended June 30, |   |
|------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                   |   | 2010                              |   |   | 2009 |   |
|                                                                   |   |                              |   |   |   |   |
| Operating activities                                                   |   |                              |   |   |   |   |
| Net loss                                                               |   | $                                 | (9,646 | ) |   | $ | (11,293 | ) |
| Adjustments to reconcile net loss to net cash                          |   |                              |   |   |   |   |   |   |
| provided by (used in) operating activities:                            |   |                              |   |   |   |   |   |   |
| Depreciation and amortization                                          |   |                              | 11,529 |   |   |   | 13,557 |   |
| Interest amortization                                                  |   |                              | 671    |   |   |   | 793 |   |
| Share based compensation                                               |   |                              | 100    |   |   |   | 90 |   |
| Below market lease amortization, net                                   |   |                              | (1,028 | ) |   |   | (1,239 | ) |
| Equity in net earnings of unconsolidated joint ventures                |   |                              | (44    | ) |   |   | (217 | ) |
| Net operating distributions received from unconsolidated               |   |                              |   |   |   |   |   |   |
|    joint ventures                                       |   |                              | 119    |   |   |   | 119 |   |
| Bad debt expense                                                       |   |                              | 249    |   |   |   | 742 |   |
| Changes in operating assets and liabilities:                           |   |                              |   |   |   |   |   |   |
| Restricted cash used for operating activities                          |   |                              | (252   | ) |   |   | 2,341 |   |
| Rents and other receivables                                            |   |                              | (362   | ) |   |   | (129 | ) |
| Other assets                                                           |   |                              | (940   | ) |   |   | (509 | ) |
| Accounts payable and other liabilities                                 |   |                              | 1,095  |   |   |   | 3,610 |   |
| Net cash provided by operating activities                              |   |                              | 1,491  |   |   |   | 7,865 |   |
| Investing activities                                                   |   |                              |   |   |   |   |   |   |
| Acquisition and improvement of real estate                             |   |                              | (4,625 | ) |   |   | (3,060 | ) |
| Capital distributions from unconsolidated joint ventures               |   |                              | 938    |   |   |   | 1,312 |   |
| Payment of leasing commissions                                         |   |                              | (798   | ) |   |   | (377 | ) |
| Decrease (increase) in restricted cash used for capital expenditures   |   |                              | 533    |   |   |   | (247 | ) |
| Net cash used in investing activities                                  |   |                              | (3,952 | ) |   |   | (2,372 | ) |
| Financing activities                                                   |   |                              |   |   |   |   |   |   |
| Repayment of mortgage notes payable                                    |   |                              | (248   | ) |   |   | (606 | ) |
| Borrowings from revolving credit facility                              |   |                              | 7,400  |   |   |   | 811 |   |
| Proceeds from sale of Senior Common Stock, net                         |   |                              | 594    |   |   |   | - |   |
| Deferred financing costs                                               |   |                              | -      |   |   |   | (123 | ) |
| Deferred offering costs                                                |   |                              | (687   | ) |   |   | (351 | ) |
| Security deposits                                                      |   |                              | (142   | ) |   |   | (50 | ) |
| Senior Common Stock dividends                                          |   |                              | (1     | ) |   |   | - |   |
| Listed Common Stock dividends                                          |   |                              | (398   | ) |   |   | (308 | ) |
| Distributions to non-controlling interests - Preferred unitholders     |   |                              | (1,136 | ) |   |   | (1,136 | ) |
| Distributions to non-controlling interests - Common unitholders        |   |                              | (1,430 | ) |   |   | (1,430 | ) |
| Net cash provided by (used in) financing activities                    |   |                              | 3,952  |   |   |   | (3,193 | ) |
| Increase in cash and cash equivalents                                  |   |                              | 1,491  |   |   |   | 2,300 |   |
| Balance at beginning of period                                         |   |                              | 2,354  |   |   |   | 3,384 |   |
| Balance at end of period                                               |   | $                                 | 3,845  |   |   | $ | 5,684 |   |
| Supplemental cash flow information                                     |   |                              |   |   |   |   |   |   |
| Interest paid                                                          |   | $                                 | 12,112 |   |   | $ | 11,530 |   |
|                                                                   |   |                              |   |   |   |   |   |   |
| Supplemental Disclosure of Non-Cash Investing and Financing Activities |   |                              |   |   |   |   |   |   |
|                                                                   |   |                              |   |   |   |   |   |   |
| Accrued capital expenditures                                           |   | $                                 | 864    |   |   |   | 572 |   |
|                                                                   |   |                              |   |   |   |   |   |   |

----

| 1. | Organization and Ownership |
|----|----------------------------|

|                                    |       |      | Property  |
|-----------------------------------------|------------|-----------|-----------|
|                                    | Number of  |      | Portfolio |
|                                    | Properties | Buildings | Sq. Ft.   |
| Wholly-owned properties                 | 8          | 11        | 2,265,339 |
| Unconsolidated joint venture properties | 16         | 34        | 2,417,359 |
| Total                                   | 24         | 45        | 4,682,698 |
|                                    |       |      |      |

|   | Transactions - |
|--------|----------------|

| 2. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

|   | Basis of Presentation - |
|--------|-------------------------|

----

----

----

----

|   | Cash and Cash Equivalents - |
|--------|-----------------------------|

----

----

----

| 3. | Investments in Real Estate, net |
|----|---------------------------------|

|   | Our investments in real estate, net, at June 30, 2010, and at December 31, 2009, are summarized as follows (in thousands): |
|--------|----------------------------------------------------------------------------------------------------------------------------|

|                                      |   | June 30, 2010 |    |   | December 31, 2009 |   |
|-------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                      |   |          |    |   |              |   |
| Land and land improvements                |   | $             | 76,054  |   |              | $      | 76,054 |   |
| Building and building improvements        |   |          | 310,735 |   |              |   | 310,507 |   |
| Tenant improvements                       |   |          | 31,229  |   |              |   | 27,707 |   |
| Construction in progress                  |   |          | 4,633   |   |              |   | 3,311 |   |
| Furniture, fixtures and equipment         |   |          | 1,402   |   |              |   | 1,401 |   |
| Investments in real estate                |   |          | 424,053 |   |              |   | 418,980 |   |
| Less:  accumulated depreciation |   |          | (43,351 | )      |              |   | (36,030 | ) |
| Investments in real estate, net           |   | $             | 380,702 |   |              | $      | 382,950 |   |
|                                      |   |          |    |   |              |   |   |   |

----

| 4. | Intangible Assets and Acquired Above and Below Market Lease Liabilities |
|----|-------------------------------------------------------------------------|

|   | Our identifiable intangible assets and acquired above and below market leases, net at June 30, 2010, and at December 31, 2009, are summarized as follows (in thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                 |   | June 30, 2010 |    |   | December 31, 2009 |   |
|--------------------------------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                                                 |   |          |    |   |              |   |
| Acquired leasing commissions                                                         |   |          |    |   |              |   |
|           Gross amount             |   | $             | 9,534   |   |              | $      | 8,857 |   |
|           Accumulated amortization |   |          | (4,891  | )      |              |   | (4,212 | ) |
|           Net balance              |   | $             | 4,643   |   |              | $      | 4,645 |   |
|                                                                                 |   |          |    |   |              |   |   |   |
| Acquired leases in place                                                             |   |          |    |   |              |   |   |   |
|           Gross amount             |   | $             | 16,794  |   |              | $      | 17,171 |   |
|           Accumulated amortization |   |          | (11,405 | )      |              |   | (10,234 | ) |
|           Net balance              |   | $             | 5,389   |   |              | $      | 6,937 |   |
|                                                                                 |   |          |    |   |              |   |   |   |
| Acquired tenant relationship costs                                                   |   |          |    |   |              |   |   |   |
|           Gross amount             |   | $             | 19,581  |   |              | $      | 19,581 |   |
|           Accumulated amortization |   |          | (5,659  | )      |              |   | (4,419 | ) |
|           Net balance              |   | $             | 13,922  |   |              | $      | 15,162 |   |
|                                                                                 |   |          |    |   |              |   |   |   |
| Acquired other intangibles                                                           |   |          |    |   |              |   |   |   |
|           Gross amount             |   | $             | 7,723   |   |              | $      | 7,767 |   |
|           Accumulated amortization |   |          | (1,436  | )      |              |   | (1,283 | ) |
|           Net balance              |   | $             | 6,287   |   |              | $      | 6,484 |   |
|                                                                                 |   |          |    |   |              |   |   |   |
| Intangible assets, net                                                               |   | $             | 30,241  |   |              | $      | 33,228 |   |
|                                                                                 |   |          |    |   |              |   |   |   |
| Acquired below market leases                                                         |   |          |    |   |              |   |   |   |
|           Gross amount             |   | $             | 15,406  |   |              | $      | 15,571 |   |
|           Accumulated amortization |   |          | (6,462  | )      |              |   | (5,447 | ) |
|  Net balance                                                                    |   |          | 8,944   |   |              |   | 10,124 |   |
|                                                                                 |   |          |    |   |              |   |   |   |
| Acquired above market leases                                                         |   |          |    |   |              |   |   |   |
|           Gross amount             |   | $             | 2,208   |   |              | $      | 2,218 |   |
|           Accumulated amortization |   |          | (1,748  | )      |              |   | (1,606 | ) |
|  Net balance                                                                    |   |          | 460     |   |              |   | 612 |   |
| Acquired below market leases, net                                                    |   | $             | 8,484   |   |              | $      | 9,512 |   |
|                                                                                 |   |          |    |   |              |   |   |   |

----

| 5. | Investment in Unconsolidated Joint Ventures |
|----|---------------------------------------------|

|                                              |   | Three months ended June 30, 2010 |   |   | Three months ended June 30, 2009 |   |   | Six monthsended June 30, 2010 |   |   | Six monthsended June 30, 2009 |   |
|---------------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|--------|--------|-------------------------------|--------|--------|-------------------------------|--------|
| Revenues:                                         |   |                             |   |   |                             |   |   |                          |   |   |                          |   |
| Rental                                            |   | $                                | 11,342 |   |                             | $      | 9,433  |                          |   | $      | 22,903                        |   |   | $ | 18,742 |   |
| Other                                             |   |                             | 2,577  |   |                             |   | 2,027  |                          |   |   | 4,826                         |   |   |   | 4,192 |   |
| Total revenues                                    |   |                             | 13,919 |   |                             |   | 11,460 |                          |   |   | 27,729                        |   |   |   | 22,934 |   |
|                                              |   |                             |   |   |                             |   |   |                          |   |   |                          |   |   |   |   |   |
| Expenses:                                         |   |                             |   |   |                             |   |   |                          |   |   |                          |   |   |   |   |   |
| Rental operating                                  |   |                             | 5,392  |   |                             |   | 4,934  |                          |   |   | 10,860                        |   |   |   | 9,699 |   |
| Depreciation and amortization                     |   |                             | 5,860  |   |                             |   | 4,211  |                          |   |   | 11,858                        |   |   |   | 8,956 |   |
| Interest                                          |   |                             | 6,409  |   |                             |   | 3,967  |                          |   |   | 12,039                        |   |   |   | 7,905 |   |
| Total expenses                                    |   |                             | 17,661 |   |                             |   | 13,112 |                          |   |   | 34,757                        |   |   |   | 26,560 |   |
| Net loss                                          |   | $                                | (3,742 | )      |                             | $      | (1,652 | )                             |   | $      | (7,028                        | )      |   | $ | (3,626 | ) |
|                                              |   |                             |   |   |                             |   |   |                          |   |   |                          |   |   |   |   |   |
| Equity in net earnings                            |   |                             |   |   |                             |   |   |                          |   |   |                          |   |   |   |   |   |
|    of unconsolidated joint venture |   | $                                | 33     |   |                             | $      | 163    |                          |   | $      | 44                            |   |   | $ | 217 |   |

|                                        |   | As of         |    |   | As of             |   |
|---------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                        |   | June 30, 2010 |    |   | December 31, 2009 |   |
| Investment in real estate, net              |   | $             | 385,754 |   |              | $      | 400,700 |   |
| Other assets                                |   |          | 68,421  |   |              |   | 61,225 |   |
| Total assets                                |   | $             | 454,175 |   |              | $      | 461,925 |   |
|                                        |   |          |    |   |              |   |   |   |
| Mortgage and other loans                    |   | $             | 366,044 |   |              | $      | 366,543 |   |
| Other liabilities                           |   |          | 16,790  |   |              |   | 14,856 |   |
| Total liabilities                           |   | $             | 382,834 |   |              | $      | 381,399 |   |
|                                        |   |          |    |   |              |   |   |   |
| Investment in unconsolidated joint ventures |   | $             | 9,898   |   |              | $      | 10,911 |   |

----

| 6. | Other Assets, net |
|----|-------------------|

|                                                                |   | June 30, 2010 |   |   | December 31, 2009 |   |
|---------------------------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
| Deferred loan fees, net of accumulated amortization of $1.3 million |   |          |   |   |              |   |
| and $1.2 million at June 30, 2010 and December 31, 2009,       |   |          |   |   |              |   |
| respectively                                                        |   | $             | 1,730  |   |              | $      | 2,008 |   |
| Equity offering costs                                               |   |          | 2,529  |   |              |   | 1,842 |   |
| Prepaid expenses                                                    |   |          | 1,954  |   |              |   | 1,204 |   |
| Other                                                               |   |          | -      |   |              |   | 1 |   |
| Total other assets, net                                             |   | $             | 6,213  |   |              | $      | 5,055 |   |

| 7. | Accounts Payable and Other Liabilities |
|----|----------------------------------------|

|                                         |   | June 30, 2010 |   |   | December 31, 2009 |   |
|----------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
| Accounts payable                             |   | $             | 1,001  |   |              | $      | 597 |   |
| Interest payable                             |   |          | 3,458  |   |              |   | 2,644 |   |
| Deferred revenue                             |   |          | 1,936  |   |              |   | 2,039 |   |
| Security deposits                            |   |          | 2,640  |   |              |   | 2,782 |   |
| Deferred straight-line ground rent           |   |          | 7,666  |   |              |   | 6,620 |   |
| Related party payable (Note 12 )             |   |          | 1,256  |   |              |   | 1,113 |   |
| Accrued expenses                             |   |          | 5,254  |   |              |   | 5,599 |   |
| Asset retirement obligations                 |   |          | 620    |   |              |   | 606 |   |
| Total accounts payable and other liabilities |   | $             | 23,831 |   |              | $      | 22,000 |   |

----

|                           |   | Outstanding Principal Balance, Net at |    |   |              |   |    |
|--------------------------------|--------|---------------------------------------|---------|--------|-------------------|--------|---------|
| Property                       |   | June 30, 2010                         |    |   | December 31, 2009 |   |    | Interest Rate |   | Maturity Date |
| Pacific Business News Building |   | $                                     | 11,602  |   |              | $      | 11,666  |   |   |   | 6.98 | % (a) | 4/6/2010 (a) |
| City Square                    |   |                                  | 27,482  |   |              |   | 27,414  |   |   |   | 5.58 | % | 9/1/2010 (b) |
| City Square                    |   |                                  | 27,017  |   |              |   | 27,017  |   |     LIBOR + 2.35% (c)  | 9/1/2010 (b) |
| Clifford Center                |   |                                  | 3,365   |   |              |   | 3,501   |   |   |   | 6.00 | % | 8/15/2011(d) |
| First Insurance Center         |   |                                  | 37,485  |   |              |   | 37,439  |   |   |   | 5.74 | % | 1/1/2016 |
| First Insurance Center         |   |                                  | 13,809  |   |              |   | 13,791  |   |   |   | 5.40 | % | 1/6/2016 |
| Sorrento Technology Center     |   |                                  | 11,579  |   |              |   | 11,625  |   |   |   | 5.75 | % | 1/11/2016 |
| Pan Am Building                |   |                                  | 59,966  |   |              |   | 59,964  |   |   |   | 6.17 | % | 8/11/2016 |
| Waterfront Plaza               |   |                                  | 100,000 |   |              |   | 100,000 |   |   |   | 6.37 | % | 9/11/2016 |
| Waterfront Plaza               |   |                                  | 11,000  |   |              |   | 11,000  |   |   |   | 6.37 | % | 9/11/2016 |
| Davies Pacific Center          |   |                                  | 94,141  |   |              |   | 94,075  |   |   |   | 5.86 | % | 11/11/2016 |
| Subtotal                       |   |                                  | 397,446 |   |              |   | 397,492 |   |   |   |   |   |   |
| Revolving line of credit (e)   |   |                                  | 16,347  |   |              |   | 8,947   |   |   |   | 1.85 | % | 12/31/2013 |
| Total                          |   | $                                     | 413,793 |   |              | $      | 406,439 |   |   |   |   |   |   |

| (a) | The loan secured by the Pacific Business News Building has matured and we have not repaid the principal balance.  As a result, interest is being incurred at the default rate of 11.98%.  The Company is currently in negotiations with the lender. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | The Company is currently in discussions with the servicer for this loan regarding an agreement to extend the maturity date of the loan and to make certain other modifications to the terms of the loan. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | The Company has an interest rate cap on this loan for the notional amount of $28.5 million, which effectively limits the LIBOR rate on this loan to 7.45%.  The interest rate cap expires on September 1, 2010, commensurate with the maturity date of this loan. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | The terms of the Clifford Center loan provide the Company with the option to extend the maturity date to August 15, 2014 subject to a nominal fee, which the Company expects to exercise. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | The revolving line of credit matures on December 31, 2013.  Amounts borrowed under the FHB Credit Facility bear interest at a fluctuating annual rate equal to the effective rate of interest paid by the lender on time certificates of deposit, plus 1.00%.  See “Revolving Line of Credit” below. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                              |   |   |    |
|-----------------------------------|--------|--------|---------|
| July 1, 2010 to December 31, 2010 |   | $      | 66,329  |   |
| 2011                              |   |   | 3,375   |   |
| 2012                              |   |   | 157     |   |
| 2013                              |   |   | 16,515  |   |
| 2014                              |   |   | 179     |   |
| Thereafter                        |   |   | 329,015 |   |
| Total                             |   | $      | 415,570 |   |
|                              |   |   |    |   |

|   | Revolving Line of Credit - |
|--------|----------------------------|

----

| 9. | Unsecured Notes Payable to Related Parties |
|----|--------------------------------------------|

| 10. | Commitments and Contingencies |
|-----|-------------------------------|

|   | Minimum Future Ground Rents - |
|--------|-------------------------------|

|   | Contingencies - |
|--------|-----------------|

----

----

| 11. | Equity and Earnings per Share |
|-----|-------------------------------|

|                         |   | Pacific Office Properties Trust, Inc. |     |   | Non-controlling interests |   |    | Total  |   |
|------------------------------|--------|---------------------------------------|----------|--------|---------------------------|--------|---------|--------|--------|
|                         |   |                                  |     |   |                      |   |    |   |   |
| Balance at December 31, 2009 |   | $                                     | (132,326 | )      |                      | $      | 183,607 |   |   | $ | 51,281 |   |
| Net loss                     |   |                                  | (2,286   | )      |                      |   | (7,360  | )      |   |   | (9,646 | ) |
| Stock compensation           |   |                                  | 100      |   |                      |   | -       |   |   |   | 100 |   |
| Senior common stock issued   |   |                                  | 594      |   |                      |   | -       |   |   |   | 594 |   |
| Dividends and distributions  |   |                                  | (404     | )      |                      |   | (2,568  | )      |   |   | (2,972 | ) |
| Balance at June 30, 2010     |   | $                                     | (134,322 | )      |                      | $      | 173,679 |   |   | $ | 39,357 |   |
|                         |   |                                  |     |   |                      |   |    |   |   |   |   |   |

----

----

|   | Loss per Share - |
|--------|------------------|

----

|                                                    |   | For the three months ended June 30, |      |   | For the six months ended June 30, |   |
|---------------------------------------------------------|--------|-------------------------------------|-----------|--------|-----------------------------------|--------|
|                                                    |   | 2010                                |      |   | 2009                              |   |   | 2010 |   |   | 2009 |   |
|                                                    |   |                                |      |   |                              |   |   |   |   |   |   |   |
| Net loss attributable to common                         |   |                                |      |   |                              |   |   |   |   |   |   |   |
| share/unit holders - basic and diluted (1)              |   | $                                   | (1,182    | )      |                              | $      | (1,116 | ) |   | $ | (2,290 | ) |   | $ | (2,172 | ) |
|                                                    |   |                                |      |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares                |   |                                | 3,855,725 |   |                              |   | 3,034,122 |   |   |   | 3,853,137 |   |   |   | 3,032,632 |   |
| Potentially dilutive common shares (2)                  |   |                                | —   |   |                              |   | — |   |   |   | — |   |   |   | — |   |
| Weighted average number of common                       |   |                                |      |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| shares/units outstanding — basic and diluted |   |                                | 3,855,725 |   |                              |   | 3,034,122 |   |   |   | 3,853,137 |   |   |   | 3,032,632 |   |
| Net loss per share — basic and diluted       |   | $                                   | (0.31     | )      |                              | $      | (0.37 | ) |   | $ | (0.59 | ) |   | $ | (0.72 | ) |
|                                                    |   |                                |      |   |                              |   |   |   |   |   |   |   |   |   |   |   |

| (1) | For the three and six months ended June 30, 2010 and June 30, 2009, net loss attributable to common stockholders includes $0.6 million of priority allocation to Preferred Unit holders each, respectively, which is included in non-controlling interests in the condensed consolidated statements of operations. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | As of June 30, 2010, approximately 47,615 nonvested restricted stock units, 32,597,528 shares of Listed Common Stock which may be issued upon redemption of Preferred Units, and 66,783 shares of Senior Common Stock, were excluded from the calculation of diluted earnings per share because they were anti-dilutive due to our net loss position. As of June 30, 2009, 52,630 nonvested restricted stock units and 32,597,528 shares of Listed Common Stock which may be issued upon redemption of Preferred Units were excluded from the calculation of diluted earnings per share because they were anti-dilutive due to our net loss position.  Refer to “Equity” section of this footnote for the redemption and conversion terms and conditions of the Preferred Units and Senior Common Stock. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 12. | Related Party Transactions |
|-----|----------------------------|

----

|                                     |   | For the threemonths endedJune 30, 2010 |   |   | For the three months endedJune 30, 2009 |   |   | For the sixmonths endedJune 30, 2010 |   |   | For the sixmonths endedJune 30, 2009 |   |
|------------------------------------------|--------|----------------------------------------|--------|--------|-----------------------------------------|--------|--------|--------------------------------------|--------|--------|--------------------------------------|--------|
| Property management fees                 |   |                                   |   |   |                                    |   |   |                                 |   |   |                                 |   |
|   to affiliates of Advisor (1) |   | $                                      | 794    |   |                                    | $      | 944    |                                 |   | $      | 1,561                                |   |   | $ | 1,780 |   |
| Leasing commissions (2)                  |   |                                   | 26     |   |                                    |   | 100    |                                 |   |   | 253                                  |   |   |   | 159 |   |
| Corporate management fees to Advisor     |   |                                   | 188    |   |                                    |   | 187    |                                 |   |   | 375                                  |   |   |   | 375 |   |
| Interest                                 |   |                                   | 515    |   |                                    |   | 443    |                                 |   |   | 998                                  |   |   |   | 880 |   |
| Construction management fees             |   |                                   |   |   |                                    |   |   |                                 |   |   |                                 |   |   |   |   |   |
|   and other                    |   |                                   | 21     |   |                                    |   | 28     |                                 |   |   | 36                                   |   |   |   | 34 |   |
| Total                                    |   | $                                      | 1,544  |   |                                    | $      | 1,702  |                                 |   | $      | 3,223                                |   |   | $ | 3,228 |   |

| ________________________ |
|--------------------------|

| (1) | Property management fees are calculated as a percentage of the rental cash receipts collected by the properties under management (ranging from 2.5% to 4.5%), plus the payroll costs of on-site employees. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Leasing commissions are capitalized as deferred leasing costs and are amortized over the life of the related lease. |
|-----|---------------------------------------------------------------------------------------------------------------------|

----

| 13. | Share-Based Payments |
|-----|----------------------|

| 14. | Segment Reporting |
|-----|-------------------|

----

|                                For the three months ended June 30, 2010 |   |     |    |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------|--------|
|                                                                                                                                                                                                                               |   | Honolulu |    |   | Western U.S. |   |   | Corporate |   |   | Total |   |
| Revenue:                                                                                                                                                                                                                           |   |     |    |   |   |   |   |   |   |   |   |   |
| Rental                                                                                                                                                                                                                             |   | $        | 7,227   |   |   | $ | 3,106 |   |   | $ | 3 |   |   | $ | 10,336 |   |
| Tenant reimbursements                                                                                                                                                                                                              |   |     | 5,668   |   |   |   | 342 |   |   |   | - |   |   |   | 6,010 |   |
| Parking                                                                                                                                                                                                                            |   |     | 1,804   |   |   |   | 242 |   |   |   | - |   |   |   | 2,046 |   |
| Other                                                                                                                                                                                                                              |   |     | 25      |   |   |   | 7 |   |   |   | 49 |   |   |   | 81 |   |
| Total revenue                                                                                                                                                                                                                      |   |     | 14,724  |   |   |   | 3,697 |   |   |   | 52 |   |   |   | 18,473 |   |
| Expenses:                                                                                                                                                                                                                          |   |     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental property operating                                                                                                                                                                                                          |   |     | 8,203   |   |   |   | 1,895 |   |   |   | - |   |   |   | 10,098 |   |
| General and administrative                                                                                                                                                                                                         |   |     | — |   |   |   | — |   |   |   | 797 |   |   |   | 797 |   |
| Depreciation and amortization                                                                                                                                                                                                      |   |     | 3,947   |   |   |   | 1,810 |   |   |   | - |   |   |   | 5,757 |   |
| Interest                                                                                                                                                                                                                           |   |     | 5,409   |   |   |   | 829 |   |   |   | 606 |   |   |   | 6,844 |   |
| Total expenses                                                                                                                                                                                                                     |   |     | 17,559  |   |   |   | 4,534 |   |   |   | 1,403 |   |   |   | 23,496 |   |
| Loss before equity in net earnings of unconsolidated                                                                                                                                                                               |   |     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| joint ventures and non-operating income                                                                                                                                                                                            |   | $        | (2,835  | )      |   | $ | (837 | ) |   | $ | (1,351 | ) |   | $ | (5,023 | ) |
| Equity in net earnings of unconsolidated joint ventures                                                                                                                                                                            |   |     |    |   |   |   |   |   |   |   |   |   |   |   | 33 |   |
| Net loss attributable to non-controlling interests                                                                                                                                                                                 |   |     |    |   |   |   |   |   |   |   |   |   |   |   | 3,812 |   |
| Dividends on Senior Common Stock                                                                                                                                                                                                   |   |     |    |   |   |   |   |   |   |   |   |   |   |   | (4 | ) |
| Net loss attributable to common stockholders                                                                                                                                                                                       |   |     |    |   |   |   |   |   |   |   |   |   |   | $ | (1,182 | ) |
|                                                                                                                                                                                                                               |   |     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                    |   | For the six months ended June 30, 2010 |    |   |         |   |
|---------------------------------------------------------|--------|----------------------------------------|---------|--------|--------------|--------|
|                                                    |   | Honolulu                               |    |   | Western U.S. |   |   | Corporate |   |   | Total |   |
| Revenue:                                                |   |                                   |    |   |         |   |   |   |   |   |   |   |
| Rental                                                  |   | $                                      | 14,477  |   |         | $      | 6,261 |   |   | $ | 7 |   |   | $ | 20,745 |   |
| Tenant reimbursements                                   |   |                                   | 10,841  |   |         |   | 577 |   |   |   | - |   |   |   | 11,418 |   |
| Parking                                                 |   |                                   | 3,585   |   |         |   | 483 |   |   |   | - |   |   |   | 4,068 |   |
| Other                                                   |   |                                   | 63      |   |         |   | 14 |   |   |   | 99 |   |   |   | 176 |   |
| Total revenue                                           |   |                                   | 28,966  |   |         |   | 7,335 |   |   |   | 106 |   |   |   | 36,407 |   |
| Expenses:                                               |   |                                   |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Rental property operating                               |   |                                   | 16,207  |   |         |   | 3,510 |   |   |   | - |   |   |   | 19,717 |   |
| General and administrative                              |   |                                   | — |   |         |   | — |   |   |   | 1,404 |   |   |   | 1,404 |   |
| Depreciation and amortization                           |   |                                   | 7,908   |   |         |   | 3,621 |   |   |   | - |   |   |   | 11,529 |   |
| Interest                                                |   |                                   | 10,633  |   |         |   | 1,652 |   |   |   | 1,162 |   |   |   | 13,447 |   |
| Total expenses                                          |   |                                   | 34,748  |   |         |   | 8,783 |   |   |   | 2,566 |   |   |   | 46,097 |   |
| Loss before equity in net earnings of unconsolidated    |   |                                   |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| joint ventures and non-operating income                 |   | $                                      | (5,782  | )      |         | $      | (1,448 | ) |   | $ | (2,460 | ) |   | $ | (9,690 | ) |
| Equity in net earnings of unconsolidated joint ventures |   |                                   |    |   |         |   |   |   |   |   |   |   |   |   | 44 |   |
| Net loss attributable to non-controlling interests      |   |                                   |    |   |         |   |   |   |   |   |   |   |   |   | 7,360 |   |
| Dividends on Senior Common Stock                        |   |                                   |    |   |         |   |   |   |   |   |   |   |   |   | (4 | ) |
| Net loss attributable to common stockholders            |   |                                   |    |   |         |   |   |   |   |   |   |   |   | $ | (2,290 | ) |

----

|                                                    |   | For the three months ended June 30, 2009 |    |   |         |   |
|---------------------------------------------------------|--------|------------------------------------------|---------|--------|--------------|--------|
|                                                    |   | Honolulu                                 |    |   | Western U.S. |   |   | Corporate |   |   | Total |   |
| Revenue:                                                |   |                                     |    |   |         |   |   |   |   |   |   |   |
| Rental                                                  |   | $                                        | 7,393   |   |         | $      | 3,211 |   |   | $ | 3 |   |   | $ | 10,607 |   |
| Tenant reimbursements                                   |   |                                     | 4,983   |   |         |   | 316 |   |   |   | — |   |   |   | 5,299 |   |
| Parking                                                 |   |                                     | 1,770   |   |         |   | 241 |   |   |   | — |   |   |   | 2,011 |   |
| Other                                                   |   |                                     | 38      |   |         |   | 14 |   |   |   | 50 |   |   |   | 102 |   |
| Total revenue                                           |   |                                     | 14,184  |   |         |   | 3,782 |   |   |   | 53 |   |   |   | 18,019 |   |
| Expenses:                                               |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Rental property operating                               |   |                                     | 7,764   |   |         |   | 1,896 |   |   |   | — |   |   |   | 9,660 |   |
| General and administrative                              |   |                                     | — |   |         |   | — |   |   |   | 497 |   |   |   | 497 |   |
| Depreciation and amortization                           |   |                                     | 5,138   |   |         |   | 1,892 |   |   |   | — |   |   |   | 7,030 |   |
| Interest                                                |   |                                     | 5,286   |   |         |   | 843 |   |   |   | 677 |   |   |   | 6,806 |   |
| Total expenses                                          |   |                                     | 18,188  |   |         |   | 4,631 |   |   |   | 1,174 |   |   |   | 23,993 |   |
| Loss before equity in net earnings of unconsolidated    |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| joint ventures and non-operating income                 |   | $                                        | (4,004  | )      |         | $      | (849 | ) |   | $ | (1,121 | ) |   | $ | (5,974 | ) |
| Equity in net earnings of unconsolidated joint ventures |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   | 163 |   |
| Non-operating income                                    |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   | 1 |   |
| Net loss attributable to non-controlling interests      |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   | 4,694 |   |
| Net loss attributable to common stockholders            |   |                                     |    |   |         |   |   |   |   |   |   |   |   | $ | (1,116 | ) |
|                                                    |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   | For the six months ended June 30, 2009   |    |   |         |   |   |
|                                                    |   | Honolulu                                 |    |   | Western U.S. |   |   | Corporate |   |   | Total |   |
| Revenue:                                                |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Rental                                                  |   | $                                        | 14,989  |   |         | $      | 6,517 |   |   | $ | 7 |   |   | $ | 21,513 |   |
| Tenant reimbursements                                   |   |                                     | 10,418  |   |         |   | 603 |   |   |   | — |   |   |   | 11,021 |   |
| Parking                                                 |   |                                     | 3,577   |   |         |   | 491 |   |   |   | — |   |   |   | 4,068 |   |
| Other                                                   |   |                                     | 63      |   |         |   | 24 |   |   |   | 100 |   |   |   | 187 |   |
| Total revenue                                           |   |                                     | 29,047  |   |         |   | 7,635 |   |   |   | 107 |   |   |   | 36,789 |   |
| Expenses:                                               |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Rental property operating                               |   |                                     | 15,629  |   |         |   | 3,946 |   |   |   | — |   |   |   | 19,575 |   |
| General and administrative                              |   |                                     | — |   |         |   | — |   |   |   | 1,646 |   |   |   | 1,646 |   |
| Depreciation and amortization                           |   |                                     | 9,736   |   |         |   | 3,821 |   |   |   | — |   |   |   | 13,557 |   |
| Interest                                                |   |                                     | 10,516  |   |         |   | 1,679 |   |   |   | 1,330 |   |   |   | 13,525 |   |
| Total expenses                                          |   |                                     | 35,881  |   |         |   | 9,446 |   |   |   | 2,976 |   |   |   | 48,303 |   |
| Loss before equity in net earnings of unconsolidated    |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| joint ventures and non-operating income                 |   | $                                        | (6,834  | )      |         | $      | (1,811 | ) |   | $ | (2,869 | ) |   | $ | (11,514 | ) |
| Equity in net earnings of unconsolidated joint ventures |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   | 217 |   |
| Non-operating income                                    |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   | 4 |   |
| Net loss attributable to non-controlling interests      |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   | 9,121 |   |
| Net loss attributable to common stockholders            |   |                                     |    |   |         |   |   |   |   |   |   |   |   | $ | (2,172 | ) |
|                                                    |   |                                     |    |   |         |   |   |   |   |   |   |   |   |   |   |   |

----

|                        |   | Honolulu |    |   | Western U.S. |   |    | Corporate |   |   | Total  |   |
|-----------------------------|--------|----------|---------|--------|--------------|--------|---------|-----------|--------|--------|--------|--------|
| Total assets:               |   |     |    |   |         |   |    |      |   |   |   |   |
| June 30, 2010               |   | $        | 370,778 |   |         | $      | 121,843 |      |   | $      | 13,948 |   |   | $ | 506,569 |   |
| December 31, 2009           |   | $        | 372,403 |   |         | $      | 124,454 |      |   | $      | 13,479 |   |   | $ | 510,336 |   |
| Total goodwill:             |   |     |    |   |         |   |    |      |   |   |   |   |   |   |   |   |
| June 30, 2010               |   | $        | 40,416  |   |         | $      | 21,603  |      |   | $      | -      |   |   | $ | 62,019 |   |
| December 31, 2009           |   | $        | 40,416  |   |         | $      | 21,603  |      |   | $      | -      |   |   | $ | 62,019 |   |
| Capital expenditures        |   |     |    |   |         |   |    |      |   |   |   |   |   |   |   |   |
| For the three months ended: |   |     |    |   |         |   |    |      |   |   |   |   |   |   |   |   |
| June 30, 2010               |   | $        | 3,138   |   |         | $      | 24      |      |   | $      | -      |   |   | $ | 3,162 |   |
| June 30, 2009               |   | $        | 2,110   |   |         | $      | 78      |      |   | $      | -      |   |   | $ | 2,188 |   |
| For the six months ended:   |   |     |    |   |         |   |    |      |   |   |   |   |   |   |   |   |
| June 30, 2010               |   | $        | 5,441   |   |         | $      | 57      |      |   | $      | -      |   |   | $ | 5,498 |   |
| June 30, 2009               |   | $        | 2,828   |   |         | $      | 240     |      |   | $      | -      |   |   | $ | 3,068 |   |

| 15. | Fair Value of Financial Instruments |
|-----|-------------------------------------|

----

| 16. | Subsequent Events |
|-----|-------------------|

Item 2. 

|   | Note Regarding Forward-Looking Statements - |
|--------|---------------------------------------------|

----

----

| PROPERTY                                 |   | NO. OF    |   |   | RENTABLE |   |      | PERCENTAGE |   |   | ANNUALIZED |   |
|------------------------------------------|--------|-----------|--------|--------|----------|--------|-----------|------------|--------|--------|------------|--------|
|                                     |   | BUILDINGS |   |   | SQ. FT.  |   |      | OWNERSHIP  |   |   | RENT(1)(2) |   |
| Consolidated Properties                  |   |      |   |   |     |   |      |       |   |   |       |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |
| Waterfront Plaza                         |   |      |   |   |     |   |      |       |   |   |       |   |
| 500 Ala Moana Blvd.                      |   |      | 1      |   |     |   | 534,475   |       |   |   | 100.0      | %      |   | $ | 17,181,341 |   |
| Honolulu, HI 96813                       |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| Davies Pacific Center                    |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 841 Bishop Street                        |   |      | 1      |   |     |   | 353,224   |       |   |   | 100.0      | %      |   |   | 10,343,160 |   |
| Honolulu, HI 96813                       |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| Pan Am Building                          |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 1600 Kapiolani Blvd.                     |   |      | 1      |   |     |   | 209,889   |       |   |   | 100.0      | %      |   |   | 7,100,868 |   |
| Honolulu, HI 96814                       |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| First Insurance Center                   |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 1100 Ward Avenue                         |   |      | 1      |   |     |   | 202,992   |       |   |   | 100.0      | %      |   |   | 7,300,308 |   |
| Honolulu, HI 96814                       |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| PBN Building                             |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 1833 Kalakaua Avenue                     |   |      | 1      |   |     |   | 90,559    |       |   |   | 100.0      | %      |   |   | 2,050,128 |   |
| Honolulu, HI 96815                       |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| Clifford Center                          |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 810 Richards Street                      |   |      | 1      |   |     |   | 72,415    |       |   |   | 100.0      | %      |   |   | 1,960,032 |   |
| Honolulu, HI 96813                       |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| Sorrento Technology Center               |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 10140 Barnes Canyon Rd.                  |   |      | 2      |   |     |   | 63,363    |       |   |   | 100.0      | %      |   |   | 1,582,836 |   |
| 10180 Barnes Canyon Rd.                  |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| San Diego, CA 92121                      |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| City Square                              |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 3800 N. Central Ave.                     |   |      | 3      |   |     |   | 738,422   |       |   |   | 100.0      | %      |   |   | 10,730,844 |   |
| 3838 N. Central Ave.                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| 4000 N. Central Ave.                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| Phoenix, AZ 85012                        |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
|                                     |   |      |   |   |     |   |      |       |   |   |       |   |   |   |   |   |
| Total Consolidated  Properties |   |      | 11     |   |     |   | 2,265,339 |       |   |   |       |   |   | $ | 58,249,517 |   |

----

| PROPERTY                       |   | NO. OF    |   |   | RENTABLE |   |    | PERCENTAGE |   |   | ANNUALIZED |   |
|--------------------------------|--------|-----------|--------|--------|----------|--------|---------|------------|--------|--------|------------|--------|
|                           |   | BUILDINGS |   |   | SQ. FT.  |   |    | OWNERSHIP  |   |   | RENT(1)(2) |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |
| Joint Venture Properties       |   |      |   |   |     |   |    |       |   |   |       |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |
| Torrey Hills Corp. Center      |   |      |   |   |     |   |    |       |   |   |       |   |
| 11250 El Camino Real           |   |      | 1      |   |     |   | 24,066  |       |   |   | 32.2       | %      |   | $ | 898,980 |   |
| San Diego, CA 92130            |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| Palomar Heights Plaza          |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| 5860 Owens Avenue              |   |      | 3      |   |     |   | 45,538  |       |   |   | 32.2       | %      |   |   | 757,020 |   |
| 5868 Owens Avenue              |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| 5876 Owens Avenue              |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| Carlsbad, CA 92008             |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| Palomar Heights Corp. Center   |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| 5857 Owens Avenue              |   |      | 1      |   |     |   | 64,812  |       |   |   | 32.2       | %      |   |   | 1,530,984 |   |
| Carlsbad, CA 92008             |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| Scripps Ranch Bus. Park        |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| 9775 Business Park Ave.        |   |      | 2      |   |     |   | 47,248  |       |   |   | 32.2       | %      |   |   | 564,504 |   |
| 10021 Willow Creek Rd.         |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| San Diego, CA 92131            |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| Via Frontera Bus. Park         |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| 10965 Via Frontera Dr.         |   |      | 2      |   |     |   | 78,819  |       |   |   | 10.0       | %      |   |   | 626,280 |   |
| 10993 Via Frontera Dr.         |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| San Diego, CA 92127            |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| Poway Flex                     |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| 13550 Stowe Drive              |   |      | 1      |   |     |   | 112,000 |       |   |   | 10.0       | %      |   |   | 1,090,248 |   |
| Poway, CA 92064                |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
|                           |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| Carlsbad Corp. Center.         |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |
| 1950 Camino Vida Roble         |   |      | 1      |   |     |   | 121,528 |       |   |   | 10.0       | %      |   |   | 2,109,612 |   |
|  Carlsbad, CA  92008 |   |      |   |   |     |   |    |       |   |   |       |   |   |   |   |   |

----

|   PROPERTY                |   | NO. OFBUILDINGS |   |   | RENTABLESQ. FT. |   |      | PERCENTAGEOWNERSHIP |   |   | ANNUALIZEDRENT(1)(2) |   |
|--------------------------------|--------|-----------------|--------|--------|-----------------|--------|-----------|---------------------|--------|--------|----------------------|--------|
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |
| Savi Tech Center               |   |            |   |   |            |   |      |                |   |   |                 |   |
| 22705 Savi Ranch Pkwy.         |   |            | 4      |   |            |   | 372,327   |                |   |   | 10.0                 | %      |   | $ | 7,031,748 |   |
| 22715 Savi Ranch Pkwy.         |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 22725 Savi Ranch Pkwy.         |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 22745 Savi Ranch Pkwy.         |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Yorba Linda, CA 92887          |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Yorba Linda Bus. Park          |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 22833 La Palma Ave.            |   |            | 5      |   |            |   | 166,042   |                |   |   | 10.0                 | %      |   |   | 1,680,168 |   |
| 22343 La Palma Ave.            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 22345 La Palma Ave.            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 22347 La Palma Ave.            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 22349 La Palma Ave.            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Yorba Linda, CA 92887          |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| South Coast Exec. Center       |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 1503 South Coast Dr.           |   |            | 1      |   |            |   | 61,025    |                |   |   | 10.0                 | %      |   |   | 788,556 |   |
| Costa Mesa, CA 92626           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Gateway Corp. Center           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 1370 Valley Vista Dr.          |   |            | 1      |   |            |   | 85,216    |                |   |   | 10.0                 | %      |   |   | 2,055,600 |   |
| Diamond Bar, CA 91765          |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Black Canyon Corp. Ctr.        |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 16404 N. Black Canyon Hwy.     |   |            | 1      |   |            |   | 218,694   |                |   |   | 17.5                 | %      |   |   | 2,596,332 |   |
| Phoenix, AZ 85053              |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Bank of Hawaii Waikiki Center  |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 2155 Kalakaua Avenue           |   |            | 1      |   |            |   | 152,288   |                |   |   | 17.5                 | %      |   |   | 6,431,268 |   |
| Honolulu, HI 96815             |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Seville Plaza                  |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 5469 Kearny Villa Rd.          |   |            | 3      |   |            |   | 138,576   |                |   |   | 7.5                  | %      |   |   | 2,441,124 |   |
| 5471 Kearny Villa Rd.          |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 5473 Kearny Villa Rd.          |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| San Diego, CA 92123            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| U.S. Bank Center               |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 101 North First Ave.           |   |            | 2      |   |            |   | 372,676   |                |   |   | 7.5                  | %      |   |   | 6,499,440 |   |
| 21 West Van Buren St.          |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Phoenix, AZ 85003              |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Seaview Corporate Center       |   |            | 5      |   |            |   | 356,504   |                |   |   | 5.0                  | %      |   |   | 10,996,404 |   |
| 10180 Telesis Court            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 10190 Telesis Court            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 10182 Telesis Court            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| 10188 Telesis Court            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| San Diego, CA 92121            |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |
| Total Joint Venture Properties |   |            | 34     |   |            |   | 2,417,359 |                |   |   |                 |   |   | $ | 48,098,268 |   |
|                           |   |            |   |   |            |   |      |                |   |   |                 |   |   |   |   |   |

| (1) | Represents annualized monthly contractual rent under existing leases as of June 30, 2010. This amount reflects total rent before abatements and includes expense reimbursements, some of which are estimated. Annualized rent for the unconsolidated joint venture properties are reported with respect to each property in its entirety, rather than the portion of the property represented by our ownership interest. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Existing net rents are converted to gross rents by adding estimated annualized operating expense reimbursements to base rents. |
|-----|--------------------------------------------------------------------------------------------------------------------------------|

----

|   | Critical Accounting Policies - |
|--------|--------------------------------|

----

|                                                 |   | 2010   |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|----------|--------|
| Revenue:                                             |   |   |   |   |   |   |   |     |   |   |     |   |
| Rental                                               |   | $      | 10,336 |   |   | $      | 10,607 |     |   | $      | (271     | )      |   |   | (2.6 | %) |
| Tenant reimbursements                                |   |   | 6,010  |   |   |   | 5,299  |     |   |   | 711      |   |   |   | 13.4 | % |
| Parking                                              |   |   | 2,046  |   |   |   | 2,011  |     |   |   | 35       |   |   |   | 1.7 | % |
| Other                                                |   |   | 81     |   |   |   | 102    |     |   |   | (21      | )      |   |   | (20.6 | %) |
| Total revenue                                        |   |   | 18,473 |   |   |   | 18,019 |     |   |   | 454      |   |   |   | 2.5 | % |
|                                                 |   |   |   |   |   |   |   |     |   |   |     |   |   |   |   |   |
| Expenses:                                            |   |   |   |   |   |   |   |     |   |   |     |   |   |   |   |   |
| Rental property operating                            |   |   | 10,098 |   |   |   | 9,660  |     |   |   | 438      |   |   |   | 4.5 | % |
| General and administrative                           |   |   | 797    |   |   |   | 497    |     |   |   | 300      |   |   |   | 60.4 | % |
| Depreciation and amortization                        |   |   | 5,757  |   |   |   | 7,030  |     |   |   | (1,273   | )      |   |   | (18.1 | %) |
| Interest                                             |   |   | 6,844  |   |   |   | 6,806  |     |   |   | 38       |   |   |   | 0.6 | % |
| Total expenses                                       |   |   | 23,496 |   |   |   | 23,993 |     |   |   | (497     | )      |   |   | (2.1 | %) |
|                                                 |   |   |   |   |   |   |   |     |   |   |     |   |   |   |   |   |
| Loss before equity in net earnings of unconsolidated |   |   |   |   |   |   |   |     |   |   |     |   |   |   |   |   |
| joint ventures and non-operating income              |   |   | (5,023 | )      |   |   | (5,974 | )        |   |   | 951      |   |   |   | (15.9 | %) |
| Equity in net earnings of unconsolidated             |   |   |   |   |   |   |   |     |   |   |     |   |   |   |   |   |
| joint ventures                                       |   |   | 33     |   |   |   | 163    |     |   |   | (130     | )      |   |   | (79.8 | %) |
| Non-operating income                                 |   |   | -      |   |   |   | 1      |     |   |   | (1       | )      |   |   | (100.0 | %) |
| Net loss                                             |   | $      | (4,990 | )      |   | $      | (5,810 | )        |   | $      | 820      |   |   |   | (14.1 | %) |
|                                                 |   |   |   |   |   |   |   |     |   |   |     |   |   |   |   |   |

|   | Revenues - |
|--------|------------|

----

|   | Expenses - |
|--------|------------|

----

|                                                 |   | 2010   |   |   | 2009   |   |    | $ Change |   |   | % Change |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|----------|--------|--------|----------|--------|
|                                                 |   |   |   |   |   |   |    |     |   |   |     |   |
| Revenue:                                             |   |   |   |   |   |   |    |     |   |   |     |   |
| Rental                                               |   | $      | 20,745 |   |   | $      | 21,513  |     |   | $      | (768     | )      |   |   | (3.6 | %) |
| Tenant reimbursements                                |   |   | 11,418 |   |   |   | 11,021  |     |   |   | 397      |   |   |   | 3.6 | % |
| Parking                                              |   |   | 4,068  |   |   |   | 4,068   |     |   |   | -        |   |   |   | N/A |   |
| Other                                                |   |   | 176    |   |   |   | 187     |     |   |   | (11      | )      |   |   | (5.9 | %) |
| Total revenue                                        |   |   | 36,407 |   |   |   | 36,789  |     |   |   | (382     | )      |   |   | -1.0 | % |
|                                                 |   |   |   |   |   |   |    |     |   |   |     |   |   |   |   |   |
| Expenses:                                            |   |   |   |   |   |   |    |     |   |   |     |   |   |   |   |   |
| Rental property operating                            |   |   | 19,717 |   |   |   | 19,575  |     |   |   | 142      |   |   |   | 0.7 | % |
| General and administrative                           |   |   | 1,404  |   |   |   | 1,646   |     |   |   | (242     | )      |   |   | (14.7 | %) |
| Depreciation and amortization                        |   |   | 11,529 |   |   |   | 13,557  |     |   |   | (2,028   | )      |   |   | (15.0 | %) |
| Interest                                             |   |   | 13,447 |   |   |   | 13,525  |     |   |   | (78      | )      |   |   | (0.6 | %) |
| Total expenses                                       |   |   | 46,097 |   |   |   | 48,303  |     |   |   | (2,206   | )      |   |   | (4.6 | %) |
|                                                 |   |   |   |   |   |   |    |     |   |   |     |   |   |   |   |   |
| Loss before equity in net earnings of unconsolidated |   |   |   |   |   |   |    |     |   |   |     |   |   |   |   |   |
| joint ventures and non-operating income              |   |   | (9,690 | )      |   |   | (11,514 | )        |   |   | 1,824    |   |   |   | (15.8 | %) |
| Equity in net earnings of unconsolidated             |   |   |   |   |   |   |    |     |   |   |     |   |   |   |   |   |
| joint ventures                                       |   |   | 44     |   |   |   | 217     |     |   |   | (173     | )      |   |   | (79.7 | %) |
| Non-operating income                                 |   |   | -      |   |   |   | 4       |     |   |   | (4       | )      |   |   | (100.0 | %) |
| Net loss                                             |   | $      | (9,646 | )      |   | $      | (11,293 | )        |   | $      | 1,647    |   |   |   | (14.6 | %) |
|                                                 |   |   |   |   |   |   |    |     |   |   |     |   |   |   |   |   |

|   | Revenues - |
|--------|------------|

|   | Expenses - |
|--------|------------|

----

|   | Cash Balances, Available Borrowings and Capital Resources - |
|--------|-------------------------------------------------------------|

----

----

| PROPERTY                                  |   | AMOUNT |    |   | INTEREST RATE |          | MATURITYDATE |     | BALANCEDUE AT MATURITY DATE |   |   | PREPAYMENT/DEFEASANCE |   |
|-------------------------------------------|--------|--------|---------|--------|---------------|---------------|--------------|----------|-----------------------------|--------|--------|-----------------------|--------|
| Pacific Business News Building (1)        |   | $      | 11,601  |   |          |          | 11.98        | %        | 4/6/2010                    |   |   |                  | (1)    |   |   |   |
| City Square                               |   |   | 27,500  |   |          |          | 5.58         | %        | 9/1/2010                    |   |   | 27,500                |   |   |   | (2) |   |
| City Square (3)                           |   |   | 27,017  |   |          | LIBOR + 2.35% |         | 9/1/2010 |                        |   | 27,017 |                  |   |   | (4) |   |
| Clifford Center (5)                       |   |   | 3,365   |   |          |          | 6.00         | %        | 8/15/2011                   |   |   | 3,032                 |   |   |   | (6) |   |
| First Insurance Center                    |   |   | 38,000  |   |          |          | 5.74         | %        | 1/1/2016                    |   |   | 38,000                |   |   |   | (7) |   |
| First Insurance Center                    |   |   | 14,000  |   |          |          | 5.40         | %        | 1/6/2016                    |   |   | 14,000                |   |   |   | (8) |   |
| Sorrento Technology Center (9)            |   |   | 11,740  |   |          |          | 5.75         | % (10)   | 1/11/2016 (10)              |   |   | 10,825                |   |   |   | (11) |   |
| Pan Am Building                           |   |   | 60,000  |   |          |          | 6.17         | %        | 8/11/2016                   |   |   | 60,000                |   |   |   | (12) |   |
| Waterfront Plaza                          |   |   | 100,000 |   |          |          | 6.37         | %        | 9/11/2016                   |   |   | 100,000               |   |   |   | (13) |   |
| Waterfront Plaza                          |   |   | 11,000  |   |          |          | 6.37         | %        | 9/11/2016                   |   |   | 11,000                |   |   |   | (14) |   |
| Davies Pacific Center                     |   |   | 95,000  |   |          |          | 5.86         | %        | 11/11/2016                  |   |   | 95,000                |   |   |   | (15) |   |
| Subtotal                                  |   | $      | 399,223 |   |          |          |         |     |                        |   |   |                  |   |   |   |   |   |
| Revolving line of credit (16)             |   |   | 16,347  |   |          |          | 1.85         | %        | 12/31/2013                  |   |   | 16,347                |   |   |   |   |   |
|   Outstanding principal balance |   | $      | 415,570 |   |          |          |         |     |                        |   |   |                  |   |   |   |   |   |
| Less: Unamortized discount, net           |   |   | (1,777  | )      |          |          |         |     |                        |   |   |                  |   |   |   |   |   |
| Net                                       |   | $      | 413,793 |   |          |          |         |     |                        |   |   |                  |   |   |   |   |   |
|                                      |   |   |    |   |          |          |         |     |                        |   |   |                  |   |   |   |   |   |

| (1) | Loan has matured and we have not repaid the principal balance.  As a result, interest is being incurred at the default rate of 11.98%.  We are currently in negotiations with the lender.  For additional information, see “Liquidity and Capital Resources” above. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Loan is prepayable and may be defeased at any time.  We are currently in discussions with the servicer for this loan regarding an agreement to extend the maturity date of the loan and to make certain other modifications to the terms of the loan. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Maximum loan amount to be advanced is $28.5 million.  In addition, the Company has an interest rate cap on this loan for the notional amount of $28.5 million, which effectively limits the LIBOR rate on this loan to 7.45%.  The interest rate cap expires on September 1, 2010, commensurate with the maturity date of this note payable.  We are currently in discussions with the servicer for this loan regarding an agreement to extend the maturity date of the loan and to make certain other modifications to the terms of the loan. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Loan may be prepaid subject to payment of a fee in amount of $142 thousand. |
|-----|-----------------------------------------------------------------------------|

| (5) | Requires monthly principal and interest payments of $39.8 thousand.  The initial maturity date is August 15, 2011.  We have the option to extend the maturity date to August 15, 2014 for a nominal fee. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Loan is prepayable, subject to prepayment premium equal to greater of 2% of amount prepaid or yield maintenance. |
|-----|------------------------------------------------------------------------------------------------------------------|

| (7) | Loan is prepayable subject to a prepayment premium in an amount equal to the greater of 3% of outstanding principal amount or yield maintenance.  No premium due after October 1, 2015.  Loan may also be defeased. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Loan is not prepayable until October 6, 2015; however, loan may be defeased.  No premium is due upon prepayment. |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (9) | Requires monthly principal and interest payments in the amount of $69 thousand. |
|-----|---------------------------------------------------------------------------------|

| (10) | Although the maturity date is January 11, 2036, January 11, 2016 is the anticipated repayment date because the interest rate adjusts as of January 11, 2016 to greater of 7.75% or treasury rate plus 70 basis points, plus 2.0%. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | No prepayment is permitted prior to October 11, 2015.  Loan may be defeased. |
|------|----------------------------------------------------------------------------------------|

| (12) | Loan is prepayable subject to a prepayment premium equal to greater of 1% of principal balance of loan or yield maintenance.  No premium is due after May 11, 2016. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (13) | Loan may be prepaid subject to payment of a yield maintenance-based prepayment premium; no premium is due after June 11, 2016.  Loan may also be defeased. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (14) | Loan may be prepaid subject to payment of a yield maintenance-based prepayment premium; no premium is due after June 11, 2016. |
|------|--------------------------------------------------------------------------------------------------------------------------------|

| (15) | Loan is prepayable, subject to prepayment premium equal to greater of (a) 1% of amount prepaid or (b) yield maintenance.  No premium due after August 11, 2016. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (16) | The revolving line of credit matures on December 31, 2013.  See “Revolving Line of Credit” below. |
|------|-------------------------------------------------------------------------------------------------------------------------|

----

----

----

Item 3. 

Item 4. 

----

PART II 

Item 1

Item 1A.

Item 2.

Item 3.

Item 4. 

Item 5.

----

Item 6.

| Exhibit No.  |  Description                                                                                                                                            |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.1               | Articles of Amendment and Restatement of the Company (previously filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed November 23, 2009 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.2               | Articles Supplementary of the Company dated November 20, 2009 (previously filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed November 23, 2009 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.3               | Articles of Amendment of the Company (previously filed as Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q filed November 23, 2009 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.4               | Articles of Amendment of the Company dated January 5, 2010 (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed January 5, 2010 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.5               | Articles Supplementary of the Board of Directors Reclassifying and Designating a series of common stock as Senior Common Stock, dated March 4, 2010 (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 9, 2010 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.6               | Certificate of Correction of the Company dated April 30, 2010 (previously filed as Exhibit 3.6 to the Company’s Quarterly Report on Form 10-Q filed May 7, 2010 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.7               | Amended and Restated Bylaws (previously filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed March 25, 2008 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.1              | First Amendment to Indemnity Agreement dated as of May 17, 2010, between Pacific Office Properties, L.P. and James C. Reynolds (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 17, 2010 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.2              | Second Amendment to Loan Documents, dated as of May 25, 2010, among First Hawaiian Bank, Pacific Office Properties, L.P. and Shidler Equities L.P. (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 26, 2010 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.3              | Second Amendment to Indemnification Agreement, dated as of May 25, 2010, between Pacific Office Properties, L.P. and Shidler Equities L.P. (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 26, 2010 (File No. 001-09900) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.4              | Purchase and Sale Agreement, effective as of June 28, 2010, between Pacific Office Properties Trust, Inc. and Terraces CP, LLC. (Filed herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.1              | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.2              | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.1              | Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.2              | Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

|                  | PACIFIC OFFICE PROPERTIES TRUST, INC. |                          |
|-----------------------|---------------------------------------|-------------------------------|
|                  |                                  |                          |   |
| Date: August 12, 2010 | By:                                   | /s/ James R. Ingebritsen |   |
|                  |                                  | James R. Ingebritsen          |   |
|                  |                                  | Chief Executive Officer       |   |
|                  |                                  |                          |   |

|   | By:    | /s/ James R. Wolford |   |
|--------|--------|---------------------------|--------|
|   |   | James R. Wolford          |   |
|   |   | Chief Financial Officer   |   |
|   |   |                      |   |