##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number:    1-9900
 PACIFIC OFFICE PROPERTIES TRUST, INC.
  Maryland
    
    86-0602478(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 233 Wilshire Boulevard, Suite 830
Santa Monica, CA  90401
 (310) 395-2083
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ
 APPLICABLE ONLY TO CORPORATE ISSUERS:




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##### 



PACIFIC OFFICE PROPERTIES TRUST, INC.
TABLE OF CONTENTS
FORM 10-Q
 PageExplanatory Note
    
    iiPART I  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    40Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    59Item 4T. Controls and Procedures
    
    
    59PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    60Item 1A. Risk Factors
    
    
    60Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    61Item 3. Defaults Upon Senior Securities
    
    
    61Item 4. Submission of Matters to a Vote of Security Holders
    
    
    61Item 5. Other Information
    
    
    61Item 6. Exhibits
    
    
    61Certification of the Chief Executive OfficerCertification of the Chief Financial OfficerCertification of the Chief Executive Officer and Chief Financial OfficerEX-31.1EX-31.2EX-32.1EX-32.2
  i




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##### Table of Contents



PACIFIC OFFICE PROPERTIES TRUST, INC.
FORM 10-Q
 
 Explanatory Note
  Business
Combinations
 ii




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements (unaudited).
 Pacific Office Properties Trust, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
 March 31, 2009
    
    
    December 31, 2008ASSETSInvestments in real estate, net (Note 3)
    
    $
    389,576
    
    
    $
    392,657Cash and cash equivalents
    
    
    6,537
    
    
    
    4,463Restricted cash
    
    
    5,266
    
    
    
    7,267Rents and other receivables, net (Note 2)
    
    
    5,387
    
    
    
    6,342Intangible assets, net (Note 4)
    
    
    38,925
    
    
    
    41,379Other assets, net (Note 6 )
    
    
    5,383
    
    
    
    4,680Goodwill
    
    
    62,019
    
    
    
    61,519Investment in unconsolidated joint ventures (Note 5)
    
    
    11,149
    
    
    
    11,590Total assets
    
    $
    524,242
    
    
    $
    529,897LIABILITIES AND EQUITYMortgage and other collateralized loans, net (Note 9)
    
    $
    400,080
    
    
    $
    400,108Unsecured notes payable to related parties (Note 10)
    
    
    23,776
    
    
    
    23,776Accounts payable and other liabilities (Note 8)
    
    
    18,970
    
    
    
    17,088Acquired below market leases, net (Note 4)
    
    
    11,186
    
    
    
    11,817Total liabilities
    
    
    454,012
    
    
    
    452,789Non-controlling interests (Note 13)
    
    
    65,859
    
    
    
    71,878Commitments and contingencies (Note 12)Equity:Proportionate Voting Preferred Stock
    
    
    
    
    
    
    Preferred stock, $0.0001 par value, 100,000,000 shares authorized,
no shares issued and outstanding at March 31, 2009 and
at December 31, 2008
    
    
    
    
    
    
    Common stock, $0.0001 par value, 200,000,000 shares authorized,
3,031,025 shares issued and
outstanding at March 31, 2009 and
at December 31, 2008
    
    
    185
    
    
    
    185Class B Common stock, $0.0001 par value, 200,000 shares authorized,
100 shares issued and outstanding at March 31, 2009 and
at December 31, 2008
    
    
    
    
    
    
    Additional paid-in capital
    
    
    12,439
    
    
    
    12,089Retained deficit
    
    
    (8,253
    )
    
    
    (7,044
    )Total equity
    
    
    4,371
    
    
    
    5,230Total liabilities and equity
    
    $
    524,242
    
    
    $
    529,897
  1




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##### Table of Contents



Pacific Office Properties Trust, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 Pacific Office
    
    
    
    
    
    
    Pacific OfficeProperties
    
    
    
    
    
    
    PropertiesTrust, Inc.
    
    
    Total (1)
    
    
    Trust, Inc.
    
    
    WaterfrontFor the period
    
    
    For the periodFor the three
    
    
    For the three
    
    
    from March 20,
    
    
    from January 1,months ended
    
    
    months ended
    
    
    2008 through
    
    
    2008 throughMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2008
    
    
    March 19, 2008Revenue:Rental
    
    $
    10,906
    
    
    $
    4,521
    
    
    $
    1,520
    
    
    $
    3,001Tenant reimbursements
    
    
    5,722
    
    
    
    2,188
    
    
    
    618
    
    
    
    1,570Parking
    
    
    2,057
    
    
    
    826
    
    
    
    264
    
    
    
    562Other
    
    
    85
    
    
    
    70
    
    
    
    41
    
    
    
    29Total revenue
    
    
    18,770
    
    
    
    7,605
    
    
    
    2,443
    
    
    
    5,162Operating Expenses:Rental property operating
    
    
    9,915
    
    
    
    4,897
    
    
    
    1,281
    
    
    
    3,616General and administrative
    
    
    1,149
    
    
    
    99
    
    
    
    69
    
    
    
    30Share-based compensation attributable to
the Transactions (Note 15)
    
    
    
    
    
    
    16,194
    
    
    
    16,194
    
    
    
    Depreciation and amortization
    
    
    6,527
    
    
    
    1,750
    
    
    
    923
    
    
    
    827Interest
    
    
    6,719
    
    
    
    2,454
    
    
    
    902
    
    
    
    1,552Other
    
    
    
    
    
    
    143
    
    
    
    35
    
    
    
    108Total operating expenses
    
    
    24,310
    
    
    
    25,537
    
    
    
    19,404
    
    
    
    6,133Loss before equity in net earnings (loss) of
unconsolidated joint ventures and
non-operating income
    
    
    (5,540
    )
    
    
    (17,932
    )
    
    
    (16,961
    )
    
    
    (971
    )Equity in net earnings (loss) of unconsolidated
joint ventures
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    Non-operating income
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    (5,483
    )
    
    
    (17,932
    )
    
    
    (16,961
    )
    
    
    (971
    )Less: net loss attributable to
non-controlling interests
    
    
    4,427
    
    
    
    13,248
    
    
    
    13,741
    
    
    
    (493
    )Net loss attributable to stockholders
    
    $
    (1,056
    )
    
    $
    (4,684
    )
    
    $
    (3,220
    )
    
    $
    (1,464
    )Net loss per common share  basic and diluted
    
    $
    (0.35
    )
    
    
    
    
    
    $
    (1.06
    )Weighted average number of common shares
outstanding  basic and diluted
    
    
    3,031,125
    
    
    
    
    
    
    
    3,031,125Net loss attributable to Common Unit
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (0.42
    )Weighted average number of Common Units
outstanding  basic and diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,494,624
 
 (1)
    
    Amounts reflected in the Total column represent the sum of the amounts included herein as the
consolidated results of operations of Waterfront and the Company (the Combined Entity) for the
period from January 1, 2008 through March 31, 2008.  2




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##### Table of Contents



Pacific Office Properties Trust, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands and unaudited)
 Pacific Office
    
    
    
    
    
    
    Pacific OfficeProperties
    
    
    
    
    
    
    PropertiesTrust, Inc.
    
    
    Total(1)
    
    
    Trust, Inc.
    
    
    WaterfrontFor the period
    
    
    For the period
    
    
    For the periodFor the three months
    
    
    from January 1,
    
    
    from March 20,
    
    
    from January 1,ended March 31,
    
    
    2008 through
    
    
    2008 through
    
    
    2008 through2009
    
    
    March 31, 2008
    
    
    March 31, 2008
    
    
    March 19, 2008Operating activitiesNet loss
    
    $
    (5,483
    )
    
    $
    (17,932
    )
    
    $
    (16,961
    )
    
    $
    (971
    )Adjustments to reconcile net loss to net cash provided by
operating activities:Depreciation and amortization
    
    
    6,527
    
    
    
    1,750
    
    
    
    923
    
    
    
    827Interest amortization
    
    
    385
    
    
    
    30
    
    
    
    30
    
    
    
    Share based compensation charge attributable to the Transaction
    
    
    
    
    
    
    16,194
    
    
    
    16,194
    
    
    
    Other share based compensation
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    Below market lease amortization, net
    
    
    (631
    )
    
    
    (155
    )
    
    
    (108
    )
    
    
    (47
    )Equity in net (loss) earnings of unconsolidated joint ventures
    
    
    (54
    )
    
    
    
    
    
    
    
    
    
    
    Net operating distributions received from unconsolidated
joint ventures
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    Bad debt expense
    
    
    632
    
    
    
    80
    
    
    
    
    
    
    
    80Other
    
    
    
    
    
    
    368
    
    
    
    
    
    
    
    368Changes in operating assets and liabilities:Rents and other receivables
    
    
    300
    
    
    
    351
    
    
    
    (3
    )
    
    
    354Other assets
    
    
    (741
    )
    
    
    413
    
    
    
    (131
    )
    
    
    544Accounts payable and other liabilities
    
    
    1,132
    
    
    
    (36
    )
    
    
    181
    
    
    
    (217
    )Net cash provided by operating activities
    
    
    2,167
    
    
    
    1,063
    
    
    
    125
    
    
    
    938Investing activitiesAcquisition and improvement of real estate
    
    
    (641
    )
    
    
    (564
    )
    
    
    (537
    )
    
    
    (27
    )Cash held by properties upon Effective Date
    
    
    
    
    
    
    8,005
    
    
    
    8,005
    
    
    
    Capital distribution from equity interests
    
    
    435
    
    
    
    
    
    
    
    
    
    
    
    Increase in leasing commissions
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    Deferred acquisition costs and other
    
    
    
    
    
    
    (4,059
    )
    
    
    
    
    
    
    (4,059
    )Decrease (increase) in restricted cash
    
    
    2,001
    
    
    
    (1,203
    )
    
    
    (545
    )
    
    
    (658
    )Net cash provided by (used in) investing activities
    
    
    1,737
    
    
    
    2,179
    
    
    
    6,923
    
    
    
    (4,744
    )Financing activitiesProceeds from issuance of equity securities
    
    
    
    
    
    
    6,350
    
    
    
    6,350
    
    
    
    Scheduled amortization of mortgage notes payable
    
    
    (123
    )
    
    
    (14
    )
    
    
    (14
    )
    
    
    Deferred financing costs
    
    
    (8
    )
    
    
    (752
    )
    
    
    (752
    )
    
    
    Equity offering costs
    
    
    (237
    )
    
    
    
    
    
    
    
    
    
    
    Security deposits
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    Dividends
    
    
    (152
    )
    
    
    
    
    
    
    
    
    
    
    Distributions to non-controlling interests
    
    
    (1,283
    )
    
    
    
    
    
    
    
    
    
    
    Equity contributions
    
    
    
    
    
    
    4,167
    
    
    
    
    
    
    
    4,167Equity distributions
    
    
    
    
    
    
    (1,425
    )
    
    
    
    
    
    
    (1,425
    )Net cash (used in) provided by financing activities
    
    
    (1,830
    )
    
    
    8,326
    
    
    
    5,584
    
    
    
    2,742Increase (decrease) in cash and cash equivalents
    
    
    2,074
    
    
    
    11,568
    
    
    
    12,632
    
    
    
    (1,064
    )Balance at beginning of period
    
    
    4,463
    
    
    
    2,619
    
    
    
    1,555
    
    
    
    2,619Balance at end of period
    
    $
    6,537
    
    
    $
    14,187
    
    
    $
    14,187
    
    
    $
    1,555Supplemental cash flow informationInterest paid
    
    $
    5,862
    
    
    $
    2,217
    
    
    $
    252
    
    
    $
    1,965Supplemental Disclosure of Non-Cash Investing and Financing ActivitiesAssets, net, acquired on the Effective Date
    
    $
    
    
    
    $
    484,325
    
    
    $
    484,325
    
    
    $
    Liabilities, net, assumed on the Effective Date
    
    $
    
    
    
    $
    325,985
    
    
    $
    325,985
    
    
    $
    
 
 (1)
    
    Amounts reflected in the Total column represent the sum of the amounts included herein as the
consolidated cash flows of the Combined Entity for the period from January 1, 2008 through March
31, 2008.  3




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements
 1. Organization and Ownership
 Pacific Office Properties
   PROPERTY
    
    
    EFFECTIVENUMBER OF
    
    
    PORTFOLIO
    
    
    PORTFOLIOPROPERTIES
    
    
    BUILDINGS
    
    
    SQ. FT.
    
    
    SQ. FT.Wholly-owned properties
    
    
    8
    
    
    
    11
    
    
    
    2,265,339
    
    
    
    2,265,339Unconsolidated joint venture properties
    
    
    15
    
    
    
    29
    
    
    
    2,060,855
    
    
    
    261,397Total
    
    
    23
    
    
    
    40
    
    
    
    4,326,194
    
    
    
    2,526,736
 4




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Transactions
  Business Combinations
   5




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
      Advisor
  6




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 2. Summary of Significant Accounting Policies
 Basis of Presentation
      Principles of Consolidation
  Investment in Unconsolidated Joint Ventures
 Determining Whether a General Partner, or the General Partners as a Group, Controls
a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights
 7




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 The Equity
Method of Accounting for Investments in Common Stock
 Consolidation of Variable Interest Entities
   Income Taxes
  8




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
   Earnings per Share
 Pacific Office Properties Trust, Inc.
   Waterfront
  Real Estate Properties
 Acquisitions
 Business Combinations ,
  9




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
      Goodwill and Other Intangible Assets,
 Mortgage and Other Collateralized Loans
  10




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
  Depreciation
  Revenue Recognition
     Accounting for Sales of Real Estate
  11




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Cash and Cash Equivalents
   Restricted Cash
  Impairment
 Accounting for the Impairment or Disposal of Long-Lived Asset
  12




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Other-Than-Temporary Impairment
  Repairs, Maintenance and Major Improvements
  Tenant Receivables
  Preferred Units
  Deferred Loan Fees
  Equity Offering Costs
  13




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Derivative Financial Instruments
   Use of Estimates in Financial Statements
  
    
    the initial valuation and underlying allocations of purchase price for investments in real
estate;
    
    the assessment of recoverability of long-lived assets;
    
    the valuation of investments in unconsolidated joint ventures;
    
    the valuation and recognition of equity instruments issued, including:
 
    
    non-controlling interests; and
    
    share-based compensation;
 
    
    the valuation and recognition of derivative financial instruments; and
    
    the determination of useful lives of investments in real estate and related assets.
 Stock-Based Compensation
 Stock-Based Compensation
 14




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Segments
 Disclosures about Segments of an Enterprise and Related Information
 Revolving Line of Credit
  Recent Accounting Pronouncements
 SFAS No. 157
 Fair Value Measurements,
 15




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 SFAS No. 141(R)
  SFAS No. 160
 Non-controlling Interests in Consolidated
Financial StatementsAn Amendment of ARB No. 51.
 Classification and Measurement of Redeemable
Securities Treatment of Minority Interests in
Certain Real Estate Investment Trusts Implementation Issues Related to the
Treatment of Minority Interests in Certain Real Estate Investment Trusts
 16




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 FSP EITF 03-6-1
 Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities
 EITF No. 08-6
 Equity Method Investment Accounting
Considerations
 FSP FAS 142-3
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangibles
 17




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 FSP 107-1 and APB 28-1
 Interim Disclosures about Fair Value of
Financial Instruments Disclosures about Fair Value of Financial
Instruments Interim Financial Reporting
 FSP No. FAS 141(R)  1
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arises from Contingencies Business Combinations
 3. Investments in Real Estate
  March 31, 2009
    
    
    December 31, 2008Land and land improvements
    
    $
    76,054
    
    
    $
    76,008Building and building improvements
    
    
    308,453
    
    
    
    308,125Tenant improvements
    
    
    24,370
    
    
    
    24,489Furniture, fixtures and equipment
    
    
    1,261
    
    
    
    1,210Construction in progress
    
    
    4,297
    
    
    
    4,082Investments in real estate
    
    
    414,435
    
    
    
    413,914Less: accumulated depreciation
    
    
    (24,859
    )
    
    
    (21,257
    )Investments in real estate, net
    
    $
    389,576
    
    
    $
    392,657
 Acquisitions of Consolidated Properties
 Transactions
 18




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 4. Intangible Assets and Acquired Below Market Lease Liabilities
  March 31, 2009
    
    
    December 31, 2008Acquired leasing commissionsGross amount
    
    $
    8,322
    
    
    $
    8,316Accumulated amortization
    
    
    (3,309
    )
    
    
    (2,950
    )Net balance
    
    $
    5,013
    
    
    $
    5,366Acquired leases in placeGross amount
    
    $
    17,846
    
    
    $
    18,109Accumulated amortization
    
    
    (7,786
    )
    
    
    (6,724
    )Net balance
    
    $
    10,060
    
    
    $
    11,385Acquired tenant relationship costsGross amount
    
    $
    19,581
    
    
    $
    19,588Accumulated amortization
    
    
    (2,560
    )
    
    
    (1,941
    )Net balance
    
    $
    17,021
    
    
    $
    17,647Acquired other intangiblesGross amount
    
    $
    7,844
    
    
    $
    7,879Accumulated amortization
    
    
    (1,013
    )
    
    
    (898
    )Net balance
    
    $
    6,831
    
    
    $
    6,981Intangible assets, net
    
    $
    38,925
    
    
    $
    41,379Acquired below market leasesGross amount
    
    $
    16,584
    
    
    $
    16,608Accumulated amortization
    
    
    (4,469
    )
    
    
    (3,755
    )Net balance
    
    
    12,115
    
    
    
    12,853Acquired above market leasesGross amount
    
    $
    2,397
    
    
    $
    2,449Accumulated amortization
    
    
    (1,468
    )
    
    
    (1,413
    )Net balance
    
    
    929
    
    
    
    1,036Acquired below market leases, net
    
    $
    11,186
    
    
    $
    11,817
 19




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
  April 1, 2009 throughDecember 31, 2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    TotalIntangible amortization
    
    $
    6,427
    
    
    $
    7,004
    
    
    $
    5,492
    
    
    $
    4,455
    
    
    $
    3,246
    
    
    $
    12,301
    
    
    $
    38,925Net below market lease
accretion
    
    $
    1,711
    
    
    $
    1,927
    
    
    $
    1,540
    
    
    $
    1,039
    
    
    $
    601
    
    
    $
    4,368
    
    
    $
    11,186
 5. Investment in Unconsolidated Joint Ventures
   20




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
  Revenues:Rental
    
    $
    9,309Other
    
    
    2,165Total revenues
    
    
    11,474Expenses:Rental operating expenses
    
    
    4,765Depreciation and amortization
    
    
    4,745Interest
    
    
    3,938Total expenses
    
    
    13,448Net loss
    
    $
    (1,974
    )
 As ofMarch 31, 2009Investment in real estate, net
    
    $
    332,897Other assets
    
    
    62,042Total assets
    
    $
    394,939Mortgage and other collateralized loans
    
    $
    318,177Other liabilities
    
    
    15,503Total liabilities
    
    $
    333,680
 Acquisitions of Unconsolidated Joint Ventures
   21




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
       22




---



##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
    6.  Other Assets, net
  March 31, 2009
    
    December 31, 2008Deferred loan fees, net of accumulated amortization of $1.05 million
and $0.77 million at March 31, 2009 and December 31, 2008,
respectively
    
    $
    3,175
    
    
    $
    3,447Prepaid expenses
    
    
    1,971
    
    
    
    1,232Equity offering costs
    
    
    237
    
    
    
    Other
    
    
    
    
    
    
    1Total other assets, net
    
    $
    5,383
    
    
    $
    4,680
 7.  Minimum Future Lease Rentals
  23




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 YearApril 1, 2009 through
December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    27,8272010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,0572011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,1632012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,0612013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,5722014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,470Thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,476Total future minimum
base rental revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    139,626
  8.  Accounts Payable and Other Liabilities
  March 31, 2009
    
    December 31, 2008Accounts payable
    
    $
    476
    
    
    $
    1,276Interest payable
    
    
    1,667
    
    
    
    1,353Deferred revenue
    
    
    1,786
    
    
    
    1,278Security deposits
    
    
    2,531
    
    
    
    2,558Deferred straight-line ground rent
    
    
    3,314
    
    
    
    2,811Related party payable (Note 14 )
    
    
    1,260
    
    
    
    1,060Accrued expenses
    
    
    7,355
    
    
    
    6,281Asset retirement obligations
    
    
    581
    
    
    
    471Total accounts payable and other liabilities
    
    $
    18,970
    
    
    $
    17,088
 24




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 9. Mortgage and Other Collateralized Loans
  OUTSTANDING
    
    
    UNAMORTIZED
    
    
    
    
    
    
    INTERESTPRINCIPAL
    
    
    PREMIUM
    
    
    
    
    
    
    RATE AT
    
    
    MATURITYPROPERTY
    
    BALANCE
    
    
    (DISCOUNT)
    
    
    NET
    
    
    MARCH 31, 2009
    
    
    DATE
    
    
    AMORTIZATIONClifford Center
    
    $
    3,675
    
    
    $
    
    
    
    $
    3,675
    
    
    
    6.00
    %
    
    
    8/15/2011
    (a)
    
    132 monthsDavies Pacific
Center
    
    
    95,000
    
    
    
    (1,026
    )
    
    
    93,974
    
    
    
    5.86
    %
    
    
    11/11/2016
    
    
    Interest OnlyFirst Insurance
Center
    
    
    38,000
    
    
    
    (631
    )
    
    
    37,369
    
    
    
    5.74
    %
    
    
    1/1/2016
    
    
    Interest OnlyFirst Insurance
Center
    
    
    14,000
    
    
    
    (235
    )
    
    
    13,765
    
    
    
    5.40
    %
    
    
    1/6/2016
    
    
    Interest OnlyPacific
Business
News Building
    
    
    11,760
    
    
    
    50
    
    
    
    11,810
    
    
    
    6.98
    %
    
    
    4/6/2010
    
    
    360 monthsPan Am
Building
    
    
    60,000
    
    
    
    (41
    )
    
    
    59,959
    
    
    
    6.17
    %
    
    
    8/11/2016
    
    
    Interest OnlyWaterfront Plaza
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    6.37
    %
    
    
    9/11/2016
    
    
    Interest OnlyWaterfront Plaza
    
    
    11,000
    
    
    
    
    
    
    
    11,000
    
    
    
    6.37
    %
    
    
    9/11/2016
    
    
    Interest OnlyCity Square
    
    
    27,500
    
    
    
    (187
    )
    
    
    27,313
    
    
    
    5.58
    %
    
    
    9/1/2010
    
    
    Interest OnlyCity Square (b)
    
    
    26,612
    
    
    
    
    
    
    
    26,612
    
    
    LIBOR + 2.35%
    
    
    9/1/2010
    
    
    Interest OnlySorrento
Techonology
Center
    
    
    11,800
    
    
    
    (197
    )
    
    
    11,603
    
    
    
    5.75
    %
    
    
    1/11/2016
    
    
    Interest OnlySubtotal
    
    $
    399,347
    
    
    $
    (2,267
    )
    
    $
    397,080Revolving line of
credit (c)
    
    
    3,000
    
    
    
    
    
    
    
    3,000
    
    
    Prime Rate +2.25% or LIBOR +3.50%
    
    
    8/25/2010
    
    
    Interest OnlyTotal
    
    $
    402,347
    
    
    $
    (2,267
    )
    
    $
    400,080
 
 (a)
    
    The terms of the Clifford Center note payable 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.(b)
    
    The City Square note payable with an outstanding balance of $26.61 million at March 31, 2009
has an additional $1.89 million available to be drawn. 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.(c)
    
    The revolving line of credit matures on August 25, 2010, but may be extended to February 25,
2011, subject to the satisfaction of certain conditions. At March 31, 2009, the interest rate on
the revolving line of credit was 5.50%, based on KeyBank National Associations Prime Rate plus a
spread of 2.25% per annum. The 30-day LIBOR rate at March 31, 2009 was 0.50063%.  25




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
  April 1, 2009 through December 31, 2009
    
    $
    2812010
    
    
    69,0402011
    
    
    2922012
    
    
    3102013
    
    
    3292014
    
    
    2,294Thereafter
    
    
    329,801Total
    
    $
    402,347
 Revolving Line of Credit
    10. Unsecured Notes Payable to Related Parties
  26




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
  11. Derivative Instruments
  12. Commitments and Contingencies
 Minimum Future Ground Rents
  April 1, 2009 through December 31, 2009
    
    $
    1,6782010
    
    
    2,4302011
    
    
    2,4402012
    
    
    2,4512013
    
    
    2,4632014
    
    
    2,474Thereafter
    
    
    215,804Total
    
    $
    229,740
   27




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Contingencies
  Concentration of Credit Risk
   Conditional Asset Retirement Obligations
 Accounting for Conditional Asset Retirement
Obligationsan interpretation of FASB Statement No. 143 Accounting
for Asset Retirement Obligations
 28




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Clifford Center Ground Lease
  Waterfront Plaza Ground Lease
  Restaurant Row Theatre Venture Lease Termination
  Purchase Commitments
  Tax Protection Arrangements
  29




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
  13. Description of Equity Securities and Calculation of Non-controlling Interests and Earnings per
Share
     30




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
       Non-Controlling
    
    Additional Paid-inInterests
    
    CapitalBalance at December 31, 2008, as reported
    
    $
    75,823
    
    
    $
    8,144Reversal of cumulative prior rebalancing
adjustments
    
    
    (3,945
    )
    
    
    3,945Balances at December 31, 2008, as adjusted
    
    $
    71,878
    
    
    $
    12,089
 31




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
  Pacific OfficeProperties Trust,
    
    Non-controllingInc.
    
    interests
    
    TotalBalance at December 31, 2008
    
    $
    5,230
    
    
    $
    71,878
    
    
    $
    77,108Net loss
    
    
    (1,056
    )
    
    
    (4,427
    )
    
    
    (5,483
    )Stock compensation
    
    
    40
    
    
    
    
    
    
    
    40Basis adjustment upon consummation of
Transactions
    
    
    309
    
    
    
    (309
    )
    
    
    Dividends and distributions
    
    
    (152
    )
    
    
    (1,283
    )
    
    
    (1,435
    )Balance at March 31, 2009
    
    $
    4,371
    
    
    $
    65,859
    
    
    $
    70,230
 32




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 Loss per Share/Loss per Unit
  Pacific Office Properties
    
    
    
    
    
    
    Pacific Office Properties Trust,Trust, Inc.
    
    
    Total
    
    
    Inc.
    
    
    WaterfrontFor the period from
    
    
    
    
    
    
    For the period fromFor the three months ended
    
    
    January 1, 2008 through
    
    
    For the period from March 20,
    
    
    January 1, 2008 throughMarch 31, 2009
    
    
    March 31, 2008
    
    
    2008 through March 31, 2008
    
    
    March 19, 2008Net loss
attributable to
common
share/unit holders
- basic and diluted
(1)
    
    $
    (1,056
    )
    
    $
    (4,684
    )
    
    $
    (3,220
    )
    
    $
    (1,464
    )Weighted average
number of common
shares
    
    
    3,031,125
    
    
    
    
    
    
    
    3,031,125Potentially
dilutive common
shares(2)Restricted Stock
Units (RSU)
    
    
    
    
    
    
    
    
    
    
    Weighted average
number of common
shares/units
outstanding 
basic and
diluted
    
    
    3,031,125
    
    
    
    
    
    
    
    3,031,125Net loss per share
 basic and
diluted
    
    $
    (0.35
    )
    
    
    
    
    
    $
    (1.06
    )Weighted average
number of units
outstanding 
basic and
diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,494,624Net loss per unit
 basic and
diluted(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (0.42
    )
 
 Notes:(1)
    
    For the three months ended March 31, 2009 and for the period from
March 20, 2008 through March 31, 2008, net loss attributable to common
stockholders includes $0.56 million and $0.07 million of priority
allocation to preferred unit holders, respectively, which is included
in non-controlling interests in the condensed consolidated statements
of operations. For the period from January 1, 2008 through March 19,
2008, net loss attributable to common stockholders included $0.11
million of priority allocation to preferred unit holders.(2)
    
    For the three months ended March 31, 2009 and for the periods
presented the potentially dilutive effect of 24,240 restricted stock
units were not included in the net loss per share calculation as their
effect is anti-dilutive. There were no securities outstanding at
March 31, 2009 or March 31, 2008 which would, upon conversion, result
in dilution of EPS.(3)
    
    We computed net loss per Common Unit for the periods prior to the
Transactions by increasing the historical net loss of Waterfront by
the 2% cumulative distributions payable on the Preferred Units
received by the former owners of Waterfront and dividing that total by
the weighted average number of Common Units received by the former
owners of Waterfront. We did not include the dilution impact of
Preferred Units because the units are contingently convertible and the
probability that the contingency will be satisfied is currently not
determinable. Dividends and Distributions
  33




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
     14. Related Party Transactions
   34




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
     Pacific OfficeProperties Trust,
    
    
    
    
    
    
    Pacific OfficeInc.
    
    
    Total
    
    
    Properties Trust, Inc.
    
    
    WaterfrontFor the period from
    
    
    For the period fromFor the three
    
    
    For the three
    
    
    March 20, 2008
    
    
    January 1, 2008months ended
    
    
    months ended
    
    
    through March 31,
    
    
    through March 19,March 31, 2009
    
    
    March 31, 2008
    
    
    2008
    
    
    2008Property management fees
to affiliates of Advisor
    
    $
    836
    
    
    $
    308
    
    
    $
    145
    
    
    $
    163Leasing commissions
    
    
    59
    
    
    
    124
    
    
    
    124
    
    
    
    Corporate management fees to Advisor
    
    
    187
    
    
    
    
    
    
    
    
    
    
    
    Interest
    
    
    437
    
    
    
    
    
    
    
    
    
    
    
    Construction management fees
and other
    
    
    6
    
    
    
    4
    
    
    
    1
    
    
    
    3Total
    
    $
    1,525
    
    
    $
    436
    
    
    $
    270
    
    
    $
    166
   35




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
     15. Share-Based Payments
    36




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 16. Segment Reporting
   For the three months ended March 31, 2009Honolulu
    
    
    Western U.S.
    
    
    Corporate
    
    
    TotalRevenue:Rental
    
    $
    7,596
    
    
    $
    3,306
    
    
    $
    4
    
    
    $
    10,906Tenant reimbursements
    
    
    5,435
    
    
    
    287
    
    
    
    
    
    
    
    5,722Parking
    
    
    1,807
    
    
    
    250
    
    
    
    
    
    
    
    2,057Other
    
    
    25
    
    
    
    10
    
    
    
    50
    
    
    
    85Total revenue
    
    
    14,863
    
    
    
    3,853
    
    
    
    54
    
    
    
    18,770Expenses:Rental property operating
    
    
    7,865
    
    
    
    2,050
    
    
    
    
    
    
    
    9,915General and administrative
    
    
    
    
    
    
    
    
    
    
    1,149
    
    
    
    1,149Depreciation and amortization
    
    
    4,598
    
    
    
    1,929
    
    
    
    
    
    
    
    6,527Interest
    
    
    5,230
    
    
    
    836
    
    
    
    653
    
    
    
    6,719Total expenses
    
    
    17,693
    
    
    
    4,815
    
    
    
    1,802
    
    
    
    24,310Loss before equity in net earnings of unconsolidated
joint ventures and non-operating income
    
    $
    (2,830
    )
    
    $
    (962
    )
    
    $
    (1,748
    )
    
    $
    (5,540
    )Equity in net earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Non-operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Net loss attributable to non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,427Net loss attributable to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,056
    )
 37




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 For the three months ended March 31, 2008Mainland-Honolulu
    
    
    Western U.S.
    
    
    Corporate
    
    
    TotalRevenue:Rental
    
    $
    3,965
    
    
    $
    556
    
    
    $
    
    
    
    $
    4,521Tenant reimbursements
    
    
    2,142
    
    
    
    46
    
    
    
    
    
    
    
    2,188Parking
    
    
    793
    
    
    
    33
    
    
    
    
    
    
    
    826Other
    
    
    32
    
    
    
    38
    
    
    
    
    
    
    
    70Total revenue
    
    
    6,932
    
    
    
    673
    
    
    
    
    
    
    
    7,605Expenses:Rental property operating
    
    
    4,631
    
    
    
    266
    
    
    
    
    
    
    
    4,897General and administrative
    
    
    
    
    
    
    4
    
    
    
    95
    
    
    
    99Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    16,194
    
    
    
    16,194Interest
    
    
    2,211
    
    
    
    205
    
    
    
    38
    
    
    
    2,454Depreciation and amortization
    
    
    1,431
    
    
    
    319
    
    
    
    
    
    
    
    1,750Other
    
    
    108
    
    
    
    35
    
    
    
    
    
    
    
    143Total expenses
    
    
    8,381
    
    
    
    829
    
    
    
    16,327
    
    
    
    25,537Loss before
equity in net loss of unconsolidated joint ventures and non-operating income
    
    $
    (1,449
    )
    
    $
    (156
    )
    
    $
    (16,327
    )
    
    $
    (17,932
    )Net loss attributable to non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,248Net loss attributable to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,684
    )
  Honolulu
    
    
    Western U.S.
    
    
    Corporate
    
    
    TotalAs of March 31, 2009:Total assets
    
    $
    381,833
    
    
    $
    128,880
    
    
    $
    13,529
    
    
    $
    524,242Goodwill
    
    $
    40,469
    
    
    $
    21,550
    
    
    $
    
    
    
    $
    62,019Capital expenditures
    
    $
    479
    
    
    $
    162
    
    
    $
    
    
    
    $
    641As of December 31,
2008:Total assets
    
    $
    383,966
    
    
    $
    130,062
    
    
    $
    15,869
    
    
    $
    529,897Goodwill
    
    $
    40,144
    
    
    $
    21,375
    
    
    $
    
    
    
    $
    61,519Capital expenditures
    
    $
    7,000
    
    
    $
    1,514
    
    
    $
    
    
    
    $
    8,514
 38




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Notes to Condensed Consolidated Financial Statements  (Continued)
 17. Registration Statement
  39




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Note Regarding Forward-Looking Statements
     40




---



##### Table of Contents



Pacific Office Properties Trust, Inc.
 Overview
   www.pacificofficeproperties.com
 41




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##### Table of Contents



Pacific Office Properties Trust, Inc.
  Consolidated Properties
 RENTABLEPROPERTY
    
    MARKET
    
    BUILDINGS
    
    SQ. FT.Waterfront Plaza
    
    Honolulu
    
    
    1
    
    
    
    534,475500 Ala Moana BoulevardDavies Pacific Center
    
    Honolulu
    
    
    1
    
    
    
    353,224841 Bishop StreetPan Am Building
    
    Honolulu
    
    
    1
    
    
    
    209,8891600 Kapiolani BoulevardFirst Insurance Center
    
    Honolulu
    
    
    1
    
    
    
    202,9921100 Ward AvenuePacific Business News Building
    
    Honolulu
    
    
    1
    
    
    
    90,5591833 Kalakaua AvenueClifford Center
    
    Honolulu
    
    
    1
    
    
    
    72,415810 Richards StreetCity Square
    
    Phoenix
    
    
    3
    
    
    
    738,4223800 North Central Avenue3838 North Central Avenue4000 North Central AvenueSorrento Technology Center
    
    San Diego
    
    
    2
    
    
    
    63,36310140 Barnes Canyon Road10180 Barnes Canyon RoadTotal  Consolidated Properties
    
    
    
    
    11
    
    
    
    2,265,339
 42




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##### Table of Contents



Pacific Office Properties Trust, Inc.
  Joint Venture Properties
 RENTABLE
    
    PERCENTAGEPROPERTY
    
    MARKET
    
    BUILDINGS
    
    SQ. FT.
    
    OWNERSHIPSeville Plaza
    
    San Diego
    
    
    3
    
    
    
    138,576
    
    
    
    7.50
    %5469 Kearny Villa Road
5471 Kearny Villa Road
5473 Kearny Villa RoadTorrey Hills Corporate Center
    
    San Diego
    
    
    1
    
    
    
    24,066
    
    
    
    32.17
    %11250 El Camino RealPalomar Heights Plaza
    
    San Diego
    
    
    3
    
    
    
    45,538
    
    
    
    32.17
    %5860 Owens Avenue (Building A)
5876 Owens Avenue (Building B)
5868 Owens Avenue (Building C)Palomar Heights Corporate Center
    
    San Diego
    
    
    1
    
    
    
    64,812
    
    
    
    32.17
    %5857 Owens Avenue (Corporate Center)Scripps Ranch Business Park
    
    San Diego
    
    
    2
    
    
    
    47,248
    
    
    
    32.17
    %9775 Business Park Avenue
10021 Willow Creek RoadBlack Canyon Corporate Center
    
    Phoenix
    
    
    1
    
    
    
    218,694
    
    
    
    17.50
    %16404 N. Black Canyon HighwayU.S. Bank Center
    
    Phoenix
    
    
    2
    
    
    
    372,676
    
    
    
    7.50
    %101 N. First Avenue
21 West Van Buren StreetBank of Hawaii Waikiki Center
    
    Honolulu
    
    
    1
    
    
    
    152,288
    
    
    
    17.50
    %2155 Kalakaua AvenueSouth Coast Executive Center
    
    Orange County
    
    
    1
    
    
    
    61,025
    
    
    
    10.00
    %1503 South Coast DriveVia Frontera Business Park
    
    San Diego
    
    
    2
    
    
    
    78,819
    
    
    
    10.00
    %10965 Via Frontera Drive
10993 Via Frontera DrivePoway Flex
    
    San Diego
    
    
    1
    
    
    
    112,000
    
    
    
    10.00
    %13550 Stowe Drive (Poway)Carlsbad Corporate Center
    
    San Diego
    
    
    1
    
    
    
    121,528
    
    
    
    10.00
    %1950 Camino Vida RobleSavi Tech Center
    
    Orange County
    
    
    4
    
    
    
    372,327
    
    
    
    10.00
    %Savi Tech -22705 Savi Ranch Parkway
Savi Tech -22715 Savi Ranch Parkway
Savi Tech -22725 Savi Ranch Parkway
Savi Tech -22745 Savi Ranch ParkwayYorba Linda Business Park
    
    Orange County
    
    
    5
    
    
    
    166,042
    
    
    
    10.00
    %22343 La Palma Avenue
22345 La Palma Avenue
22347 La Palma Avenue
22349 La Palma Avenue
22833 La Palma AvenueGateway Corporate Center
    
    San Gabriel
    
    
    1
    
    
    
    85,216
    
    
    
    10.00
    %1370 Valley Vista DriveTotal  Joint Venture Properties
    
    
    
    
    
    
    29
    
    
    
    2,060,855PORTFOLIO TOTALS:
    
    
    
    
    
    
    40
    
    
    
    4,326,194
 43




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##### Table of Contents



Pacific Office Properties Trust, Inc.
  The Transactions Included in the Master Agreement
    Market Information
  44




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Honolulu Segment
 Honolulu Office Market
  Western United States Segment
 Phoenix Office Market
  San Diego Office Market
  Critical Accounting Policies
  45




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##### Table of Contents



Pacific Office Properties Trust, Inc.
  Investment in Real Estate. Business Combinations Exchanges of Ownership Interests between Entities under Common Control
 Determination of the Measurement Date for the Market Price
of Acquirer Securities Issued in a Purchase Business Combination
   46




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Impairment of Long-Lived Assets. Accounting for the Impairment
or Disposal of Long-Lived Assets
 Goodwill. Goodwill and Other Intangible Assets
 Revenue Recognition.
     Monitoring of Rents and Other Receivables.
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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Investments in Joint Ventures Consolidation of Variable Interest Entities Investors Accounting for an
Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or
Shareholders Have Certain Approval or Veto Rights, Accounting for
Investments in Real Estate Ventures Determining Whether a General Partner, or the
General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited
Partners Have Certain Rights.
 Income Taxes
  Results of Operations
  48




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Overview
     Comparison of three months ended March 31, 2009 to the three months ended March 31, 2008
 Revenues
 Rental Revenue
 Tenant Reimbursements.
 Parking Revenue.
 49




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Expenses
 Rental Property Operating Expenses.
 General and Administrative
 Depreciation and Amortization Expense.
 Interest Expense.
 Liquidity and Capital Resources
 Cash Balances, Available Borrowings and Capital Resources
   50




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Pacific Office Properties Trust, Inc.
     Cash Flows
    51




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Pacific Office Properties Trust, Inc.
  52




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Pacific Office Properties Trust, Inc.
 Indebtedness
 Mortgage and Collateralized Loans
  BALANCEDUE ATINTEREST
    
    
    MATURITY
    
    
    MATURITY
    
    
    PREPAYMENT/PROPERTY
    
    AMOUNT
    
    
    RATE
    
    
    DATE
    
    
    DATE
    
    
    DEFEASANCEClifford Center (1)
    
    
    3,675
    
    
    
    6.00
    %
    
    
    8/15/2011
    
    
    
    3,032
    
    
    
    (2)Davies Pacific Center
    
    
    95,000
    
    
    
    5.86
    %
    
    
    11/11/2016
    
    
    
    95,000
    
    
    
    (3)First Insurance Center
    
    
    38,000
    
    
    
    5.74
    %
    
    
    1/1/2016
    
    
    
    38,000
    
    
    
    (4)First Insurance Center
    
    
    14,000
    
    
    
    5.40
    %
    
    
    1/6/2016
    
    
    
    14,000
    
    
    
    (5)Pacific Business News
Building(6)
    
    
    11,760
    
    
    
    6.98
    %
    
    
    4/6/2010
    
    
    
    11,613
    
    
    
    (7)Pan Am Building
    
    
    60,000
    
    
    
    6.17
    %
    
    
    8/11/2016
    
    
    
    60,000
    
    
    
    (8)Waterfront Plaza
    
    
    100,000
    
    
    
    6.37
    %
    
    
    9/11/2016
    
    
    
    100,000
    
    
    
    (9)Waterfront Plaza
    
    
    11,000
    
    
    
    6.37
    %
    
    
    9/11/2016
    
    
    
    11,000
    
    
    
    (10)City Square
    
    
    27,500
    
    
    
    5.58
    %
    
    
    9/1/2010
    
    
    
    27,500
    
    
    
    (11)City Square (12)
    
    
    26,612
    
    
    LIBOR + 2.35%
    
    
    9/1/2010
    
    
    
    26,612
    
    
    
    (13)Sorrento
Technology Center (14)
    
    
    11,800
    
    
    
    5.75
    %(15)
    
    
    1/11/2016
    (15)
    
    
    11,800
    
    
    
    (16)Subtotal
    
    $
    399,347Revolving
line of credit (17)
    
    
    
    
    
    Prime Rate +2.25
    %3,000
    
    
    or LIBOR +3.50
    %
    
    
    8/25/2010
    
    
    
    3,000Outstanding principal balance
    
    $
    402,347Less: Unamortized discount, net
    
    
    (2,267
    )Net
    
    $
    400,080
 
 (1)
    
    Requires monthly principal and interest payments of $39.8. 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.(2)
    
    Loan is prepayable, subject to prepayment premium equal to greater of 2% of amount prepaid or
yield maintenance.(3)
    
    Loan is prepayable, after second anniversary of its securitization, subject to prepayment
premium equal to greater of (a) 1% of amount prepaid or (b) yield maintenance. No premium due
after August 11, 2016.(4)
    
    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 after earlier of December 2008 or two years after the start-up
date of the loan, if securitized.(5)
    
    Loan is not prepayable until October 6, 2015; however, loan may be defeased after earlier of
August 2009 and two years after the start-up date of the loan, if securitized. No premium
is due upon prepayment.(6)
    
    Requires monthly principal and interest payments of $81.(7)
    
    Loan may not be prepaid until February 6, 2010. No premium is due upon prepayment. Loan may
be defeased after the earlier of September 2008 or two years after the start-up date of the
loan, if securitized.(8)
    
    Loan may be prepaid following second anniversary of its securitization 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.(9)
    
    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 after the date that is two
years from the start-up date of the loan, if securitized.(10)
    
    Loan may be prepaid subject to payment of a yield maintenance-based prepayment premium; no
premium is due after June 11, 2016.(11)
    
    Loan may not be prepaid until June 1, 2010. Loan may be defeased at any time.(12)
    
    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.(13)
    
    Loan may be prepaid subject to payment of a fee in amount of $142.(14)
    
    From and after January 11, 2010, requires monthly principal and interest payments in the
amount of $69.(15)
    
    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%.(16)
    
    No prepayment is permitted prior to October 11, 2016. Loan may be defeased after the earlier
of December 15, 2009 or second anniversary of the start-up date of the loan, if securitized.(17)
    
    The revolving line of credit matures on August 15, 2010, but may be extended to February 25,
2011, subject to the satisfaction of certain conditions, including the compliance of debt
covenants and payment of a fee. At December 31, 2008, the interest rate on the revolving line
of credit was 5.50% per annum, based on KeyBank National Associations Prime Rate plus a
spread of 2.25% per annum. The 30-day LIBOR rate at March 31, 2009 was 0.50063%. 53




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Pacific Office Properties Trust, Inc.
      54




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Pacific Office Properties Trust, Inc.
 Revolving Line of Credit
    Subordinated Promissory Notes
   Derivative Instruments
  55




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Pacific Office Properties Trust, Inc.
 Distributions
       Related Party Transactions
  56




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 New Accounting Pronouncements
 SFAS No. 157
 Fair Value Measurements,
 SFAS No. 141(R)
 Business Combinations Business Combinations
 SFAS No. 160
 Non-controlling Interests in Consolidated
Financial StatementsAn Amendment of ARB No. 51.
 Classification and Measurement of Redeemable
Securities
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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Treatment of
Minority Interests in Certain Real Estate Investment Trusts Implementation
Issues Related to the Treatment of Minority Interests in Certain Real Estate Investment Trusts
 FSP EITF 03-6-1
 Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities
 EITF No. 08-6
 Equity Method Investment Accounting
Considerations
 FSP FAS 142-3
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangibles
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##### Table of Contents



Pacific Office Properties Trust, Inc.
  FSP 107-1 and APB 28-1
 Interim Disclosures about Fair Value of
Financial Instruments Disclosures about Fair Value of Financial
Instruments Interim Financial Reporting
 FSP
No. FAS 141(R)  1
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arises from Contingencies
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4T. Controls and Procedures.
 Evaluation of disclosure controls and procedures.
  Changes in Internal Control Over Financial Reporting
  59




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##### Table of Contents



Pacific Office Properties Trust, Inc.
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
 If we fail to remain qualified as a REIT, we will be subject to taxation as a regular corporation
and could face substantial tax liability.
   
    
    we would not be required to make distributions to our shareholders;
    
    we would not be allowed to deduct distributions to our shareholders in computing our
taxable income;
    
    we would be subject to federal income tax, including any applicable alternative
minimum tax, at regular corporate rates; and
    
    any resulting tax liability could be substantial and could require us to borrow
money or sell assets to pay such liability, and would reduce the amount of cash
available for distribution to shareholders. Unless we were entitled to relief under applicable statutory provisions, we would be
disqualified from treatment as a REIT for the subsequent four taxable years following the
year during which we lost our qualification, and thus, our cash available for
distribution to shareholders would be reduced for each of the years during which we did
not qualify as a REIT.
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##### Table of Contents



Pacific Office Properties Trust, Inc.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
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##### Table of Contents



Pacific Office Properties Trust, Inc.
 Exhibit No.
    
    Description3.1
    
    Amended and Restated Articles of Incorporation of the
Company (previously filed as Exhibit 3.1 to the
Companys Current Report on Form 8-K filed March 25,
2008 (File No. 000-53143) (the March 25, 2008 Form
8-K) and incorporated herein by reference).3.2
    
    Amended and Restated Bylaws (previously filed as
Exhibit 3.2 to the March 25, 2008 Form 8-K and
incorporated herein by reference).3.3
    
    Articles Supplementary of Board of Directors
Classifying and Designating a Series of Preferred Stock
as Proportionate Voting Preferred Stock (Articles
Supplementary)(previously filed as Exhibit 3.3 to the
March 25, 2008 Form 8-K and incorporated herein by
reference).3.4
    
    Articles of Amendment to Articles Supplementary
(previously filed as Exhibit 3.1 to the Companys
Current Report on Form 8-K filed March 10, 2009 (File
No. 001-09900) and incorporated herein by reference).10.1
    
    Amended and Restated Advisory Agreement dated as of
March 3, 2009, by and among the Company, Pacific Office
Properties, L.P., and Pacific Office Management, Inc.
(previously filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K filed March 9, 2009 (File
No. 001-09900) and incorporated herein by reference).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.)
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Pacific Office Properties Trust, Inc.
 
 SIGNATURES
  PACIFIC OFFICE PROPERTIES TRUST, INC.Date:  May 15, 2009
    /s/ Dallas E. LucasDallas E. LucasChief Executive Officer/s/ James M. KasimJames M. KasimChief Financial Officer 63