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<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold" size="2">1. Organization and Offering</font></b></p>
<p style="MARGIN: 0in 0in 0pt"> </p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" size="2">Clarion Partners Property Trust Inc. (the “Company”), was formed on November 3, 2009 as a Maryland corporation and intends to qualify as a real estate investment trust (“REIT”). Substantially all of the Company’s business will be conducted through CPT Real Estate LP, the Company’s operating partnership (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership and has contributed $199,000 to the Operating Partnership in exchange for its general partner interest. The initial limited partner of the Operating Partnership is CPT OP Partner LLC (“CPT OP Partner”), a wholly owned subsidiary of the Company, which has contributed $1,000 to the Operating Partnership. As the Company completes the settlement for the purchase orders for shares of its common stock in its continuous public offering, it will transfer substantially all of the net proceeds of the offering to the Operating Partnership. On May 16, 2011, the Company’s Registration Statement on Form S-11, as amended (File No. 333-164777) (the “Registration Statement”) for its initial public offering (the “Offering”) was initially declared effective by the Securities and Exchange Commission (the “SEC”). Neither the Company nor the Operating Partnership has engaged in any significant operations to date.</font></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt"> </p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" size="2">The Company was organized to invest primarily in a diversified portfolio of (1) income-producing properties which may include office, industrial, retail, multifamily residential, hospitality and other real property types, (2) debt and equity interests backed principally by real estate (collectively, “real estate related assets”) and (3) cash, cash equivalents and other short-term investments. As discussed in Note 3, the Company was initially capitalized by issuing 20,000 Class A shares of its common stock to Clarion Partners, LLC (“Clarion Partners”), the Company’s sponsor, on November 10, 2009. The Company’s fiscal year end is December 31.</font></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt"> </p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" size="2">CPT Advisors LLC (the “Advisor”), a wholly owned subsidiary of Clarion Partners, manages the day-to-day operations of the Company.</font></p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt"> </p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" size="2">The Company is offering to the public, pursuant to its Registration Statement, $2,000,000,000 of shares of its common stock in its primary offering and $250,000,000 of shares of its common stock pursuant to its distribution reinvestment plan . The Company is offering to the public two classes of shares of its common stock, Class A shares and Class W shares. The Company is offering to sell any combination of Class A and Class W shares with a dollar value up to the maximum offering amount. The Company may reallocate the shares offered between the primary offering and the distribution reinvestment plan. From May 16, 2011, the first date on which the Company’s shares were offered for sale to the public (the “Initial Offering Date”), until (1) the Company has received purchase orders for at least $10,000,000 (excluding purchase orders received from Pennsylvania and Tennessee investors) in any combination of Class A and Class W shares of its common stock (the “Minimum Offering Amount”) and (2) the Company’s board of directors has authorized the release of the escrowed funds to the Company by November 12, 2012 (the “Escrow Period”), the per-share purchase price for shares of the Company’s common stock will be $10.00, plus, for Class A shares only, applicable selling commissions. The Company will not sell any shares to Pennsylvania investors unless, before November 12, 2012, it has received purchase orders for at least $66,700,000 (including purchase orders received from residents of other jurisdictions where a lower minimum offering amount applies) in any combination of Class A shares and Class W shares from persons not affiliated with the Company or the Advisor. In addition, the Company will not sell any shares to Tennessee investors unless, before November 12, 2012, it receives purchase orders (including purchase orders received from residents of other jurisdictions where a lower minimum offering amount applies) for at least $50,000,000 in any combination of Class A shares and Class W shares from persons not affiliated with the Company or the Advisor. After the close of the Escrow Period, shares will be sold at the Company’s net asset value (“NAV”) per share, plus, for Class A shares only, applicable selling commissions. Each class of shares will have a different NAV per share because certain fees are charged differently with respect to each class. NAV per share is calculated by dividing a class’s NAV at the end of each trading day by the number of shares outstanding for that class on such day. If (1) the Company does not raise the Minimum Offering Amount by November 12, 2012 or (2) the Company’s board of directors does not determine that it is in the best interest of the stockholders of the Company to cause the proceeds raised in the Offering to be released to the Company within such period so that it may commence operations, the Offering will be terminated and the Company’s escrow agent will promptly send each prospective stockholder a full refund of its investment with interest and without deduction for escrow expenses. Notwithstanding the foregoing, each prospective stockholder may elect to withdraw its purchase order and request a full refund of its investment with interest and without deduction for escrow expenses at any time during the Escrow Period. In addition, if the Company raises the Minimum Offering Amount and the proceeds are released to the Company, investors will also receive additional shares of the Company’s common stock in an amount equal to their pro rata share of the interest earned from the escrow account based on the number of days each investor’s proceeds were held in the escrow account. As of March 31, 2012, the Company had not raised the Minimum Offering Amount or commenced any significant operations.</font></p></td></tr></table>
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<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">2. Summary of Significant Accounting Policies</font></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Basis of Presentation and Principles of Consolidation</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The accompanying consolidated financial statements are unaudited and include the accounts of the Company, CPT OP Partner and the Operating Partnership. All significant intercompany balances and transactions are eliminated in consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting policies consistent with those of the Company.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the SEC and should be read in conjunction with the “Risk Factors” section of the Company’s Registration Statement and Form 10-K.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Use of Estimates</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Cash and Cash Equivalents</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value and may consist of investments in money market accounts. There are no restrictions on the use of the Company’s cash balance.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Financial Instruments Not Measured at Fair Value</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The carrying amounts reported in the balance sheets for cash and cash equivalents approximate their fair values.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Prepaid Expenses</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Prepaid expenses include board of directors fees incurred as of the balance sheet date that relate to future periods. Any amounts with no future economic benefit are charged to earnings when identified.  As of March 31, 2012, the Company did not have any prepaid expenses as a result of the reversal of the liability to the Advisor that was recorded as of December 31, 2011.  As a result of the amendment to the advisory agreement discussed in Note 4, all costs funded by the Advisor on behalf of the Company will not be included in the financial statements of the Company until the conclusion of the Escrow Period as such costs will not be a liability of the Company until the conclusion of the Escrow Period.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align="center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Other Assets</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Other assets include deferred financing costs, which are the direct costs associated with obtaining financing. Such costs include commitment fees, legal fees and other third-party costs associated with obtaining commitments for financing that result in a closing of such financing. The Company will amortize these costs into interest expense on a straight-line basis, which approximates the effective interest method, over the terms of the obligations, once the loan process is completed. The Company expects to obtain a credit facility, but has not executed definitive loan documentation regarding a line of credit with any lender.  As of March 31, 2012, the Company did not have any other assets as a result of the reversal of the liability to the Advisor that was recorded as of December 31, 2011.  As a result of the amendment to the advisory agreement discussed in Note 4, all costs funded by the Advisor on behalf of the Company will not be included in the financial statements of the Company until the conclusion of the Escrow Period as such costs will not be a liability of the Company until the conclusion of the Escrow Period.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Organization, Offering and Operating Costs</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Organization and offering expenses (other than selling commissions) include costs and expenses incurred by the Company in connection with the Company’s formation, preparing for the Offering, the qualification and registration of the Offering, and the marketing and distribution of the Company’s shares. Offering costs will include, but are not limited to the dealer manager and distribution fees, accounting and legal fees (including legal fees of the Dealer Manager), costs to amend the Registration Statement and to prepare prospectus supplements, printing, mailing and distribution costs, filing fees, amounts to reimburse the Advisor or its affiliates for the salaries of employees and other costs in connection with preparing supplemental sales literature, amounts to reimburse the Dealer Manager for amounts that it may pay to reimburse the <i>bona fide</i> due diligence expenses of any participating broker-dealers supported by detailed and itemized invoices, fees of the transfer agent, registrars, trustees, depositories and experts, the cost of educational conferences held by the Company (including the travel, meal and lodging costs of registered representatives of any participating broker-dealers), and attendance fees and cost reimbursement for employees of affiliates to attend retail seminars conducted by broker-dealers.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Advisor and ING Investments Distributor, LLC (the “Dealer Manager”) have agreed to fund the Company’s organization and offering expenses incurred through the Escrow Period. The Company will reimburse the Advisor and the Dealer Manager for such expenses ratably on a monthly basis over the period that begins 12 months after the end of the Escrow Period and ends 60 months after the end of the Escrow Period. The Company will reimburse the Advisor and the Dealer Manager for any offering expenses incurred after the end of the Escrow Period by the Advisor and the Dealer Manager on its behalf as and when incurred; provided, however, that total organization and offering costs (including selling commissions, dealer manager and distribution fees and <i>bona fide </i>due diligence expenses) may not exceed 15% of the gross proceeds from the primary offering.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Organizational expenses will be expensed as incurred. Offering costs incurred by the Company, the Advisor and their affiliates on behalf of the Company will be deferred and charged against the proceeds of the continuous public offering. Such costs will be treated as a reduction of total proceeds.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Advisor has funded on behalf of the Company costs totaling $4.7 million through March 31, 2012,  comprised of $3.7 million of offering costs, $0.4 million of organizational costs, and $0.6 million of operating expenses.  As a result of the amendment to the advisory agreement discussed in Note 4, all costs funded by the Advisor on behalf of the Company will not be included in the financial statements of the Company until the conclusion of the Escrow Period as such costs will not be a liability of the Company until the conclusion of the Escrow Period.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align="center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Income Taxes</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company intends to elect to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with the Company’s taxable year ending December 31 of the year in which the Escrow Period concludes. In order to maintain the Company’s qualification as a REIT, the Company is required to, among other things, distribute at least 90% of the Company’s REIT taxable income to the Company’s stockholders and meet certain tests regarding the nature of the Company’s income and assets. As a REIT, the Company will not be subject to federal income tax with respect to the portion of the Company’s income that meets certain criteria and is distributed annually to stockholders. The Company intends to operate in a manner that allows the Company to meet the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. If the Company were to fail to meet these requirements, it could be subject to federal income tax on the Company’s taxable income at regular corporate rates. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to<b> </b>qualify as a REIT. The Company will also be disqualified for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Basic and Diluted Earnings per Common Share</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during each period. Diluted earnings (loss) per share includes the effects of potentially issuable common shares, but only if dilutive.  The Company did not have any dilutive shares as of March 31, 2012.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Stock-Based Compensation</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company has adopted a stock-based long-term incentive award plan for employees, directors, consultants and advisors. The Company accounts for this plan in accordance with ASC 718, <i>Compensation—Stock Compensation</i>, which requires the measurement and recognition of compensation expense for all stock-based awards granted. No stock awards were issued under the plan as of March 31, 2012.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Accounting Standards Updates</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-05 (ASU 2011-05), <i>Presentation of Comprehensive Income</i>, which amends ASC 220 to move the presentation of Other Comprehensive Income from the statement of stockholder’s equity to either a continuous statement of comprehensive income or to two separate consecutive statements. ASU 2011-05 is effective for interim and annual reporting periods beginning after December 15, 2011. The adoption of ASU 2011-05 and its disclosure requirements for 2012 did not have a material impact on the Company’s consolidated financial statements.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">In May 2011, the FASB issued Accounting Standards Update No. 2011-04 (ASU 2011-04), <i>Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs</i>, which amends ASC 820 to change certain fair value principles to eliminate differences between US GAAP and IFRS. ASU 2011-05 is effective for interim and annual reporting periods beginning after December 15, 2011. The adoption of ASU 2011-04 and its disclosure requirements for 2012 did not have a material impact on the Company’s consolidated financial statements.</font></p></td></tr></table>
<table style="font-size:10pt; font-family:'Times New Roman',times,serif;">
<tr>
<td>
<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">3. Capitalization</font></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Under the Company’s charter, the Company has the authority to issue 1,000,000,000 shares of its common stock, 700,000,000 of which are classified as Class A shares and 300,000,000 of which are classified as Class W shares, and 50,000,000 shares of preferred stock. All shares of such stock have a par value of $0.01 per share. On November 10, 2009, Clarion Partners purchased 20,000 Class A shares of the Company’s common stock for total cash consideration of $200,000 to provide the Company’s initial capitalization. The Company’s board of directors is authorized to amend its charter, without the approval of the stockholders, to increase or decrease the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue.</font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2"> </font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Distribution Reinvestment Plan</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company has adopted a distribution reinvestment plan that will allow stockholders to have the cash distributions attributable to the class of shares that the stockholder owns automatically invested in additional shares of the same class. Shares are offered pursuant to the Company’s distribution reinvestment plan at NAV per share applicable to that class, calculated as of the distribution date. Stockholders who elect to participate in the distribution reinvestment plan, and who are subject to U.S. federal income taxation laws, will incur a tax liability on an amount equal to the fair value on the relevant distribution date of the shares of the Company’s common stock purchased with reinvested distributions, even though such stockholders have elected not to receive the distributions used to purchase those shares of its common stock in cash.</font></p>
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<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Share Redemption Plan</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company has adopted a redemption plan whereby on a daily basis stockholders may request the redemption of all or any portion of their shares beginning on the first day of the calendar quarter following the conclusion of the Escrow Period. The redemption price per share will be equal to the Company’s NAV per share of the class of shares being redeemed on the date of redemption.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Under the redemption plan, the total amount of net redemptions during any calendar quarter is limited to shares whose aggregate value (based on the redemption price per share on the day the redemption is effected) is 5% of the combined NAV of both classes of shares, calculated as of the last day of the previous calendar quarter, which means that net redemptions will be limited to approximately 20% of the total NAV in any 12 month period.  The Company uses the term “net redemptions” to mean the excess of share redemptions (capital outflows) over share purchases (capital inflows) in the Offering. As a result, redemptions will count against the 5% cap during a calendar quarter only to the extent the aggregate value of share redemptions during the quarter exceeds the aggregate value of share purchases in the same quarter. Thus, on any business day during a calendar quarter, the maximum amount available for redemptions for that quarter will be equal to (1) 5% of the combined NAV of both classes of shares, calculated as of the last day of the previous calendar quarter, plus (2) proceeds from sales of new shares in the Offering (including reinvestment of distributions) since the beginning of the current calendar quarter, less (3) redemption proceeds paid since the beginning of the current calendar quarter. If the quarterly redemption limitation is reached during a given day, the Company will no longer accept redemptions for the remainder of the quarter, regardless of additional share purchases by investors in the Offering for the remainder of such quarter.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.25in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">On the first business day during any quarter in which the Company has reached that quarter’s volume limitation for redemptions, unless the Company’s board of directors determines to suspend the redemption plan, the redemption plan will automatically and without stockholder notification, resume on the first day of the calendar quarter following the quarter in which redemptions were suspended due to reaching such quarter’s volume limitation for redemptions.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.25in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">While there is no minimum holding period, shares redeemed within 365 days of the date of purchase will be redeemed at the Company’s NAV per share of the class of shares being redeemed on the date of redemption less a short-term trading discount equal to 2% of the gross proceeds otherwise payable with respect to the redemption. The Company may waive the short-term trading discount (1) with respect to redemptions resulting from death or qualifying disability or (2) in the event that a stockholder’s shares are redeemed because the stockholder has failed to maintain a minimum balance of $2,000.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align="center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">In the event that any stockholder fails to maintain a minimum balance of $2,000 of shares of common stock, the Company may redeem all of the shares held by that stockholder at the redemption price per share in effect on the date it is determined that the stockholder has failed to meet the minimum balance, less the short-term trading discount of 2%, if applicable. Minimum account redemptions will apply even in the event that the failure to meet the minimum balance is caused solely by a decline in the Company’s NAV.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company’s board of directors has the discretion to suspend or modify the share redemption plan if (1) it determines that such action is in the best interests of the Company’s stockholders, (2) it determines that it is necessary due to regulatory changes or changes in law or (3) it becomes aware of undisclosed material information that it believes should be publicly disclosed before shares are redeemed. In addition, the Company’s board of directors may suspend the offering, including the share redemption plan, if it determines that the calculation of NAV is materially incorrect or there is a condition that restricts the valuation of a material portion of the Company’s assets.</font></p></td></tr></table>
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<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">4. Related Party Arrangements</font></b></p>
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<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Advisory Agreement</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company will pay the Advisor an advisory fee equal to (1) a fixed component that accrues daily in an amount equal to 1/365th of 0.90% of the Company’s NAV for each class for such day and (2) a performance component calculated for each class on the basis of the total return to stockholders of the class in any calendar year, such that for any year in which the Company’s total return per share allocable to such class exceeds 6% per annum, the Advisor will receive 25% of the excess total return allocable to that class; provided that in no event will the performance component exceed 10% of the aggregate total return allocable to such class for such year. The fixed component of the advisory fee is payable quarterly in arrears and the performance component is payable annually in arrears. In the event the Company’s NAV per share for either class or common stock decreases below $10.00, any increase in NAV per share to $10.00 with respect to that class will not be included in the calculation of the performance component. The Company will reimburse the Advisor for all expenses paid or incurred by the Advisor in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse the Advisor for any amount by which its operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceed the greater of: (1) 2% of its average invested assets; or (2) 25% of its net income determined without reduction for any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of the Company’s assets for that period. Notwithstanding the above, the Company may reimburse the Advisor for expenses in excess of this limitation if a majority of the independent directors determines that such excess expenses are justified based on unusual and non-recurring factors.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">On February 24, 2012, the Company entered into an amendment to the advisory agreement.  Prior to the execution of this amendment, the Advisor had agreed to fund the Company’s offering and organization expenses through the Escrow Period.  The Company had agreed to reimburse the Advisor for these expenses ratably on a monthly basis over the period that ends 60 months after the end of the Escrow Period.  However, as a result of the amendment to the advisory agreement, all costs including organization, offering and operating expenses funded by the Advisor on behalf of the Company through the Escrow Period will be reimbursed ratably on a monthly basis over the period that begins 12 months after the end of the Escrow Period and ends 60 months after the end of the Escrow Period.  Operating expenses include, without limitation, director compensation and legal, accounting, tax and consulting fees.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 39pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Advisor has funded on behalf of the Company costs totaling $4.7 million through March 31, 2012, which is comprised of $3.7 million of offering costs, $0.4 million of organizational costs, and $0.6 million of operating expenses.  Operating expenses of $0.4 million and the related liability to the Advisor that were recorded as of December 31, 2011 have been reversed to reflect the amendment to the advisory agreement.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align="center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt"><b><i><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman" size="2">Dealer Manager Agreement</font></i></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company has entered into a dealer manager agreement with the Dealer Manager pursuant to which the Dealer Manager will perform the dealer manager function for the Company’s offering. For these services, the Dealer Manager will earn selling commissions of up to 3% of the total price per share of the Class A shares purchased in the primary offering. Pursuant to separately negotiated agreements, the Dealer Manager will engage and pay the selling commissions it receives to broker-dealers participating in the offering. No selling commissions will be paid for Class W shares or for sales under the distribution reinvestment plan.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company will pay the Dealer Manager a dealer manager fee that accrues daily in an amount equal to 1/365th of 0.55% of the Company’s NAV for each share class for such day. The dealer manager fee will be payable quarterly in arrears. The Dealer Manager, in its sole discretion and based on factors set forth in the participating broker-dealer agreement, may reallow a portion of the dealer manager fee equal to an amount up to 1/365th of 0.20% of the Company’s NAV to participating broker-dealers. In the event the Dealer Manager reallows less than all of the reallowable portion of the dealer manager fee, the fee paid to the Dealer Manager will be reduced in part.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company will also pay the Dealer Manager, with respect to Class A shares only,  a distribution fee that accrues daily in an amount equal to 1/365th of 0.50% of the Company’s NAV for the Class A shares for such day. The distribution fee is not payable with respect to Class W shares. The distribution fee will be payable in arrears on a quarterly basis. The Dealer Manager will reallow the distribution fee to participating broker-dealers as marketing fees or to defray other expense related to the distribution of the Class A shares and ongoing stockholder services.</font></p></td></tr></table>
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<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">5.  Incentive Award Plan</font></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Clarion Partners Property Trust Inc. Long-Term Incentive Plan (the “Long-Term Incentive Plan”) was adopted by the Company’s board of directors on September 22, 2010, and provides for the grant of equity awards to </font><font style="FONT-SIZE: 10pt" size="2">employees, directors, consultants and advisors. Subject to adjustment as set forth in the Long-Term Incentive Plan, the aggregate number of shares reserved and available for issuance is 4,000,000, not to exceed 2% of the Company’s total outstanding shares as of the date of any proposed grant. The vesting period of stock-based awards will be determined by the Company’s board of directors or a committee thereof, and the exercise term will be limited to ten years.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Subject to availability under the Long-Term Incentive Plan and among other restrictions as described in the Clarion Partners Property Trust Inc. Independent Directors Compensation Plan, which operates as a subplan of the Long-Term Incentive Plan, each independent director will receive an initial grant of 5,000 Class A shares of restricted stock (the “Initial Restricted Stock Grant”) on the date that the Company issues 15,000,000 shares of stock. Each new independent director that subsequently joins the board of directors will receive the Initial Restricted Stock Grant on the date he or she joins the board. Each restricted stock grant issued following the Initial Restricted Stock Grant will generally vest on the first anniversary of the grant date, except that the Initial Restricted Stock Grant will vest on the day immediately preceding the first annual stockholders meeting held after the date that the Company issues 15,000,000 shares of stock.</font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">No stock awards were issued under the Long-Term Incentive Plan as of March 31, 2012.</font></p></td></tr></table>
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<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">6. Distributions</font></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Operating Partnership’s limited partnership agreement generally provides that the Operating Partnership will distribute cash flow from operations and net sales proceeds from disposition of assets to the partners of the Operating Partnership in accordance with their relative percentage interests, on at least a quarterly basis, in amounts determined by the Company, as the general partner.</font></p></td></tr></table>
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<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">7. Economic Dependency</font></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company will be dependent on the Advisor and the Dealer Manager for certain services that are essential to the Company, including the sale of the Company’s shares of common stock, asset acquisition and disposition decisions and other general and administrative responsibilities. In the event that the Advisor or the Dealer Manager is unable to provide such services, the Company would be required to find one or more alternative service providers.</font></p></td></tr></table>
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<p style="MARGIN: 0in 0in 0pt"><b><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">8. Subsequent Events</font></b></p>
<p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"> </font></p>
<p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">The Company has evaluated subsequent events through the filing of this 10-Q, and determined that there have not been any events that have occurred that would require adjustments to the disclosures in the consolidated financial statements.</font></p></td></tr></table>
Clarion Partners Property Trust Inc.
0001476886
10-Q
2012-03-31
false
2012
Q1
20000
0
Non-accelerated Filer
Yes
--12-31
0
0