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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on October 6, 2010

Registration No. 333-        

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549



FORM S-11
FOR REGISTRATION UNDER
THE SECURITIES ACT OF 1933 OF SECURITIES
OF CERTAIN REAL ESTATE COMPANIES



Eola Property Trust

(Exact Name of Registrant as Specified in Governing Instruments)

390 N. Orange Avenue, Suite 2400
Orlando, FL 32801
(407) 650-0593
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)



James R. Heistand
Executive Chairman
390 N. Orange Avenue, Suite 2400
Orlando, FL 32801
(407) 650-0593
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



Copies to:

J. Warren Gorrell, Jr., Esq.
David W. Bonser, Esq.
Eve N. Howard, Esq.

Hogan Lovells US LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Phone: (202) 637-5600
Facsimile: (202) 637-5910

 

Edward F. Petrosky, Esq.
J. Gerard Cummins, Esq.

Sidley Austin LLP
787 Seventh Avenue
New York, NY 10019
Phone: (212) 839-5300
Facsimile: (212) 839-5599

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

          If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(do not check if a smaller
reporting company)
  Smaller reporting company o

CALCULATION OF REGISTRATION FEE

       
 
Title of Securities
to be Registered

  Proposed Maximum
Aggregate Offering
Price(1)

  Amount of
Registration Fee

 

Common shares of beneficial interest, $0.01 par value per share

  $675,000,000   $48,128

 

(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

          The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.


Table of Contents

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale of the securities is not permitted.

Subject to Completion
Preliminary Prospectus, dated October 6, 2010

PROSPECTUS

            Shares

Eola Property Trust

Common Shares



        We are a fully integrated, self-administered and self-managed real estate investment trust, or REIT, specializing in the acquisition, ownership, management, redevelopment and disposition of high quality office buildings located in the Southeastern and mid-Atlantic United States. Upon completion of this offering and our formation transactions, we will own interests in a portfolio of 57 properties, totaling approximately 12.0 million rentable square feet.

        This is our initial public offering and no public market currently exists for our common shares of beneficial interest, or common shares. We are offering            common shares pursuant to this prospectus and expect the public offering price to be between $      and $      per share. All of the common shares offered by this prospectus are being sold by us. We intend to apply to have our common shares listed on the New York Stock Exchange, or the NYSE, under the symbol "EOLA."

        We intend to elect and to qualify to be taxed as a REIT for U.S. federal income tax purposes, commencing with the portion of our taxable year ending December 31, 2010. To assist us in qualifying as a REIT, shareholders generally are restricted from owning more than 9.8% of our outstanding common shares or our preferred shares of beneficial interest, in each case by value or number of shares, whichever is more restrictive. See "Description of Shares—Restrictions on Ownership and Transfer."

        Investing in our common shares involves risks. See "Risk Factors" beginning on page 19 of this prospectus for a discussion of the risks that you should consider before making a decision to invest in our common shares.



 
  Per Share   Total

Public offering price

  $   $

Underwriting discount

  $   $

Proceeds, before expenses, to us

  $   $

        We have granted the underwriters an option to purchase up to            additional common shares from us at the public offering price, less the underwriting discount, within 30 days after the date of this prospectus solely to cover overallotments, if any.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        The common shares sold in this offering will be ready for delivery on or about                , 2010.



BofA Merrill Lynch   Barclays Capital   Wells Fargo Securities



The date of this prospectus is                , 2010.


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TABLE OF CONTENTS

Summary

  1

Risk Factors

  19

Forward-Looking Statements

  48

Use of Proceeds

  50

Distribution Policy

  53

Capitalization

  56

Dilution

  57

Selected Financial Data

  58

Management's Discussion and Analysis of Financial Condition and Results of Operations

  62

Economic and Market Overview

  81

Business and Properties

  108

Management

  145

Certain Relationships and Related Transactions

  160

Investment Policies and Policies with Respect to Certain Activities

  162

Structure and Formation of Our Company

  168

Principal Shareholders

  174

Description of Shares

  176

Shares Eligible for Future Sale

  181

Certain Provisions of Maryland Law and Our Declaration of Trust and Bylaws

  183

Description of the Partnership Agreement of Eola Property Trust,  L.P. 

  189

Material United States Federal Income Tax Considerations

  195

ERISA Considerations

  223

Underwriting (Conflicts of Interest)

  225

Legal Matters

  231

Experts

  231

Change in Independent Registered Accounting Firm

  232

Where You Can Find More Information

  233

Index to Financial Statements

  F-1

        You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by us or information to which we have referred you. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and any free writing prospectus prepared by us is accurate only as of their respective dates or on the date or dates which are specified in these documents. Our business, financial condition, liquidity, results of operations, funds from operations, or FFO, and prospects may have changed since those dates.



        We use market data and industry forecasts and projections throughout this prospectus, including the sections entitled "Summary," "Economic and Market Overview" and "Business and Properties." We have obtained substantially all of this information from a market study prepared for us in connection with this offering by Rosen Consulting Group, or RCG, a nationally recognized real estate consulting firm. We have paid RCG a fee for such services. Such information is included in this prospectus in reliance on RCG's authority as an expert on such matters. See "Experts." Any forecasts or projections prepared by RCG are based on data (including third party data), models and experience of various professionals, and are based on various assumptions, all of which are subject to change without notice. In addition, we have obtained certain market and industry data from publicly available

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industry publications. These sources generally state that the information they provide has been obtained from sources believed to be reliable, but that the accuracy and completeness of the information are not guaranteed. The forecasts and projections are based on industry surveys and the preparers' experience in the industry, and there is no assurance that any of the forecasts or projections will be achieved. We believe that the surveys and market research others have performed are reliable, but we have not independently verified this information.



        Unless the context indicates otherwise: (1) the terms "our initial portfolio" and "our properties" as used in this prospectus and the statistical information presented in this prospectus regarding our initial portfolio and our properties include our wholly owned properties and our pro rata share of properties owned through our consolidated and unconsolidated joint ventures; (2) the terms "our consolidated portfolio" and "our consolidated properties" as used in this prospectus and the statistical information presented in this prospectus regarding our consolidated portfolio and our consolidated properties include our wholly owned properties and our properties owned through our consolidated joint ventures; and (3) the terms "our unconsolidated portfolio" and "our unconsolidated properties" as used in this prospectus and the statistical information presented in this prospectus regarding our unconsolidated portfolio and our unconsolidated properties include only our pro rata share of properties owned through our unconsolidated joint ventures. Please refer to "—Our Properties—Our Initial Portfolio" and "—Joint Ventures" under the heading "Business and Properties" for additional information.



        Our "annualized rent" is calculated by multiplying (i) rental payments (defined as base rent plus operating expenses, if payable by the tenant on a monthly basis, before rental abatements and including rental payments related to leases that had been executed but not commenced as of June 30, 2010 in lieu of rental payments under any existing leases for the same space) for the month ended June 30, 2010, by (ii) 12. In instances in which base rents and operating expenses are collected on an annual, semi-annual or quarterly basis, such amounts have been multiplied by a factor of 1, 2 or 4, respectively, to calculate the annualized figure. For triple net or modified gross leases, annualized rent has been converted to a full service gross basis by one of the following methods: (1) when we have access to the operating expenses of the tenant, expenses have been estimated by adding billed expense reimbursements to base rent; or (2) when we do not have access to the operating expenses of the tenant, expenses have been estimated by either (a) applying current Building Owners and Managers Association, or BOMA, estimated expense standards in markets where BOMA standards have been published or (b) using the expenses of tenants at comparable properties in the market.

        Certain of the leases in our initial portfolio are triple net leases and modified gross leases in which the tenant pays directly all or a portion of real estate taxes, insurance and other property-related expenses. As a result, such amounts are not included in rental payments and reimbursements as they are in the case of our gross leases. Throughout this prospectus, when we present "annualized rent," we have made adjustments to the rental payments received under our triple net leases and modified gross leases so that they are presented on an equivalent basis to our gross leases. We believe this is a more appropriate presentation as it allows comparability of rent per leased square foot and similar metrics among leases in our initial portfolio and comparability to market rental rates, which are typically quoted on a gross basis. However, it should be noted that, as a result of these adjustments, "annualized rent" does not represent the amount of rent and reimbursements actually received from our tenants.

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SUMMARY

        This summary highlights certain of the information included in this prospectus. It does not contain all of the information that you should consider before making a decision to invest in our common shares. You should read carefully the more detailed information set forth under "Risk Factors" and the other information included in this prospectus. Except where the context suggests otherwise, the terms "our company," "we," "us" and "our" refer to (1) Eola Property Trust, a Maryland real estate investment trust, together with its consolidated subsidiaries after giving effect to the formation transactions described in this prospectus, including Eola Property Trust, L.P., a Delaware limited partnership, which we refer to in this prospectus as our operating partnership, and (2) the businesses conducted prior to this offering by James R. Heistand, our Executive Chairman, through Eola Capital LLC, or Eola Capital, and Rudy Prio Touzet, our President and Chief Executive Officer, during his tenure at America's Capital Partners, LLC, or AmCP, as applicable. Our promoter is James R. Heistand, our Executive Chairman. Unless otherwise indicated, the information in this prospectus assumes (1) the consummation of our formation transactions, (2) the effectiveness of our Articles of Amendment and Restatement of Declaration of Trust, or our declaration of trust, and our Amended and Restated Bylaws, or our bylaws, (3) no exercise by the underwriters of their option to purchase up to an additional            common shares solely to cover overallotments, if any, (4) the common shares to be sold in this offering are sold at $            per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and (5) the initial value of the units of limited partnership interest in our operating partnership, or OP units, is equal to the public offering price of our common shares.


Our Company

        We are a fully integrated, self-administered and self-managed REIT specializing in the acquisition, ownership, management, redevelopment and disposition of high quality office buildings located in the Southeastern and mid-Atlantic United States. Upon completion of this offering and our formation transactions, we will own interests in a portfolio of 57 properties totaling approximately 12.0 million rentable square feet. These properties are comprised of 32 consolidated properties and 25 properties held through unconsolidated joint ventures, all of which we will manage. Our ownership interest in our unconsolidated properties ranges from 8.7% to 30.0%. Our pro rata ownership share of our initial portfolio equates to approximately 8.3 million rentable square feet.

        Our initial portfolio as of June 30, 2010 was approximately 82.7% leased and had a remaining weighted-average lease term of approximately five years, assuming no exercise of early termination rights. As of June 30, 2010, our initial portfolio generated approximately $158.3 million of annualized rent and approximately $23.07 of annualized rent per leased square foot. Our top six markets by both rentable square footage and annualized rent are Atlanta, Orlando, Philadelphia, Jacksonville, Washington, D.C. and Tampa. As of June 30, 2010, these markets accounted for approximately 96.5% of the rentable square footage and approximately 96.7% of the annualized rent of our initial portfolio.

        We intend to focus primarily on owning and acquiring properties in markets that generally have been characterized by strong and stable employment bases, above-average job growth prospects and strong long-term growth potential as a result of their growing populations, net migration inflows and access to a talented and educated workforce. We believe that our top six markets provide attractive long-term return opportunities and that our integrated platform, market knowledge and industry and investor relationships give us a competitive advantage relative to our peers in each of our markets. Our in-house property management, asset management and leasing capabilities allow us to meet the needs of our existing tenants and identify value-enhancement opportunities, such as acquiring under-leased assets at attractive purchase prices and leasing them up over time. Through our focused strategy and extensive experience in our markets, we have developed an expansive network of market participants, including sales and leasing brokers, lenders, operators, tenants and institutional buyers and sellers of

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real estate. We believe these relationships, along with our reputation for reliably closing on our commitments, have allowed us to source and close off-market and limited-market opportunities.

        Our objective is to expand our holdings in our current markets by identifying properties where we can capitalize on our competitive strengths to generate an attractive return on our investment. In addition, we will seek to expand our presence in other Southeastern and mid-Atlantic markets by acquiring well-located assets in strong markets and hiring regional professionals with local market expertise. We also may enter new markets in the Eastern United States as we identify attractive investment opportunities. We will evaluate our portfolio on a regular basis and dispose of assets when returns appear to have been maximized and will look to recycle capital as appropriate.

        We believe that our senior management team's extensive experience in acquiring, owning, financing, structuring, managing, redeveloping and monetizing office properties in our markets provides us with a significant competitive advantage. In addition, we believe our execution of repeat transactions with multiple sophisticated institutional investors over an extended period is a testament to our historical performance and long-term stewardship of investor interests.

        We intend to elect and to qualify to be taxed as a REIT for U.S. federal income tax purposes, commencing with the portion of our taxable year ending December 31, 2010. We will conduct substantially all of our business through our operating partnership, of which we will serve as the sole general partner and own approximately    % upon completion of this offering and our formation transactions.


Competitive Strengths

        We believe we distinguish ourselves from other owners and operators of office properties through the following competitive strengths:

    High Quality Office Portfolio Located in Growth-Oriented Markets.  Our properties are located in select growth-oriented markets in the Southeastern and mid-Atlantic United States. We have high quality office properties that we believe have strong growth characteristics and are located in both central business districts, or CBDs, and suburban markets that generally are characterized by positive demographic trends and real estate fundamentals. As the economy recovers, we believe we are well positioned to take advantage of these positive longer-term demographic trends and real estate fundamentals.

    Robust Asset Management, Property Management and Leasing Platform.  We are a fully integrated real estate company with in-house asset management, property management and leasing capabilities. Utilizing this platform, we entered into more than 250 leases in 2009, representing approximately 1.4 million square feet, despite adverse market and economic conditions. We believe our tenant-focused approach, coupled with our disciplined expense control program, drives internal growth and maximizes operating results within our portfolio.

    Experienced and Committed Senior Management Team with a Proven Track Record.  We believe our in-depth market knowledge and extensive experience acquiring, owning, financing, structuring, managing, redeveloping and monetizing office properties in our markets provide us with a significant competitive advantage. Our senior management team is led by James R. Heistand, our Executive Chairman, and Rudy Prio Touzet, our President and Chief Executive Officer, and has an average of more than 19 years of experience in the real estate industry. Since 2000, Messrs. Heistand and Touzet collectively have overseen the acquisition of more than 24 million square feet of office space with a cost of approximately $3.0 billion, and the disposition of approximately 12 million square feet for gross proceeds of approximately $1.6 billion.

    Long-Standing Institutional Investor and Industry Relationships.  We believe our execution of repeat transactions with multiple institutional investors over an extended period is a testament to our

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      historical performance and long-term stewardship of investor interests. Some of our long-standing institutional investor relationships include affiliates of General Electric Capital Corporation, affiliates of Lehman Brothers Holdings, Inc., the Utah State Retirement Investment Fund and Dreilaender Fond. We also have long-standing relationships in the real estate and financial industries with real estate developers, brokers, advisors, general contractors, architects and consultants, as well as with investment banks, brokerage firms and commercial banks. We believe our long-standing institutional investor and industry relationships will allow us to identify and consummate attractive investment opportunities and financings and provide us with access to valuable market knowledge.

    Growth-Oriented and Conservative Capital Structure.  Upon completion of this offering and our formation transactions, we expect to have a ratio of our pro rata share of debt to total market capitalization of approximately    %. As of June 30, 2010 and taking into account the anticipated use of proceeds from this offering, we have no scheduled debt maturities prior to 2015 in our consolidated portfolio. We believe our conservative capital structure and strong liquidity position will provide us with financial and operational flexibility and allow us to pursue attractive acquisition opportunities as they arise.

    Diverse and Stable Tenant Base.  We have a diverse tenant base in our initial portfolio, with more than 800 tenants that operate in a variety of professional, financial, governmental and other businesses. We believe that our base of smaller-sized tenants provides us with valuable diversification and greater leverage in tenant negotiations. Other than the U.S. Government and CIGNA Corp., no tenant accounted for more than 3.2% of the annualized rent of our initial portfolio as of June 30, 2010.


Business and Growth Strategies

        Our primary objective is to create value for our shareholders by increasing cash flow from operations, achieving sustainable growth in FFO and realizing long-term capital appreciation. We intend to achieve these objectives by executing on the following business and growth strategies:

    Maximize Cash Flow by Continuing to Enhance the Operating Performance of Each Property.  We will provide property and asset management and leasing services to our portfolio, actively managing our properties and leveraging our tenant relationships to improve operating performance, maximize cash flow and enhance shareholder value. We believe that our initial portfolio has strong long-term growth prospects as a result of both the forecasted market recovery and our ability to increase operating income through intensive asset management.

    Pursue Acquisitions on Attractive Terms.  Our acquisition strategy is to pursue attractive returns by focusing primarily on office buildings and portfolios that are well located and competitively positioned within CBD and suburban markets throughout the Southeastern and mid-Atlantic United States. Given the recent economic downturn, we currently are focused on newer, high quality assets in our markets that may be challenged due to an overleveraged capital structure and/or decreased occupancy or other operational stress.

    Leverage Our Institutional Investor and Industry Relationships to Identify, Finance and Consummate Acquisition Opportunities.  We believe that our relationships with leading institutional investors and real estate and financial industry professionals will provide us with critical market intelligence, an ongoing acquisition pipeline, potential joint venture partners and financing alternatives. Our senior management team has significant relationships with institutional equity sources and, by leveraging these relationships, we believe that we will be able to execute on investment opportunities that would otherwise be unavailable or impractical for us.

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    Recycle Capital through Select Asset Sales.  We intend to pursue an efficient capital allocation strategy that maximizes the return on our invested capital. This may include selectively disposing of properties where we believe returns have been maximized and redeploying capital into acquisitions or other opportunities. We have consistently grown our portfolio through acquisitions, while at the same time strategically disposing of properties when we believe we have maximized the economic return from a particular investment.


Economic and Market Overview

        Except for the data presented for the properties in our portfolio and unless otherwise indicated, all information in this Economic and Market Overview section is derived from the market studies prepared by RCG.

        The U.S. economic recovery that officially began in the second half of 2009 continues to spread throughout the economy as underlying economic data, capital markets activity and asset pricing have rebounded from their lows. While the near-term conditions are anticipated to be characterized by a moderate but uneven recovery, RCG forecasts a more robust recovery beginning in 2011 with continued improvement in the business and financial sectors. RCG is forecasting slow growth in gross domestic product, or GDP, with an annual increase of 2.2% for 2010. However, in 2011 and 2012, RCG expects GDP to grow by 2.4% to 3.0% annually, driving the continued recovery from the recession while also creating jobs.

        The office-using employment sectors continued to recover in the first half of 2010, as nearly 139,000 jobs were added by the public and private sectors. The job creation is a positive sign that office leasing conditions may be beginning to recover. Going forward, RCG expects office-employment job growth to increase from 0.5% in 2010 to 1.7% by 2014.

        Through the second quarter of 2010, the national office market appeared to be nearing a bottom and, according to RCG, is expected to improve in the near-term as companies begin to expand as the general economy improves. The total office vacancy rate stood at 17.8% in the second quarter of 2010, down 10 basis points from the first quarter of 2010, leading RCG to believe that prospects for demand growth have resumed. Going forward, RCG expects the overall vacancy rate for the national office market to decline gradually through 2014, decreasing to 15.2%. RCG expects that asking rents will increase by 0.5% in 2010 and will increase an average of 2.8% per year between 2011 and 2014.

        RCG projects that the demographics in our top six markets—Atlanta, Orlando, Philadelphia, Jacksonville, Washington, D.C. and Tampa, which represent approximately 96.7% of the annualized rent of our initial portfolio as of June 30, 2010—will outperform the national market over the next four years in several respects. Certain demographic and market information for our top six markets is set forth below.

    Population Growth.  Population growth in our top six markets was nearly 150% of the national average from 2005 to 2009. From 2011 to 2014, population growth in our top six markets is expected to be 1.3% annually versus the national average of 1.0%. Furthermore, annual population growth in Atlanta and Orlando is expected to increase 2.2% and 1.8%, respectively, far outpacing the national average.

    Job Growth.  Consistent with outperformance in population growth, job growth in our top six markets on average exceeded the national average during the period from 2005 to 2009. From 2011 to 2014, job growth in our top six markets is expected to be 1.3% annually versus the national average of 1.1%, with greater outperformance expected in Washington, D.C. and Orlando.

    Unemployment Rate.  As of the second quarter of 2010, our top six markets had a weighted-average unemployment rate of 9.7%, compared to the national average of 9.5%. While

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      Washington, D.C. and Philadelphia consistently have outperformed the national average, we believe the outperformance in our top six markets will be driven by significant improvement in Orlando, Jacksonville and Tampa, each of which, according to RCG, is projected to exhibit a drop in the unemployment rate of at least three percentage points by 2014. By 2014, the weighted-average unemployment rate is projected to be 6.4% for our top six markets versus a national average of 7.0%.

    Vacancy Rate.  As of the second quarter of 2010, our top six markets had a weighted-average vacancy rate of 17.7% compared to the national average of 17.8%. Washington, D.C. and Philadelphia consistently have outperformed the national average and had vacancy rates of 15.6% and 15.3%, respectively, as of the second quarter of 2010. Moreover, RCG expects our top six markets to outperform the national average from 2011 to 2014, forecasting a decline of approximately 430 basis points in the vacancy rate in our top six markets over that period compared to a decline of approximately 240 basis points in the national office vacancy rate. By 2014, the weighted-average vacancy rate in our top six markets is projected to be 13.6% versus a national average of 15.2%.

        As a result of these attractive demographics and market statistics, we believe our initial portfolio is well positioned for internal growth.

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Our Properties

        Upon completion of this offering and our formation transactions, we will own interests in a portfolio of 56 office properties and one related retail property that is part of an office complex, totaling approximately 12.0 million rentable square feet. These properties are comprised of 32 consolidated properties and 25 properties owned through seven unconsolidated joint ventures. The following table presents an overview of our initial portfolio, based on information as of June 30, 2010.

Metropolitan Area/Property
  Percent
Ownership
(%)
  Year
Built
  Rentable
Square
Footage
  Percent
Leased
(%)(1)
  Annualized
Rent($)(2)
  Annualized
Rent Per
Leased Square
Foot ($)(3)
 

Consolidated Properties

                                     

Atlanta, Georgia

                                     

Ten 10th Street (Millennium)

    100.0     2001     421,557     98.1     12,500,233     30.22  

Peachtree Marquis II(4)

    100.0     1987     464,277     99.1     8,826,079     19.17  

Two Ravinia Drive

    100.0     1987     437,826     82.2     6,664,372     18.53  

Peachtree Harris(4)

    100.0     1978     394,694     80.5     5,842,084     18.40  

Peachtree International(4)(5)

    100.0     1973     386,563     86.9     5,762,215     17.16  

Peachtree Marquis I(4)

    100.0     1980     460,437     65.2     5,551,432     18.49  

Peachtree South(4)(5)

    100.0     1969     306,914     73.7     3,531,635     15.62  

Peachtree Mall (retail)(4)(6)

    100.0     1969     124,929     71.7     2,839,675     31.70  

Peachtree North(4)(5)

    100.0     1967     302,951     49.6     2,532,508     16.85  

The Cornerstone Building at Peachtree Center

    100.0     1928     77,691     77.5     1,418,237     23.56  
                               
 

Metropolitan Area Subtotal / Weighted Average

                3,377,839     80.3     55,468,471     20.44  

Philadelphia, Pennsylvania

                                     

Two Liberty Place(7)

    89.0     1990     937,566     99.4     25,251,804     27.10  
                               
 

Metropolitan Area Subtotal / Weighted Average

                937,566     99.4     25,251,804     27.10  

Jacksonville, Florida

                                     

Independent Square(8)

    100.0     1975     647,251     92.2     13,215,792     22.14  

Capital Plaza I and II (2 buildings)(9)

    25.0     1990     307,856     82.3     4,912,660     19.40  

245 Riverside

    100.0     2003     135,286     94.6     2,818,518     22.02  

Capital Plaza III(9)

    25.0     1999     108,774     80.7     1,841,524     20.98  
                               
 

Metropolitan Area Subtotal / Weighted Average

                1,199,167     88.9     22,788,494     21.38  

Orlando, Florida

                                     

Bank of America Center

    100.0     1987     421,069     83.0     9,802,287     28.04  

Primera V

    100.0     2000     190,081     100.0     4,261,715     22.42  

Maitland Forum

    100.0     1985     267,913     76.6     3,979,989     19.38  

Maitland Park Center

    100.0     1984     102,169     73.6     1,534,292     20.41  

2400 Maitland Center

    100.0     1982     101,612     65.1     1,263,799     19.09  

Interlachen Corporate Center

    100.0     1986     79,312     69.1     1,051,122     19.19  

500 Winderley Place

    100.0     1985     101,040     50.8     849,927     16.56  
                               
 

Metropolitan Area Subtotal / Weighted Average

                1,263,196     78.6     22,743,131     22.92  

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Metropolitan Area/Property
  Percent
Ownership
(%)
  Year
Built
  Rentable
Square
Footage
  Percent
Leased
(%)(1)
  Annualized
Rent($)(2)
  Annualized
Rent Per
Leased Square
Foot ($)(3)
 

Tampa, Florida

                                     

International Plaza Four(10)

    100.0     2008     250,097     59.2     4,406,661     29.75  

Westshore Corporate Center(11)

    100.0     1989     169,619     73.6     2,982,282     23.90  

Cypress Center I(12)

    100.0     1982     152,758     94.7     2,695,736     18.63  

Cypress Center III(12)

    100.0     1982     82,871     83.2     1,540,195     22.33  

Cypress Center II(12)

    100.0     1982     50,697     100.0     1,130,647     22.30  

Cypress West(12)

    100.0     1985     64,510     32.0     432,545     20.95  
                               
 

Metropolitan Area Subtotal / Weighted Average

                770,552     72.4     13,188,065     23.64  

Washington, D.C.

                                     

1110 Vermont Avenue(13)

    100.0     1980     305,543     81.7     11,772,649     47.18  
                               
 

Metropolitan Area Subtotal / Weighted Average

                305,543     81.7     11,772,649     47.18  

Columbia, South Carolina

                                     

Center Point (2 buildings)(14)

    95.0     1988     154,283     92.6     2,627,752     18.40  
                               
 

Metropolitan Area Subtotal / Weighted Average

                154,283     92.6     2,627,752     18.40  

Richmond, Virginia

                                     

Overlook I

    100.0     1998     62,664     100.0     1,266,883     20.22  

Overlook II

    100.0     1998     63,832     86.7     1,129,808     20.41  
                               
 

Metropolitan Area Subtotal / Weighted Average

                126,496     93.3     2,396,691     20.31  

Total/Weighted Average—Consolidated Properties (32 properties)

               
8,134,642
   
83.2
   
156,237,058
   
23.07
 
                               

Total/Weighted Average—Pro Rata Share of Consolidated Properties

                7,711,323     83.1     148,262,334     23.14  
                               

Unconsolidated Properties

                                     

Atlanta, Georgia

                                     

5660 New Northside Drive

    10.0     1989     272,650     87.9     5,124,860     21.37  

300 Windward Plaza

    10.0     2000     203,248     100.0     4,037,816     19.87  

Deerfield Point (2 buildings)

    10.0     1999     202,619     81.3     3,425,988     20.80  

Parkwood Point

    10.0     2001     219,357     89.8     3,368,442     17.10  

Interstate NW Business Park (4 buildings)

    30.0     1979     283,679     82.2     3,173,440     13.61  

100 Windward Plaza

    10.0     1998     132,250     100.0     2,251,478     17.02  

3720 Davinci Court

    25.0     2000     100,698     100.0     2,126,516     21.12  

Windward Pointe 200

    10.0     1997     129,448     76.3     1,947,143     19.71  

280 Interstate North Office Park

    10.0     1982     125,377     74.7     1,640,663     17.53  

3740 Davinci Court

    25.0     2001     100,751     74.6     1,470,738     19.58  

20 Technology Park

    25.0     1982     90,852     91.4     1,391,884     16.77  
                               
 

Metropolitan Area Subtotal / Weighted Average

                1,860,929     87.1     29,958,968     18.48  

Orlando, Florida

                                     

One Orlando Centre

    10.0     1987     355,783     92.6     8,385,109     25.45  

Millennia Park One

    10.0     1999     157,291     92.6     3,473,225     23.84  

Southhall Center

    10.0     1986     159,840     97.1     2,985,346     19.23  
                               
 

Metropolitan Area Subtotal / Weighted Average

                672,914     93.7     14,843,680     23.55  

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Metropolitan Area/Property
  Percent
Ownership
(%)
  Year
Built
  Rentable
Square
Footage
  Percent
Leased
(%)(1)
  Annualized
Rent($)(2)
  Annualized
Rent Per
Leased Square
Foot ($)(3)
 

Washington, D.C.

                                     

Irvington Three

    20.0     2003     217,928     75.2     5,288,394     32.26  

Irvington One

    20.0     2001     154,469     74.8     3,838,754     33.23  

Irvington Four

    20.0     2007     224,258     33.2     2,826,624     37.92  

Irvington Two

    20.0     2001     153,866     50.1     2,618,119     33.93  
                               
 

Metropolitan Area Subtotal / Weighted Average

                750,521     57.4     14,571,890     33.80  

Tampa, Florida

                                     

Westshore 500

    8.7     1984     129,728     84.2     2,734,098     25.04  

Buschwood Park III

    20.0     1989     77,568     90.4     1,325,958     18.90  

Buschwood Park II

    20.0     1987     88,019     71.2     1,221,849     19.49  

Buschwood Park I

    20.0     1985     83,147     52.6     984,314     22.52  
                               
 

Metropolitan Area Subtotal / Weighted Average

                378,462     75.5     6,266,219     21.93  

Panama City, Florida

                                     

Beckrich One

    10.0     2002     33,739     90.5     907,628     29.74  

Beckrich Two

    10.0     2003     33,369     89.6     726,574     24.30  
                               
 

Metropolitan Area Subtotal / Weighted Average

                67,108     90.0     1,634,202     27.05  

Tallahassee, Florida

                                     

Southwood One

    10.0     2002     89,059     62.4     1,030,949     18.56  
                               
 

Metropolitan Area Subtotal / Weighted Average

                89,059     62.4     1,030,949     18.56  

Total/Weighted Average—Unconsolidated Properties (25 properties)

               
3,818,993
   
80.8
   
68,305,909
   
22.14
 
                               

Total/Weighted Average—Pro Rata Share of Unconsolidated Properties

                580,713     78.0     9,988,371     22.04  
                               

TOTAL/WEIGHTED AVERAGE—ALL PROPERTIES (57 properties)

                11,953,635     82.5     224,542,967     22.78  

TOTAL/WEIGHTED AVERAGE—INITIAL PORTFOLIO(15)

               
8,292,036

(16)
 
82.7
   
158,250,705
   
23.07
 

(1)
Based on leases signed as of June 30, 2010, and calculated as leased square footage divided by rentable square footage, expressed as a percentage.

(2)
Annualized rent is calculated by multiplying (i) rental payments (defined as base rent plus operating expenses, if payable by the tenant on a monthly basis, before rental abatements and including rental payments related to leases that had been executed but not commenced as of June 30, 2010 in lieu of rental payments under any existing leases for the same space) for the month ended June 30, 2010, by (ii) 12. In instances in which base rents and operating expenses are collected on an annual, semi-annual or quarterly basis, such amounts have been multiplied by a factor of 1, 2 or 4, respectively, to calculate the annualized figure. For triple net or modified gross leases, annualized rent has been converted to a full service gross basis by one of the following methods: (1) when we have access to the operating expenses of the tenant, expenses have been estimated by adding billed expense reimbursements to base rent; or (2) when we do not have access to the operating expenses of the tenant, expenses have been estimated by either (a) applying current BOMA estimated expense standards in markets where BOMA standards have been published or (b) using the expenses of tenants at comparable properties in the market. Rental abatements committed to as of June 30, 2010 for the twelve months ending June 30, 2011 were $6,190,841 for our consolidated properties, $2,685,095 for our unconsolidated properties and $6,456,757 for our initial portfolio.

(3)
Represents annualized rent divided by leased square footage, including leases executed but not commenced as of June 30, 2010.

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(4)
Three parking garages stand adjacent to the seven Peachtree Center properties (Peachtree Marquis I, Peachtree Marquis II, Peachtree Harris, Peachtree International, Peachtree North, Peachtree South and Peachtree Mall). The parking garages are subject to ground leases that expire between 2065 and 2067.

(5)
Property is subject to a ground lease that expires in 2060.

(6)
Peachtree Mall is our only retail property and connects the office towers of Peachtree Center in Atlanta. Property is subject to a ground lease that expires in 2060.

(7)
We have an option, and our partner has the right to require us, to acquire the remaining 11% interest in this property at a mutually agreed-upon price, at any time on or after the three-year anniversary of this offering and our formation transactions. Total rentable square footage and total annualized rent for the entire property are presented. This building includes 20 floors of residential condominiums that are owned and managed by a third party in which James R. Heistand, our Executive Chairman, and Rudy Prio Touzet, our President and Chief Executive Officer, collectively have a 1.25% non-managing member interest. Rentable square footage does not include this space.

(8)
Property includes an adjacent parking garage.

(9)
Total rentable square footage and total annualized rent for the entire property are presented.

(10)
Property is subject to a ground lease that expires in 2080. We currently own a 67% interest in this property and have an option to purchase the remaining 33% interest between November 1, 2010 and December 31, 2010, which we intend to exercise prior to or concurrently with the completion of this offering.

(11)
Property is subject to a ground lease that expires in 2077.

(12)
Approximately 6.30 acres of developable land is adjacent to Cypress Center I, Cypress Center II, Cypress Center III and Cypress West. This land currently is used as parking for those properties, and there are no current plans with respect to the improvement or development of this land.

(13)
Our acquisition of this property is subject to closing conditions that may not be in our control. See "Risk Factors—Risks Related to Our Business and Operations—Our acquisition of the 1110 Vermont Avenue property is subject to closing conditions that could delay or prevent the acquisition of this property." We currently are pursuing potential third parties to co-invest in the acquisition of this property. If we reach an agreement with such parties, our interest in this property would be held through a joint venture, and our ownership percentage may be significantly reduced.

(14)
Total rentable square footage and total annualized rent for the entire property are presented. Approximately 1.4 acres of developable land is adjacent to Center Point. There are no current plans with respect to the improvement or development of this land.

(15)
Amounts for our initial portfolio are based on total amounts for our wholly owned properties and our pro rata share for properties owned through our consolidated and unconsolidated joint ventures based on our economic ownership interest in those joint ventures.

(16)
Initial portfolio total consists of 6,814,508 leased square feet, 1,432,224 available square feet and 45,304 building management use square feet.


Summary of Risk Factors

        You should carefully consider the matters discussed under the heading "Risk Factors" beginning on page 19 of this prospectus prior to deciding whether to invest in our common shares. Some of these risks include:

    We will be significantly influenced by the economic and other conditions of the specific markets in which we operate, particularly Atlanta, and also Orlando, Philadelphia, Jacksonville, Washington, D.C. and Tampa, where we have high concentrations of properties.

    We have considerable lease expirations in 2010, 2011 and 2012 and face strong competition in the leasing market and may be unable to lease vacant space or renew existing leases or re-let space on terms that are as favorable as, or even similar to, the existing leases, or we may expend significant capital in our efforts to re-let space, which may materially and adversely affect us.

    We depend on tenants for our revenue and, accordingly, lease terminations and/or tenant defaults, particularly by one of our more significant tenants, could adversely affect the income

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      produced by our properties and seriously harm our operating performance, which could materially and adversely affect us.

    Adverse global market and economic conditions and dislocations in the credit markets could cause us to recognize impairment charges, which could materially and adversely affect our business, financial condition and results of operations.

    We expect to have approximately $413.4 million of consolidated indebtedness outstanding following this offering and are likely to incur additional mortgage and other indebtedness in the future, which may increase our business risks.

    Our current and future joint venture investments could be adversely affected by a lack of sole decision-making authority and reliance on the financial condition and liquidity of our joint venture partners.

    Our acquisition of the 1110 Vermont Avenue property is subject to closing conditions that could delay or prevent the acquisition of this property.

    Our growth depends on external sources of capital that are outside our control and may not be available to us on favorable terms or at all.

    Our success depends on key personnel whose continued service is not guaranteed and each of whom would be difficult to replace.

    Our management has limited experience operating a REIT and a public company, which may impede their ability to successfully manage our business.

    Future cash flows may not be sufficient to make distributions to our common shareholders at expected levels, which could result in a significant decrease in the market price of our common shares.

    If we do not qualify as a REIT or if we fail to remain qualified as a REIT, we will be subject to U.S. federal income tax and potentially state and local taxes, which would reduce the amount of cash available for distribution to our common shareholders.

    REIT distribution requirements could adversely affect our ability to execute our business plan or cause us to finance our needs during unfavorable market conditions.


Structure and Formation of Our Company

Structure

        Upon completion of this offering and our formation transactions, our operating partnership will hold substantially all of our assets and conduct substantially all of our business. We will contribute the net proceeds from this offering to our operating partnership in exchange for a number of OP units equal to the number of common shares issued in this offering. We will control our operating partnership as its sole general partner and as the holder of approximately      % of the aggregate OP units. Our executive officers and other employees and third party contributors initially will own the remaining OP units and will be limited partners in our operating partnership.

        All of our management services will be conducted by wholly owned subsidiaries of our operating partnership. Certain properties in which we will not own all of the equity interests, as well as properties in which we will not own any of the equity interests, will be managed by Eola TRS LLC, a wholly owned subsidiary of our operating partnership, which we refer to as our TRS. Our TRS will elect to be treated as a corporation for U.S. federal income tax purposes and, effective contemporaneously with that election, will elect jointly with us to be treated as a taxable REIT subsidiary of ours. Our TRS will conduct certain other activities that we may not engage in directly without adversely affecting our qualification as a REIT. We may form additional taxable REIT subsidiaries in the future.

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Formation Transactions

        Prior to or concurrently with the completion of this offering, we will engage in certain formation transactions which are designed to: consolidate our asset management, property management, leasing, acquisition and related businesses into our operating partnership; consolidate the ownership of a portfolio of properties, together with certain other real estate assets, into our operating partnership; facilitate this offering; enable us to raise necessary capital to repay existing indebtedness related to certain properties in our portfolio; enable us to qualify as a REIT for U.S. federal income tax purposes commencing with the portion of our taxable year ending December 31, 2010; and preserve the tax position of certain investors in our predecessor and its related entities that will receive common shares and/or OP units in connection with our formation transactions, which we refer to as our continuing investors.

        The significant elements of our formation transactions include:

    formation of our company, our operating partnership and our TRS;

    the contribution transactions, pursuant to which we will acquire our assets; and

    the assumption by us of indebtedness related to our initial portfolio, the repayment of certain outstanding indebtedness and other related financing transactions.

        The following diagram depicts our ownership structure and the ownership structure of our operating partnership upon completion of this offering and our formation transactions:

GRAPHIC

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Benefits of Formation Transactions to Related Parties

        In connection with this offering and our formation transactions, certain of our executive officers and other key employees, trustees and 5% shareholders will receive material benefits, including the following (amounts below are based on the mid-point of the price range set forth on the cover page of this prospectus).

    Consideration for Contribution of Interests in Our Assets

    James R. Heistand, our Executive Chairman, will receive            common shares, with an aggregate value of approximately $       million, in exchange for the contribution by him of all of his interests in our assets.

    Rudy Prio Touzet, our President and Chief Executive Officer, will receive            OP units and             common shares, with an aggregate value of approximately $       million, in exchange for the contribution by him of all of his interests in our assets.

    Henry F. Pratt, III, our Chief Operating Officer, will receive            common shares, with an aggregate value of approximately $       million, in exchange for the contribution by him of all of his interests in our assets.

    David O'Reilly, our Chief Financial Officer, will receive            common shares, with an aggregate value of approximately $       million, in exchange for the contribution by him of all of his interests in our assets.

    Scott Francis, our Chief Accounting Officer, will receive            common shares, with an aggregate value of approximately $       million, in exchange for the contribution by him of all of his interests in our assets.

    Messrs. Heistand, Touzet, Pratt, O'Reilly and Francis also will receive cash as a result of (i) customary real estate closing prorations, (ii) a return of restricted cash reserves that were previously funded by such parties and which are required to remain with the property-owning entities under the terms of loan documents and (iii) repayment of loans made by them. We currently estimate these cash payments will total approximately $             million, excluding customary real estate prorations, the amount of which will be determined by the timing of the completion of this offering and our formation transactions.

    Employment Agreements

        We will enter into an employment agreement with each of our executive officers that will be effective upon completion of this offering. These employment agreements will provide for base salary, bonus and other benefits, including accelerated vesting of equity awards upon a change in our control or termination of the executive's employment under certain circumstances. See "Management—Executive Compensation—Employment Agreements."

    Indemnification Agreements for Officers and Trustees

        We intend to enter into indemnification agreements with our trustees and executive officers that will be effective upon completion of this offering. These indemnification agreements will provide indemnification to these persons by us to the maximum extent permitted by Maryland law and certain procedures for indemnification, including advancement by us of certain expenses relating to claims brought against these persons under certain circumstances. See "Management—Limitation of Liability and Indemnification."

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    Registration Rights Agreement

        We will enter into a registration rights agreement with the various persons receiving our common shares and/or OP units in connection with our formation transactions, including each of our executive officers. See "Shares Eligible for Future Sale—Registration Rights Agreement."

    Contributor Indemnity Agreement

        We expect to cause any personal guaranties that were previously made by certain members of our senior management team in connection with mortgage loans secured by the properties and other assets being contributed to us to be released by the lenders concurrently with the completion of this offering. If we are unsuccessful in obtaining any such release, we will enter into a contributor indemnity agreement with such members of our senior management team pursuant to which we will indemnify each of them with respect to any loss incurred to the lender pursuant to such guaranty.


Credit Facility

        We currently are negotiating the terms of a $          million revolving credit facility that we expect to enter into upon completion of this offering and our formation transactions. There can be no assurance that we will be successful in obtaining such a facility.


Tax Status

        We intend to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes, commencing with the portion of our taxable year ending December 31, 2010. Our qualification as a REIT depends upon our ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our common shares. We believe that our organization and proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT.

        So long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our REIT taxable income that we distribute currently to our shareholders. If we fail to qualify for taxation as a REIT in any taxable year, and the statutory relief provisions of the Internal Revenue Code do not apply, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we lost our REIT qualification. Distributions to shareholders in any year in which we are not a REIT would not be deductible by us, nor would they be required to be made. Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income or property, and certain of our subsidiaries that will be taxable REIT subsidiaries will be subject to U.S. federal, state and local income taxes.


Distribution Policy

        To satisfy the requirements to qualify as a REIT, and to avoid paying tax on our income, we intend to make regular quarterly distributions of all, or substantially all, of our REIT taxable income (including net capital gains) to our shareholders. We intend to make a pro rata distribution with respect to the period commencing on completion of this offering and ending on            , 2010, based on a distribution of $      per common share for a full quarter. On an annualized basis, this would be $      per common share, or an annualized distribution rate of approximately      % based on an assumed initial public offering price of $      per common share, which is the mid-point of the price range set forth on the cover page of this prospectus. We intend to maintain our initial distribution rate for the 12-month period following completion of this offering unless our actual results of operations or cash

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flows, economic conditions or other factors differ materially from the assumptions used in projecting our initial distribution rate.

        Our future distributions will be at the sole discretion of our board of trustees, and their form, timing and amount, if any, will depend upon our actual and projected financial condition, liquidity, results of operations and FFO and other factors that could differ materially from our current expectations. Our actual financial condition, liquidity, results of operations, FFO and ability to make distributions to our shareholders will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, recurring capital expenditures, the ability of our tenants to meet their obligations and unanticipated expenditures, as well as prohibitions and other limitations under our financing arrangements and applicable law. To the extent that our cash available for distribution is less than 90% of our REIT taxable income, we may consider various means to cover any such shortfall, including borrowing under our revolving credit facility or other loans, selling certain of our assets or using a portion of the net proceeds we receive from this offering or future offerings of equity, equity-related or debt securities or declaring taxable stock dividends. We do not intend to reduce the annualized distribution rate per common share if the underwriters' overallotment option is exercised.


Restrictions on Ownership and Transfer of Our Shares

        In order to assist us in complying with the limitations on the concentration of ownership of REIT shares imposed by the Internal Revenue Code and for strategic reasons, our declaration of trust generally prohibits any person (other than a person who has been granted an exception) from directly or indirectly, actually or constructively, owning more than 9.8% of the aggregate of our outstanding common shares by value or by number of shares, whichever is more restrictive, or 9.8% of the aggregate of the outstanding shares of any class or series of our preferred shares of beneficial interest, or preferred shares, by value or by number of shares, whichever is more restrictive. However, our declaration of trust permits (but does not require) exceptions to be made for shareholders, provided that our board of trustees determines such exceptions will not jeopardize our qualification as a REIT.

        Our declaration of trust also prohibits any person from (1) beneficially or constructively owning our shares of beneficial interest that would result in our being "closely held" under Section 856(h) of the Internal Revenue Code at any time during the taxable year, (2) transferring our shares if such transfer would result in our shares being beneficially owned by fewer than 100 persons (determined without regard to any rules of attribution), (3) beneficially or constructively owning our shares that would result in our owning (actually or constructively) 10% or more of the ownership interest in a tenant of our real property if income derived from such tenant for our taxable year would result in more than a de minimis amount of non-qualifying income for purposes of the REIT tests and (4) beneficially or constructively owning our shares if such ownership would cause us otherwise to fail to qualify as a REIT.


Corporate Information

        Our principal executive office is located at 390 N. Orange Avenue, Suite 2400, Orlando, Florida 32801. Our telephone number is (407) 650-0593. Our website is                    . The information contained on, or otherwise accessible through, our website does not constitute a part of this prospectus. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website.

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The Offering

Common shares offered by us

                          common shares (plus up to          common shares that we may issue if the underwriters exercise their overallotment option in full)

Common shares to be outstanding after this offering and our formation transactions

                          common shares(1)

Common shares and OP units to be outstanding after this offering and our formation transactions

                          common shares and OP units(1)(2)

Use of proceeds

  We estimate that the net proceeds from this offering, after deducting the underwriting discount and estimated expenses, will be approximately $            million (or $            million if the underwriters exercise their overallotment option in full). We will contribute the net proceeds from this offering to our operating partnership. Our operating partnership intends to use the net proceeds from this offering as follows:

 

•       approximately $389.5 million to repay outstanding indebtedness and to pay costs associated with such repayment and loan assumption fees;

 

•       approximately $141.6 million, including estimated closing costs, to acquire the 1110 Vermont Avenue property;

 

•       approximately $51.9 million to acquire interests in properties from the current holders of those interests and to pay related costs;

 

•       approximately $15.0 million to fund a reserve account for capital expenditures; and

 

•       the remaining approximately $            million for general working capital purposes, including funding future acquisitions, capital expenditures, tenant improvements, leasing commissions and, potentially, making distributions.

  See "Use of Proceeds" on page 50.

Risk factors

  Investing in our common shares involves a high degree of risk. You should carefully read and consider the information set forth under the heading "Risk Factors" beginning on page 19 and other information included in this prospectus.

Proposed NYSE symbol

  "EOLA"

Conflicts of interest

  A portion of the net proceeds from this offering will be used to repay certain indebtedness, the lender of which is an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, one of the underwriters in this offering.

(1)
Excludes (i)             common shares issuable upon the exercise of the underwriters' overallotment option in full and (ii)            common shares reserved for future issuance under our equity incentive plan.

(2)
Includes            OP units expected to be issued in our formation transactions.

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Summary Selected Financial Data

        The following table sets forth summary selected financial and operating data on (i) a pro forma basis for our company and (ii) a combined historical basis for our predecessor. Our predecessor is comprised of the real estate holdings and operations of the entities that are under common control of James R. Heistand. We have not presented historical information for Eola Property Trust because we have not had any corporate activity since our formation other than the issuance of 1,000 common shares to Mr. Heistand in connection with our initial capitalization and because we believe that a discussion of the results of Eola Property Trust would not be meaningful.

        You should read the following summary selected financial data in conjunction with the combined historical consolidated financial statements of our predecessor and the related notes and with "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are included elsewhere in this prospectus.

        The historical combined balance sheet information as of December 31, 2009 and 2008 of our predecessor and the combined statements of operations information for each of the years ended December 31, 2009, 2008 and 2007 of our predecessor have been derived from the historical audited combined financial statements included elsewhere in this prospectus. The historical combined balance sheet information as of June 30, 2010 of our predecessor and the combined statements of operations information for the six months ended June 30, 2010 and 2009 of our predecessor have been derived from the historical unaudited combined financial statements included elsewhere in this prospectus and include all adjustments, consisting of normal recurring adjustments, which management considers necessary for a fair presentation of the historical financial statements for such periods.

        Our unaudited summary selected pro forma condensed consolidated financial statements and operating information as of and for the six months ended June 30, 2010 and for the year ended December 31, 2009 assume completion of this offering and our formation transactions as of the beginning of the periods presented for the operating data and as of the stated date for the balance sheet data. Our pro forma financial information is not necessarily indicative of what our actual financial position and results of operations would have been as of the date and for the periods indicated, nor does it purport to represent our future financial position or results of operations.

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  Six Months Ended June 30,   Year Ended December 31,  
 
   
   
   
   
  Historical
Combined
 
 
   
  Historical Combined    
 
 
  Pro Forma
Consolidated
2010
  Pro Forma
Consolidated
2009
 
 
  2010   2009   2009   2008   2007  
 
  (Unaudited)
  (Unaudited)
  (Unaudited)
  (Unaudited)
   
   
   
 
 
  (In thousands, except per share data and number of properties)
 

Statement of Operations Data:

                                           

Revenues

                                           
 

Rental revenue

        $ 3,381   $ 3,838         $ 7,696   $ 5,116   $ 4,773  
 

Tenant reimbursements

          1,866     1,926           3,953     3,371     3,373  
 

Parking and other income

                               
 

Management and other fees

          11,167     7,398           17,782     16,834     15,097  
                               
   

Total revenues

          16,414     13,162           29,431     25,321     23,243  

Expenses

                                           
 

Property operating expenses

          2,944     3,391           6,237     4,300     4,214  
 

General and administrative

          8,953     6,226           15,731     14,088     15,446  
 

Depreciation and amortization

          2,962     2,200           4,896     3,543     3,227  
 

Property impairment

                        457          
                               
   

Total expenses

          14,859     11,817           27,321     21,931     22,887  
                               

Operating income (loss)

          1,555     1,345           2,110     3,390     356  

Other Income (Expenses)

                                           
 

Equity in earnings (loss) from real estate joint ventures

          (414 )   (2,105 )         (4,863 )   (18,735 )   (2,221 )
 

Interest and other income, net

          70     11           56     201     382  
 

Interest expense

          (1,676 )   (4,163 )         (7,650 )   (5,291 )   (5,158 )
                               
 

Other expenses

                                 
   

Total other income (expenses)

          (2,020 )   (6,257 )         (12,457 )   (23,825 )   (6,997 )
                               

Net income (loss)

          (465 )   (4,912 )         (10,347 )   (20,435 )   (6,641 )

Less: net (income) loss attributable to non-controlling interests - OP units

                                   

Less: net (income) loss attributable to non-controlling interests—property

          (1,548 )   (4,581 )         (9,065 )   (16,153 )   (2,764 )
                               

Net income (loss) attributable to the Company

        $ 1,083   $ (331 )       $ (1,282 ) $ (4,282 ) $ (3,877 )
                               

Per Share Data:

                                           
 

Pro forma earnings (loss) per share—basic and diluted

                                           
 

Pro forma weighted average common shares outstanding—basic and diluted

                                           

Balance Sheet Data (at period end):

                                           
 

Real estate investment, net

        $ 53,973   $ 56,166         $ 54,891   $ 56,929   $ 42,097  
 

Total assets

          87,273     81,455           80,997     84,412     88,220  
 

Notes payable and other debt

          83,122     78,624           80,886     79,325     60,325  
 

Total liabilities

          104,925     92,557           98,710     89,531     70,273  
 

Equity

          (10,059 )   (9,454 )         (11,194 )   (8,319 )   (3,789 )
 

Non-controlling interests - OP units

                                           
 

Non-controlling interests - property

          (7,593 )   (1,649 )         (6,519 )   3,200     21,736  
 

Total equity

          (17,652 )   (11,103 )         (17,713 )   (5,119 )   17,947  
 

Total liabilities and equity

          87,273     81,455           80,997     84,412     88,220  

Other Data:

                                           
 

Number of properties

          55     35           56     34     32  
 

Total rentable square footage

          11,685     5,404           11,705     5,274     5,103  
 

Total rentable square footage—pro rata share

          365     234           373     234     230  
 

Pro forma net operating income

                                           
 

Pro forma net operating income, including pro rata joint venture share

                                           
 

Pro forma earnings before interest, taxes, depreciation and amortization

                                           
 

Pro forma funds from operations

                                           
 

Pro forma diluted funds from operations per share

                                           
 

Cash flows from:

                                           
   

Operating activities

        $ 1,242   $ 2,277         $ 3,703   $ 1,932   $ 1,874  
   

Investing activities

          (2,440 )   128           (1,531 )   (399 )   (19,204 )
   

Financing activities

          2,719     (1,811 )         (3,067 )   33     17,026  

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  Pro Forma  
 
  Six Months Ended
June 30, 2010
  Year Ended
December 31, 2009
 
 
  (In thousands)
  (In thousands)
 

Reconciliation of FFO(1), EBITDA(2) and NOI(3) to Net Income:

             

Net income (loss) attributable to the Company

 
$
 
$
 

Add/(deduct):

             
 

Net income (loss) attributable to non-controlling interests - OP units

             
 

Depreciation and amortization(4)

             
 

Depreciation and amortization—unconsolidated properties

             
 

Gain on sale of discontinued operations

             
           

Funds from operations

  $     $   (5)

Add/(deduct):

             
 

Interest expense, net(4)

             
 

Interest expense, net—unconsolidated properties

             
 

Non real estate related depreciation and amortization(4)

             
 

Non real estate related depreciation and amortization—unconsolidated properties

             
 

Interest and other income, net

             
           

EBITDA

  $     $   (5)

Add/(deduct):

             
 

Management and other fees

             
 

General and administrative

             
 

Property impairment

             
           

Net operating income (NOI), including pro rata joint venture share

  $     $    

Deduct:

             
 

Pro rata joint venture share of net operating income

             
           

Net operating income

  $     $    

(1)
We calculate FFO before non-controlling interest, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. FFO is defined by NAREIT as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, plus depreciation and amortization of real estate assets (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures.

FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of our operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results of operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, therefore, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should not be considered as an alternative to net income available to common shareholders (determined in accordance with GAAP) as an indicator of our financial performance. While management believes that FFO is an important supplemental non-GAAP financial measure, management believes it is also important to stress that FFO should not be considered as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. Further, FFO is not necessarily indicative of sufficient cash flow to fund all of our cash needs, including our ability to service indebtedness or make distributions.

(2)
EBITDA represents net income (losses) excluding: (i) interest; (ii) income tax expense, including deferred income tax benefits and expenses and income taxes applicable to sale of assets; and (iii) depreciation and amortization. EBITDA should not be considered as an alternative to net income available to common shareholders (determined in accordance with GAAP). We believe EBITDA is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA as one measure in determining the value of acquisitions and dispositions.

(3)
We consider NOI to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core operations of our properties. NOI should not be considered as an alternative to net income (determined in accordance with GAAP). We define NOI as operating revenue (including rental revenue, tenant reimbursements and parking and other income) less property operating expenses. NOI excludes depreciation and amortization, impairments, gain/loss on sale of real estate, interest expense and other non-operating items.

(4)
Net of amounts attributable to non-controlling interests in properties.

(5)
Includes an impairment charge of $457 for the year ended December 31, 2009.

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RISK FACTORS

        Investing in our common shares involves risks. You should carefully consider the following risk factors, together with all the other information contained in this prospectus, including our historical and pro forma combined financial statements and the notes thereto, before making an investment decision to purchase our common shares. The occurrence of any of the following risks could materially and adversely affect our business, prospects, financial condition, cash flows, liquidity, FFO and results of operations, the market price of our common shares, our ability to service our indebtedness and our ability to make cash distributions to our shareholders, which could cause you to lose all or a significant part of your investment in our common shares. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled "Forward-Looking Statements."

Risks Related to Our Business and Operations

We will be significantly influenced by the economic and other conditions of the specific markets in which we operate, particularly Atlanta, and also Orlando, Philadelphia, Jacksonville, Washington, D.C. and Tampa, where we have high concentrations of properties.

        The geographic concentration of our properties exposes us to the risk of economic downturns in the markets in which we operate to a greater extent than if our portfolio were more diversified geographically. We have a high concentration of properties located in Atlanta, Orlando, Philadelphia, Jacksonville, Washington, D.C. and Tampa, which accounted for approximately 37.8%, 15.3%, 14.2%, 11.2%, 9.3% and 8.9%, respectively, of the annualized rent of our initial portfolio as of June 30, 2010. Because of the concentration of our properties in these metropolitan areas, and in the Southeastern and mid-Atlantic United States more generally, we depend on the local economic conditions in these markets and are particularly susceptible to adverse conditions in these markets, including developments affecting real estate, employment, changes in demographics and natural disasters, such as hurricanes or floods. All of the markets in which we operate have experienced downturns in recent years that have resulted in, among other things, industry slowdowns, business layoffs and relocations, declining property values, reduced demand for office properties and lower rental rates. We can provide no assurances that these markets will return to historical growth patterns or recover from the recent economic downturn at the same pace as the national market, or at all. Continued adverse economic or real estate developments in the markets in which we have a concentration of properties, or in any of the other markets in which we operate, could materially and adversely affect us.

We have considerable lease expirations in 2010, 2011 and 2012, face strong competition in the leasing market and may be unable to lease vacant space or renew existing leases or re-let space on terms that are as favorable as, or even similar to, the existing leases, or we may expend significant capital in our efforts to re-let space, which may materially and adversely affect us.

        As of June 30, 2010, leases representing approximately 32.5% of the annualized rent of our initial portfolio are scheduled to expire by the end of 2012, assuming no exercise by our tenants of early termination rights (or approximately 40.0% of the annualized rent of our initial portfolio, assuming the exercise of all early termination rights). We compete with a number of other developers, owners and operators of office and office-oriented, mixed-use properties, many of whom may possess more substantial resources and access to capital than we have, as well as greater expertise or flexibility in designing space to meet prospective tenants' needs. As a result, we may be unable to renew leases with our existing tenants and, if our current tenants do not renew their leases, we may be unable to re-let the space to new tenants. Furthermore, to the extent that we are able to renew leases that are scheduled to expire in the short-term or re-let such space to new tenants, heightened competition resulting from adverse market conditions may require us to accept more unfavorable terms, including lower rental rates and rent concessions and tenant improvements that exceed those we have historically

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granted. In addition, recent volatility in the mortgage-backed securities markets has led to foreclosures and sales of foreclosed properties at depressed values, and we may have difficulty competing with competitors who have purchased properties in the foreclosure process, because their lower cost basis in their properties may allow them to offer space at reduced rental rates.

        If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose existing or potential tenants, and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights and other concessions in order to attract and retain tenants. Even if our tenants renew their leases or we are able to re-let the space, the terms and other costs of renewing or re-letting, including the cost of required renovations, increased tenant improvement allowances, leasing commissions, declining rental rates and other potential concessions, may be less favorable than the terms of our current leases and could require significant capital expenditures. If we are unable to lease unoccupied space or renew existing leases or re-let space on favorable terms in a reasonable time, or if rental rates decline or tenant improvement allowances, leasing commissions or other costs increase, we could be materially and adversely affected.

We depend on tenants for our revenue and, accordingly, lease terminations and/or tenant defaults, particularly by one of our more significant tenants, could adversely affect the income produced by our properties and seriously harm our operating performance, which could materially and adversely affect us.

        Our success depends on the financial stability of our tenants, any of which may experience a change in its business at any time that affects its operating performance, liquidity and/or financial condition. For example, the recent economic downturn may have adversely affected, or a delayed recovery may in the future adversely affect, one or more of our tenants. As a result, any of our tenants may fail to make rental payments when due, delay lease commencements, decline to extend or renew its leases upon expiration, exercise early termination rights (to the extent such rights are available to the tenant) or declare bankruptcy or become subject to bankruptcy proceedings. If any of the foregoing were to occur, we could lose significant rental income until the tenant is able to make payments or the space can be re-let to another tenant. If leases are terminated or defaulted upon, we may be unable to lease the property on the same terms (including rent) as the prior leases, or at all, which would result in us incurring a loss. In addition, if any tenant defaults or declares bankruptcy or becomes subject to bankruptcy proceedings, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our rights.

        The occurrence of any of the situations described above, particularly if it involves one of our more significant tenants, could seriously harm our operating performance. Our most significant tenant other than the U.S. Government, based on annualized rent as of June 30, 2010, was CIGNA Corp., which accounted for approximately 7.1% of the annualized rent of our initial portfolio and approximately 48.6% of the annualized rent of Two Liberty Place. Because the revenues generated by that property are substantially dependent upon CIGNA Corp., a bankruptcy proceeding or general downturn in the businesses of this tenant may result in the failure or delay of its rental payments, which could materially and adversely affect us. In addition, as of June 30, 2010, the U.S. Government had 22 leases at 11 different properties in our initial portfolio and accounted for approximately 8.8% of the annualized rent of our initial portfolio. The U.S. Government's failure to renew its leases with us upon their expiration on comparable terms, or at all, could materially and adversely affect us.

If our tenants are unable to obtain financing necessary to continue to operate their businesses and pay us rent, we could be materially and adversely affected.

        Many of our tenants rely on external sources of financing to operate their businesses. The U.S. financial and credit markets continue to experience significant liquidity disruptions, resulting in the unavailability of financing for many businesses. If our tenants are unable to obtain financing necessary

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to continue to operate their businesses, they may be unable to meet their rent obligations to us or enter into new leases with us or they may be forced to declare bankruptcy and reject our leases, which could materially and adversely affect us.

We may be unable to collect balances due from any tenants in bankruptcy.

        We cannot assure you that any tenant that files for bankruptcy protection or becomes subject to bankruptcy proceedings will continue to pay us rent. A bankruptcy filing by or relating to one of our tenants would bar all efforts by us to collect pre-bankruptcy debts from that tenant, or its property, unless we receive an order permitting us to do so from the bankruptcy court. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any unsecured claim we hold may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. Moreover, restrictions under bankruptcy laws limit the amount of the claim we can make if a lease is rejected. As a result, it is likely that we will recover substantially less than the full value of any unsecured claims we hold.

Adverse global market and economic conditions and dislocations in the credit markets could cause us to recognize impairment charges, which could materially and adversely affect our business, financial condition and results of operations.

        We continually monitor events and changes in circumstances, including those resulting from the recent economic downturn, that could indicate that the carrying value of the real estate and related intangible assets in which we have an ownership interest may not be recoverable. When circumstances indicate that the carrying value of real estate and related intangible assets may not be recoverable, we assess the recoverability of these assets by determining whether the carrying value will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, we adjust the real estate and related intangible assets to the fair value and recognize an impairment loss. Because our predecessor acquired many of the properties in our initial portfolio in the last five years, when prices for commercial real estate in many markets were at or near their peaks, we may be particularly susceptible to future non-cash impairment charges as compared to companies that have carrying values well below current market values, which could materially and adversely affect our business, financial condition and results of operations.

        Projections of expected future cash flows require management to make assumptions to estimate future occupancy, rental rates, property operating expenses, the number of months it takes to re-let the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow analysis, including discount rates, could result in an incorrect assessment of the property's fair value and, therefore, could result in the misstatement of the carrying value of our real estate and related intangible assets and our results of operations. Ongoing adverse market and economic conditions and market volatility will likely continue to make it difficult to value the real estate assets owned by us, as well as the value of our interests in unconsolidated joint ventures and/or our goodwill and other intangible assets. As a result of current adverse market and economic conditions, there may be significant uncertainty in the valuation, or in the stability of, the cash flows, discount rates and other factors related to such assets that could result in a substantial decrease in their value.

Our current and future joint venture investments could be adversely affected by a lack of sole decision-making authority and reliance on the financial condition and liquidity of our joint venture partners.

        Upon completion of this offering and our formation transactions, we will own interests in 29 properties through ten joint ventures, including seven unconsolidated joint ventures, representing approximately 5.3 million rentable square feet, or approximately 1.7 million rentable square feet based

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on our pro rata share. We may enter into additional joint ventures in the future to acquire, develop, improve or dispose of properties, thereby reducing the amount of capital required by us to make investments and diversifying our capital sources for growth. Such joint venture investments involve risks not otherwise present in a wholly owned property or a development or redevelopment project, including the following:

    we do not have exclusive control over the development, financing, leasing, management and other aspects of the property or joint venture, which may prevent us from taking actions that are in our best interest but opposed by our partners;

    two existing joint venture agreements restrict our ability to acquire properties in certain submarkets in which the applicable joint venture owns properties, unless our partner elects on behalf of such joint venture not to pursue the acquisition;

    joint venture agreements often restrict the transfer of a partner's interest or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms;

    our existing joint venture agreements contain, and any future joint venture agreements may contain, buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner's interest or selling its interest to that partner;

    we would not be in a position to exercise sole decision-making authority regarding the property or joint venture, which could create the potential risk of creating impasses on decisions, such as acquisitions or sales;

    a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals;

    a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our current policy with respect to maintaining our qualification as a REIT;

    a partner may fail to fund its share of required capital contributions or may become bankrupt, which would mean that we and any other remaining partners generally would remain liable for the joint venture's liabilities;

    our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or assets underlying such relationship or may need to purchase such interests or assets at a premium to the market price to continue ownership;

    disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our officers and trustees from focusing their time and efforts on our business and could result in subjecting the properties owned by the joint venture to additional risk; or

    we may, in certain circumstances, be liable for the actions of our partners, and the activities of a partner could adversely affect our ability to qualify as a REIT, even though we do not control the joint venture.

        Any of the above might subject a property to liabilities in excess of those contemplated and adversely affect the value of our current and future joint venture investments.

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Our acquisition of the 1110 Vermont Avenue property is subject to closing conditions that could delay or prevent the acquisition of this property.

        We have entered into a definitive agreement to acquire the 1110 Vermont Avenue property. This acquisition is subject to closing conditions, including lender consents, that could delay or prevent the acquisition of this property. If we are unable to complete this acquisition or experience significant delays in executing the acquisition, our revenues will not include the approximately $11.8 million of annualized rent from 1110 Vermont Avenue as of June 30, 2010. In addition, if we fail to purchase this property, we will have no specific designated use for the net proceeds from this offering allocated to the purchase of this property and investors will be unable to evaluate in advance the manner in which we will invest, or the economic merits of the properties we may ultimately acquire with, such proceeds.

Competition for acquisitions may result in fewer acquisition opportunities and increased prices for properties, which may impede our growth and materially and adversely affect us.

        Our growth depends in part on our ability to identify attractive acquisition candidates or investment opportunities that are compatible with our acquisition strategy. We may not be successful in identifying such candidates or opportunities or in consummating acquisitions on favorable terms, if at all. In addition, we can provide no assurances regarding the availability of, or our ability to source and close, off-market or limited-market deals. Failure to identify or consummate acquisitions on favorable terms, or at all, would impede our growth and materially and adversely affect us.

        Further, we face significant competition for attractive investment opportunities from an indeterminate number of other real estate investors, including investors with significantly greater capital resources and access to capital than we have, such as domestic and foreign corporations and financial institutions, publicly traded and privately held REITs, private institutional investment funds, investment banking firms, life insurance companies and pension funds. Moreover, in light of current market conditions and depressed real estate values, owners of office properties may be reluctant to sell, resulting in fewer acquisition opportunities. As a result of such increased competition and limited opportunities, we may be unable to acquire additional properties as we desire or the purchase price of such properties may be significantly elevated, which may impede our growth and materially and adversely affect us.

Future acquisitions of properties may not yield anticipated returns, may result in disruptions to our business, may strain management resources and/or may be dilutive to our shareholders.

        Our business and growth strategies involve the acquisition of underperforming office properties. In evaluating a particular property, we make certain assumptions regarding the expected future performance of that property. However, newly acquired properties, whether or not they were previously underperforming, may fail to perform as expected, and we may not successfully manage and lease those properties to meet our expectations. In particular, our acquisition activities pose the following risks to our ongoing operations:

    we may be unable to integrate new acquisitions quickly and efficiently, particularly acquisitions of portfolios of properties, into our existing operations;

    we may not achieve the increased occupancy, cost savings and operational efficiencies projected at the time of acquiring a property;

    management may incur significant costs and expend significant resources evaluating and negotiating potential acquisitions, including those that we subsequently are unable to complete;

    we may acquire properties or other real estate-related investments that are not initially accretive to our results upon acquisition, and we may not successfully manage and lease those properties to meet our expectations;

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    management's attention may be diverted to the integration of acquired properties, which in some cases may turn out to be less compatible with our business and growth strategies than originally anticipated;

    the acquired properties may not perform as well as we anticipate due to various factors, including changes in macroeconomic conditions and the demand for office space;

    costs necessary to bring acquired properties up to standards established for their intended market position may exceed our expectations;

    we may be unable to obtain financing for acquisitions on favorable terms or at all;

    we may acquire properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as clean-up of environmental contamination, claims by tenants, vendors or other persons against the former owners of the properties, and claims for indemnification by general partners, trustees, officers, and others indemnified by the former owners of the properties; and

    we may issue common shares or OP units as consideration for a property acquisition, which would dilute our current shareholders if such acquisition is not accretive.

We may acquire properties with high vacancy rates, which could reduce our operating income and materially and adversely affect us.

        The recent economic downturn has reduced demand for office space, which is evidenced by increased vacancy rates. To the extent that the operating stress caused by such increased vacancy rates puts pressure on owners to seek liquidity, including through sales of their commercial real estate assets, we may acquire properties from these owners, and any properties we acquire from these owners may have high vacancy rates. We may be unable to lease up these properties successfully, and their high vacancy rates may prevent us from increasing, and may cause us to lower, rents and may force us to grant tenant improvements and other concessions to a greater extent than we have historically, all of which could reduce our operating income from those properties and materially and adversely affect us.

Our success depends on key personnel whose continued service is not guaranteed and each of whom would be difficult to replace.

        Our success depends upon the continued contributions of certain key personnel, particularly James R. Heistand, our Executive Chairman, and Rudy Prio Touzet, our President and Chief Executive Officer. Each of these executives would be difficult to replace because of his in-depth knowledge of our markets, extensive experience acquiring, financing and managing office properties, and long-standing relationships with brokers, lenders and institutional buyers and sellers in the real estate industry in our key markets. In addition, our property-level managers have long-standing relationships with local businesses and existing tenants and on-the-ground knowledge of our existing properties and target markets. Although we will enter into employment agreements upon completion of this offering with each of our executive officers, including Messrs. Heistand and Touzet, we can provide no assurances that any of them will remain employed by us. The loss of services of one or more of these executives or property-level managers could diminish our business and investment opportunities and weaken our relationships with lenders, business partners and existing and prospective tenants and thus slow our future growth, which could materially and adversely affect us. Further, such a loss could be negatively perceived in the capital markets, which could reduce the market value of our common shares.

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We may make structured debt or equity investments, which will subject us to unique risks associated with these kinds of investments.

        We may from time to time make structured debt or equity investments in which, at the time of our investment, we do not control the underlying property. These investments will involve special risks relating to the particular entity in which we invest, including its financial condition, liquidity, results of operations, business and prospects. In particular, these investments likely will be subordinated to other obligations. If an entity in which we invest defaults, there may not be sufficient funds remaining for us after payment to the holders of senior obligations. In that event, we would not recover some or all of our investment. In addition, even if we are able to foreclose on any underlying property following a default, we would be substituted for the defaulting entity and, to the extent income generated by any underlying property is not sufficient to meet outstanding debt obligations on the property, we may need to commit substantial additional capital to stabilize the property and prevent additional defaults. In addition, these investments will subject us to the risks inherent with real estate investments referred to elsewhere in this prospectus. Significant losses related to these kinds of investments could materially and adversely affect us.

We may become subject to litigation, which could have a material and adverse effect on us.

        In the future we may become subject to litigation, including claims relating to our operations, offerings and otherwise in the ordinary course of business. Some of these claims may result in significant defense costs and potentially significant judgments against us, some of which are not, or cannot be, insured against. We generally intend to defend ourselves vigorously; however, we cannot be certain of the ultimate outcomes of any claims that may arise in the future. Resolution of these types of matters against us may result in our having to pay significant fines, judgments or settlements, which, if uninsured, or if the fines, judgments and settlements exceed insured levels, could adversely impact our earnings and cash flows, thereby having an adverse effect on our financial condition, results of operations and market price of our common shares. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flows, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and trustees.

Risks Related to the Real Estate Industry

Our performance and value are subject to risks associated with real estate and with the real estate industry.

        Our economic performance and the value of our real estate assets, and consequently the value of our securities, are subject to the risk that if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to make distributions to our shareholders will be adversely affected. In addition, there are significant expenditures associated with an investment in real estate (such as mortgage payments, real estate taxes and maintenance costs) that generally do not decline when circumstances reduce the income from the property. The following factors, among others, may adversely affect the operating performance and long- or short-term value of our properties:

    changes in the national, regional and local economic climate, particularly in markets in which we have a concentration of properties;

    local office market conditions, such as changes in the supply of, or demand for, space in properties similar to those that we own within a particular area;

    the financial stability of our tenants, including bankruptcies, financial difficulties or lease defaults by our tenants;

    vacancies or our inability to rent space on favorable terms;

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    the attractiveness of our properties to potential tenants;

    changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive or otherwise reduce returns to shareholders;

    changes in operating costs and expenses, including costs for maintenance, insurance and real estate taxes, and our ability to control rents in light of such changes;

    the need to periodically fund the costs to repair, renovate and re-let space;

    earthquakes, tornadoes, hurricanes and other natural disasters, civil unrest, terrorist acts or acts of war, which may result in uninsured or underinsured losses;

    changes in, or increased costs of compliance with, laws and/or governmental regulations, including those governing usage, zoning, the environment and taxes;

    decreases in the underlying value of our real estate; and

    changing submarket demographics.

        In addition, periods of economic slowdown or recession, rising interest rates or declining demand for real estate could result in a general decrease in rents or an increased occurrence of defaults under existing leases, which would adversely affect our financial condition and results of operations. Any of the above factors may prevent us from realizing growth or maintaining the value of our properties.

The illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties.

        Real estate investments, including high-quality office properties such as many of those in our portfolio, are relatively illiquid. As a result, we may not be able to sell a property or properties quickly or on favorable terms in response to changing economic, financial and investment conditions when it otherwise may be prudent to do so. Current conditions in the U.S. economy and credit markets have made it difficult to sell properties at attractive prices. We cannot predict whether we will be able to sell any property for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. We may be required to expend funds to correct defects or to make improvements before a property can be sold, and we cannot provide any assurances that we will have funds available to correct such defects or to make such improvements. Our inability to dispose of assets at opportune times or on favorable terms could adversely affect our cash flows and results of operations, thereby limiting our ability to make distributions to shareholders.

        Moreover, the Internal Revenue Code imposes restrictions on a REIT's ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interests. Therefore, we may not be able to vary our portfolio promptly in response to economic or other conditions or on favorable terms, which may adversely affect our cash flows, our ability to make distributions to shareholders and the market price of our common shares.

        In addition, our ability to dispose of some of our properties could be constrained by their tax attributes. Properties which we own for a significant period of time or which we acquire through tax deferred contribution transactions in exchange for OP units in our operating partnership may have low tax bases. If we dispose of these properties outright in taxable transactions, we may be required to distribute a significant amount of the taxable gain to our shareholders under the requirements of the Internal Revenue Code for REITs, which in turn would impact our cash flow and increase our leverage. In some cases, without incurring additional costs, we may be restricted from disposing of properties

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contributed in exchange for our OP units under tax protection agreements with contributors. To dispose of low basis or tax-protected properties efficiently, we may from time to time use like-kind exchanges, which qualify for non-recognition of taxable gain, but can be difficult to consummate and result in the property for which the disposed assets are exchanged inheriting their low tax bases and other tax attributes (including tax protection covenants).

Many real estate costs are fixed, even if income from our properties decreases.

        Many real estate costs, such as real estate taxes, insurance premiums and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, a tenant fails to pay rent or other circumstances cause a reduction in property revenues. In addition, newly acquired properties may not produce significant revenues immediately, and the property's operating cash flow may be insufficient to pay the operating expenses and debt service associated with these new properties. If we are unable to offset real estate costs with sufficient revenues across our portfolio, our financial performance and liquidity could be materially and adversely affected.

Uninsured losses or losses in excess of our insurance coverage could materially and adversely affect us.

        Upon completion of this offering and our formation transactions, we will carry comprehensive general liability, fire, extended coverage, business interruption, rental loss coverage and umbrella liability coverage on all of our properties and earthquake, wind, flood and hurricane coverage on properties in areas where such coverage is warranted. We believe the policy specifications and insured limits of these policies are adequate and appropriate given the relative risk of loss, the cost of the coverage and industry practice. However, we may be subject to certain types of losses that are generally catastrophic in nature, such as losses due to wars, conventional terrorism, Chemical, Biological, Nuclear and Radiation, or CBNR, acts of terrorism and, in some cases, earthquakes, hurricanes and flooding, either because such coverage is not available or is not available at commercially reasonable rates. If we experience a loss that is uninsured or that exceeds policy limits, we could lose all or a significant portion of the capital we have invested in the damaged property, as well as the anticipated future revenue from the property. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it impractical or undesirable to use insurance proceeds to replace a property after it has been damaged or destroyed. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged. Furthermore, we may not be able to obtain adequate insurance coverage at reasonable costs in the future, as the costs associated with property and casualty renewals may be higher than anticipated.

        In addition, insurance risks associated with potential terrorism acts could sharply increase the premiums we pay for coverage against property and casualty claims. With the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, United States insurers cannot exclude conventional (non-CBNR) terrorism losses. These insurers must make terrorism insurance available under their property and casualty insurance policies; however, this legislation does not regulate the pricing of such insurance. In some cases, mortgage lenders have begun to insist that commercial property owners purchase coverage against terrorism as a condition of providing mortgage loans. Such insurance policies may not be available at a reasonable cost, which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses.

        Any uninsured losses or losses in excess of our insurance coverage as a result of the foregoing could materially and adversely affect us.

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Costs of complying with governmental laws and regulations may adversely affect our results of operations and liquidity and reduce the cash available for distribution to our shareholders.

        All real property and the operations conducted on real property are subject to federal, state, and local laws and regulations relating to environmental protection and human health and safety. Tenants' ability to operate and to generate income to pay their lease obligations may be affected by permitting and compliance obligations arising under such laws and regulations. Some of these laws and regulations may impose joint and several liability on tenants, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may hinder our ability to sell, rent or pledge such property as collateral for future borrowings.

        Compliance with new laws or regulations or stricter interpretation of existing laws by agencies or the courts may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. Additionally, our tenants' operations, the existing condition of land when we buy it, operations in the vicinity of our properties such as the presence of underground storage tanks or activities of unrelated third parties may affect our properties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance. Any material expenditures, fines or damages we must pay will adversely affect our results of operations and liquidity and our ability to make distributions to our shareholders.

We face possible risks associated with the physical effects of climate change.

        We cannot predict with certainty whether climate change is occurring and, if so, at what rate. However, the physical effects of climate change could have a material adverse effect on our properties, operations and business. For example, many of our properties are located along the Gulf and East coasts. To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity and rising sea-levels. Over time, these conditions could result in declining demand for office space in our buildings or our inability to operate the buildings at all. Climate change also may have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy and increasing the cost of snow removal at our properties. There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.

As the present or former owner or operator of real property, we could become subject to liability for environmental contamination, regardless of whether we caused such contamination, which could materially and adversely affect us.

        Under various federal, state, and local environmental laws, ordinances, and regulations, a current or former owner or operator of real property may be liable for the cost to remove or remediate hazardous or toxic substances, wastes, or petroleum products on, under, from, or in such property. These costs could materially and adversely affect us, and liability under these laws may attach whether or not the owner or operator knew of, or was responsible for, the presence of such contamination. Even if more than one person may have been responsible for the contamination, each liable party may be held entirely responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a property for damages based on personal injury, natural resources or property damage and/or for other costs, including investigation and clean-up costs, resulting from the environmental contamination. The presence of contamination on one of our properties, or the failure to properly remediate a contaminated property, could give rise to a lien in favor of the government for costs it may incur to address the contamination, or otherwise adversely affect our ability to sell or lease the property or borrow using the property as collateral. In addition, if contamination is discovered on

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our properties, environmental laws may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures on our part or prevent us from entering into leases with prospective tenants.

As the owner of real property, we could become subject to liability for adverse environmental conditions in the buildings on our properties, which could materially and adversely affect us.

        Some of our properties contain asbestos-containing building materials. Environmental laws require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators who fail to comply with these requirements. In addition, environmental laws and the common law may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos. Some of our properties also may contain or develop harmful mold or suffer from other air quality issues. Any of these materials or conditions could result in liability for personal injury and costs of remediating adverse conditions, which could materially and adversely affect us.

As the owner of real property, we could become subject to liability for failure to comply with environmental requirements regarding the handling and disposal of regulated substances and wastes or for non-compliance with health and safety requirements, which requirements are subject to change.

        Some of our tenants may handle regulated substances and wastes as part of their operations at our properties. Environmental laws regulate the handling, use, and disposal of these materials and subject our tenants, and potentially us, to liability resulting from non-compliance with these requirements. The properties in our portfolio also are subject to various federal, state, and local health and safety requirements, such as state and local fire requirements. If we or our tenants fail to comply with these various requirements, we might incur governmental fines or private damage awards. Moreover, we do not know whether or the extent to which existing requirements or their enforcement will change or whether future requirements will require us to make significant unanticipated expenditures that will materially and adversely impact our financial condition, results of operations, cash flows, cash available for distribution to shareholders, the market price of our common shares, and our ability to satisfy our debt service obligations. If our tenants become subject to liability for noncompliance, it could affect their ability to make rental payments to us.

Compliance or failure to comply with the Americans with Disabilities Act and other safety regulations and requirements could result in substantial costs.

        Under the Americans with Disabilities Act of 1990, or the ADA, places of public accommodation must meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. Although we believe that our properties are currently in material compliance with these regulatory requirements, we have not conducted an audit or investigation of all of our properties to determine our compliance with the ADA, and we cannot predict the ultimate cost of compliance with the ADA or other legislation. If one or more of our properties is not in compliance with the ADA or other legislation, we would be required to incur additional costs to achieve compliance. If we are required to make unanticipated expenditures to comply with the ADA, including removing access barriers, our cash flows and the amounts available for distribution to our shareholders may be adversely affected.

        Our properties also are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or

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whether compliance with future requirements would require significant unanticipated expenditures that would affect our cash flow and results of operations. If we incur substantial costs to comply with the ADA or other safety regulations and requirements, our financial condition, results of operations, the market price of our common shares, cash flows and our ability to satisfy our debt obligations and to make distributions to our shareholders could be adversely affected.

We are exposed to risks associated with property development and redevelopment.

        We may engage in development and redevelopment activities with respect to certain of our properties. To the extent that we do so, we will be subject to certain risks, including the availability and pricing of financing on favorable terms or at all; construction and/or lease-up delays; cost overruns, including construction costs that exceed our original estimates; contractor and subcontractor disputes, strikes, labor disputes or supply disruptions; failure to achieve expected occupancy and/or rent levels within the projected time frame, if at all; and delays with respect to obtaining or the inability to obtain necessary zoning, occupancy, land use and other governmental permits, and changes in zoning and land use laws. These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development or redevelopment activities once undertaken, any of which could materially and adversely affect us.

Future terrorist attacks in the major metropolitan areas in which we own properties could significantly impact the demand for, and value of, our properties.

        Our portfolio maintains significant holdings in markets that have been and continue to be a high risk geographical area for terrorism and threats of terrorism, including Washington, D.C. Future terrorist attacks and other acts of terrorism or war would severely impact the demand for, and value of, our properties. Terrorist attacks in and around any of the major metropolitan areas in which we own properties also could directly impact the value of our properties through damage, destruction, loss or increased security costs, and could thereafter materially impact the availability or cost of insurance to protect against such acts. A decrease in demand could make it difficult to renew or re-let our properties at lease rates equal to or above historical rates, or at all. To the extent that any future terrorist attack otherwise disrupts our tenants' businesses, it may impair their ability to make timely payments under their existing leases with us, which would harm our operating results and could materially and adversely affect us.

Risks Related to Our Financing Activities

We expect to have approximately $413.4 million of consolidated indebtedness outstanding following this offering and are likely to incur additional mortgage and other indebtedness in the future, which may increase our business risks.

        Upon completion of this offering and our formation transactions, we anticipate that our total consolidated indebtedness will be approximately $413.4 million and our pro rata share of unconsolidated indebtedness will be approximately $87.8 million. In addition, we expect to enter into a $             million revolving credit facility upon completion of this offering, and we are likely to incur additional indebtedness to acquire properties or make other real estate-related investments, to fund property improvements and other capital expenditures or for other corporate purposes. We intend to maintain a ratio of our pro forma share of net debt to EBITDA in a target range of            to            ; however, we can provide no assurances that we will be successful in maintaining this ratio. Moreover, our organizational documents contain no limitations on the amount of indebtedness that we may incur; thus, we may become more highly leveraged in the future without shareholder approval.

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        Our level of debt and the limitations imposed on us by our financing agreements could have significant adverse consequences on us, including the following:

    our cash flow may be insufficient to allow us to meet our debt service requirements and to repay our debt, operate our properties, make distributions to our shareholders or successfully execute our growth strategy;

    we may be unable to borrow additional funds as needed on favorable terms, or at all, which could, among other things, adversely affect our ability to fund acquisitions or meet operational needs;

    we may be unable to refinance our indebtedness at maturity or the available refinancing terms may be less favorable than the terms of our original indebtedness;

    because a portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense;

    we may be forced to dispose of one or more of our properties, possibly on unfavorable terms;

    we may be at a competitive disadvantage compared to our competitors that have less debt;

    we may default on our payment obligations or violate restrictive covenants, in which case the lenders may accelerate our debt obligations and/or foreclose on our properties or our interests in the entities that own the properties that secure their loans; and

    our default under any indebtedness with cross-collateralization or cross default provisions could result in a default on other indebtedness.

        If any one of these events were to occur, we could be materially and adversely affected.

Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.

        Incurring mortgage or other secured debt obligations increases the risk of loss because defaults on indebtedness secured by properties may result in lenders initiating foreclosure actions. If we default on any of our mortgage or other secured debt obligations, we could lose the property securing the loan that is in default. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but we would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Internal Revenue Code. In addition, we may give full or partial guarantees to lenders of mortgage debt on behalf of the entities that own our properties. When we give a guarantee on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity. If any of our properties are foreclosed on due to a default, our ability to pay cash distributions to our shareholders will be limited.

Our growth depends on external sources of capital that are outside our control and may not be available to us on favorable terms or at all.

        In order to qualify and maintain our qualification as a REIT, we must distribute at least 90% of our REIT taxable income annually, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, to the extent that we distribute less than 100% of our REIT taxable income, including any net capital gains, we will be subject to income tax at regular corporate rates. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flow. Consequently, we intend to rely

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on third-party sources to fund a substantial portion of our future capital needs. We cannot assure you that capital will be available from such sources on favorable terms or at all. Any additional debt we incur will increase our leverage, expose us to the risk of default and impose operating restrictions on us, and any additional equity we raise could be dilutive to existing shareholders. Our access to third-party sources of capital depends, in part, on:

    general market conditions;

    the market's view of the quality of our assets;

    the market's perception of our growth potential;

    our current debt levels;

    our current and expected future earnings;

    our cash flow and cash distributions; and

    the market price of our common shares.

        If we are unable to obtain capital from third party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our properties, satisfy our debt service obligations or make the cash distributions to our shareholders necessary to qualify and maintain our qualification as a REIT.

Disruptions in the financial markets could adversely affect our ability to obtain sufficient third party financing for our capital needs, including expansion, acquisition and other activities, on favorable terms or at all, which could materially and adversely affect us.

        The U.S. stock and credit markets recently have experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks to fluctuate substantially and the spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the financial markets, making terms for certain financings less attractive, and in some cases have resulted in the unavailability of financing, even for companies which otherwise are qualified to obtain financing. In addition, several banks and other institutions that historically have been reliable sources of financing have gone out of business, which has reduced significantly the number of lending institutions and the availability of credit. Continued volatility and uncertainty in the stock and credit markets may negatively impact our ability to access additional financing for our capital needs, including expansion, acquisition activities and other purposes, on favorable terms or at all, which may negatively affect our business. Additionally, due to this uncertainty, we may in the future be unable to refinance or extend our debt, or the terms of any refinancing may not be as favorable as the terms of our existing debt. If we are not successful in refinancing our debt when it becomes due, we may be forced to dispose of properties on disadvantageous terms, which might adversely affect our ability to service other debt and to meet our other obligations. A prolonged downturn in the financial markets may cause us to seek alternative sources of potentially less attractive financing and may require us to further adjust our business plan accordingly. These events also may make it more difficult or costly for us to raise capital through the issuance of new equity capital or the incurrence of additional secured or unsecured debt, which could materially and adversely affect us.

Existing loan agreements contain, and future financing arrangements likely will contain, restrictive covenants relating to our operations, which could materially and adversely affect us and our ability to make distributions to our shareholders.

        We are subject to certain restrictions pursuant to the restrictive covenants of our outstanding indebtedness, which may affect our distribution and operating policies and our ability to incur additional indebtedness. Loan documents evidencing our existing indebtedness (including our proposed

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$       million revolving credit facility) contain, and loan documents entered into in the future likely will contain, certain operating covenants that limit our ability to further mortgage our properties or discontinue insurance coverage. In addition, these agreements generally contain financial covenants, including certain coverage ratios and limitations on our ability to incur secured and unsecured debt, make dividend payments, sell all or substantially all of our assets, and engage in mergers and consolidations and certain acquisitions. Covenants under our existing indebtedness do, and under any future indebtedness likely will, restrict our ability to pursue certain business initiatives or certain acquisition transactions. If we fail to meet or satisfy any of these covenants in our debt agreements, we would be in default under these agreements, which could result in a cross-default under other debt agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral and enforce their respective interests against existing collateral. In addition, certain of our debt agreements contain, and debt agreements entered into in the future may contain, specific cross-default provisions with respect to specified other indebtedness, giving the lenders the right to declare a default if we are in default under other loans in some circumstances. A default also could limit significantly our financing alternatives, which could cause us to curtail our investment activities and/or dispose of assets when we otherwise would not choose to do so. If we default on several of our debt agreements or any single significant debt agreement, we could be materially and adversely affected.

Failure to hedge effectively against interest rate changes may adversely affect our results of operations.

        We seek to manage our exposure to interest rate volatility by entering into interest rate hedging arrangements, such as interest rate cap agreements and interest rate swap agreements. Although these arrangements are intended to lessen the impact of rising interest rates on us, they also expose us to the risks that the other parties to the agreements will not perform their obligations, that these arrangements will not be effective in reducing our exposure to interest rate changes and that a court could rule that such agreements are unenforceable. We also could incur significant costs associated with the settlement of the agreements, and the underlying transactions may fail to qualify as highly effective cash flow hedges under Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 815, Derivatives and Hedging. At the time of this offering, we expect that a portion of our total indebtedness will be floating rate debt, a substantial portion of which is subject to hedging agreements. Hedging may reduce the overall returns on our investments, and the failure to hedge effectively against interest rate changes may materially adversely affect our results of operations.

        When a hedging agreement is required under the terms of our debt, it is often a condition, among other conditions, that the hedge counterparty agree to maintain a specified credit rating. With the current volatility in the financial markets, there is a reduced pool of eligible counterparties that are able to meet or are willing to assume these conditions, which has resulted in an increased cost for hedging agreements. This will make it more difficult and costly to enter into hedging agreements in the future. Additionally, due to the current volatility in the financial markets, there is an increased risk that hedge counterparties could have their credit rating downgraded to a level that would not be acceptable under the related debt. If we were unable to renegotiate the credit rating condition with the lender or find an alternative counterparty with an acceptable credit rating, we could be in default under the related debt, which, in the case of any secured debt, would subject us to the risk of foreclosure of the collateral.

Risks Related to Our Organization and Structure

Our management has limited experience operating a REIT and a public company, which may impede their ability to successfully manage our business.

        We have no history operating as a REIT or as a public company. In addition, certain members of our board of trustees and our senior management team have limited experience operating a business in

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accordance with the Internal Revenue Code requirements for maintaining qualification as a REIT and operating a public company. Upon completion of this offering, we will be required to develop and implement substantial control systems and procedures to assist us in qualifying and maintaining our qualification as a public REIT, satisfying our periodic and current reporting requirements under applicable SEC regulations and complying with NYSE listing standards. As a result, substantial work on our part will be required to implement and execute appropriate reporting and compliance processes, including internal control over financial reporting, assess their design, remediate any deficiencies identified and test the operation of such processes. We have limited experience implementing and executing such processes in a public company, and this process is expected to be both costly and challenging. In particular, we note that our former independent auditor identified a material weakness in our internal controls due to a lack of a sufficient number of trained accounting and finance personnel, which we are in the process of remediating. We cannot assure you that our management's past experience will be sufficient to develop and implement these systems and procedures and to operate our company successfully. Failure to effectively develop and implement such systems, policies and procedures could hinder our ability to operate as a public company and adversely affect our results of operations, cash flows and ability to make distributions to our shareholders. Furthermore, if we fail to qualify and maintain our qualification as a REIT, our distributions to shareholders would not be deductible for U.S. federal income tax purposes and we would be required to pay corporate tax at applicable rates on our taxable income, which would substantially reduce our earnings and may reduce the market price of our common shares.

We may pursue less vigorous enforcement of terms of the contribution and other agreements entered into in connection with our formation transactions because of conflicts of interest with certain of our officers and related parties.

        Pursuant to the contribution and other agreements entered into in connection with our formation transactions, certain of our executive officers and other contributors made limited representations and warranties to us regarding potential material adverse impacts on the entities and assets to be acquired by us in our formation transactions and agreed to indemnify us and our operating partnership for breaches of such representations and warranties. In addition, we will enter into an employment agreement with each of our executive officers. Because of our desire to maintain ongoing relationships with our executive officers and other contributors, we may choose not to enforce, or to enforce less vigorously, our rights under these agreements.

The consideration paid by us in exchange for the contribution of properties and other assets to us in our formation transactions may exceed the fair market value of these assets.

        We did not obtain independent fairness opinions in connection with our formation transactions and, in certain instances, the amount of consideration we will pay for our assets was not negotiated on an arm's length basis. Further, the value of the OP units and our common shares that we will issue as consideration for certain of the properties and assets that we will acquire in our formation transactions will increase or decrease if the market price of our common shares increases or decreases. The initial public offering price of our common shares will be determined in consultation with the underwriters. Among the factors that will be considered are our record of operations, our management, our historical and projected net income, FFO and cash available for distribution, our anticipated dividend yield, our growth prospects, the quality of our portfolio and our tenants, the current market valuations, financial performance and dividend yields of publicly traded companies considered by us and the underwriters to be comparable to us and the current state of the commercial real estate industry and the economy as a whole. The initial public offering price does not necessarily bear any relationship to the book value or fair market value of our properties and assets. As a result, the fair market value of the equity securities we issue and/or the amount of cash we pay to the contributors and sellers of properties and other assets in our formation transactions may exceed the fair market value of these properties and assets.

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Certain of our executive officers exercised significant influence with respect to the terms of our formation transactions.

        We did not conduct arm's length negotiations with certain of our executive officers with respect to the terms of our formation transactions, including the terms of the contribution agreements and the employment agreements with our executive officers. Therefore, the terms of these agreements may not be as favorable to us as if they were so negotiated. In structuring our formation transactions, certain of our executive officers exercised significant influence on the type and level of benefits that they and other members of our senior management team will receive from us, including the amount of cash and number of our common shares or OP units that they will receive in connection with their contribution to us of our properties and the benefits our senior management team will receive from us for their services.

We may assume unknown liabilities in connection with our formation transactions.

        As part of our formation transactions, we will acquire entities and assets that are subject to existing liabilities, some of which may be unknown or unquantifiable at the time this offering is completed. These assumed liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims by tenants, vendors or other persons dealing with our predecessor (that had not been asserted or threatened prior to this offering), tax liabilities and accrued but unpaid liabilities incurred in the ordinary course of business or otherwise. While in some instances we may have the right to seek reimbursement against an insurer or another third party, recourse against the contributors and sellers of our properties and other assets for certain of these liabilities will be limited. There can be no assurance that we will be entitled to any such reimbursement or that we ultimately will be able to recover in respect of such rights for any of these historical liabilities, which may adversely affect our financial condition, results of operations, cash flows and the market price of our common shares.

Conflicts of interest exist or could arise in the future between the interests of our shareholders and the interests of holders of OP units, which may impede business decisions that could benefit our shareholders.

        Conflicts of interest exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership or any partner thereof, on the other. Our trustees and officers have duties to our company and our shareholders under applicable Maryland law in connection with their management of our company. At the same time, we, as general partner, have fiduciary duties and obligations to our operating partnership and its limited partners under Delaware law and the partnership agreement of our operating partnership in connection with the management of our operating partnership. Our duties as general partner to our operating partnership and its partners may come into conflict with the duties of our trustees and officers to our company and our shareholders. These conflicts may be resolved in a manner that is not in the best interests of our shareholders.

        Additionally, the partnership agreement of our operating partnership expressly limits our liability by providing that neither we, as the general partner of our operating partnership, nor any of our trustees or officers, will be liable or accountable for damages to our operating partnership, the limited partners or assignees for errors in judgment, mistakes of fact or law or for any act or omission if we, or such trustee or officer, acted in good faith. In addition, our operating partnership is required to indemnify us, and our officers, trustees, employees, agents and designees to the fullest extent permitted by applicable law from and against any and all claims arising from operations of our operating partnership, unless it is established that (1) the act or omission was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, (2) the indemnified party actually received an improper personal benefit in money, property or services or (3) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that

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the act or omission was unlawful. The provisions of Delaware law that allow the fiduciary duties of a general partner to be modified by a partnership agreement have not been resolved in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the partnership agreement that purport to waive or restrict our fiduciary duties that would be in effect were it not for the partnership agreement.

The share ownership limits imposed by the Internal Revenue Code for REITs and our declaration of trust may restrict our business combination opportunities.

        In order for us to maintain our qualification as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of each taxable year following our first year. Our declaration of trust, with certain exceptions, authorizes our board of trustees to take the actions that are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of trustees, no person may own more than 9.8% of the aggregate of our outstanding common shares by value or by number of shares, whichever is more restrictive, or 9.8% of the aggregate of the outstanding shares of any series or class of our preferred shares by value or by number of shares, whichever is more restrictive. Our board may, in its sole discretion, grant an exemption to the share ownership limits, subject to certain conditions and the receipt by our board of certain representations and undertakings. In addition, our board may change the share ownership limits as described under "Certain Provisions of Maryland Law and Our Declaration of Trust and Bylaws." Our declaration of trust also prohibits any person from (a) beneficially or constructively owning, as determined by applying certain attribution rules of the Internal Revenue Code, our shares that would result in us being "closely held" under Section 856(h) of the Internal Revenue Code or that would otherwise cause us to fail to qualify as a REIT or to have significant non-qualifying income from "related" parties or (b) transferring shares if such transfer would result in our shares being owned by fewer than 100 persons. The ownership limits imposed under the Internal Revenue Code and described in clause (a) of this paragraph are based upon direct or indirect ownership by "individuals" during the last half of a tax year. The share ownership limits contained in our declaration of trust key off the ownership at any time by any "person," which term includes entities. These share ownership limits in our declaration of trust are common in REIT charters and are intended to provide added assurance of compliance with the tax law requirements and to minimize administrative burdens. However, the share ownership limits also might delay or prevent a transaction or a change in our control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.

Our authorized but unissued common shares and preferred shares may prevent a change in our control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.

        Our declaration of trust authorizes us to issue additional authorized but unissued common or preferred shares. In addition, our board of trustees may, without shareholder approval, amend our declaration of trust to increase the aggregate number of our common shares or the number of shares of any class or series of preferred shares that we have authority to issue and classify or reclassify any unissued common shares or preferred shares and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our board of trustees may establish a series of common shares or preferred shares that could delay or prevent a transaction or a change in our control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.

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Certain provisions of Maryland law could inhibit changes in control.

        Certain provisions of the Maryland General Corporation Law, or MGCL, that are applicable to Maryland real estate investment trusts may have the effect of deterring a third party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of our common shares, including:

    "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested shareholder" (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our voting shares or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting shares at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose fair price and/or supermajority and shareholder voting requirements on these combinations; and

    "control share" provisions that provide that "control shares" of our company (defined as voting shares that, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

        As permitted by Maryland law, we have elected, by resolution of our board of trustees, to opt out of the business combination provisions of the MGCL and, pursuant to a provision in our bylaws, to exempt any acquisition of our shares from the control share provisions of the MGCL. However, our board of trustees may by resolution elect to repeal the exemption from the business combination provisions of the MGCL and may by amendment to our bylaws opt into the control share provisions of the MGCL at any time in the future.

        Certain provisions of the MGCL applicable to Maryland real estate investment trusts permit our board of trustees, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to adopt certain mechanisms, some of which (for example, a classified board) we do not have. These provisions may have the effect of limiting or precluding a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in our control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then current market price. Our declaration of trust contains a provision whereby we will elect, at such time as we become eligible to do so, to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of trustees. See "Certain Provisions of Maryland Law and Our Declaration of Trust and Bylaws."

Certain provisions in the partnership agreement for our operating partnership may delay or prevent unsolicited acquisitions of us.

        Provisions in the partnership agreement for our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or a change in our control, although some shareholders might consider such proposals, if made, desirable. These provisions include, among others:

    redemption rights of qualifying parties;

    transfer restrictions on our OP units;

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    our ability, as general partner, in some cases, to amend the partnership agreement without the consent of the limited partners; and

    the right of the limited partners to consent to transfers of the general partnership interest and mergers, consolidations and other business combinations under specified circumstances.

Termination of the employment agreements with our executive officers could be costly and prevent a change in our control.

        The employment agreements with our executive officers each provide that if their employment with us terminates under certain circumstances (including upon a change in our control), we may be required to pay them significant amounts of severance compensation, including accelerated vesting of equity awards, thereby making it costly to terminate their employment. Furthermore, these provisions could delay or prevent a transaction or a change in our control that might involve a premium paid for our common shares or otherwise be in the best interests of our shareholders.

Our board of trustees may change significant corporate policies and practices without shareholder approval, which limits your control of our policies and practices.

        Our board of trustees has broad authority to determine our investment, financing, borrowing and distribution policies and our policies with respect to all other activities, including growth, capitalization and operations, without shareholder approval. Likewise, these policies may be amended or revised at the discretion of our board of trustees without a vote of our shareholders. As a result, the ability of our shareholders to control our policies and practices is extremely limited. We could make investments and engage in business activities that are different from, and possibly riskier than, the investments and businesses described in this prospectus. Further, our board of trustees may alter or eliminate our current policy on borrowing at any time without shareholder approval, and we may become more highly leveraged, which could result in increased debt service payments and an increased risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets or markets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk. These and other changes to our policies could adversely affect our financial condition, results of operations, cash flows and the market price of our common shares.

Our declaration of trust contains provisions that make removal of our trustees difficult, which could make it difficult for our shareholders to effect changes to our management.

        Our declaration of trust provides that, subject to the rights of holders of one or more classes or series of preferred shares to elect or remove one or more trustees, a trustee may be removed only for cause and only by the affirmative vote of holders of at least two-thirds of the votes entitled to be cast in the election of trustees and that our board of trustees has the exclusive power to fill vacant trusteeships, even if the remaining trustees do not constitute a quorum. These provisions make it more difficult to change our management by removing and replacing trustees and may delay or prevent a change in our control that is in the best interests of our shareholders.

Our rights and the rights of our shareholders to take action against our trustees and officers are limited, which could limit our shareholders' recourse in the event of actions not in our shareholders' best interests.

        Under Maryland law generally, a trustee is required to perform his or her duties in good faith, in a manner he or she reasonably believes to be in the best interest of the company and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Under Maryland law, trustees are presumed to have acted with this standard of care. In addition, our declaration of trust

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limits the liability of our trustees and officers to us and our shareholders for money damages, except for liability resulting from:

    actual receipt of an improper benefit or profit in money, property or services; or

    active and deliberate dishonesty by the trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

        Our declaration of trust and bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to indemnify and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to any present or former trustee or officer who is made or threatened to be made a party to the proceeding by reason of his or her service to us in that capacity. In addition, we may be obligated to advance the defense costs incurred by our trustees and officers. As a result, we and our shareholders may have more limited rights against our trustees and officers than might otherwise exist absent the current provisions in our declaration of trust and bylaws or that might exist with other companies.

All of the members of our senior management team have outside business interests that could require time and attention and may interfere with their ability to devote time to our business and affairs or present financial conflicts with us and may adversely affect our business.

        All of the members of our senior management team have outside business interests that are not being contributed to our company and that could require time and attention. These interests include ownership interests in office properties in Atlanta, Charlotte, Jacksonville and Tampa, as well as interests in properties that are under contract or letter of intent to be sold. See "Business and Properties—Excluded Assets." In some cases, one or more members of our senior management team may have financial conflicts between these properties and the properties in our initial portfolio. In addition, certain members of our senior management team will have certain management and fiduciary obligations related to these business interests that may interfere with their ability to devote time to our business and affairs and may adversely affect our business.

We are a holding company with no direct operations and will rely on funds received from our operating partnership to pay our obligations.

        We are a holding company and will conduct substantially all of our business through our operating partnership. We do not have, apart from our ownership of our operating partnership, any independent operations. As a result, we will rely on distributions from our operating partnership to make any distributions we might declare on our common shares. We also will rely on distributions from our operating partnership to meet any of our obligations, including any tax liability on taxable income allocated to us from our operating partnership (which might even make distributions to us less than the tax on such allocated taxable income) to the extent we distribute less than 100% of our REIT taxable income.

        In addition, because we are a holding company, your claims as shareholders will be structurally subordinated to all existing and future liabilities (whether or not for borrowed money) and preferred equity of our operating partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our operating partnership and its subsidiaries will be able to satisfy the claims of our shareholders only after all of our and our operating partnership's and its subsidiaries' liabilities and preferred equity have been paid in full.

        Upon completion of this offering and our formation transactions, we will own approximately      % of the OP units in our operating partnership (or      % if the underwriters exercise their overallotment option in full). However, our operating partnership may issue additional OP units to third parties in the future. Such issuances would reduce our ownership in our operating partnership and reduce the cash

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available for distribution to our shareholders. Because you will not directly own OP units, you will not have any voting rights with respect to any such issuances or other partnership level activities of our operating partnership.

If we fail to establish and maintain an effective system of integrated internal controls, we may not be able to accurately report our financial results.

        In connection with our operation as a public company, we will be required to report our operations on a consolidated basis and, in some cases, on a property by property basis. We are in the process of implementing an internal audit function and modifying our company-wide systems and procedures in a number of areas to enable us to report on a consolidated basis as we continue the process of integrating the financial reporting of the entities we will acquire in connection with this offering and our formation transactions. We note that our former independent auditor identified a material weakness in our internal controls due to a lack of a sufficient number of trained accounting and finance personnel, which we are in the process of remediating. If we fail to implement proper overall business controls, including as required to integrate the entities contributing property interests to us in connection with our formation transactions, our results of operations could be harmed or we could fail to meet our reporting obligations. In addition, the existence of a material weakness or significant deficiency could result in errors in our consolidated financial statements that could require a restatement of our consolidated financial statements, cause us to fail to meet our reporting obligations, result in increased costs to remediate any deficiencies, attract regulatory scrutiny or lawsuits and cause investors to lose confidence in our reported financial information, leading to a decline in the market price of our common shares.

Risks Related to this Offering

There has been no public market for our common shares prior to this offering and an active, liquid trading market for our common shares may not develop or continue following this offering.

        Prior to this offering, there has been no public market for our common shares. An active trading market for our common shares may never develop or be sustained and securities analysts may choose not to cover us, which could affect the liquidity of our common shares, limit the ability of our shareholders to sell our common shares when desired or at all and could depress the market price of our common shares. In addition, the initial public offering price will be determined through negotiations between us and the representatives of the underwriters and may bear no relationship to the price at which our common shares will trade upon completion of this offering or the price at which you may be able to sell our common shares in the future.

The market price and trading volume of our common shares may be volatile and could decline substantially following this offering.

        The stock markets, including the NYSE, on which we intend to apply to list our common shares, historically have experienced significant price and volume fluctuations. As a result, the market price of our common shares is likely to be similarly volatile and subject to wide fluctuations, and investors in our common shares may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The market price of our common shares could decline substantially in response to a number of factors, including those listed in this "Risk Factors" section of this prospectus and others such as:

    our actual or anticipated operating performance and the performance of other similar companies;

    actual or anticipated changes in our and our tenants' business strategies or prospects;

    actual or anticipated variations in our quarterly operating results or dividends;

    our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts;

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    publication of research reports about us, the commercial real estate sector or the real estate industry;

    equity issuances by us, or share resales by our shareholders, or the perception that such issuances or resales could occur;

    the passage of legislation or other regulatory developments that adversely affect us or the assets in which we seek to invest;

    increases in market interest rates that lead purchasers of our common shares to demand a higher yield;

    the use of significant leverage to finance our assets;

    changes in market valuations of similar companies;

    additions to or departures of our key personnel;

    actions by our shareholders;

    changes in accounting principles or actual, potential or perceived accounting problems;

    failure to qualify, or maintain our qualification, as a REIT;

    failure to satisfy the listing requirements of the NYSE;

    failure to comply with the requirements of the Sarbanes-Oxley Act;

    speculation in the press or investment community; and

    general market and economic conditions, including conditions in the Southeastern and mid-Atlantic United States, where we have a geographic concentration of properties.

        We can provide no assurance that the market price of our common shares will not fluctuate or decline significantly in the future or that shareholders will be able to sell their shares when desired on favorable terms, or at all.

        In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common shares. This type of litigation could result in substantial costs and divert our management's attention and resources, which could have a material adverse effect on our cash flows, our ability to execute our business strategy and our ability to make distributions to our shareholders.

The number of our common shares eligible for future sale may have adverse effects on the market price of our common shares.

        We are offering        common shares, as described in this prospectus. Upon completion of this offering, we will grant an aggregate of        restricted share units under our equity incentive plan to our executive officers, non-employee trustees and certain employees. Each of our executive officers, trustees and certain continuing investors may sell the common shares that they acquire in our formation transactions at any time following the expiration of the lock-up period for such shares, which expires 180 days after the date of this prospectus, or earlier with the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc. and Wells Fargo Securities, LLC. We cannot predict the effect, if any, of future sales of our common shares, or the availability of shares for future sales, on the market price of our common shares. The market price of our common shares may decline significantly when the restrictions on resale by certain of our shareholders lapse or upon the registration of additional common shares pursuant to registration rights granted in connection with this offering and our formation transactions. Sales of substantial amounts of common shares or the perception that such sales could occur may materially and adversely affect the market price for our common shares and may adversely affect the terms upon which we may obtain additional capital through the sale of equity or equity-related securities in the future.

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        In addition, at any time following the expiration of the 180-day lock-up period of our company, we may issue additional common shares in subsequent public offerings or private placements for a variety of purposes. We are not required to offer any common shares to existing shareholders on a preemptive basis. Therefore, it may not be possible for existing shareholders to participate in such future share issuances, which may dilute existing shareholders' interests in us.

Future offerings of debt or equity securities, which could be senior to our common shares, may adversely affect the market price of our common shares.

        In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities (or causing our operating partnership to issue debt securities), including medium-term notes, senior or subordinated notes and classes or series of preferred shares. Upon liquidation, holders of our debt securities and preferred shares and lenders with respect to other borrowings will be entitled to receive our available assets prior to distribution to the holders of our common shares. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to holders of our common shares. We are not required to offer any such additional debt or equity securities to existing common shareholders on a preemptive basis. Therefore, additional common share issuances, directly or through convertible or exchangeable securities, warrants or options, will dilute our existing common shareholders' ownership in us and such issuances, or the perception that such issuances may occur, may reduce the market price of our common shares. Our preferred shares, if issued, could have a preference on distributions, whether periodic or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to our common shareholders. Because our decision to issue securities in any future offering or otherwise incur debt will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. Thus, our shareholders bear the risk of our future offerings reducing the market price of our common shares and diluting the value of their share holdings in us.

Future cash flows may not be sufficient to make distributions to our shareholders at expected levels, which could result in a significant decrease in the market price of our common shares.

        We may be unable to pay our estimated initial annual distribution to shareholders out of cash available for distribution. If sufficient cash is not available for distribution from our operations, we may have to fund distributions from working capital, borrow or raise equity to provide funds for such distributions or reduce the amount of such distributions or declare taxable stock dividends. If cash available for distribution generated by our assets is less than our current estimate, or if such cash available for distribution decreases in future periods from expected levels, we may be unable to make the expected cash distributions, which could result in a significant decrease in the market price of our common shares. In the event the underwriters' overallotment option is exercised, pending investment of the net proceeds therefrom, our ability to make such distributions out of cash from our operations may be further materially and adversely affected.

        Our future distributions will be at the sole discretion of our board of trustees and will depend upon our actual and projected financial condition, results of operations, cash flows, liquidity and FFO, our REIT qualification and such other matters as our board of trustees may deem relevant from time to time. We may not be able to make distributions in the future or may need to fund such distributions from external sources, as to which no assurances can be given. Among the factors that could impair our ability to make distributions to our shareholders are:

    reductions in cash flow resulting from the failure of tenants to pay their rent obligations to us or our failure to re-let space upon expiration or termination of leases;

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    our debt servicing requirements;

    capital expenditures;

    unanticipated expenses that reduce our cash flow;

    increases in interest rates;

    variances between actual and anticipated operating expenses;

    the need to reduce our leverage; and

    other restrictions under financing arrangements and applicable law.

        In addition, some of our distributions may include a return of capital. To the extent that we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions generally would be considered a return of capital for U.S. federal income tax purposes to the extent of the holder's adjusted tax basis in its shares, and thereafter as gain on a sale or exchange of such shares. See "Material United States Federal Income Tax Considerations—Taxation of Shareholders." If we fund our future needs with debt, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.

As a result of differences between the book value of assets contributed or acquired in our formation transactions and the price paid for our common shares in this offering, you will experience an immediate and material dilution in the book value per common share.

        As of June 30, 2010, the aggregate historical combined net tangible book value of the interests and assets to be transferred to our operating partnership in our formation transactions was approximately $       million, or $            per common share held by the former owners of our predecessor, assuming the exchange of OP units for our common shares on a one-for-one basis. As a result, the pro forma net tangible book value per common share upon completion of this offering and our formation transactions will be substantially less than the initial public offering price. Accordingly, the purchasers of our common shares in this offering will experience an immediate dilution of approximately $            in the pro forma net tangible book value per common share, based on the mid-point of the price range set forth on the cover page of this prospectus, or $            per common share if the underwriters exercise their overallotment option in full.

Market interest rates may have an effect on the value of our common shares.

        One of the factors that will influence the market price of our common shares will be the dividend yield on our common shares (as a percentage of the price of our common shares) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of our common shares to expect a higher dividend yield, which we may not be able, or may choose not, to provide. As a result, prospective purchasers may decide to purchase other securities rather than our common shares, which would reduce the demand for our common shares and result in a decline in the market price of our common shares.

Risks Related to Our Taxation as a REIT

Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code.

        Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. Moreover, new legislation, court decisions or administrative

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guidance, in each case possibly with retroactive effect, may make it more difficult or impossible for us to qualify as a REIT. Certain rules applicable to REITs are particularly difficult to interpret or to apply in the case of REITs investing in real estate mortgage loans that are acquired at a discount, subject to work-outs or modifications, or reasonably expected to be in default at the time of acquisition. In addition, our ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

If we do not qualify as a REIT or if we fail to remain qualified as a REIT, we will be subject to U.S. federal income tax and potentially state and local taxes, which would reduce the amount of cash available for distribution to our shareholders.

        We have been organized and we intend to operate in a manner that will enable us to qualify as a REIT for U.S. federal income tax purposes commencing with the portion of our taxable year ending December 31, 2010. Although we do not intend to request a ruling from the Internal Revenue Service, or the IRS, as to our REIT qualification, we have received an opinion of Hogan Lovells US LLP, or Hogan Lovells, with respect to our qualification as a REIT in connection with this offering of common shares. Investors should be aware, however, that opinions of counsel are not binding on the IRS or any court. The opinion of Hogan Lovells represents only the view of our counsel based on our counsel's review and analysis of existing law and on certain representations as to factual matters and covenants made by us, including representations relating to the values of our assets and the sources of our income. The opinion is expressed as of the date issued. Hogan Lovells will have no obligation to advise us or our common shareholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in applicable law. Furthermore, both the validity of the opinion of Hogan Lovells and our qualification as a REIT depend on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis, the results of which will not be monitored by Hogan Lovells.

        Our ability to satisfy the REIT income and asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income and asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis.

        If we were to fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and dividends paid to our shareholders would not be deductible by us in computing our taxable income. Any resulting corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our shareholders, which in turn could have an adverse impact on the market price of our common shares. Unless we were entitled to relief under certain Internal Revenue Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year in which we failed to qualify as a REIT.

Failure of our operating partnership to be treated as a partnership for U.S. federal income tax purposes would result in our failure to qualify as a REIT and the imposition of corporate tax on our operating partnership.

        Failure of our operating partnership to be treated as a partnership would have serious adverse consequences to our shareholders. If the IRS were to successfully challenge the tax status of our operating partnership for U.S. federal income tax purposes, our operating partnership or the affected subsidiary partnership would be taxable as a corporation. In such event, we would cease to qualify as a REIT and the imposition of a corporate tax on our operating partnership or a subsidiary partnership would reduce the amount of cash available for distribution from our operating partnership to us and ultimately to our shareholders.

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Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

        The maximum tax rate applicable to income from "qualified dividends" payable to U.S. shareholders that are individuals, trusts and estates has been reduced by legislation to 15% (through 2010). Dividends payable by REITs, however, generally are not eligible for the reduced rates and will continue to be subject to tax at rates applicable to ordinary income, which will be as high as 35% through 2010 (and in the absence of legislative action, as high as 39.6% starting in 2011). Although this legislation does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common shares.

REIT distribution requirements could adversely affect our ability to execute our business plan or cause us to finance our needs during unfavorable market conditions.

        We generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order for U.S. federal corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement but distribute less than 100% of our taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. We intend to make distributions to our shareholders to comply with the REIT requirements of the Internal Revenue Code.

        From time to time, we may generate taxable income greater than our income for financial reporting purposes prepared in accordance with GAAP. In addition, differences in timing between the recognition of taxable income and the actual receipt of cash may occur. As a result, we may find it difficult or impossible to meet distribution requirements in certain circumstances. In particular, where we experience differences in timing between the recognition of taxable income and the actual receipt of cash, the requirement to distribute a substantial portion of our taxable income could cause us to (1) sell assets in adverse market conditions, (2) borrow on unfavorable terms, (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt or (4) make a taxable distribution of our common shares as part of a distribution in which shareholders may elect to receive our common shares or (subject to a limit measured as a percentage of the total distribution) cash, in order to comply with REIT requirements. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our common shares.

Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow.

        Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income, property or net worth, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Internal Revenue Code to maintain our qualification as a REIT. See "Material United States Federal Income Tax Considerations—Taxation of REITs in General." Any of these taxes would decrease cash available for the payment of our debt obligations and distributions to shareholders. Our TRS will be subject to U.S. federal corporate income tax on its net taxable income, if any. Moreover, if we have net income from "prohibited transactions," that income will be subject to a 100% tax. In general, prohibited transactions are sales or other dispositions by us and not by our TRS of property held primarily for sale to customers in the ordinary course of business. The determination as to

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whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale.

Complying with REIT requirements may force us to forgo and/or liquidate otherwise attractive investment opportunities.

        To qualify as a REIT, we must ensure that we meet the REIT gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries. See "Material United States Federal Income Tax Considerations—Requirements for Qualification as a REIT." If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio, or contribute to a taxable REIT subsidiary, otherwise attractive investments in order to maintain our qualification as a REIT. These actions could have the effect of reducing our income and amounts available for distribution to our shareholders. In addition, we may be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution, and may be unable to pursue investments that would otherwise be advantageous to us in order to satisfy the source of income or asset diversification requirements for qualifying as a REIT. Thus, compliance with the REIT requirements may hinder our ability to make, and, in certain cases, maintain ownership of, certain attractive investments.

We may in the future choose to pay dividends in our own common shares, in which case shareholders may be required to pay income taxes in excess of the cash dividends they receive.

        We may seek in the future to distribute taxable dividends that are payable in cash and our common shares at the election of each shareholder. Taxable shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, shareholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. shareholder sells the common shares that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our shares at the time of the sale. In addition, in such case, a U.S. shareholder could have a capital loss with respect to the common shares sold that could not be used to offset such dividend income. Furthermore, with respect to certain non-U.S. shareholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common shares. In addition, if a significant number of our shareholders determine to sell our common shares in order to pay taxes owed on dividends, it may put downward pressure on the market price of our common shares.

Our ownership of taxable REIT subsidiaries will be limited and our transactions with our taxable REIT subsidiaries will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm's length terms.

        A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries. A taxable REIT subsidiary may hold assets and earn income that would not be qualifying assets or income if held

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or earned directly by a REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary. Overall, no more than 25% of the value of a REIT's assets may consist of stock or securities of one or more taxable REIT subsidiaries. In addition, the rules applicable to taxable REIT subsidiaries limit the deductibility of interest paid or accrued by a taxable REIT subsidiary to its parent REIT to assure that the taxable REIT subsidiary is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a taxable REIT subsidiary and its parent REIT that are not conducted on an arm's length basis.

        Our TRS will pay U.S. federal, state and local income tax on its taxable income, and its after-tax net income will be available for distribution to us but is not required to be distributed by such domestic taxable REIT subsidiary to us. We anticipate that the aggregate value of the stock and securities of our TRS will be less than 25% of the value of our total assets (including the stock and securities of our TRS). Furthermore, we will monitor the value of our respective investments in our TRS for the purpose of ensuring compliance with the ownership limitations applicable to taxable REIT subsidiaries. In addition, we will scrutinize all of our transactions with our TRS to ensure that they are entered into on arm's length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 25% limitation discussed above or to avoid application of the 100% excise tax discussed above.

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FORWARD-LOOKING STATEMENTS

        Some of the statements contained in this prospectus constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "seeks," "intends," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "pro forma" or "potential" or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

        The forward-looking statements contained in this prospectus reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed in or implied by any forward-looking statement. We do not guarantee that the transactions and events described herein will happen as described (or that they will happen at all). Statements regarding the following subjects, among others, may be forward-looking:

    our use of the net proceeds from this offering;

    changes in our business and growth strategies;

    our ability to execute our business and growth strategies or to manage our growth effectively;

    our ability to source off-market or limited-market acquisitions in the future;

    the closing of our acquisition of the 1110 Vermont Avenue property and any future acquisitions;

    integration of acquired properties;

    our projected operating results, liquidity and financial condition;

    availability, terms and deployment of capital;

    our ability to re-let space on favorable terms;

    defaults on, early terminations of or non-renewal of leases by tenants;

    tenant bankruptcies;

    decreased rental rates or increased vacancy rates or our failure to increase occupancy rates from current levels;

    declining real estate valuations and impairment charges;

    adverse demographic changes in our markets;

    our expected leverage;

    future debt service obligations;

    estimates relating to our ability to make distributions to our shareholders in the future;

    changes in interest rates and the market value of our target assets;

    impact of changes in governmental regulations, tax law and rates, and similar matters;

    our ability to maintain our qualification as a REIT for U.S. federal income tax purposes;

    our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended, or the 1940 Act;

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    availability of, and our ability to attract and retain, qualified personnel;

    maintenance of insurance levels;

    the consequences of any future terrorist attacks; and

    market trends in our industry, the credit and capital markets or the general economy.

        While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future results. Readers are cautioned not to place undue reliance on any of these forward-looking statements. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes, except as required by applicable law. For a further discussion of these and other factors that could cause future results to differ materially from those expressed or implied by any forward-looking statements, see the section above entitled "Risk Factors."

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USE OF PROCEEDS

        We estimate that the net proceeds we will receive from this offering will be approximately $             million, after deducting the underwriting discount and estimated offering expenses (or approximately $             million if the underwriters exercise their overallotment option in full), based on an assumed initial public offering price of $            per share, which is the mid-point of the price range set forth on the cover page of this prospectus. We will contribute the net proceeds from this offering to our operating partnership. Our operating partnership intends to use the net proceeds from this offering as follows:

    approximately $389.5 million to repay outstanding indebtedness and to pay costs associated with such repayment and loan assumption fees;

    approximately $141.6 million, including estimated closing costs, to acquire the 1110 Vermont Avenue property;

    approximately $51.9 million to acquire interests in properties from the current holders of those interests and to pay related costs; and

    approximately $15.0 million to fund a reserve account for capital expenditures.

        We expect to have approximately $             million remaining of unapplied net proceeds upon completion of this offering and our formation transactions (or approximately $             million if the underwriters exercise their overallotment option in full). Any remaining net proceeds will be used for general working capital purposes, including funding future acquisitions, capital expenditures, tenant improvements, leasing commissions and, potentially, making distributions. Pending application of cash proceeds, we will invest the net proceeds in interest-bearing accounts and short-term, interest-bearing securities in a manner that is consistent with our intention to qualify for taxation as a REIT.

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        We expect to use a portion of the net proceeds from this offering to repay approximately $380.4 million of our outstanding indebtedness in accordance with the chart below:

Property
  Annual
Interest Rate
  Maturity Date   Pro Rata Share of Balance Outstanding
as of June 30, 2010
 

Bank of America Center

    5.88 %   12/1/2011   $ 74,500,000  

Two Liberty Place

    5.41 %   3/1/2012     64,147,195 (1)

Two Ravinia Drive

    5.68 %   12/31/2010     51,600,000  

Two Liberty Place Mezzanine Loan

    5.94 %   2/27/2012     46,814,000 (2)

2400 Maitland Center, Interlachen Corporate Center and 500 Winderley Place

    6.87 %   9/20/2012     28,814,556  

245 Riverside, Overlook I and Overlook II(3)

    L+1.75 %(4)   7/9/2011     27,500,000 (5)

Maitland Forum

    L+1.80 %(6)   1/31/2012     26,693,503  

Center Point

    L+3.00 %(7)                      (8)   14,825,966 (9)

International Plaza Four

    6.16 %(10)   10/15/2012     14,251,512  

Maitland Park Center

    L+1.80 %(6)   1/31/2012     10,532,850  

Peachtree Marquis II(11)

    6.00 %   4/1/2021     7,584,660  

Management Company Term Loan

    5.75 %(12)   9/16/2014     3,400,000  

Independent Square Garage(13)

    7.07 %   9/26/2013     2,974,930  

Cypress Center 6.30 Acre Land Parcel(14)

    L+2.25 %(15)   4/11/2011     2,000,000  

Cypress Center I, Cypress Center II and Cypress Center III and Cypress West—Mezzanine Loan

    7.92 %   10/1/2011     1,884,934  

Capital Plaza I and II, Capital Plaza III

    12.00 %   5/5/2016     1,600,000 (16)

EB Investors Loan

    9.60 %   12/31/2010     1,057,153  

Independent Square—Mezzanine Loan

    9.00 %   4/30/2011     195,080  
                   

Total

              $ 380,376,338  
                   

(1)
Total amount outstanding as of June 30, 2010 was $72,075,500. Our joint venture partner has agreed to repay the remainder of the outstanding balance.

(2)
Total amount outstanding as of June 30, 2010 was $52,600,000. Our joint venture partner has agreed to repay the remainder of the outstanding balance.

(3)
The loan balance is allocated as follows: $15,000,000 to 245 Riverside and $12,500,000 to Overlook I and Overlook II.

(4)
The variable interest rate is based on one-month LIBOR. The effective interest rate was 2.10% as of June 30, 2010.

(5)
The balance outstanding as of June 30, 2010 was $34,210,000. We expect to repay $27,500,000 in full satisfaction of the loan with a portion of the net proceeds from this offering.

(6)
Requires monthly interest only payments of LIBOR + 1.80% until November 2010 and LIBOR + 3.5% through maturity. The variable interest rate is based on one-month LIBOR. The effective interest rate was 2.15% as of June 30, 2010.

(7)
The variable interest rate is based on one-month LIBOR. The effective interest rate was 3.35% as of June 30, 2010.

(8)
The original maturity date was in January 2009. We have been in ongoing negotiations with the lender regarding an extension or repayment of the loan. We intend to repay the loan in full with a portion of the net proceeds from this offering.

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(9)
The balance outstanding as of June 30, 2010 was $16,300,000, which was subsequently reduced by $1,474,034 pursuant to the sale of one of the properties securing the loan.

(10)
There is an interest rate swap on a notional amount of $12,742,461 at 6.155%. The remaining balance above this notional amount bears interest at one-month LIBOR + 4.00%. The effective interest rate on the floating rate portion of the loan was 4.35% as of June 30, 2010. The interest rate swap matures concurrently with the loan.

(11)
Represents a loan made by SunTrust Bank, Inc., a tenant in Peachtree Marquis II, to partially fund the tenant improvements in the space it leases in the building.

(12)
The interest rate is the greater of (i) one-month LIBOR + 3.75% or (ii) 5.75% per annum.

(13)
Includes three loans with outstanding balances of $429,157, $1,697,697 and $848,075, respectively, and interest rates of 7.00%, 7.63% and 6.00%, respectively. The loans are secured by the parking garage adjacent to Independent Square.

(14)
Land is adjacent to Cypress Center I, Cypress Center II and Cypress Center III in Tampa, Florida.

(15)
The variable interest rate is based on one-month LIBOR. The effective interest rate was 2.60% as of June 30, 2010.


(16)
The balance outstanding as of June 30, 2010 was $15,893,761. We expect to repay $1,600,000 in full satisfaction of the loan with a portion of the net proceeds from this offering.

        For additional information, see our historical and pro forma financial statements contained elsewhere in this prospectus.

        A portion of the net proceeds from this offering will be used to repay certain indebtedness, the lender of which is an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, one of the underwriters in this offering. See "Underwriting (Conflicts of Interest)—Conflicts of Interest."

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DISTRIBUTION POLICY

        To satisfy the requirements to qualify as a REIT, and to avoid paying tax on our income, we intend to make regular quarterly distributions of all, or substantially all, of our REIT taxable income (including net capital gains) to our shareholders. We intend to make a pro rata distribution with respect to the period commencing on completion of this offering and ending on            , 2010, based on a distribution of $      per common share for a full quarter. On an annualized basis, this would be $      per common share, or an annualized distribution rate of approximately      % based on an assumed initial public offering price of $            per common share, which is the mid-point of the price range set forth on the cover page of this prospectus. We estimate that this initial annual distribution rate will represent approximately        % of estimated cash available for distribution to our common shareholders for the 12-month period ending June 30, 2011. Our intended initial annual distribution rate has been established based on our estimate of cash available for distribution for the 12-month period ending June 30, 2011, which we have calculated based on adjustments to our pro forma net income for the 12-month period ending June 30, 2010 (after giving effect to this offering and our formation transactions). This estimate was based on our pro forma operating results and does not take into account our business and growth strategies, nor does it take into account any unanticipated expenditures we may have to make or any financings for such expenditures. In estimating our cash available for distribution for the 12-month period ending June 30, 2011, we have made certain assumptions as reflected in the table and footnotes below.

        Our estimate of cash available for distribution does not include the effect of any changes in our working capital resulting from changes in our working capital accounts. Our estimate also does not reflect the amount of cash estimated to be used for investing activities for acquisition and other activities. It also does not reflect the amount of cash estimated to be used for financing activities, other than scheduled loan principal payments on mortgage and other indebtedness that will be outstanding upon completion of this offering. Any such investing and/or financing activities may have a material adverse effect on our estimate of cash available for distribution. Because we have made the assumptions set forth above in estimating cash available for distribution, we do not intend this estimate to be a projection or forecast of our actual results of operations, FFO, liquidity or financial condition and have estimated cash available for distribution for the sole purpose of determining our estimated initial annual distribution amount. Our estimate of cash available for distribution should not be considered as an alternative to cash flow from operating activities (computed in accordance with GAAP) or as an indicator of our liquidity or our ability to make distributions. In addition, the methodology upon which we made the adjustments described below is not necessarily intended to be a basis for determining future distributions.

        We intend to maintain our initial distribution rate for the 12-month period following completion of this offering unless our actual results of operations or cash flows, economic conditions or other factors differ materially from the assumptions used in projecting our initial distribution rate. Distributions made by us will be authorized and determined by our board of trustees in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including prohibitions and other limitations under our financing arrangements and applicable law and other factors described herein. We believe that our estimate of cash available for distribution constitutes a reasonable basis for setting the initial distribution rate; however, we cannot assure you that our estimate will prove accurate, and actual distributions may therefore be significantly below the expected distributions. We do not intend to reduce the annualized distribution rate per common share if the underwriters exercise their overallotment option; however, this could require us to borrow funds to make the distributions or to make the distributions from net offering proceeds.

        We cannot assure you that our estimated distributions will be made or sustained or that our board of trustees will not change our distribution policy in the future. Our future distributions will be at the sole discretion of our board of trustees, and their form, timing and amount, if any, will depend upon

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our actual and projected financial condition, liquidity, results of operations and FFO and other factors that could differ materially from our current expectations. Our actual financial condition, liquidity, results of operations, FFO and ability to make distributions to our shareholders will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, recurring capital expenditures, the ability of our tenants to meet their obligations and unanticipated expenditures, as well as prohibitions and other limitations under our financing arrangements and applicable law. For more information regarding risk factors that could materially and adversely affect us, please see "Risk Factors." If our operations do not generate sufficient cash flow to enable us to pay our intended distributions, we may be required either to fund distributions from working capital, borrow or raise equity or to reduce such distributions.

        Distributions in excess of our current and accumulated earnings and profits will not be taxable to a taxable U.S. shareholder under current U.S. federal income tax law to the extent those distributions do not exceed the shareholder's adjusted tax basis in his or her common shares, but rather will reduce the adjusted basis of the shares. In that case, the gain (or loss) recognized on the sale of those shares or upon our liquidation will be increased (or decreased) accordingly. To the extent those distributions exceed a taxable U.S. shareholder's adjusted tax basis in his or her shares, they generally will be treated as a gain realized from the taxable disposition of those shares. The percentage of distributions to our shareholders that exceeds our current and accumulated earnings and profits may vary substantially from year to year. For a more complete discussion of the tax treatment of distributions to holders of our common shares, see "Material United States Federal Income Tax Considerations."

        U.S. federal income tax law requires that a REIT distribute annually at least 90% of its REIT taxable income, excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its REIT taxable income, including capital gains. For more information, please see "Material United States Federal Income Tax Considerations." We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs and the amount necessary to avoid the payment of tax on undistributed income. However, under some circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet these distribution requirements and we may need to borrow funds to make certain distributions.

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        The following table describes our pro forma net income for the 12 months ending June 30, 2010, and the adjustments we have made thereto in order to estimate our initial cash available for distribution to our common shareholders for the 12 months ending June 30, 2011:

Pro forma net income for the year ended December 31, 2009

  $    
 

Less: pro forma net income for the six months ended June 30, 2009

       
 

Add: pro forma net income for the six months ended June 30, 2010

       

Pro forma net income for the 12 months ended June 30, 2010

 
$
 
 

Add: pro forma real estate depreciation and amortization

       
 

Add: pro forma depreciation and amortization from equity method investments

       
 

Add: amortization of deferred financing costs

       
 

Add: non-cash interest expense

       
 

Less: net effect of straight-line rents and above (below) market lease intangible amortization

       
 

Add: net increases in contractual rent income

       
 

Less: net decreases in contractual rent income due to lease expirations, assuming no renewals

       
 

Add: non-cash compensation expense

       
       

Estimated cash flow from operating activities for the 12 months ending June 30, 2011

  $    
 

Less: estimated contractual obligations for tenant improvements and leasing commissions

       
 

Less: estimated annual provision for recurring capital expenditures

       
       

Total estimated cash flows used in investing activities

  $    
       

Estimated cash flow used in financing activities

       
       
 

Less: scheduled mortgage loan principal repayments for consolidated properties

       
       
 

Less: pro rata share of scheduled mortgage loan principal payments from equity method investments

       
       

Estimated cash flow used in financing activities for the 12 months ending June 30, 2011

  $    
       

Estimated cash available for distribution for the 12 months ending June 30, 2011

  $    
       
 

Our share of estimated cash available for distribution

       
       
 

Non-controlling partnership interests' share of estimated cash available for distribution

       
       

Total estimated initial annual distribution to shareholders

  $    
       
 

Estimated initial annual distribution per share

       
       
 

Payout ratio based on our share of estimated cash available for distribution

      %

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CAPITALIZATION

        The following table sets forth the historical capitalization of our predecessor at June 30, 2010, and our pro forma consolidated capitalization at June 30, 2010, as adjusted to give effect to our formation transactions, this offering and the use of proceeds from this offering as described in "Use of Proceeds." You should read this table together with "Use of Proceeds," "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated historical and pro forma financial statements and notes thereto included elsewhere in this prospectus.

 
  At June 30, 2010  
 
  Historical   Pro Forma
Consolidated
 
 
  (in thousands, except per
share data)

 

Notes payable and other debt(1)

  $ 83,122   $    

Equity

             
 

Common shares, $0.01 par value per share; 100,000 shares authorized and 1,000 shares issued and outstanding, historical, and 450,000,000 shares authorized and            shares issued and outstanding, on a pro forma basis(2)

        (3)  
 

Preferred shares, $0.01 par value per share; 10,000 shares authorized and 0 shares issued and outstanding, historical, and 50,000,000 shares authorized and 0 shares issued and outstanding, on a pro forma basis

         
 

Additional paid-in capital

        (3)  
           

Equity (deficit)

    (17,652 )      

Non-controlling interest - OP units

           

Non-controlling interests - property

           
 

Total equity (deficit)

    (17,652 )      
           

Total capitalization

  $ 65,470   $     
           

(1)
We also expect to enter into a $       million revolving credit facility, which we expect will be undrawn upon completion of this offering.

(2)
The outstanding common shares on a pro forma basis include (a)             common shares to be issued in connection with our formation transactions and (b)                         common shares to be sold in this offering, but excludes (i)             common shares issuable upon the exercise of the underwriters' overallotment option in full, (ii)             common shares reserved for future issuance under our equity incentive plan and (iii)              common shares that may be issued, at our option, upon exchange of OP units to be issued in our formation transactions.

(3)
This dollar amount assumes that            of our common shares will be sold in this offering and will increase or decrease depending upon whether such common shares are sold above or below the mid-point of the price range set forth on the cover page of this prospectus.

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DILUTION

        Purchasers of our common shares offered by this prospectus will experience an immediate and substantial dilution of the net tangible book value per common share from the assumed initial public offering price based on the mid-point of the price range set forth on the cover page of this prospectus of $      per share. As of June 30, 2010, we had a net tangible book value of approximately $           million, or $      per common share held by continuing investors, assuming the exchange of OP units into common shares on a one-for-one basis. After giving effect to the sale of our common shares in this offering, the application of the aggregate net proceeds from this offering and the completion of our formation transactions, the pro forma net tangible book value at June 30, 2010 attributable to common shareholders would have been $    million, or $      per common share. This amount represents an immediate increase in net tangible book value of $      per share to our continuing investors and an immediate dilution in pro forma net tangible book value of $      per share to new public investors. The following table illustrates this per share dilution.

Assumed initial public offering price per share based on the mid-point of the price range set forth on the cover page of this prospectus

  $
 

Net tangible book value per share at June 30, 2010, before our formation transactions and this offering(1)

   
 

Net increase in pro forma net tangible book value per share attributable to our formation transactions and this offering

   

Pro forma net tangible book value per share after our formation transactions and this offering(2)

   

Dilution in pro forma net tangible book value per share to new investors(3)

  $

(1)
Net tangible book value per common share at June 30, 2010 before our formation transactions and this offering was determined by dividing the net tangible book value of our predecessor at June 30, 2010 by the number of our common shares held by continuing investors after this offering, assuming the exchange for our common shares on a one-for-one basis of the OP units to be issued in connection with our formation transactions.

(2)
The pro forma net tangible book value per share after our formation transactions and this offering was determined by dividing net tangible book value of approximately $      million by      common shares and OP units to be outstanding after this offering, which amount excludes the common shares that may be issued by us upon exercise of the underwriters' overallotment option and      of our common shares available for issuance in the future under our equity incentive plan.

(3)
Dilution is determined by subtracting pro forma net tangible book value per common share after giving effect to our formation transactions and this offering from the assumed initial public offering price paid by a new investor for our common shares.

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SELECTED FINANCIAL DATA

        The following table sets forth summary selected financial and operating data on (i) a pro forma basis for our company and (ii) a combined historical basis for our predecessor. Our predecessor is comprised of the real estate holdings and operations of the entities that are under common control of James R. Heistand. We have not presented historical information for Eola Property Trust because we have not had any corporate activity since our formation other than the issuance of 1,000 common shares to Mr. Heistand in connection with our initial capitalization and because we believe that a discussion of the results of Eola Property Trust would not be meaningful.

        You should read the following summary selected financial data in conjunction with the combined historical consolidated financial statements of our predecessor and the related notes and with "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are included elsewhere in this prospectus.

        The historical combined balance sheet information as of December 31, 2009 and 2008 of our predecessor and the combined statements of operations information for each of the years ended December 31, 2009, 2008 and 2007 of our predecessor have been derived from the historical audited combined financial statements included elsewhere in this prospectus. The historical combined balance sheet information as of June 30, 2010 of our predecessor and the combined statements of operations for the six months ended June 30, 2010 and 2009 of our predecessor have been derived from the historical unaudited combined financial statements included elsewhere in this prospectus. The historical combined balance sheet information as of December 31, 2007, 2006 and 2005 of our predecessor and the combined statements of operations for the years ended December 31, 2006 and 2005 of our predecessor have been derived from the unaudited combined financial statements of our predecessor. In the opinion of management, the historical combined balance sheet information as of December 31, 2007, 2006 and 2005 and the historical combined statements of operations for the years ended December 31, 2006 and 2005 include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the information set forth therein.

        Our unaudited summary selected pro forma condensed consolidated financial statements and operating information as of and for the six months ended June 30, 2010 and for the year ended December 31, 2009 assume completion of this offering and our formation transactions as of the beginning of the periods presented for the operating data and as of the stated date for the balance sheet data. Our pro forma financial information is not necessarily indicative of what our actual financial position and results of operations would have been as of the date and for the periods indicated, nor does it purport to represent our future financial position or results of operations.

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  Six Months Ended June 30,   Year Ended December 31,  
 
  Pro Forma
Consolidated

  Historical Combined   Pro Forma
Consolidated

  Historical Combined  
 
  2010   2010   2009   2009   2009   2008   2007   2006   2005  
 
  (Unaudited)
  (Unaudited)
  (Unaudited)
  (Unaudited)
   
   
   
  (Unaudited)
  (Unaudited)
 
 
  (In thousands, except per share data and number of properties)
 

Statement of Operations Data:

                                                       

Revenues

                                                       
 

Rental revenue

        $ 3,381   $ 3,838         $ 7,696   $ 5,116   $ 4,773   $ 5,205   $ 187  
 

Tenant reimbursements

          1,866     1,926           3,953     3,371     3,373     754      
 

Parking and other income

                                                       
 

Management and other fees

          11,167     7,398           17,782     16,834     15,097     14,200     10,644  
                                       
   

Total revenues

          16,414     13,162           29,431     25,321     23,243     20,159     10,831  

Expenses

                                                       
 

Property operating expenses

          2,944     3,391           6,237     4,300     4,214     2,983     28  
 

General and administrative

          8,953     6,226           15,731     14,088     15,446     10,893     9,754  
 

Depreciation and amortization

          2,962     2,200           4,896     3,543     3,227     2,860     77  
 

Property impairment

                            457                          
   

Total expenses

          14,859     11,817           27,321     21,931     22,887     16,736     9,859  
                                       

Operating income (loss)

          1,555     1,345           2,110     3,390     356     3,423     972  

Other Income (Expenses)

                                                       
 

Equity in earnings (loss) from real estate joint ventures

          (414 )   (2,105 )         (4,863 )   (18,735 )   (2,221 )   (894 )   435  
 

Interest and other income, net

          70     11           56     201     382     200     32  

Other expenses

                                         
 

Interest expense

          (1,676 )   (4,163 )         (7,650 )   (5,291 )   (5,158 )   (3,380 )   (501 )
                                       
   

Total other income (expenses)

          (2,020 )   (6,257 )         (12,457 )   (23,825 )   (6,997 )   (4,074 )   (34 )
                                       
   

Discontinued operations

                                        2,917  
                                       

Net income (loss)

          (465 )   (4,912 )         (10,347 )   (20,435 )   (6,641 )   (651 )   3,855  

Less: net (income) loss attributable to non-controlling interests - OP units

         
   
         
   
   
   
   
 

          (1,548 )   (4,581 )         (9,065 )   (16,153 )   (2,764 )   210     1,836  

Less: net (income) loss attributable to non-controlling interests—property

                                         
                                       

Net income (loss) attributable to the Company

        $ 1,083   $ (331 )       $ (1,282 ) $ (4,282 ) $ (3,877 ) $ (861 ) $ 2,019  
                                       

Per Share Data:

                                                       
 

Pro forma earnings (loss) per share—basic and diluted

                                                       
 

Pro forma weighted average common shares outstanding—basic and diluted

                                                       

Balance Sheet Data (at period end):

                                                       
 

Real estate investment, net

        $ 53,973   $ 56,166         $ 54,891   $ 56,929   $ 42,097   $ 40,880   $  
 

Total assets

          87,273     81,455           80,997     84,412     88,220     71,954     13,597  
 

Notes payable and other debt

          83,122     78,624           80,886     79,325     60,325     60,325     6,547  
 

Total liabilities

          104,925     92,557           98,710     89,531     70,273     64,419     7,416  
 

Equity

          (10,059 )   (9,454 )         (11,194 )   (8,319 )   (3,789 )   (330 )   975  
 

Non-controlling interests - OP units

                                                       
 

Non-controlling interests - property

          (7,593 )   (1,649 )         (6,519 )   3,200     21,736     7,865     5,206  
 

Total equity

          (17,652 )   (11,103 )         (17,713 )   (5,119 )   17,947     7,535     6,181  
 

Total liabilities and equity

          87,273     81,455           80,997     84,412     88,220     71,954     13,597  

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  Six Months Ended June 30,   Year Ended December 31,  
 
  Pro Forma
Consolidated

  Historical Combined   Pro Forma
Consolidated

  Historical Combined  
 
  2010   2010   2009   2009   2009   2008   2007   2006   2005  
 
  (Unaudited)
  (Unaudited)
  (Unaudited)
  (Unaudited)
   
   
   
  (Unaudited)
  (Unaudited)
 
 
  (In thousands, except per share data and number of properties)
 

Other Data:

                                                       
 

Number of properties

          55     35           56     34     32     11     4  
 

Total rentable square footage

          11,685     5,404           11,705     5,274     5,103     1,814     1,238  
 

Total rentable square footage—pro rata share

          365     234           373     234     230     180     168  
 

Pro forma net operating income

                                                       
 

Pro forma net operating income, including pro rata joint venture share

                                                       
 

Pro forma earnings before interest, taxes, depreciation and amortization

                                                       
 

Pro forma funds from operations

                                                       
 

Pro forma diluted funds from operations per share

                                                       
 

Cash flows from:

                                                       
   

Operating activities

        $ 1,242   $ 2,277         $ 3,703   $ 1,932   $ 1,874   $ 4,403   $ (7,148 )
   

Investing activities

          (2,440 )   128           (1,531 )   (399 )   (19,204 )   (56,526 )   (6,173 )
   

Financing activities

          2,719     (1,811 )         (3,067 )   33     17,026     53,767     13,403  

 

 
  Pro Forma  
 
  Six Months Ended
June 30, 2010
  Year Ended
December 31, 2009
 
 
  (In thousands)
  (In thousands)
 

Reconciliation of FFO(1), EBITDA(2) and NOI(3) to Net Income:

             

Net income (loss) attributable to the Company

  $     $    

Add/(deduct):

             
 

Net income (loss) attributable to non-controlling interests - OP units

             
 

Depreciation and amortization(4)

             
 

Depreciation and amortization—unconsolidated properties

             
 

Gain on sale of discontinued operations

                           
           

Funds from operations

  $     $   (5)

Add/(deduct):

             
 

Interest expense, net(4)

             
 

Interest expense, net—unconsolidated properties

             
 

Non real estate related depreciation and amortization(4)

             
 

Non real estate related depreciation and amortization—unconsolidated properties

                           
 

Interest and other income, net

             
           

EBITDA

  $     $   (5)

Add/(deduct):

             
 

Management and other fees

             
 

General and administrative

                           
 

Property impairment

             
           

Net operating income (NOI), including pro rata joint venture share

  $     $    

Deduct:

             
 

Pro rata joint venture share of net operating income

                           
           

Net operating income

  $     $    

(1)
We calculate FFO before non-controlling interest, or FFO, in accordance with the standards established by NAREIT. FFO is defined by NAREIT as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, plus depreciation and amortization of real estate assets (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures.

FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding

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    real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of our operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results of operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, therefore, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should not be considered as an alternative to net income available to common shareholders (determined in accordance with GAAP) as an indicator of our financial performance. While management believes that FFO is an important supplemental non-GAAP financial measure, management believes it is also important to stress that FFO should not be considered as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. Further, FFO is not necessarily indicative of sufficient cash flow to fund all of our cash needs, including our ability to service indebtedness or make distributions.

(2)
EBITDA represents net income (losses) excluding: (i) interest; (ii) income tax expense, including deferred income tax benefits and expenses and income taxes applicable to sale of assets; and (iii) depreciation and amortization. EBITDA should not be considered as an alternative to net income available to common shareholders (determined in accordance with GAAP). We believe EBITDA is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA as one measure in determining the value of acquisitions and dispositions.

(3)
We consider NOI to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core operations of our properties. NOI should not be considered as an alternative to net income (determined in accordance with GAAP). We define NOI as operating revenue (including rental revenue, tenant reimbursements and parking and other income) less property operating expenses. NOI excludes depreciation and amortization, impairments, gain/loss on sale of real estate, interest expense and other non-operating items.

(4)
Net of amounts attributable to non-controlling interests in properties.

(5)
Includes an impairment charge of $457 for the year ended December 31, 2009.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with the selected financial data, the audited financial statements and the unaudited financial statements of the Eola Predecessor Companies and related notes thereto and the pro forma financial information of Eola Property Trust, appearing elsewhere in this prospectus. Where appropriate, the following discussion includes analysis of the expected effects of our formation transactions and this offering. These effects are reflected in the pro forma combined financial statements located elsewhere in this prospectus. As used in this section, unless the context otherwise requires, "we," "us," "our" and "our company" mean the Eola Predecessor Companies for the periods presented and Eola Property Trust and its consolidated subsidiaries upon completion of this offering and our formation transactions.

Overview

Our Company

        Eola Property Trust, a Maryland real estate investment trust, was formed on July 7, 2010 to acquire the entities owning various real estate assets and a management service company and to succeed to the business of our predecessor. We are engaged primarily in the acquisition, ownership, management, redevelopment and disposition of high quality office buildings located in the Southeastern and mid-Atlantic United States. Eola Property Trust has not had any corporate activity since its formation, other than the issuance of shares to James R. Heistand in connection with the initial capitalization of the company and the opening of a bank account. Accordingly, we believe that a discussion of the results of Eola Property Trust would not be meaningful, and we therefore have set forth below a discussion regarding the historical operations of our predecessor only. We have included an analysis of certain matters expected as a result of this offering and our formation transactions where we believe such presentation would be meaningful.

        Our predecessor is comprised of certain real estate holdings and a management service company and operations of the entities that are under control or influence of Mr. Heistand that will be contributed to Eola Property Trust. The combined entities in our predecessor, which consist of the entities contributing properties and real estate operations to our operating partnership in our formation transactions, include Eola Capital and its related asset management, property management and leasing businesses, three consolidated office properties and two vacant land parcels. Our predecessor also includes equity method investments, ranging from approximately 1% to 51%, in 52 properties owned by entities over which Mr. Heistand has significant influence, but for which he does not exercise control.

        Concurrently with this offering, we will complete our formation transactions, pursuant to which we will acquire, through a series of merger or contribution agreements, all of the interests in our predecessor and interests in certain other entities (which we refer to as our non-predecessor entities) and assets. We also have entered into a definitive agreement to acquire the 1110 Vermont Avenue property, which is subject to customary closing conditions. The effects of our formation transactions are reflected in the pro forma financial statements located elsewhere in this prospectus. We direct your attention to these pro forma financial statements, as well as the three-year audited statements of revenues and certain expenses for the non-predecessor entities. In light of the substantial number of equity method investments in our predecessor for properties that will be consolidated upon completion of this offering and our formation transactions, we believe that our pro forma financial statements represent a more meaningful presentation of our financial condition and results of operations as compared to our predecessor's historical financial statements.

        We have determined that the Eola Predecessor Companies is the acquirer for accounting purposes. The three consolidated properties in our predecessor that are being contributed in our formation transactions and the 52 equity method investments in properties that will remain unconsolidated joint

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ventures in our initial portfolio will be recorded at historical cost because no change in control occurred upon contribution to Eola Property Trust. The acquisition of the other interests for which a change in control will have occurred will be accounted for as business combinations under the acquisition method of accounting and recognized at the estimated fair value of acquired assets and assumed liabilities on the date of such acquisition. The fair value of the debt assumed is determined using current market interest rates for comparable debt financings.

        Upon completion of this offering and our formation transactions, we expect our operations to be carried on through our operating partnership and subsidiaries of our operating partnership, including our TRS. Our formation transactions are designed to: (1) consolidate our asset management, property management, leasing, acquisition and related businesses into our operating partnership; (2) consolidate the ownership of a portfolio of properties, together with certain other real estate assets, into our operating partnership; (3) facilitate this offering; (4) enable us to raise necessary capital to repay existing indebtedness related to certain properties in our portfolio; (5) enable us to qualify as a REIT for U.S. federal income tax purposes commencing with the portion of our taxable year ending December 31, 2010; and (6) preserve the tax position of certain continuing investors. As a result, we expect to be a fully integrated, self-administered and self-managed real estate company, providing substantial in-house expertise in asset management, property management, leasing, acquisitions, tenant improvement construction, repositioning, redevelopment and financing.

Revenue Base

        Upon completion of this offering and our formation transactions, we will own interests in a portfolio of 57 properties totaling approximately 12.0 million rentable square feet. These properties are comprised of 32 consolidated properties and 25 properties held through unconsolidated joint ventures, all of which we will manage. Our ownership interest in our unconsolidated properties will range from 8.7% to 30.0%. Our pro rata ownership share of our initial portfolio equates to approximately 8.3 million rentable square feet. All of our properties are located in the Southeastern and mid-Atlantic United States.

        Office Leases.    Historically, our predecessor primarily leased its office properties to tenants on a full service gross, modified gross or triple net lease basis, and we expect to continue to do so in the future. A full service gross lease has a base year expense stop, whereby the tenant pays a stated amount of expenses as part of the rent payment, while future increases (above the base year stop) in property operating expenses are billed to the tenant based on such tenant's proportionate square footage in the property. The increased property operating expenses, as well as any base operating expense amount stipulated in the leases, are reflected in operating expenses and amounts recovered from tenants are reflected as tenant recoveries in the statements of income. In a triple net lease, the tenant is responsible for all property taxes and operating expenses. As such, the base rent payment does not include any operating expenses, but rather all such expenses are billed to the tenant. The full amount of the expenses for this lease type is reflected in operating expenses, and the reimbursement is reflected in tenant recoveries. In a modified gross lease, which combines features of a full service gross lease and a triple net lease, the tenant reimburses the landlord or directly pays for some but not all expenses.

        Management and Advisory Service Fees.    Historically, our predecessor entered into management and leasing agreements with respect to the properties in its portfolio, and we expect to continue to do so for the properties in our initial portfolio in which we will not own all of the interests, as well as for certain additional properties in which we will not own an interest. Pursuant to these agreements, we collect management fees that are based on a percentage of rental receipts of managed properties, construction management fees that are based on a percentage of the cost of tenant and building improvements and leasing commission fees that are based on a percentage of gross rents payable under newly executed leases.

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Factors That May Influence Our Operating Results

        Business and Strategy.    We intend to focus primarily on owning and acquiring properties in markets that generally have been characterized by strong and stable employment bases, above-average job growth prospects and strong long-term growth potential as a result of their growing populations, net migration inflows and access to a talented and educated workforce. We believe that our top six markets—Atlanta, Orlando, Philadelphia, Jacksonville, Washington, D.C. and Tampa—provide attractive long-term return opportunities and that our integrated platform, market knowledge and industry and investor relationships give us a competitive advantage relative to our peers in each of our markets. Our in-house property management, asset management and leasing capabilities allow us to meet the needs of our existing tenants and identify value-enhancement opportunities, such as acquiring under-leased assets at attractive purchase prices and leasing them up over time. We believe that our relationships with leading institutional investors and real estate and financial industry professionals will provide us with critical market intelligence, an ongoing acquisition pipeline, potential joint venture partners and financing alternatives.

        Our objective is to expand our holdings in our current markets by identifying properties where we can capitalize on our competitive strengths to generate an attractive return on our investment. We currently are focused on newer, high quality assets in our markets that may be challenged due to an overleveraged capital structure and/or decreased occupancy or other operational stress. We also may consider expanding into other Southeastern, mid-Atlantic and Eastern U.S. markets in the event that we identify attractive investment opportunities. In addition, we may consider other opportunistic or distressed real estate investments, such as structured equity or debt investments with attractive control features, which may ultimately lead to ownership of the underlying asset. Finally, we intend to continue to redevelop and reposition properties to increase rental and occupancy rates at our properties.

        We plan to continue to acquire properties subject to existing mortgage financing and other indebtedness or to incur indebtedness in connection with acquiring or refinancing these properties. Debt service on such indebtedness will have a priority over any distributions with respect to our common shares.

        Rental and Other Property-Related Revenue.    We receive income primarily from rental revenue from our office properties. The amount of rental revenue generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that becomes available from lease expirations. As of June 30, 2010, the occupancy of our initial portfolio was approximately 82.7%. The amount of rental revenue generated by us also depends on our ability to maintain or increase rental rates at our properties. We believe that the average rental rates for our properties generally are equal to or slightly above the current average quoted market rate. Negative trends in one or more of these factors could adversely affect our rental revenue in future periods. Future local, regional or national economic downturns affecting our markets or downturns in our tenants' industries that impair our ability to renew or re-lease space and the ability of our tenants to fulfill lease commitments, as in the case of tenant bankruptcies, likely would adversely affect our ability to maintain or increase rental rates at our properties. In addition, growth in rental revenue also will partially depend on our ability to acquire additional properties that are consistent with our acquisition strategy.

        Scheduled Lease Expirations.    Our ability to re-lease space subject to expiring leases will impact our results of operations and is affected by economic and competitive conditions in our markets as well as the desirability of our individual properties. As of June 30, 2010, in addition to approximately 1.4 million rentable square feet of currently available space in our initial portfolio, leases representing approximately 5.5% and 10.2%, respectively, of the rentable square footage of our initial portfolio are scheduled to expire during the remainder of 2010 and 2011, assuming no exercise of renewal options or early termination rights. The leases scheduled to expire in the remainder of 2010 and 2011 represent

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approximately 6.1% and 11.4%, respectively, of the annualized rent for our initial portfolio, assuming no exercise of renewal options or early termination rights.

        Conditions in Our Markets.    Our initial portfolio is comprised of our interests in 56 office properties and one related retail property that is part of an office complex, located in the Southeastern and mid-Atlantic United States. Positive or negative changes in economic or other conditions, adverse weather conditions and natural disasters in these markets may impact our overall performance.

        Operating Expenses.    Our operating expenses generally consist of utilities, property and ad valorem taxes, insurance and site maintenance costs. Increases in these expenses over tenants' base years are generally passed on to tenants in our full-service gross leased properties and are generally paid in full by tenants in our triple net lease properties.

        General and Administrative Expenses.    As a public company, we estimate our annual general and administrative expenses will increase by approximately $         million initially due to increased legal, insurance, accounting and other expenses related to corporate governance, SEC reporting and other compliance matters, compared to our predecessor's operations.

        Interest Rates.    We expect that future changes in interest rates will impact our overall performance. While we will seek to manage our exposure to future changes in interest rates through interest rate swap agreements and/or interest rate caps, portions of our overall outstanding debt, including borrowings under our revolving credit facility, will likely remain at floating rates.

        Taxable REIT Subsidiary.    Eola TRS LLC was formed as a Delaware limited liability company on September 20, 2010 and, upon completion of this offering and our formation transactions, will be a wholly owned subsidiary of our operating partnership. Our TRS will elect to be treated as a corporation for U.S. federal income tax purposes and, effective contemporaneously with that election, will elect jointly with us to be treated as a taxable REIT subsidiary of ours. Our TRS generally may provide non-customary and other services to our tenants and engage in activities that we may not engage in directly without adversely affecting our qualification as a REIT. We may form additional taxable REIT subsidiaries in the future. Because a taxable REIT subsidiary is subject to U.S. federal income tax, and state and local income tax (where applicable), as a regular corporation, the income earned by our TRS generally will be subject to an additional level of tax as compared to the income earned by our other subsidiaries and our predecessor.

Critical Accounting Policies

        Our discussion and analysis of the historical financial condition and results of operations of our predecessor are based upon its combined financial statements, which have been prepared in accordance with generally accepted accounting principles in the Unites States (GAAP). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses in the reporting period. Actual amounts may differ from these estimates and assumptions. We have provided a summary of our significant accounting policies in the notes to the combined financial statements of the Eola Predecessor Companies included elsewhere in this registration statement. We have summarized below those accounting policies that require material subjective or complex judgments and that have the most significant impact on our financial condition and results of operations. We evaluate these estimates on an ongoing basis, based on information currently available to us and various assumptions that we believe are reasonable as of the date hereof. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition and results of operations to those of other companies.

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Basis of Presentation and Combination

        The financial statements of the Eola Predecessor Companies include the accounts of certain majority-owned investments controlled by Mr. Heistand, and certain investments that are less than majority-owned but are controlled by us through our ownership interest. All significant intercompany amounts have been eliminated. Control of an investment is demonstrated by, among other factors, (i) our ability to manage day-to-day operations, (ii) our ability to refinance debt and sell the investment without the consent of any other owner, and (iii) the inability of any other owner to replace us.

        The financial statements of the Eola Predecessor Companies also include the accounts of investments identified as variable interest entities, or VIEs, when we are determined to be the primary beneficiary. The determination of the primary beneficiary of a VIE considers all relationships between the investment and the VIE, including management agreements and other contractual arrangements, when determining the party that has the power to control the decisions that significantly impact the VIE's economic performance, as defined by accounting standards. As a result, Deerwood Holdings LLC, or Deerwood, which holds the investment in Capital Plaza I and II and Capital Plaza III, and CAT-B Holdings LLC, or CAT-B, which holds the investments in the Center Point property, were determined to be VIEs. Our company is considered the primary beneficiary. We have the power to control the decisions that significantly impact the economic performance of these VIEs. Consequently, Deerwood is combined in the accompanying combined financial statements for all periods presented and CAT-B is consolidated as of December 8, 2008, the date the power to control was obtained.

        Investments in real estate joint ventures represent non-controlling ownership interests in various real estate investments. We account for these investments using the equity method of accounting. Investments are initially recorded at cost and are subsequently adjusted for cash contributions and distributions and earnings (losses), which are generally allocated based on the provisions of the joint venture agreements.

        Certain investments have undergone recapitalization events during the periods presented in the accompanying combined financial statements. As a result of these recapitalization events, our interests may have changed from a non-controlling interest to a controlling interest or remained as a non-controlling interest. If the interest changed from a non-controlling interest to a controlling interest, the recapitalization was recorded as a purchase in the period the transaction occurred, and the controlling interest has been reflected in the combined financial statements since the transaction date. If the interest remained as a non-controlling interest, the interest continued to be recorded at its historical basis and any basis differential related to the new joint venture is amortized as part of "Equity in earnings (loss) from real estate joint ventures" going forward based upon the estimated lives of the underlying investment's assets.

Real Estate

        Land is carried at cost; land improvements, buildings and improvements, parking garages and improvements, and tenant improvements are carried at cost less accumulated depreciation. Additions and betterments are capitalized while maintenance and repairs which do not improve or extend the lives of the respective assets are expensed currently. Interest is capitalized on construction in progress and included in the cost of real estate to the extent that underlying capital expenditures support such capitalization.

        In leasing tenant space, we may provide funding to the lessee through a tenant allowance. In accounting for a tenant allowance, we determine whether the allowance represents funding for the construction of tenant improvements and evaluate the ownership, for accounting purposes, of such improvements. If we are considered the owner of the tenant improvements for accounting purposes, we capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of

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the tenant improvements or the related lease term. If the tenant allowance represents a payment for a purpose other than funding tenant improvements, or in the event we are not considered the owner of the improvements for accounting purposes, the allowance is considered to be a lease acquisition cost (including lease inducements) and is recognized over the lease term as a reduction of rental revenue on a straight-line basis.

        Depreciation is recorded using the straight-line method over estimated useful lives of the buildings and improvements ranging from 10 to 50 years or the life of the related leases in the case of tenant allowances.

        We assign the purchase price of assets acquired and liabilities assumed to the acquired tangible assets (normally consisting of land, buildings, parking garages, and improvements) and identified intangible assets and liabilities (normally consisting of the value of in-place leases, including above-market and below-market leases). The costs are assigned based on the fair values of the assets acquired and liabilities assumed.

        The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, buildings, parking garages, and improvements based on the estimation of the fair values of the assets.

        In determining the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management's estimate of fair value lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease and any below-market fixed rate renewal periods (for below-market lease values). The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. The capitalized below-market lease values are accreted as an increase to rental income over the initial term and any fixed rate renewal periods in the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be expensed.

        The value of in-place leases is estimated based on the value associated with the costs avoided in originating leases compared to the acquired in-place leases, as well as the value associated with lost rental revenue and operating expense reimbursements during the assumed lease-up period. The value of in-place leases is amortized over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be expensed.

        We are required to expense property acquisition-related costs related to property acquisitions as incurred effective January 1, 2009. Prior to January 1, 2009, these costs were capitalized as part of the purchase price and allocated to the tangible and intangible assets acquired.

        We review our real estate and other related assets and liabilities included in the asset group for impairment whenever events or changes in circumstances indicate that the carrying value of the asset group may not be recoverable through operations. We determine whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges) of the asset group, with the carrying cost of the asset group. If impairment is indicated, a loss is recorded for the amount by which the carrying value of the asset group exceeds its fair value. We recorded an impairment charge of real property related to a combined real estate property of $0.5 million during the year ended December 31, 2009. No impairment of real property was recorded during 2010, 2008, or 2007.

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Investments in Real Estate Joint Ventures

        We account for our investments in real estate joint ventures under the equity method of accounting because we exercise significant influence over, but do not control, these entities. Our judgment with respect to the level of influence or control of an entity involves the consideration of various factors, including the form of our ownership interest, our representation in the entity's governance, our ability to participate in policy making decisions and the rights of the other investors to participate in the decision-making process and to replace us as manager and/or liquidate the venture, if applicable. Our assessment of our influence or control over an entity affects the presentation of these investments in our combined financial statements.

        These investments are recorded initially at cost and subsequently adjusted for equity in earnings (loss) and cash contributions and distributions from the real estate joint ventures. Any difference between the carrying amount of these investments on the balance sheet and the underlying equity in net assets is amortized as an adjustment to equity in earnings (loss) from joint ventures over the life of the related investment's assets. Under the equity method of accounting, our net equity investment is reflected on one line within the combined balance sheets, and our share of net income (loss) from the joint ventures is included within the combined statements of operations. The joint venture agreements may designate different percentage allocations among investors for profits and losses; however, our recognition of joint venture income or loss generally follows the joint venture's distribution priorities, which may change upon the achievement of certain investment return thresholds. We separately report investments in real estate joint ventures for which accumulated distributions have exceeded investments in and our share of net income of the joint ventures within "Losses and distributions in excess of contributions in real estate joint ventures" in the liability section of the combined balance sheets. The net equity of certain joint ventures may be less than zero if financing or operating distributions are greater than net income, as net income includes non-cash charges for depreciation and amortization. Distributions received that are considered a return on investment are reported as operating cash flows and distributions received that are considered a return of investment are reported as investing cash flows for combined statement of cash flow purposes.

        Our investments in real estate joint ventures are reviewed for impairment periodically, and we record impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying values has occurred and such decline is other-than-temporary. The ultimate realization of the investment in real estate joint ventures is dependent on a number of factors, including the performance of each investment and market conditions. We recorded impairment charges related to our investments in eight real estate joint ventures of $0.3 million and $14.8 million during the years ended December 31, 2009 and 2008, respectively, which have been included in equity in earnings (loss) from real estate joint ventures in the combined statements of operations. No impairment charges of real property related to our investments in real estate joint ventures were recorded during 2010 or 2007 because any declines in value below our carrying amount were not deemed to be other than temporary.

Revenue Recognition

        We lease office space and parking space to tenants, including certain related parties, under operating lease agreements with varying terms. Rental revenue is recognized as earned. When scheduled rentals vary during the lease term, revenue is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Accrued rental income is the aggregate difference between scheduled rental payments, which vary during the lease term, and rental revenue recognized on a straight-line basis over the lease term. Rental revenue is reported net of sales taxes collected from tenants, which are recorded as liabilities on the combined balance sheets.

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        Tenant reimbursements represent amounts from tenants for real estate taxes, common area maintenance charges and building and parking operating expenses and are recognized as earned.

        Management fees are based on a percentage of rental receipts of properties managed and are recognized as the rental receipts are collected. Leasing commissions are based on a percentage of gross rents payable under newly executed leases and are recorded when earned. Fees for construction supervision of tenant and building improvements are based on a percentage of the cost of improvements and are recorded upon completion of the improvements.

Non-Controlling Interests

        Effective January 1, 2009, we retrospectively adopted a newly issued accounting standard for non-controlling interests, which requires a non-controlling interest in an entity to be reported as equity and the amount of net income (loss) specifically attributable to the non-controlling interest to be included within net income (loss). This standard also requires consistency in the manner of reporting changes in the parent's ownership interest and requires fair value measurement of any non-controlling equity investment retained in a deconsolidation. Net income (loss) attributable to non-controlling interests in combined properties is a component of net income (loss).

Historical Results of Operations

        At December 31, 2009, our predecessor owned 56 properties and two land parcels, of which three properties and the two land parcels were consolidated in our predecessor's results of operations, and 53 properties were accounted for under the equity method. At June 30, 2010, our predecessor owned 55 properties and two land parcels, of which three properties and two land parcels were consolidated in our predecessor's results of operations and 52 properties were accounted for under the equity method.

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

    Revenues

        Rental Revenue.    Rental revenue includes rental revenues received from our properties. Rental revenue decreased $0.4 million, or 11%, to $3.4 million for the six months ended June 30, 2010, compared to $3.8 million for the six months ended June 30, 2009. The decrease in rental revenue was primarily attributable to losing, in November 2009, a tenant that occupied approximately 38,000 rentable square feet.

        Tenant Reimbursements.    Tenant recoveries remained constant at $1.9 million for the six months ended June 30, 2010 and 2009.

        Management and Advisory Service Fees—Affiliates.    Management and advisory service fees—affiliates are revenues derived from a percentage of rental receipts of managed properties, leasing commission fees that are based on a percentage of gross rents payable under newly executed leases, and construction management fees that are based on a percentage of the cost of tenant and building improvements. Total management and advisory service fees increased $3.8 million, or 51%, to $11.2 million for the six months ended June 30, 2010, compared to $7.4 million for the six months ended June 30, 2009. The increase in management and other fees was primarily due to the September 2009 acquisition of a non-controlling interest in a portfolio of properties totaling approximately 7.6 million rentable square feet, the majority of which we began leasing and managing in connection with the portfolio acquisition.

    Expenses

        Real Estate Operating Expenses.    Real estate operating expenses decreased $0.5 million, or 15%, to $2.9 million for the six months ended June 30, 2010, compared to $3.4 million for the six months ended

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June 30, 2009. The decrease was primarily due to a decrease in real estate taxes and general building maintenance expenses.

        Property and General Administrative Expenses.    Property and general administrative expenses were comparable period over period.

        Depreciation and Amortization.    Depreciation and amortization expense increased $0.8 million, or 36%, to $3.0 million for the six months ended June 30, 2010 compared to $2.2 million for the six months ended June 30, 2009. The increase in depreciation and amortization expense was primarily due to amortization of the cost of management and leasing contracts acquired in September 2009, in conjunction with the acquisition of the portfolio of office properties discussed above in Management and Advisory Service Fees—Affiliates.

        Management and Advisory Services Operating Expenses.    Management and advisory services operating expense increased $2.8 million, or 46%, to $8.9 million for the six months ended June 30, 2010 compared to $6.1 million for the six months ended June 30, 2009 primarily due to the growth of our company, and reflected primarily increases in personnel costs.

    Other Income (Expenses)

        Equity in Earnings (Loss) from Real Estate Joint Ventures.    Total equity in earnings (loss) from real estate joint ventures increased $1.7 million, or 81%, to $(0.4) million for the six months ended June 30, 2010 compared to $(2.1) million for the six months ended June 30, 2009. The increase in equity in earnings (loss) from real estate joint venture investments was primarily due to increased earnings of our investments in real estate joint ventures and equity earnings related to equity investments made subsequent to June 2009, along with a large one-time gain at one investment related to a discounted debt payoff.

        Interest and Other Income, Net.    Interest and other income, net was comparable period over period.

        Interest Expense.    Interest expense decreased $2.5 million, or 60%, to $1.7 million for the six months ended June 30, 2010 compared to $4.2 million for the six months ended June 30, 2009. The decrease in interest expense was primarily due to the reversal of late fees and default interest expense of $2.7 million on a mortgage payable that was recorded in 2009 and waived in 2010 in connection with ongoing negotiations with the lender.

Comparison of year ended December 31, 2009 to year ended December 31, 2008

    Revenue

        Rental Revenue.    Rental revenue increased $2.6 million, or 51%, to $7.7 million for the year ended December 31, 2009 compared to $5.1 million for the year ended December 31, 2008. The increase in rental revenue was primarily attributable to a full year of operations in 2009 of the Center Point property, which was acquired in December 2008.

        Tenant Reimbursements.    Tenant reimbursements increased $0.6 million, or 18%, to $4.0 million for the year ended December 31, 2009 compared to $3.4 million for the year ended December 31, 2008, primarily due to year over year increases in utilities and other common area maintenance expenses.

        Management and Advisory Service Fees—Affiliates.    Total management and advisory service fees—affiliates increased $1.0 million, or 6%, to $17.8 million for the year ended December 31, 2009 compared to $16.8 million for the year ended December 31, 2008. The increase in management and advisory service fees—affiliates was primarily due to the September 2009 acquisition of a

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non-controlling interest in a portfolio of properties totaling approximately 7.6 million rentable square feet, the majority of which we began leasing and managing in connection with the portfolio acquisition.

    Expenses

        Real Estate Operating Expenses.    Real estate operating expenses increased $1.9 million, or 44%, to $6.2 million for the year ended December 31, 2009 compared to $4.3 million for the year ended December 31, 2008. The increase in real estate operating expenses was primarily attributable to higher utilities and maintenance costs. In addition, approximately $0.3 million of the increase was due to the inclusion for a full year of operations in 2009 of the Center Point property, which was acquired in December 2008.

        Property and General Administrative Expenses.    Property and general administrative expenses increased $0.1 million, or 50%, to $0.3 million for the year ended December 31, 2009 compared to $0.2 million for the year ended December 31, 2008. The increase was primarily related to additional professional service fees incurred on one building.

        Depreciation and Amortization.    Depreciation and amortization expense increased $1.4 million, or 40%, to $4.9 million for the year ended December 31, 2009 compared to $3.5 million for the year ended December 31, 2008. The increase in depreciation and amortization expense was primarily due to depreciation and amortization related to the acquisition of the Center Point property, and amortization related to the acquisition of management and leasing contracts in September 2009.

        Property Impairment.    We recorded a property impairment charge of $0.5 million during the year ended December 31, 2009 due to lower than expected performance of the underlying operations of one building.

        Management and Advisory Services Operating Expenses.    Management and advisory services operating expense increased $1.5 million, or 11%, to $15.4 million for the year ended December 31, 2009 compared to $13.9 million for the year ended December 31, 2008 primarily due to the growth of our company, as noted above, and reflected primarily increases in personnel costs.

    Other Income (Expenses)

        Equity in Earnings (Loss) from Real Estate Joint Ventures.    Total equity in earnings (loss) from real estate joint ventures increased $13.8 million, or 74%, to $(4.9) million for the year ended December 31, 2009 compared to $(18.7) million for the year ended December 31, 2008. The increase in equity in earnings (loss) from real estate joint ventures was primarily due to the recording of a $14.8 impairment charge on our interests in certain real estate joint ventures in 2008.

        Interest and Other Income, Net.    Interest and other income, net decreased $0.1 million, or 50%, to $0.1 million for the year ended December 31, 2009 compared to $0.2 million for the year ended December 31, 2008 due to lower returns on money market cash accounts.

        Interest Expense.    Interest expense increased $2.4 million, or 45%, to $7.7 million for the year ended December 31, 2009 compared to $5.3 million for the year ended December 31, 2008. The increase in interest expense was primarily attributable to default interest and late fees of $2.1 million related to a $16.3 million mortgage note payable, which was assumed in connection with the acquisition in December 2008 of the Center Point property.

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Comparison of year ended December 31, 2008 to year ended December 31, 2007

    Revenue

        Rental Revenue.    Rental revenue increased $0.3 million, or 6%, to $5.1 million for the year ended December 31, 2008 compared to $4.8 million for the year ended December 31, 2007. The increase in rental revenue was primarily attributable to the Center Point acquisition in December 2008.

        Tenant Reimbursements.    Operating expense reimbursements remained relatively flat at $3.4 million for the years ended December 31, 2008 and 2007.

        Management and Advisory Service Fee—Affiliates.    Total management and advisory service fees—affiliates increased $1.7 million, or 11%, to $16.8 million for the year ended December 31, 2008 compared to $15.1 million for the year ended December 31, 2007. The increase was due to a full year of management fees in 2008 related to equity method investments made during the second half of 2007.

    Expenses

        Real Estate Operating Expenses.    Real estate operating expenses remained relatively flat at approximately $4.3 million and $4.2 million for the years ended December 31, 2008 and 2007, respectively.

        Property and General Administrative Expenses.    Property and general administrative expenses were comparable period over period.

        Depreciation and Amortization.    Depreciation and amortization expense increased $0.3 million, or 9%, to $3.5 million for the year ended December 31, 2008 compared to $3.2 million for the year ended December 31, 2007. The increase in depreciation and amortization expense was primarily attributable to depreciation capital expenditures for tenant improvements made in early 2008.

        Management and Advisory Services Operating Expenses.    Management and advisory services operating expense decreased $1.4 million, or 9%, to $13.9 million for the year ended December 31, 2008 compared to $15.3 million for the year ended December 31, 2007. The decrease was primarily due to professional fees incurred in 2007 related to the purchase of real estate properties in late 2007 and early 2008.

    Other Operating Income (Expenses)

        Equity in Earnings (Loss) from Real Estate Joint Ventures.    Total equity in loss from real estate joint ventures increased $16.5 million, or 75%, to $(18.7) million for the year ended December 31, 2008 compared to $(2.2) million for the year ended December 31, 2007. The increase in equity in (loss) from real estate joint ventures was primarily due to a $14.9 million impairment charge on our investments in certain real estate joint ventures in 2008.

        Interest and Other Income, Net.    Interest and other income, net decreased $0.2 million, or 50%, to $0.2 million for the year ended December 31, 2008 compared to $0.4 million for the year ended December 31, 2007 due to lower returns on money market cash accounts.

        Interest Expense.    Interest expense remained relatively flat at $5.3 million and $5.2 million for the years ended December 31, 2008 and 2007, respectively.

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Liquidity and Capital Resources

    Analysis of Liquidity and Capital Resources

        We believe that this offering and our formation transactions will improve our financial performance through changes in our capital structure, including a reduction in our leverage and enabling us to access public equity and debt markets. On a pro forma basis after giving effect to this offering and our formation transactions, we expect that our pro rata share of debt to total market capitalization will be approximately    %.

        As of June 30, 2010, on a pro forma basis after giving effect to this offering and our formation transactions, we will have approximately $       million in restricted cash that we expect to use to fund tenant improvements and other costs with respect to the applicable properties. In addition, we intend to enter into a revolving credit facility under which we can borrow up to $       million. We intend to use the revolving credit facility to fund acquisition, redevelopment and repositioning opportunities, to fund tenant improvements and capital expenditures and for general corporate and working capital purposes.

        The nature of our business, coupled with the requirement imposed by REIT rules that we distribute a substantial majority of our REIT taxable income on an annual basis, will cause us to have substantial liquidity needs over both the short term and the long term. Our short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties, distributions to the limited partners in our operating partnership and expected distributions to our shareholders (including those required to maintain our REIT status), interest expense and scheduled principal payments on our debt and recurring capital expenditures. When we lease space to new tenants, or renew leases for existing tenants, we also incur expenditures for tenant improvements and leasing commissions. This amount, as well as the amount of recurring capital expenditures that we incur, will vary from year to year, in some cases significantly. We expect to meet our short-term liquidity requirements through net cash from operations, restricted cash that has been set aside for these purposes, reserves established from existing cash, the net proceeds from this offering and, if necessary, by borrowing under our revolving credit facility or obtaining new indebtedness.

        Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, redevelopment and repositioning of properties, non-recurring capital improvements and repayment of debt at maturity. We do not expect that we will have sufficient funds on hand to cover all of these long-term cash requirements. We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured debt and the issuance of equity and debt securities, including units in our operating partnership, property dispositions and joint venture transactions. We also may fund property acquisitions and non-recurring capital improvements using our revolving credit facility.

        We believe that, as a publicly traded REIT, we will have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and raising additional equity. However, as a new public company, we cannot assure you that this will be the case, especially in difficult market conditions, or that the terms of available capital will be attractive. Our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, our liquidity, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to access the equity capital markets will be dependent on a number of factors as well, including our operating results and prospects, market perceptions about our company and general market conditions for REITs.

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    Indebtedness to be Outstanding after this Offering

        Upon completion of this offering and our formation transactions, we expect to have approximately $413.4 million of consolidated indebtedness outstanding, of which our pro rata share will be approximately $383.4 million, based on balances outstanding as of June 30, 2010. In addition, we expect that our pro rata share of unconsolidated indebtedness outstanding will be approximately $87.8 million, based on balances outstanding as of June 30, 2010 and based on those properties which we expect will be held in non-controlled joint ventures. See "Business and Properties—Outstanding Indebtedness." All of our consolidated indebtedness accrues interest at a fixed rate, after taking into account interest rate swap agreements. Approximately $8.8 million of our pro rata share of the indebtedness of our unconsolidated joint ventures is subject to variable interest rates as of June 30, 2010, after taking into account interest rate swap agreements.

        The following table sets forth information on a pro forma basis as of June 30, 2010 with respect to the amortization and maturities of the indebtedness we expect to be outstanding upon completion of this offering and our formation transactions, assuming no exercise of extension options.

 
  Amortization Payments   Maturity Payments   Total Payments  
Year
  Total   Pro Rata Share   Total   Pro Rata Share   Total   Pro Rata Share  

Consolidated Properties

                                     

Through December 31, 2010

    1,291,160     1,291,160             1,291,160     1,291,160  

2011

    6,101,862     6,101,862             6,101,862     6,101,862  

2012

    4,817,954     4,817,954             4,817,954     4,817,954  

2013

    2,470,498     2,470,498             2,470,498     2,470,498  

2014

    2,515,563     2,515,563             2,515,563     2,515,563  

2015

    2,517,900     2,517,900     156,537,716     156,537,716     159,055,615     159,055,615  

Thereafter

    5,387,076     5,387,076     231,768,164     201,768,164     237,155,241     207,155,241  
                           
 

Total—Consolidated Properties

  $ 25,102,012   $ 25,102,012   $ 388,305,880   $ 358,305,880   $ 413,407,892   $ 383,407,892  

Unconsolidated Properties

                                     

Through December 31, 2010

    206,082     17,919             206,082     17,919  

2011

    424,172     36,882     152,625,842     26,233,168     153,050,013     26,270,050  

2012

    599,710     59,049     67,412,713     11,874,552     68,012,423     11,933,601  

2013

    1,361,507     136,151     24,000,000     2,400,000     25,361,507     2,536,151  

2014

    1,438,928     143,893             1,438,928     143,893  

2015

    1,521,259     152,126             1,521,259     152,126  

Thereafter

    2,586,736     258,674     321,666,704     46,457,070     324,253,441     46,715,744  
                           
 

Total—Unconsolidated Properties

  $ 8,138,393   $ 804,693   $ 565,705,259   $ 86,964,791   $ 573,843,652   $ 87,769,484  

TOTAL—INITIAL PORTFOLIO

 
$

33,240,405
 
$

25,906,705
 
$

954,011,139
 
$

445,270,671
 
$

987,251,544
 
$

471,177,376
 

    Revolving Credit Facility

        We expect to enter into a $       million revolving credit facility upon completion of this offering and our formation transactions. There can be no assurance that we will be successful in obtaining such a facility.

Contractual Obligations

        The following table provides information with respect to our principal obligations and commitments, on a pro forma basis as of June 30, 2010 to reflect the obligations that we expect to have

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upon completion of this offering and our formation transactions. The table does not reflect available debt extensions.

 
  Payments Due by Period  
 
  (amounts in thousands)  
Contractual Obligation
  Total   2010   2011 - 2012   2013 - 2015   After 2015  

Long term debt obligations

  $ 413,408   $ 1,291   $ 10,920   $ 164,041   $ 237,156  

Interest payments

    135,044     13,351     49,297     67,857     4,539  

Minimum lease payments

    1,695     189     747     678     81  

Ground lease payments

    44,780     386     1,556     2,359     40,479  

Capital commitments

    7,000     7,000              

Tenant related commitments

    8,966     6,684     2,069     213      
                       

Total

  $ 610,893   $ 28,901   $ 64,589   $ 235,148   $ 282,255  
                       

        Certain of our debt agreements contain covenants that, among other things, restrict activities regarding cash reserve accounts, borrowings, liens, leasing and sale of property, and require us to meet certain financial ratios, none of which are considered material. We are in compliance with our debt covenants except with respect to the Center Point loan, the original maturity date of which was in January 2009. We intend to repay the Center Point loan in full with a portion of the net proceeds from this offering.

        In addition to the contractual obligations set forth in the table above, we expect to enter into employment agreements with certain of our executive officers. These employment agreements provide for salary, bonus, incentive compensation and other benefits, all as more fully described under "Management—Executive Compensation—Employment Agreements."

Off Balance Sheet Arrangements

        Our off-balance sheet arrangements consist primarily of our investments in joint ventures, which are common in the real estate industry and are described in Note 6 of the notes to the accompanying combined financial statements. Our joint ventures typically fund their cash needs through secured debt financings obtained by and in the name of the joint venture entity. The joint venture debt is secured by a first mortgage, is without recourse to the joint venture partners, and does not represent a liability of the partners, except to the extent the partners or their affiliates expressly guarantee the joint venture debt. As of June 30, 2010, our operating partnership had guaranteed $29.3 million of the total joint venture related mortgage or other indebtedness of the $573.8 million then outstanding. We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not required contractually or otherwise.

Cash Flows

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

        Cash and cash equivalents were $3.7 million and $3.6 million at June 30, 2010 and 2009, respectively.

        Net cash provided by operating activities decreased by $1.0 million to $1.2 million for the six months ended June 30, 2010 compared to $2.3 million for the six months ended June 30, 2009. The decrease was primarily attributable to a decrease in losses related to equity investments, fluctuations in operating escrows, receivables, accrued interest payable, accounts payable and other liabilities.

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        Net cash (used in) provided by investing activities was $(2.4) million for the six months ended June 30, 2010 compared to $0.1 million net cash provided by investing activities for the six months ended June 30, 2009. The decrease was primarily attributable to a $5.0 million deposit made in conjunction with the pending acquisition of the 1110 Vermont property offset by $2.8 million of cash received from joint ventures to purchase real estate.

        Net cash provided by (used in) financing activities was $2.7 million for the six months ended June 30, 2010 compared to $(1.8) million for the six months ended June 30, 2009. The change was primarily attributable to increased proceeds of notes payable and reduced cash distributions to owners.

    Comparison of year ended December 31, 2009 to year ended December 31, 2008

        Cash and cash equivalents were $2.1 million and $3.0 million at December 31, 2009 and December 31, 2008, respectively.

        Net cash provided by operating activities increased by $1.8 million to $3.7 million for the year ended December 31, 2009 compared to $1.9 million for the year ended December 31, 2008. The increase was primarily attributable to a decrease in losses related to equity investments, fluctuations in operating escrows, receivables, deposits and prepaid expenses, accrued interest payable, accounts payable and other liabilities.

        Net cash (used in) investing activities was $(1.5) million for the year ended December 31, 2009 compared to $(0.4) million for the year ended December 31, 2008. The change was primarily attributable to the acquisition of management and leasing contracts in 2009 and the acquisition of additional equity and cost method investments in 2009, offset by a decrease in returns of equity method investments.

        Net cash (used in) provided by financing activities was $(3.1) million for the year ended December 31, 2009 compared to less than $0.1 million for the year ended December 31, 2008. The change was primarily attributable to a reduction in cash distributions to owners, increased borrowing under notes payable, funding of loans to members, and an increase in repayment of notes payable.

    Comparison of year ended December 31, 2008 to year ended December 31, 2007

        Cash and cash equivalents were $3.0 million and $1.5 million at December 31, 2008 and December 31, 2007, respectively.

        Net cash provided by operating activities increased by $0.1 million to $1.9 million for the year ended December 31, 2008 compared to approximately $1.8 million for the year ended December 31, 2007. The increase was attributable to fluctuations in various working capital accounts.

        Net cash (used in) investing activities was $(0.4) million for the year ended December 31, 2008 compared to $(19.2) million for the year ended December 31, 2007. The change was primarily attributable to less acquisition activity in 2008 related to equity method investments compared to 2007.

        Net cash provided by financing activities was less than $0.1 million for the year ended December 31, 2008 compared to $17.0 million net cash provided by financing activities for the year ended December 31, 2007. The change was primarily attributable to fluctuations in proceeds from capital contributions and cash distributions, offset by borrowings under notes payable.

Funds From Operations

        We calculate FFO before non-controlling interest, or FFO, in accordance with the standards established by NAREIT. FFO is defined by NAREIT as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, plus depreciation

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and amortization of real estate assets (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures.

        FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of our operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results of operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, therefore, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should not be considered as an alternative to net income available to common shareholders (determined in accordance with GAAP) as an indicator of our financial performance. While management believes that FFO is an important supplemental non-GAAP financial measure, management believes it is also important to stress that FFO should not be considered as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. Further, FFO is not necessarily indicative of sufficient cash flow to fund all of our cash needs, including our ability to service indebtedness or make distributions.

        EBITDA represents net income (losses) excluding: (i) interest; (ii) income tax expense, including deferred income tax benefits and expenses and income taxes applicable to sale of assets; and (iii) depreciation and amortization. EBITDA should not be considered as an alternative to net income available to common shareholders (determined in accordance with GAAP). We believe EBITDA is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA as one measure in determining the value of acquisitions and dispositions.

        We consider NOI to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core operations of our properties. NOI should not be considered as an alternative to net income (determined in accordance with GAAP). We define NOI as operating revenue (including rental revenue, tenant reimbursements and parking and other income) less property operating expenses. NOI excludes depreciation and amortization, impairments, gain/loss on sale of real estate, interest expense and other non-operating items.

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        The following table sets forth a reconciliation of our pro forma net income to pro forma FFO before non-controlling interest for the periods presented.

 
  Pro Forma  
 
  Six Months Ended
June 30, 2010
  Year Ended
December 31, 2009
 
 
  (In thousands)
  (In thousands)
 

Reconciliation of FFO, EBITDA and NOI to Net Income:

             

Net income (loss) attributable to the Company

 
$
 
$
 

Add/(deduct):

             
 

Net income (loss) attributable to non-controlling interests - OP units

             
 

Depreciation and amortization(1)

             
 

Depreciation and amortization—unconsolidated properties

             
 

Gain on sale of discontinued operations

  $     $    
           

Funds from operations

          (2)  

Add/(deduct):

             
 

Interest expense, net(1)

             
 

Interest expense, net—unconsolidated properties

             
 

Non real estate related depreciation and amortization(1)

             
 

Non real estate related depreciation and amortization—unconsolidated properties

             
 

Interest and other income, net

  $     $    
           

EBITDA

          (2)  

Add/(deduct):

             
 

Management and other fees

             
 

General and administrative

             
 

Property impairment

  $     $    
           

Net operating income (NOI), including pro rata joint venture share

             

Deduct:

             
 

Pro rata joint venture share of net operating income

  $     $    
           

Net operating income

             

(1)
Net of amounts attributable to non-controlling interests in properties.

(2)
Includes an impairment charge of $457 for the year ended December 31, 2009.

Inflation

        Substantially all of our office leases provide for separate real estate tax and operating expense escalations. In addition, most of the leases provide for fixed rent increases. We believe that inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above.

Recently Adopted Pronouncements

        In December 2007, the FASB issued updated guidance, which applies to all transactions or events in which an entity obtains control of one or more businesses. This guidance (i) establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, (ii) requires expensing of most transactions costs, and (iii) requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. These provisions were adopted by us on January 1, 2009. The

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primary impact of adopting this guidance on our combined financial statements was the requirement to expense transaction costs relating to our acquisition activities starting in 2009.

        In February 2008, the FASB issued updated guidance which defers the effective date of previous guidance issued regarding the fair value of nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis, until fiscal years beginning after November 15, 2008. These provisions were adopted by us on January 1, 2009, and did not have a material impact on our combined financial statements.

        In May 2009 and February 2010, the FASB issued updated guidance to establish general standards of accounting for and disclosure of subsequent events. This guidance renamed the two types of subsequent events as recognized subsequent events or non-recognized subsequent events and modified the definition of the evaluation period for subsequent events as events or transactions that occur after the balance sheet date, but before the financial statements are issued. We adopted this guidance during 2009. The adoption of this guidance did not have a material impact on our combined financial statements.

        In June 2009, the FASB issued guidance, which establishes the FASB's Accounting Standards Codification, or the Codification, as the exclusive authoritative reference for nongovernmental U.S. GAAP for use in financial statements, except for SEC rules and interpretative releases, which are also authoritative for SEC registrants. As a result, the Codification provides guidance that all standards will carry the same level of authority. We adopted this guidance during 2009. The only impact of adopting this guidance was to update and remove certain references to technical accounting literature in the combined financial statements.

        In November 2008, the FASB ratified guidance related to equity method investment accounting. This guidance applies to all investments accounted for under the equity method and clarifies the accounting for certain transactions and impairment considerations involving equity method investments. This guidance became effective beginning in the first quarter of fiscal year 2010. The adoption of the new guidance did not have a significant impact on our combined financial statements.

        In June 2009, the FASB issued updated guidance, which amends guidance for determining whether an entity is a VIE and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity is required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. This guidance became effective beginning in the first quarter of fiscal year 2010. We adopted this guidance effective January 1, 2010 and applied it retrospectively to all prior periods presented in our combined financial statements. The cumulative result of this adoption was the consolidation of Deerwood, as described above under the subheading "—Critical Accounting Policies—Basis of Presentation and Combination."

        In August 2009, the FASB issued new guidance for the accounting for the fair value measurement of liabilities. The new guidance provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the approved techniques. The new guidance clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance is effective for the first reporting period (including interim periods) beginning after issuance. The adoption of the standard did not have a significant impact on our combined financial statements.

        In January 2010, the FASB issued new guidance for fair value measurements and disclosures, which is intended to improve disclosures regarding fair value measurements. This update requires new

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disclosures for transfer in and out of Level 1 and 2, as well as disclosure about the valuation techniques and inputs used to measure fair value for Level 1 and 2. In addition, activity in Level 3 should present separately information about purchases, sales, issuances and settlements on a gross basis (rather than as one net number). A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. The new disclosures and clarifications of existing disclosures are effective beginning in the first quarter of fiscal year 2010, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We believe the adoption of the standard will not have a significant impact on our financial position or results of operations.

Quantitative and Qualitative Disclosure About Market Risk

        Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. As more fully described in the interest rate risk section, we use derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. We only enter into contracts with major financial institutions based on their credit rating and other factors.

        As of June 30, 2010, on a pro forma basis, our total outstanding consolidated debt was approximately $413.4 million, all of which was fixed rate debt. As of June 30, 2010, on a pro forma basis, our pro rata share of total outstanding debt with respect to our unconsolidated joint ventures was approximately $87.8 million, of which $75.5 million was fixed rate debt, $3.5 million was variable rate debt that was subject to interest rate swap agreements, and $8.8 million was variable rate debt that was not subject to any interest rate swap agreement. Based on the foregoing anticipated debt levels, a 100 basis point increase in market interest rates would not have a material impact on our future earnings or cash flows.

        Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

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ECONOMIC AND MARKET OVERVIEW

        Except for the data presented for the properties in our portfolio and unless otherwise indicated, all information in this Economic and Market Overview section is derived from the market studies prepared by RCG. As used herein, RCG's forecast horizon is 2010 to 2014 and any references in a table or otherwise to one or more of those years is, by definition, a forecast or projection.

National U.S. Economic and Office Market Overview

        The U.S. economic recovery that officially began in the second half of 2009 continues to spread throughout the economy as underlying economic data, capital markets activity and asset pricing have rebounded from their lows. RCG forecasts a modest recovery through 2010 based on improvements in the business and financial sectors, with a more robust recovery expected between 2011 and 2014. RCG expects the pace of job growth to increase during the remainder of 2010, with the overall creation of more than one million new jobs by year-end 2010.

        The next 18 months likely will be characterized by a moderate but uneven recovery. RCG believes that employment, retail sales, interest rates, home prices and industrial production all will trend higher but that month-to-month improvements will be irregular. Specifically, RCG is forecasting slow growth in GDP with an annual increase of 2.2% for 2010. However, in 2011 and 2012, RCG expects GDP to grow by 2.4% to 3.0% annually, driving the continued recovery from the recession while also creating jobs.

        Several sectors already are showing strength in the job market. For example, the global liquidity resulting from the financial rescue operations of 2009 has supported renewed activity in the financial markets and continues to drive additional hiring by financial services firms. RCG believes that the national unemployment rate will remain elevated throughout 2010 despite employment gains, as signs of an improving economy bring many individuals who have not been searching for employment back into the job market, causing these individuals to be counted in the unemployment rate. RCG therefore expects unemployment, currently at 9.5% as of June 2010, to rise slightly to 9.6% by year-end, before falling steadily to 7.0% by 2014.

    Demand Drivers

    GRAPHIC

        The office-using employment sectors continued to recover in the first half of 2010, as nearly 139,000 jobs were added in the financial sector, the professional and business services sector and the office-using segment of the information services sector. This was the third consecutive quarter of job creation in the office-using sectors. The professional and business services sector continued to lead the recovery, adding more than 225,000 jobs in the first half of 2010. The job creation is a positive sign that office leasing conditions are on the road to recovery. However, an improvement in the office market is expected to lag the jobs recovery as companies are expected to backfill excess space and remain

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cautious until the economic recovery is more entrenched. Going forward, RCG expects office-employment job growth to increase from 0.5% in 2010 to 1.7% by 2014.

    Office Market Conditions

        The national office market appeared to be nearing a bottom through the second quarter of 2010 as the pace of deterioration in the occupancy rate began to slow from year-end 2009 and even showed a modest improvement from the first quarter of 2010. On the supply side, the construction pipeline remained substantially closed and deliveries of new office space were minimal—factors that are expected to position the office market for a recovery.

        The total office vacancy rate stood at 17.8% in the second quarter of 2010, down 10 basis points from the first quarter of 2010, leading RCG to believe that prospects for demand growth have resumed. For most office markets, the majority of currently vacant space became vacant during the first three quarters of 2009. With tenant move-outs now slowing over the last three quarters, the markets are poised to turn the corner. RCG expects the overall vacancy rate to decline gradually through 2014, decreasing to 15.2% by 2014.

GRAPHIC

        The U.S. CBD vacancy rate declined to 14.8% in the second quarter from 15.0% in the first quarter of 2010. With available space still on the market and relatively fewer tenants seeking to lease space, landlords continued to offer leasing incentives and decrease asking rents. RCG expects that market conditions in the CBD markets will continue to improve, with the vacancy rate expected to decline further to 14.6% by year-end 2010 and to 11.9% by 2014. RCG forecasts that asking rents in the CBD markets will post a nearly flat rate increase of 0.2% in 2010 and will increase an average of 3.3% per year between 2011 and 2014.

        During the past several years, certain suburban regions suffered from a combination of a decrease in tenant demand and speculative construction activity that came to market during the recession. The suburban vacancy rate increased slightly to 19.5% in the second quarter from 19.4% in the first quarter of 2010. However, RCG expects the suburban vacancy rate to decline to 19.3% at year-end 2010 and to decline further to 17.0% by year-end 2014 as tenant demand increases. With little leasing activity, landlords had limited pricing power and concession packages remained a significant portion of the total consideration of a lease. RCG expects that asking rents actually will increase by 0.7% in total in 2010 and will increase an average of 2.5% per year between 2011 and 2014.

    Investment Trends

        Investment activity showed strong signs of improvement in late 2009 and through the first half of 2010 as investors re-entered the market, leading to an increase in the number of private transactions. The availability of capital and the search for higher yielding investments drove investors back into the real estate markets, and this increase in demand began to drive up pricing and attract more sellers. Moreover, Green Street Advisors estimates that through August 2010, property values have risen 25%

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from the 2009 low, which means that nearly half of the decline that occurred from 2007 to 2009 has been erased.

        With short term treasury rates at historical lows, REIT dividend yields have attracted investors and driven demand for public real estate securities. While most of the new issuance activity has been in REIT equity and unsecured debt, issuances in the commercial mortgage-backed securities, or CMBS, market have slowly resumed. The first new private multi-borrower CMBS issuance came to market at the end of the first quarter of 2010 and the pipeline of new deals has grown.

        RCG believes that the capital markets will continue to improve throughout the year and that the real estate financing market will also continue to improve. RCG expects that several real estate mortgage securitizations will come to market in the second half of 2010 and that by 2011 a smaller and more conservative CMBS market will begin to emerge. The broader availability of CMBS debt and willingness of other lenders to enter the market will pave the way towards a more stable investment environment.

Selected Existing Office Market Overviews

        This section presents detailed information for our top six markets based on annualized rent: Atlanta, Orlando, Philadelphia, Jacksonville, Washington, D.C. and Tampa, which collectively accounted for approximately 96.7% of the annualized rent of our initial portfolio as of June 30, 2010.

        We believe that our markets exhibit positive economic characteristics, driving favorable office market fundamentals and positioning us to achieve attractive risk-adjusted returns. According to RCG, our top six markets have historically outperformed the national average in terms of both population growth and unemployment.

        This positive growth can be attributed to a number of factors, including a strong and stable employment base, favorable business environment and access to a talented and educated workforce. Although the recent downturn impacted our markets, we believe many of the factors that drove our top six markets to perform well from 2004 to 2009 remain and position our markets for future growth as the economy rebounds.

        Population growth in our top six markets was nearly 150% of the national average from 2005 to 2009. From 2011 to 2014, population growth in our top six markets is expected to be 1.3% annually versus the national average of 1.0%. Furthermore, annual population growth in Atlanta and Orlando is expected to increase 2.2% and 1.8%, respectively, far outpacing the national average.

        Co