10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             .

Commission File Number: 000-53200

CB RICHARD ELLIS REALTY TRUST

(Exact name of registrant as specified in its charter)

Maryland	56-2466617
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

515 South Flower Street, Suite 3100, Los Angeles, California 90071

(Address of principal executive offices) (Zip Code)

(609) 683-4900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

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  ¨    Accelerated filer  ¨    Non-accelerated filer  x    Smaller reporting company  ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

The number of shares outstanding of the registrant’s common shares, $0.01 par value, was 58,890,397 as of October 31, 2008

CB RICHARD ELLIS REALTY TRUST

INDEX

		Page
Part I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2008 and 2007	2
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007	3
	Condensed Consolidated Statement of Shareholders’ Equity for the Nine Months Ended September 30, 2008	4
	Notes to the Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2008 and 2007	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	59
Item 4T.	Controls and Procedures	59
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Submission of Matters to a Vote of Security Holders	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
	Signatures	62

i

PART I.

FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

CB RICHARD ELLIS REALTY TRUST

Condensed Consolidated Balance Sheets

as of September 30, 2008 and December 31, 2007 (unaudited)

(In Thousands, Except Share Data)

	September 30, 2008			December 31, 2007
ASSETS:
Investments in Real Estate:
Land	$	84,743		$	58,580
Site Improvements		35,903			21,672
Buildings and Improvements		298,557			227,166
Tenant Improvements		12,004			9,620
		431,207			317,038
Less: Accumulated Depreciation and Amortization		(13,697	)		(7,233	)
Net Investments in Real Estate		417,510			309,805
Investments in Unconsolidated Entities		115,639			101
Cash and Cash Equivalents		34,198			77,554
Restricted Cash		956			430
Accounts and Other Receivables		1,942			1,947
Deferred Rent		2,175			1,196
Acquired Above Market Leases, Net of Accumulated Amortization of $1,911 and $921, respectively		11,856			12,505
Acquired In-Place Lease Value, Net of Accumulated Amortization of $12,883 and $8,181, respectively		35,658			29,619
Deferred Financing Costs, Net of Accumulated Amortization of $601 and $267, respectively		2,032			1,369
Lease Commissions, Net of Accumulated Amortization of $87 and $46, respectively		308			180
Other Assets		4,225			1,045
Total Assets	$	626,499		$	435,751
LIABILITIES AND SHAREHOLDERS’ EQUITY:
LIABILITIES:
Notes Payable, less discount of $3,255 and $3,049, respectively	$	154,047		$	116,876
Loan Payable		—			45,000
Security Deposits		568			155
Accounts Payable and Accrued Expenses		7,375			4,621
Accrued Offering Costs Payable to Related Parties		4,415			5,241
Distributions Payable		7,511			4,013
Acquired Below Market Leases, Net of Accumulated Amortization of $2,997 and $1,696, respectively		14,710			12,839
Property Management Fee Payable to Related Party		99			50
Investment Management Fee Payable to Related Party		381			429
Total Liabilities		189,106			189,224
MINORITY INTEREST:		1,377			1,495
SHAREHOLDERS’ EQUITY:
Common Shares of Beneficial Interest, $0.01 par value, 990,000,000 shares authorized; 55,546,825 and 31,076,709 issued and outstanding, respectively		556			311
Additional Paid-in-Capital		482,012			264,954
Accumulated Deficit		(41,411	)		(20,274	)
Accumulated Other Comprehensive (Loss) Income		(5,141	)		41
Total Shareholders’ Equity		436,016			245,032
Total Liabilities and Shareholders’ Equity	$	626,499		$	435,751

See accompanying notes to condensed consolidated financial statements.

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CB RICHARD ELLIS REALTY TRUST

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

(In Thousands, Except Share Data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
REVENUES:
Rental	$	8,767		$	3,666		$	23,631		$	7,323
Tenant Reimbursements		1,548			643			4,250			1,592
		10,315			4,309			27,881			8,915
EXPENSES:
Operating and Maintenance		1,030			261			2,207			695
Property Taxes		1,218			412			3,134			1,004
Interest		2,728			1,330			7,479			2,348
General and Administrative		680			453			2,098			1,182
Property Management Fee to Related Party		125			54			348			74
Investment Management Fee to Related Party		1,016			405			2,495			904
Depreciation and Amortization		4,417			2,115			11,457			4,585
Loss on Transfer of Real Estate Held for Sale to Continuing Operations		3,451			—			3,451			—
		14,665			5,030			32,669			10,792
INTEREST AND OTHER INCOME		467			1,160			1,797			2,198
(LOSS) INCOME BEFORE INCOME TAXES, MINORITY INTEREST, AND EQUITY IN EARNINGS IN UNCONSOLIDATED ENTITIES		(3,883	)		439			(2,991	)		321
MINORITY INTEREST		14			(5	)		12			(1	)
BENEFIT (PROVISION) FOR INCOME TAXES		557			—			41			(14	)
EQUITY IN EARNINGS OF UNCONSOLIDATED ENTITIES		379			—			103			—
NET (LOSS) INCOME	$	(2,933	)	$	434		$	(2,835	)	$	306
Basic and Diluted Net Loss per Share	$	(0.01	)	$	0.02		$	(0.01	)	$	0.02
Weighted Average Common Shares Outstanding—Basic and Diluted		50,072,669			22,538,536			41,444,884			15,386,375

See accompanying notes to condensed consolidated financial statements.

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CB RICHARD ELLIS REALTY TRUST

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2008 and 2007 (unaudited)

(In Thousands)

	Nine Months Ended September 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income	$	(2,835	)	$	306
Adjustments to Reconcile Net (Loss) Income to Net Cash Flows Provided by Operating Activities:
Equity Income in Unconsolidated Entities		(103	)		—
Minority Interest		(12	)		1
Loss on Transfer of Real Estate Held for Sale to Continuing Operations		3,451			—
Depreciation and Amortization of Building and Improvements		6,555			2,074
Amortization of Deferred Financing Costs		334			68
Amortization of Acquired In-Place Lease Value		4,861			2,488
Amortization of Above and Below Market Leases		(311	)		(214	)
Amortization of Lease Commissions		41			22
Amortization of Discount on Notes Payable		304			18
Deferred Income Taxes		(217	)		—
Changes in Assets and Liabilities:
Accounts and Other Receivables		5			(50	)
Deferred Rent		(979	)		(319	)
Other Assets		(610	)		98
Accounts Payable and Accrued Expenses		2,970			2,370
Investment Management and Property Management Fees Payable to Related Party		1			55
Net Cash Flows Provided By Operating Activities		13,455			6,917
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of Real Estate Property		(114,503	)		(198,220	)
Investments in Unconsolidated Entities		(115,316	)
Purchase Deposit		(3,121	)		(791	)
Restricted Cash		(526	)		(265	)
Lease Commissions		(169	)		(75	)
Improvements to Investments in Real Estate		(262	)		(283	)
Net Cash Flows Used in Investing Activities		(233,897	)		(199,634	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Common Shares – Public Offering and Dividend Reinvestment		248			174
Proceeds from Additional Paid-in-Capital – Public Offering and Dividend Reinvestment		237,736			168,222
Redemption of Common Shares		(2,540	)		(308	)
Payment of Public Offering Costs		(18,967	)		(14,672	)
Payment of Distributions		(14,804	)		(4,008	)
Distribution to Minority Interest		(106	)		(96	)
Borrowings on Loan Payable		—			65,000
Payments on Loan Payable		(45,000	)		—
Proceeds from Notes Payable		23,867			10,945
Principal Payments on Notes Payable		(2,607	)		(270	)
Deferred Financing Costs		(998	)		(994	)
Security Deposits		413			43
Net Cash Flows Provided by Financing Activities		177,242			224,036
EFFECT OF FOREIGN CURRENCY TRANSLATION:		(156	)		3
Net (Decrease) Increase in Cash and Cash Equivalents		(43,356	)		31,322
Cash and Cash Equivalents, Beginning of Period		77,554			14,021
Cash and Cash Equivalents, End of Period	$	34,198		$	45,343
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During the Period for Interest	$	6,466		$	1,828
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Distributions Declared and Payable	$	7,511		$	3,099
Application of Deposit to Purchase Price of Carolina Portfolio	$	551		$	—
Accrued Acquisition Costs Related to Real Estate		—		$	719
Notes Payable Assumed on Acquisition of Real Estate	$	18,281		$	63,390

See accompanying notes to condensed consolidated financial statements.

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CB RICHARD ELLIS REALTY TRUST

Condensed Consolidated Statement of Shareholders’ Equity

For the Nine Months Ended September 30, 2008 (unaudited)

(In Thousands, Except Share Data)

	Common Shares					Additional Paid-in- Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares		Amount
Balance at January 1, 2008	31,076,709		$	311		$	264,954		$	(20,274	)	$	41		$	245,032
Net Loss	—			—			—			(2,835	)		—			(2,835	)
Foreign Currency Translation Loss	—			—			—			—			(5,182	)		(5,182	)
Total Comprehensive Loss	—			—			—			(2,835	)		(5,182	)		(8,017	)
Net Contributions From Public Offering of Common Shares, $0.01 Par Value	24,753,530			248			237,736			—			—			237,984
Costs Associated with Public Offering	—			—			(18,141	)		—			—			(18,141	)
Redemption of Common Shares	(283,414	)		(3	)		(2,537	)		—			—			(2,540	)
Distributions	—			—			—			(18,302	)		—			(18,302	)
Balance at September 30, 2008	55,546,825		$	556		$	482,012		$	(41,411	)	$	(5,141	)	$	436,016

See accompanying notes to condensed consolidated financial statements

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

1. Organization and Nature of Business

CB Richard Ellis Realty Trust (the “Company”) was formed on March 30, 2004 under the laws of the state of Maryland. CBRE Operating Partnership, L.P. (“CBRE OP”) was formed in Delaware on March 30, 2004, with the Company as the sole general partner (the “General Partner”). The Company has elected to be taxed as a Real Estate Investment Trust (“REIT”) under sections 856 through 860 of the Internal Revenue Code of 1986, as amended, beginning with its taxable period ended December 31, 2004. The Company was incorporated to raise capital and acquire ownership interests in high quality real estate properties, including office, retail, industrial, and multi-family residential properties, as well as other real estate-related assets. CBRE OP was formed as a holding company to own investment interests in properties and other assets, as well as for the purpose of operating these investment interests. This structure is commonly known in the real estate industry as an umbrella partnership REIT.

On July 1, 2004, the Company commenced operations and issued 6,844,313 common shares of beneficial interest in connection with the initial capitalization of the Company. For each common share the Company issued, one class A partnership unit in CBRE OP was issued to the Company in exchange for the cash proceeds from the issuance of the common shares. In addition, CBRE REIT Holdings, LLC (“REIT Holdings”), an affiliate of CBRE Advisors LLC (the “Investment Advisor”), purchased 29,937 class A partnership units in CBRE OP as a limited partner. During October 2004, the Company issued an additional 123,449 common shares of beneficial interest to an unrelated third-party investor. On July 2, 2007, in conjunction with the Carolina Portfolio acquisition, the Company formed a taxable REIT subsidiary, CBRE RT Carolina TRS, Inc., (“Carolina TRS”), to hold certain real estate assets designated by management as held for sale which represent non-qualified REIT assets.

The registration statement relating to our initial public offering was declared effective on October 24, 2006. CNL Securities Corp., a related party, is the dealer manager (the “Dealer Manager”) of our offering. The registration statement covers up to $2,000,000,000 in common shares of beneficial interest, 90% of which will be offered at a price of $10.00 per share, and 10% of which will be offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date, as determined by CBRE Advisors LLC, the Investment Advisor, or another firm we choose for that purpose. During the period October 24, 2006 through September 30, 2008, the Company issued 48,933,180 additional common shares of beneficial interest.

The Company operates in an umbrella partnership REIT structure in which its majority-owned subsidiary, CBRE OP, owns, directly or indirectly, substantially all of the properties acquired on behalf of the Company. The Company, as the sole general partner of CBRE OP, owns approximately 99.56% of the class A partnership units therein. REIT Holdings, an affiliate of the Investment Advisor, holds the remaining interest through 246,361 class A partnership units representing approximately a 0.44% ownership interest in the total class A partnership units as of September 30, 2008. In exchange for services provided to the Company relating to its formation and future services, REIT Holdings also owns a class B limited partnership interest (“class B interest”). The Investment Advisor is affiliated with the Company in that the two entities have common officers some of whom also own equity interests in the Investment Advisor and the Company. All business activities of the Company are managed by the Investment Advisor.

Unless the context otherwise requires or indicates, references to “CBRE REIT,” “we,” “our,” and “us” refer to the activities of and the assets and liabilities of the business and operations of the Company and its subsidiaries.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules applicable to Form 10-Q and reflect all adjustments, which are, in our opinion, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Certain information and footnotes required for annual financial statement presentation have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our interim financial statements do not include all of the information and disclosures required under U.S. GAAP for complete financial statements. The condensed consolidated financial statements and notes thereto should be read in conjunction with our current Annual Report on Form 10-K, which contains the latest available audited consolidated financial statements and notes thereto, which are as of and for the year ended December 31, 2007.

Principles of Consolidation

Because we are the sole general partner of CBRE OP and the owner of Carolina TRS and have majority control over their management and major operating decisions, the accounts of CBRE OP and Carolina TRS are consolidated in our financial statements. The interests of REIT Holdings are reflected in minority interest in the accompanying condensed consolidated financial statements. All significant inter-company accounts and transactions are eliminated in consolidation. CB Richard Ellis Investors, LLC (“CBRE Investors”), an affiliate of the Investment Advisor, also owns an interest in us through its ownership of 243,229 common shares of beneficial interest at September 30, 2008 and December 31, 2007.

Investments in Unconsolidated Entities

Our determination of the appropriate accounting method with respect to our investments in CB Richard Ellis Strategic Partners Asia II-A, L.P. (“CBRE Strategic Partners Asia”), which is considered a Variable Interest Entity (“VIE”), is based on Financial Accounting Standards Board, or FASB, Interpretation No. 46 (revised in December 2003), “Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51” (“FIN46R”). We account for this VIE, of which we are not the primary beneficiary, under the equity method of accounting.

We determine if an entity is a VIE under FIN 46R based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, then a quantitative analysis, if necessary. In a quantitative analysis, we incorporate various estimates, including estimated future cash flows, asset hold periods and discount rates, as well as estimates of the probabilities of various scenarios occurring. If the entity is a VIE, we then determine whether we consolidate the entity as the primary beneficiary. We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. If we made different judgments or utilized different estimates in these evaluations, it could result in differing conclusions as to whether or not an entity is a VIE and whether or not to consolidate such entity.

With respect to our majority limited membership interest in the Duke/Hulfish, LLC joint venture (the “Duke joint venture”) and the Afton Ridge Joint Venture, LLC (“Afton Ridge”), we considered EITF 96-16, “Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights” in determining that we did not have control over the financial and operating decisions of such entity due to the existence of substantive participating rights held by the minority limited member who is also the managing member of the Duke joint venture.

We carry our investments in CBRE Strategic Partners Asia, the Duke joint venture and Afton Ridge on the equity method of accounting because we have the ability to exercise significant influence (but not control) over operating and financial policies of each such entity. We eliminate transactions with such equity method entity to the extent of our ownership in each such entity. Accordingly, our share of net income (loss) of these equity method entities is included in consolidated net income (loss). Under the equity method, impairment losses are recognized upon evidence of other-than-temporary losses of value.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Use of Estimates

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segment Information

Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related Information,” established standards for disclosure about operating segments and related disclosure about products and services, geographic areas and major customers. We currently operate in two geographic areas, the United States and the United Kingdom. We view our operations as two reportable segments, a Domestic segment and an International segment (which are each comprised of aggregated operating segments), which participate in the acquisition, development, ownership, and operation of high quality real estate in their respective regions.

Cash Equivalents

We consider short-term investments with maturities of three months or less when purchased to be cash equivalents. As of September 30, 2008 and December 31, 2007, cash equivalents consisted primarily of investments in money market funds.

Restricted Cash

Restricted cash represents those cash accounts for which the use of funds is restricted by loan covenants. As of September 30, 2008 and December 31, 2007, our restricted cash balance was $956,000 and $430,000, respectively, which represents amounts set aside as impounds for future property tax payments as required by our agreements with our lenders.

Discontinued Operations and Real Estate Held for Sale

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“SFAS No. 144”), the income or loss and net gain on dispositions of operating properties and the income or loss on all properties classified as held for sale are reflected in the consolidated statements of operations as discontinued operations for all periods presented. A property is classified as held for sale when certain criteria, as set forth under SFAS No. 144, are met. At such time, we present the respective assets and liabilities separately on the balance sheet and cease to record depreciation and amortization expense. Properties held for sale are reported at the lower of their carrying value or their estimated current sales value less costs to sell. As of December 31, 2007, we had 18 properties classified as held for sale and during the three months ended September 30, 2008, they were transferred to continuing operations (see Note 5).

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Accounting for Derivative Financial Investments and Hedging Activities

We account for our derivative and hedging activities, if any, in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”) as amended, which requires all derivative instruments to be carried at fair value on the balance sheet. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking each hedge transaction. We periodically review the effectiveness of each hedging transaction, which involves estimating future cash flows. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in other comprehensive income within shareholders’ equity. Calculation of a fair value of derivative instruments also requires management to use estimates. Amounts will be reclassified from other comprehensive income to the income statement in the period or periods the hedged forecasted transaction affects earnings. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges under SFAS No. 133. The changes in fair value hedges are accounted for by recording the fair value of the derivative instruments on the balance sheet as either assets or liabilities, with the corresponding amount recorded in current period earnings.

Investments in Real Estate

Our investment in real estate is stated at depreciated cost. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:

Buildings and Improvements	39 years
Site Improvements	15 years
Tenant Improvements	Shorter of the useful lives or the terms of the related leases

Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Repairs and maintenance are charged to expense as incurred. As of September 30, 2008 and December 31, 2007, we owned, on a consolidated basis, 49 and 44 real estate investments, respectively.

On January 23, 2008, we acquired land parcels located in North Carolina and South Carolina. The purchase price was $857,000 including transaction costs and acquisition fees. The purchase price was allocated to Fairforest Bldg. 6 located in Spartanburg, SC ($584,000), North Rhett III located in Charleston, SC ($69,000) and Kings Mountain I located in Charlotte, NC ($204,000).

On March 5, 2008, we acquired Lakeside Office Center, a multi-tenant office building, located in Dallas, TX. The purchase price was approximately $17,965,000 including transaction costs and acquisition fees.

On March 14, 2008, we acquired Kings Mountain III, a warehouse distribution building, located in Charlotte, NC. The purchase price was approximately $25,662,000 including transaction costs and acquisition fees.

On March 20, 2008, we acquired Thames Valley Five, a single tenant office building, located in Reading, United Kingdom. The purchase price was approximately £14,734,000 ($29,529,000) including transaction costs and acquisition fees.

On July 1, 2008, we acquired Enclave on the Lake, a single tenant office building, located in Houston, TX. The purchase price was approximately $37,762,000 including transaction costs and acquisition fees.

On July 11, 2008, we acquired Albion Mills Retail Park, a multi-tenant retail property, located in Wakefield, United Kingdom. The purchase price was approximately £11,142,000 ($22,064,000) including transaction costs and acquisition fees.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Other Assets

Other assets consist primarily of purchase deposits paid in connection with future acquisitions that have not yet been applied to investments in real estate or investments in unconsolidated entities, and prepaid insurance. Other assets will be amortized to expense or reclassified to other asset accounts upon being put into service in future periods.

Other assets include the following as of September 30, 2008 and December 31, 2007 (in thousands):

	September 30, 2008		December 31, 2007
Purchase deposit	$	3,121	$	551
Prepaid insurance		379		339
Prepaid real estate taxes		68		—
Interest rate cap at fair value		14		121
Other		643		34
Total	$	4,225	$	1,045

Concentration of Credit Risk

Our properties are located throughout the United States and in the United Kingdom. The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory, and social factors affecting the communities in which the tenants operate. Our credit risk relates primarily to cash, restricted cash, and interest rate cap agreements. Cash accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000 through December 31, 2009. We have not experienced any losses to date on its invested cash and restricted cash. The interest rate cap agreements create credit risk. Credit risk arises from the potential failure of counterparties to perform in accordance with the terms of their contracts. Our risk management policies define parameters of acceptable market risk and limit exposure to credit risk. Credit exposure resulting from derivative financial instruments is represented by their fair value amounts, increased by an estimate of potential adverse position exposure arising from changes over time in interest rates, maturities, and other relevant factors. We do not anticipate nonperformance by any of our counterparties.

Minority Interest in CBRE OP

The interest in CBRE OP not owned by us, which is reflected as minority interest as of September 30, 2008 and December 31, 2007, represents 0.44% and 0.79%, respectively, of CBRE OP. Of the 246,341 operating partnership units held as minority interest as of September 30, 2008 and December 31, 2007, 246,341 operating partnership units were exchangeable on a one for one basis for common shares of CBRE REIT, with an estimated aggregate fair value of $2,463,000, based on the gross selling price of $10.00 per share of CBRE REIT’s common shares in our initial public offering.

9

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Impairment of Long-Lived Assets

We assess whether there has been impairment in the value of our long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. Management believes no impairment in the net carrying values of the investments in real estate has occurred as of September 30, 2008.

Purchase Accounting for Acquisition of Investments in Real Estate

We apply purchase accounting to all acquired real estate investments. The purchase price of the real estate is allocated to the acquired tangible assets, consisting primarily of land, building and tenant improvements and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases, value of tenant relationships and acquired ground leases, based in each case on their fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market loans, will be recorded based on the fair value of any loans assumed in connection with acquiring the real estate.

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 (or acquired ground lease if the land is subject to a ground lease), building and tenant improvements based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, legal and other related costs.

In allocating the purchase price 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 market lease rates for the corresponding in-place leases measured over a period equal to the remaining non-cancelable term of the lease and, for below-market leases, over a period equal to the initial term plus any below-market fixed rate renewal periods. The capitalized below-market lease values, also referred to as acquired lease obligations, are amortized as an increase to rental income over the initial terms of the respective leases and any below-market fixed rate renewal periods. The capitalized above-market lease values are amortized as a decrease to rental income over the initial terms of the prospective leases.

The aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationships, is measured by the estimated cost of operations during a theoretical lease-up period to replace in-place leases, including lost revenues and any unreimbursed operating expenses, plus an estimate of deferred leasing commissions for in-place leases. This aggregate value is allocated between in-place lease value and tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease; however, the value of tenant relationships has not been separated from in-place lease value for the real estate acquired as such value and its consequence to amortization expense is immaterial for these particular acquisitions. Should future acquisitions of properties result in allocating material amounts to the value of tenant relationships, an amount would be separately allocated and amortized over the estimated life of the relationship. The value of in-place leases is amortized to expense 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 written-off.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income. In the accompanying consolidated balance sheets, accumulated other comprehensive income consists of foreign currency translation adjustments.

Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our taxable period ended December 31, 2004. To qualify as a REIT, we must distribute annually at least 90% of our adjusted taxable income, as defined in the Code, to our shareholders and satisfy certain other organizational and operating requirements. We generally will not be subject to U.S. federal income taxes if we distribute 100% of our taxable income for each year to our shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income taxes (including any applicable alternative minimum tax) on our taxable income at regular corporate rates and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and to U.S. federal income taxes and excise taxes on our undistributed taxable income. We believe that we have met all of the REIT distribution and technical requirements for the nine months ended September 30, 2008 and the year ended December 31, 2007. Management intends to continue to adhere to these requirements and maintain our REIT status.

Revenue Recognition

All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. In connection with various leases, we have received irrevocable stand-by letters of credit totaling $6,785,000 and $8,353,000 as security for such leases at September 30, 2008 and December 31, 2007, respectively.

Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance and other recoverable costs, are recognized as revenue in the period the expenses are incurred. Tenant reimbursements are recognized and presented in accordance with Emerging Issues Task Force Issue 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent (“Issue 99-19”). Issue 99-19 requires that these reimbursements be recorded on a gross basis, when we are the primary obligor with respect to incurring expenses and with respect to having the credit risk.

Tenant receivables and deferred rent receivables are carried net of the allowances for uncollectible current tenant receivables and deferred rent. Management’s determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, individual receivables, current economic conditions, and other relevant factors. The allowances are increased or decreased through the provision for bad debts. The allowance for uncollectible rent receivable was $4,000 and $1,000 as of September 30, 2008 and December 31, 2007, respectively.

Offering Costs

Offering costs totaling $18,141,000 and $14,212,000 were incurred during the nine months ended September 30, 2008 and 2007, respectively, and are recorded as a reduction of additional paid-in-capital in the consolidated statement of shareholders’ equity. Offering costs incurred through September 30, 2008 totaled $43,550,000. Of the total amount, $37,143,000 was incurred to CNL Securities Corp., as dealer manager; $3,969,000 was incurred to CB Richard Ellis Group, Inc., an affiliate of the Investment Advisor; $134,000 was incurred to the Investment Advisor for reimbursable marketing costs and $2,304,000 was incurred to other service providers. Each party will be paid the amount incurred from proceeds of the public offering. As of September 30, 2008 and December 31, 2007, the accrued offering costs payable to related parties included in our consolidated balance sheets were $4,415,000 and $5,241,000, respectively. Offering costs payable to unrelated parties of $519,000 and $0 at September 30, 2008 and December 31, 2007, respectively, were included in accounts payable and accrued expenses.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Deferred Financing Costs and Discounts on Notes Payable

Direct costs incurred in connection with obtaining financing are amortized over the respective term of the loan on a straight-line basis, which approximates the effective interest method.

Discounts on notes payable are amortized to interest expense based on the effective interest method.

Translation of Non-U.S. Currency Amounts

The financial statements and transactions of our United Kingdom real estate operation is reported in its functional currency, namely the Great Britain Pound (“GBP”) and is then translated into U.S. dollars (“USD”). Assets and liabilities of this operation are denominated in the functional currency and are then translated at exchange rates in effect at the balance sheet date. Revenues and expenses are translated at the average exchange rate for the reporting period. Translation adjustments are reported in “Accumulated Other Comprehensive Income (Loss),” a component of Shareholders’ Equity.

The carrying value of our United Kingdom assets and liabilities fluctuate due to changes in the exchange rate between the USD and the GBP. The exchange rate of the USD to the GBP was $1.7787 and $1.9869 as of September 30, 2008 and December 31, 2007, respectively.

Class B Interest – Related Party

Effective July 1, 2004, REIT Holdings, an affiliate of the Investment Advisor, was granted a class B interest in CBRE OP. The class B interest is an equity instrument issued to non-employees in exchange for services. The holder is entitled to receive distributions made by CBRE OP in an amount equal to 15% of all net proceeds of any disposition of properties to be distributed to the partners after subtracting (i) the costs of such distribution, (ii) the amount of equity capital invested in such property which has not been reinvested or returned to the partners, and (iii) an amount equal to 7% annual, uncompounded return on such invested capital. The terms of the termination provision relating to the class B interest were amended to require its forfeiture in the event the Advisor unilaterally terminates the Investment Advisory Agreement. As a result future changes in the fair value of the class B interest will be deferred from recognition in the financial statements until a listing of the common shares on a national securities exchange or a change in a control transaction takes place.

Accounting Pronouncements Adopted January 1, 2008

Effective January 1, 2008, we adopted, on a prospective basis, SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”) as amended by FASB Staff Position SFAS No. 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (“FSP FAS No. 157-1”) and FASB Staff Position SFAS No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS No. 157-2”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in U.S. GAAP and provides for expanded disclosure about fair value measurements. SFAS No. 157 applies prospectively to all other accounting pronouncements that require or permit fair value measurements. FSP FAS No. 157-1 amends SFAS No. 157 to exclude from the scope of SFAS No. 157 certain leasing transactions accounted for under SFAS No. 13, “Accounting for Leases.” FSP FAS No. 157-2 amends SFAS No. 157 to defer the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities except those that are recognized or disclosed at fair value in the financial statements on a recurring basis to fiscal years beginning after November 15, 2008.

Earnings Per Share

Basic net income (loss) per share from continuing operations and discontinued operations is computed by dividing income (loss) from continuing operations and discontinued operations by the weighted average number of common shares outstanding during each period. The computation of diluted net income (loss) from continuing operations and discontinued operations per share further assumes the dilutive effect of stock options, stock warrants and contingently issuable shares, if any. In accordance with SFAS No. 128, “Earnings Per Share,” as we have recorded net losses from continuing operations and net income from discontinued operations for the nine months ended September 30, 2008 and 2007, the effect, of stock options, stock warrants and contingently issuable shares, if any, would be anti–dilutive, and accordingly are excluded from the earnings per share computation. In addition, no stock options, stock warrants or contingently issuable shares have ever been issued. As a result, there is no difference in basic and diluted shares.

12

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

The adoption of SFAS No. 157 did not have a material impact on our consolidated financial statements. Management is evaluating the impact that SFAS No. 157 will have on our non-financial assets and non-financial liabilities since the application of SFAS No. 157 for such items was deferred to January 1, 2009. We believe that the impact of these items will not be material to our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis to which we have not yet applied SFAS No. 157 due to the deferral of SFAS No. 157 for such items include:

• Non-financial assets and liabilities initially measured at fair value in an acquisition or business combination;

• Long-lived assets measured at fair value due to an impairment assessment under SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets;” and

• Asset retirement obligations initially measured under SFAS No. 143, “Accounting for Asset Retirement Obligations.”

Effective January 1, 2008, we adopted, on a prospective basis, SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The adoption of SFAS No. 159 did not have a material impact on our consolidated financial statements since we did not elect to apply the fair value option for any of its eligible financial instruments or other items on the January 1, 2008 effective date.

New Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) changes the requirements for an acquirer’s recognition and measurement of the assets acquired and the liabilities assumed in a business combination. SFAS No. 141(R) is effective for annual periods beginning after December 15, 2008 and should be applied prospectively for all business combinations entered into after the date of adoption. We anticipate that the adoption of SFAS No. 141(R) will only have an impact on our financial statements in so far as we will not be able to capitalize deal costs to our acquisitions.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 requires (i) that noncontrolling (minority) interests be reported as a component of shareholders’ equity, (ii) that net income attributable to the parent and to the noncontrolling interest be separately identified in the consolidated statement of operations, (iii) that changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, (iv) that any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value, and (v) that sufficient disclosures are provided that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for annual periods beginning after December 15, 2008 and should be applied prospectively. However, the presentation and disclosure requirements of the statement shall be applied retrospectively for all periods presented. Management does not expect the adoption of the provisions of SFAS No. 160 will have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). This new standard enhances disclosure requirements for derivative instruments in order to provide users of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under Financial Accounting Standards No. 133 “Accounting for Derivative Instruments and Hedging Activities” and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is to be applied prospectively for the first annual reporting period beginning on or after November 15, 2008. We believe that the adoption of SFAS No. 161 will not have a material impact on our financial statement disclosures since we do not currently have any material derivative instruments.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

3. Acquisitions of Real Estate

The Carolina land parcels were acquired on January 23, 2008 for $857,000, Lakeside Office Center was acquired on March 5, 2008 for $17,965,000, Kings Mountain III was acquired on March 14, 2008 for $25,662,000, Thames Valley Five was acquired on March 20, 2008 for £14,734,000 ($29,529,000), Enclave on the Lake was acquired on July 1, 2008 for $37,762,000 and Albion Mills Retail Park was acquired on July 11, 2008 for £11,142,000 ($22,064,000).

These property acquisitions are accounted for in accordance with SFAS No. 141, “Business Combinations.” The fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, site improvements, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above and below-market leases and the value of in-place leases and tenant relationships, if any, based in each case on their respective fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market loans, will be recorded based on the fair value of any loans assumed in connection with acquiring the real estate. The purchase price allocation to the assets and liabilities acquired at Lakeside Office Center, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park are preliminary and are subject to revision based on the finalization of appraisals of the assets and liabilities acquired.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed for the above noted acquisitions during the nine months ended September 30, 2008 and designated as real estate held for investment (in thousands):

Property	Land		Site Improvements		Building Improvements		Tenant Improvements		Acquired In- Place Lease Value		Above Market Lease Value		Below Market Lease Value			Discount on Notes		Purchase Price		Notes Payable Assumed			Net Assets Acquired
Carolina Land Parcels	$	857	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	857	$	—		$	857
Lakeside Office Center		4,249		804		10,614		1,119		1,798		2		(621	)		—		17,965		—			17,965
Kings Mountain III		1,180		2,340		22,142		—		—		—		—			—		25,662		—			25,662
Thames Valley Five		8,052		1,181		15,925		97		4,325		—		(51	)		—		29,529		—			29,529
Enclave on the Lake		4,944		10,147		19,989		1,188		3,591		—		(2,607	)		510		37,762		(18,790	)		18,972
Albion Mills Retail Park		9,236		218		9,067		—		3,651		19		(127	)		—		22,064		—			22,064
	$	28,518	$	14,690	$	77,737	$	2,404	$	13,365	$	21	$	(3,406	)	$	510	$	133,839	$	(18,790	)	$	115,049

Building Improvements are depreciated over 39 years; Site Improvements are depreciated over 15 years; Tenant Improvements, Value of In-Place Leases, Above-Market Lease Values and Below-Market Lease Values are amortized over the remaining lease terms at the time of acquisition.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Unaudited pro forma results, assuming the above noted acquisitions had occurred as of January 1, 2007 for purposes of the 2008 and 2007 pro forma disclosures, are presented below. These unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments, such as increased depreciation and amortization expenses as a result of tangible and intangible assets acquired in the acquisitions. These unaudited pro forma results do not purport to be indicative of what operating results would have been had the acquisitions occurred on January 1, 2007 and may not be indicative of future operating results (dollars in thousands, except share data):

	Nine Months Ended September 30,
	2008			2007
Revenue	$	31,671		$	27,844
Operating (Loss) Income		(4,711	)		1,929
Net (Loss) Income		(1,291	)		4,307
Basic and Diluted (Loss) Income Per Share		(0.03	)		0.28
Weighted Average Shares Outstanding for Basic and Diluted (Loss) Income		41,444,884			15,386,375

4. Investments in Unconsolidated Entities

Investments in unconsolidated entities at September 30, 2008 and December 31, 2007 consist of the following:

	September 30, 2008			December 31, 2007
CBRE Strategic Partners Asia	$	(133	)	$	101
Duke joint venture		70,084			—
Afton Ridge		45,688			—
	$	115,639		$	101

The following is a summary of the investments in unconsolidated entities for the nine months ended September 30, 2008:

Investment Balance, January 1, 2008	$	101
Contributions		113,136
REIT Basis Additions		2,180
Other Comprehensive Income		119
Company’s Equity in Net Income (including adjustments for basis differences)		103
Investment Balance, September 30, 2008	$	115,639

CBRE Strategic Partners Asia

We have agreed to a capital commitment of $20,000,000 in CBRE Strategic Partners Asia, which extends for 24 months after the close of the final capital commitment. On October 16, 2007, we contributed $200,000 of our capital commitment which was funded using net proceeds from our initial public offering. CBRE Investors, our sponsor, formed CBRE Strategic Partners Asia to purchase, reposition, develop, hold for investment and sell institutional quality real estate and related assets in targeted markets in Asia, including China, Japan, India, South Korea, Hong Kong, Singapore and other Asia Pacific markets. The initial closing date of CBRE Strategic Partners Asia was in July 2007, with additional commitments being accepted through January 2008. CBRE Strategic Partners Asia closed on January 31, 2008, with aggregate capital commitments of $394,200,000. CBRE Strategic Partners Asia has an eight year term, which may be extended for up to two one-year periods with the approval of two-thirds of the limited partners.

As of September 30, 2008, CBRE Strategic Partners Asia, with its parallel fund, CB Richard Ellis Strategic Asia II, L.P., had aggregate investor commitments of approximately $394,200,000 from institutional investors including CBRE Investors. We own an ownership interest of approximately 5.07% in CBRE Strategic Partners Asia. As of September 30, 2008, CBRE Strategic Partners Asia had acquired ownership interests in nine properties, four in China and five in Japan. Our capital commitment is currently being pledged as collateral for borrowings of CBRE Strategic Partners Asia of which our pro-rata portion of such borrowing was $10,661,000, based on our 5.07% ownership interest at September 30, 2008. Currency translation gains recognized during the nine months ended September 30, 2008 were recognized as Other Comprehensive Income in the amount of $119,000.

15

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

We carry our investment in CBRE Strategic Partners Asia on the equity method of accounting. Those investments where we have the ability to exercise significant influence (but not control) over operating and financial policies of such entities (including certain entities where we have less than 20% ownership) are accounted for using the equity method. We eliminate transactions with such equity method entities to the extent of our ownership in such entities. Accordingly, our share of the earnings or losses of these equity method entities is included in consolidated net loss. Under the equity method, impairment losses are recognized upon evidence of other-than-temporary losses of value.

Consolidated Balance Sheets of CBRE Strategic Partners Asia as of September 30, 2008 and December 31, 2007 (in thousands):

	September 30, 2008			December 31, 2007
Assets
Real Estate Net	$	224,751		$	98,995
Other Assets		50,720			7,510
Total Assets	$	275,471		$	106,505
Liabilities and Equity
Notes Payable	$	210,135		$	44,969
Loan Payable		60,212			57,389
Other Liabilities		7,268			2,062
Total Liabilities		277,615			104,420
Company’s (Deficit) Equity		(133	)		101
Other Investors’ (Deficit) Equity		(2,011	)		1,984
Total Liabilities and Equity	$	275,471		$	106,505

Consolidated Statements of Operations of CBRE Strategic Partners Asia for the three and nine months ended September 30, 2008 (unaudited) (in thousands); there were no activities for the three and nine months ended September 30, 2007:

	Three Months Ended September 30, 2008			Nine Months Ended September 30, 2008
Total Revenues	$	351		$	1,190
Total Expenses		1,665			8,183
Net Loss	$	(1,314	)	$	(6,993	)
Company’s Equity in Net Loss	$	(76	)	$	(353	)

Duke Joint Venture

On May 5, 2008, we entered into a contribution agreement with Duke Realty Limited Partnership (“Duke”), a subsidiary of Duke Realty Corporation (NYSE: DRE), to form the Duke joint venture to acquire $248,900,500 in industrial real property assets (the “Industrial Portfolio”). The Industrial Portfolio consists of six bulk industrial built-to-suit, fully leased properties. On September 12, 2008, we entered into a first amendment to the contribution agreement to acquire a fully leased office building for $37,100,000 and to increase and revise the total purchase commitment to $282,400,000. We own an 80% interest and Duke owns a 20% interest in the Duke joint venture.

On June 12, 2008 and September 30, 2008, the Duke joint venture acquired fee interests in five properties pursuant to the contribution agreement. The Duke joint venture expects to acquire two industrial properties prior to the end of the year. All of the properties acquired are new built-to-suit, 100% leased, single-tenant buildings that do not have an operating history. The Duke joint venture obtained financing from 40/86 Mortgage Capital, Inc. for each of the four properties acquired on September 30, 2008 and for the previously acquired Buckeye Logistics Center property, which was acquired on June 12, 2008. The financings, totaling $99,200,000, carry an interest rate of 5.58%, a term of five years and are cross-collateralized among the properties. The four buildings acquired on September 30, 2008 were completed in 2008. The Buckeye Logistics Center was completed in September 2007. The Duke joint venture has purchased approximately $182,700,000 of assets, exclusive of acquisition fees and closing costs, to date.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

The following table provides further detailed information concerning the properties held in the Duke joint venture:

Property and Market	Property Type	Net Rentable Square Feet	Tenant	Lease Expiration	Approximate Purchase Price (1)		Pro Rata Share of Approximate Purchase Price (2)		Approximate Debt Financing		Acquisition Fee (3)		Address
201 Sunridge Blvd. / Dallas, Texas	Warehouse/ Distribution	822,550	Unilever(4)	09/2018	$	31,600,000	$	25,280,000	$	19,400,000	$	253,006	201 Sunridge Blvd. Hutchins, Texas
12200 President’s Court / Jacksonville, Florida	Warehouse/ Distribution	772,210	Unilever(4)	09/2018	$	37,000,000	$	29,600,000	$	21,600,000	$	295,649	12200 President’s Court Jacksonville, Florida
AllPoints at Anson Bldg. 1 / Indianapolis, Indiana	Warehouse/ Distribution	630,570	Amazon.com(5)	07/2018	$	33,400,000	$	26,720,000	$	17,000,000	$	267,204	4237-4251 Anson Blvd. Indianapolis, Indiana
Aspen Corporate Center 500 / Nashville, Tennessee	Office	180,147	Verizon Wireless(6)	10/2018	$	37,100,000	$	29,680,000	$	21,200,000	$	296,888	500 Duke Dr. Franklin, Tennessee
Buckeye Logistics Center / Phoenix, Arizona	Warehouse/ Distribution	604,678	Amazon.com(5)	06/2018	$	43,600,000	$	34,880,000	$	20,000,000	$	344,810	6835 W. Buckeye Rd. Phoenix, Arizona

⁽¹⁾ Approximate total purchase price, exclusive of closing costs, paid by the Duke joint venture for each of these properties.

⁽²⁾ Pro rata share of approximate purchase price is at our pro rata share of effective ownership for each of these properties, which was funded using net proceeds of our initial public offering.

⁽³⁾ Acquisition fees paid to our Investment Advisor are not included in the total acquisition cost for the properties, but are included as additional REIT basis in our investment in unconsolidated entities balance.

⁽⁴⁾ Our tenant CONOPCO, Inc. is a wholly-owned subsidiary of Unilever United States, Inc., which is wholly-owned by Unilever N.V. and Unilever PLC, together Unilever. Unilever is one of the world’s largest suppliers of food products and consumer goods.

⁽⁵⁾ Our tenants Amazon.com.indc, LLC and Amazon.com.axdc, Inc. are both wholly-owned subsidiaries of Amazon.com, one of the world’s largest internet-based retailers of consumer goods. AllPoints at Anson Bldg. 1 and Buckeye Logistics Center are two of Amazon’s largest fulfillment centers in North America.

⁽⁶⁾ Our tenant Cellco Partnership does business as Verizon Wireless and is one of the nation’s largest suppliers of cellular communications services.

We have entered into an operating agreement for the Duke joint venture with Duke. The term of the Duke joint venture is 10 years, subject to certain conditions. Duke acts as the managing member of the Duke joint venture and is entitled to receive fees in connection with the services it provides to the Duke joint venture, including asset management, construction, development, leasing and property management services. Duke is also entitled to a promoted interest in the Duke joint venture. We have joint approval rights over all major operating and financial policy decisions.

For a period of three years from the date of the operating agreement, the Duke joint venture will have the right to acquire additional newly developed bulk industrial built-to-suit properties from Duke if such properties satisfy certain specified conditions. We will retain the right to approve the acquisition and purchase price of each such property. The total amount of properties (inclusive of the Industrial Portfolio) that may be contributed to the Duke joint venture over this period may be up to $800,000,000.

We carry our investment in the Duke joint venture on the equity method of accounting. Those investments where we have the ability to exercise significant influence (but not control) over operating and financial policies of such entities are accounted for using the equity method. We eliminate transactions with such equity method subsidiaries to the extent of our ownership in such entities.

17

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Consolidated Balance Sheet of the Duke joint venture as of September 30, 2008 (unaudited) (in thousands):

	September 30, 2008		REIT Basis Adjustments			Total
Assets
Real Estate Net	$	169,051	$	1,671		$	170,722
Other Assets		16,201		(6	)		16,195
Total Assets	$	185,252	$	1,665		$	186,917
Liabilities and Equity
Loan Payable		99,200					99,200
Other Liabilities		616					616
Total Liabilities		99,816					99,816
Company’s Equity		68,419		1,665			70,084
Other Investor’s Equity		17,017					17,017
Total Liabilities and Equity	$	185,252	$	1,665		$	186,917

Consolidated Statements of the Duke joint venture for the three months ended September 30, 2008 and for the period June 12, 2008 through September 30, 2008 (unaudited) (in thousands); there were no activities for the three and nine months ended September 30, 2007:

	Three Months Ended September 30, 2008			For the Period June 12, 2008 Through September 30, 2008
Total Revenues	$	1,035		$	1,252
Total Expenses		684			899
Net Income	$	351		$	353
Company’s Share in Net Income	$	351		$	353
Adjustments for REIT Basis		(6	)	$	(6	)
Company’s Equity in Net Income	$	345		$	347

Afton Ridge Joint Venture

On September 18, 2008, we acquired a 90% ownership interest in Afton Ridge, the owner of Afton Ridge Shopping Center, from unrelated third parties. CK Afton Ridge Shopping Center, LLC, a subsidiary of Childress Klein Properties, Inc. (“CK Afton Ridge”), retained a 10% ownership interest in Afton Ridge and continues to manage Afton Ridge Shopping Center. In connection with the services it provides, CK Afton Ridge is entitled to receive fees, including management, construction management and property management fees. Afton Ridge Shopping Center is located at the intersection of I-85 and Kannapolis Parkway, in Kannapolis, North Carolina. We acquired our ownership interest in Afton Ridge for approximately $45,000,000, exclusive of customary closing costs, which was funded using net proceeds from our initial public offering. Upon closing, we paid our Investment Advisor an acquisition fee of approximately $450,000. This acquisition fee is not included in the $45,000,000 total acquisition cost of Afton Ridge.

Afton Ridge Shopping Center is a 470,288 square foot regional shopping center, completed in 2006, in which Afton Ridge owns 296,388 rentable square feet that is currently 91% occupied. One of the shopping center’s anchors, a 173,900 square foot SuperTarget, is not owned by us. Additional anchor tenants in Afton Ridge Shopping Center are Best Buy, Marshalls, PetSmart, Dick’s Sporting Goods, Stein Mart and Ashley Furniture. Afton Ridge Shopping Center is the retail component of a 260 acre master planned mixed-use development.

We carry our investment in Afton Ridge on the equity method of accounting. Those investments where we have the ability to exercise significant influence (but not control) over operating and financial policies of such entities are accounted for using the equity method. We eliminate transactions with such equity method subsidiaries to the extent of our ownership in such entities.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Consolidated Balance Sheet of Afton Ridge as of September 30, 2008 (unaudited) (in thousands):

	September 30, 2008		REIT Basis Adjustments		Total
Assets
Real Estate Net	$	50,071	$	509	$	50,580
Other Assets		533				533
Total Assets	$	50,604	$	509	$	51,113
Liabilities and Equity
Other Liabilities		405				405
Total Liabilities		405				405
Company’s Equity		45,179		509		45,688
Other Investor’s Equity		5,020				5,020
Total Liabilities and Equity	$	50,604	$	509	$	51,113

Consolidated Statements of Afton Ridge for the period September 18, 2008 through September 30, 2008 (unaudited) (in thousands); there were no activities for the three and nine months ended September 30, 2007:

	For the period September 18, 2008 Through September 30, 2008
Total Revenues	$	154
Total Expenses		32
Net Income		122
Company’s Equity in Net Income	$	109

On October 15, 2008, Afton Ridge obtained a $25,500,000 loan from the Metropolitan Life Insurance Company, secured by the Afton Ridge Shopping Center originally acquired on September 18, 2008. The loan is for a term of five years, plus a 12 month extension option, and bears interest at a fixed rate of 5.70%. Interest payments only are due monthly for the term of the loan with principal due at maturity.

5. Transfer of Held for Sale Real Estate to Investments in Real Estate

As of December 31, 2007, we had 18 properties classified as held for sale and during the three months ended September 30, 2008, they were transferred to continuing operations. During the period ended September 30, 2008, management determined that greater long-term value could be realized from operating the properties than could be achieved in a sale of the properties in the current market. As a result of the transfer of the previously held for sale real estate to investments in real estate, a loss was recorded in the current period in the amount of $3,451,000 to measure each of the properties at the lower of its carrying amount adjusted for depreciation and amortization expense that would have been recognized had the asset been continuously classified as held for investment, or its fair value at the date of the decision not to sell. Prior period revenues and expenses from continuing operations increased by the following amount as a result of the reclassification of amounts previously reported as discontinued operations for the three and nine months ended September 30, 2007:

REVENUES
Rental	$	340
Tenant Reimbursements		58
Total Revenues		398
EXPENSES
Operating and Maintenance		11
Property Taxes		70
General and Administrative		6
Total Expenses	$	87

In addition, revenues and expenses from continuing operations for the six months ended June 30, 2008 increased from the amounts previously reported as a result of the transfer of the previously held for sale properties to investments in real estate.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

The real estate held for sale assets were reclassified from assets held for sale to investments in real estate on the consolidated balance sheet at December 31, 2007, and then adjusted for the loss on transfer at September 30, 2008 as follows (in thousands):

	December 31, 2007			Loss Adjustment			September 30, 2008
Land	$	9,614		$	(39	)	$	9,575
Site Improvements		3,771			(284	)		3,487
Building Improvements		43,897			(1,412	)		42,485
Tenant Improvements		172			(71	)		101
Above Market Lease		770			(421	)		349
Below Market Lease		(944	)		171			(773	)
In-Place Lease Value		3,294			(1,395	)		1,899
	$	60,574		$	(3,451	)	$	57,123

6. Acquisition Related Intangible Assets

Our acquisition related intangible assets are included in the consolidated balance sheets as acquired in-place lease value, acquired above market lease value and acquired below market lease value.

The following is a schedule of future amortization of acquisition related intangible assets as of September 30, 2008 (in thousands):

	Acquired In-Place Lease Value		Below Market Lease Value		Above Market Lease Value
2008 (Three months ending December 31, 2008)	$	2,112	$	536	$	670
2009		7,562		2,127		2,510
2010		5,481		1,927		2,308
2011		4,610		1,871		2,207
2012		4,320		1,792		2,199
2013		3,299		1,341		1,383
Thereafter		8,274		5,116		579
	$	35,658	$	14,710	$	11,856

The amortization of the above- and below- market lease values included in rental revenue were $(477,000) and $361,000, respectively, for the three months ended September 30, 2008; $(139,000) and $224,000, respectively, for the three months ended September 30, 2007. The amortization of in-place lease value included in amortization expense was $1,692,000 and $1,095,000 for the three months ended September 30, 2008 and 2007, respectively.

The amortization of the above- and below- market lease values included in rental revenue were $(991,000) and $1,301,000, respectively, for the nine months ended September 30, 2008; $(239,000) and $453,000, respectively, for the nine months ended September 30, 2007. The amortization of in-place lease value included in amortization expense was $4,861,000 and $2,488,000 for the nine months ended September 30, 2008 and 2007, respectively.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

7. Debt

Notes Payable secured by real property is summarized as follows (in thousands):

	Interest Rate as of					Notes Payable as of
Property	September 30, 2008		December 31, 2007		Maturity Date	September 30, 2008			December 31, 2007
REMEC	4.79	%	4.79	%	November 1, 2011	$	13,250		$	13,250
300 Constitution	4.84		4.84		April 1, 2012		12,000			12,000
Deerfield Commons I(1)	5.23		5.23		December 1, 2015		9,725			9,725
602 Central Blvd.(2)	6.47		6.94		April 27, 2014		9,783			10,928
Bolingbrook Point III	5.26		5.26		January 1, 2015		9,000			9,000
Fairforest Bldg. 5(3)	6.33		6.33		February 1, 2024		10,872			11,177
Fairforest Bldg. 6(3)	5.42		5.42		June 1, 2019		3,573			3,754
HJ Park—Bldg. 1(3)	4.98		4.98		March 1, 2013		1,228			1,407
North Rhett I(3)	5.65		5.65		August 1, 2019		4,645			4,871
North Rhett II(3)	5.20		5.20		October 1, 2020		2,541			2,652
North Rhett III(3)	5.75		5.75		February 1, 2020		2,071			2,166
North Rhett IV(3)	5.80		5.80		February 1, 2025		10,841			11,132
Mt Holly Bldg.(3)	5.20		5.20		October 1, 2020		2,541			2,652
Orangeburg Park Bldg.(3)	5.20		5.20		October 1, 2020		2,584			2,697
Kings Mountain I(3)	5.27		5.27		October 1, 2020		2,198			2,294
Kings Mountain II(3)	5.47		5.47		January 1, 2020		6,602			6,911
Union Cross Bldg. I(3)	5.50		5.50		July 1, 2021		3,154			3,278
Union Cross Bldg. II(3)	5.53		5.53		June 1, 2021		9,647			10,031
Thames Valley Five(4)	6.42		—		May 30, 2013		13,340			—
Lakeside Office Center(5)	6.03		—		September 1, 2015		9,000			—
Enclave on the Lake(6)	5.45		—		May 1, 2011		18,707			—
Notes Payable							157,302			119,925
Less Discount							(3,255	)		(3,049	)
Notes Payable Less Discount						$	154,047		$	116,876

⁽¹⁾ Interest only payments are due monthly for the first 60 months of the loan term. Principal and interest payments are due monthly for the remaining 60 months of the loan term.

⁽²⁾ Variable interest rate of 6.47% and 6.94% at September 30, 2008 and December 31, 2007 based on three month GBP based London Inter-Bank Offering Rate (“LIBOR”) plus 0.67%. The loan agreement requires us to maintain a rate cap agreement pursuant to which we will be protected against an increase in the three month LIBOR over 6.25% through May 27, 2010.

⁽³⁾ These notes payable were assumed from the seller of the Carolina Portfolio on August 30, 2007 as part of the property acquisitions and were recorded at estimated fair value which includes the discount.

⁽⁴⁾ Interest rate of 6.42% at September 30, 2008 based on interest rate swap agreement fixed rate of 5.41% plus 1.01%.

⁽⁵⁾ Interest only payments are due monthly for the first 36 months of the loan term. Principal and interest payments are due monthly for the remaining 48 months of the loan term.

⁽⁶⁾ The loan was assumed from the seller of Enclave on the Lake on July 1, 2008.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

In connection with our acquisition of the Carolina Portfolio on August 30, 2007, we assumed 13 loans with principal balances totaling $66,110,000 ($62,944,000 at estimated fair value including the discount of $3,166,000) from various lenders that are secured by first deeds of trust on the properties and the assignment of related rents and leases. Assumption fees and other loan closing costs totaling $765,500 were capitalized as incurred. The loans bear interest at rates ranging from 4.98% to 6.33% per annum and mature between March 1, 2013 and February 1, 2025. The loans require monthly payments of interest and principal, fully amortized over the lives of the loans. Principal payments totaling $2,524,000 were made during the nine months ended September 30, 2008. We indemnify the lenders against environmental costs and expenses and guarantee the loans under certain conditions.

On April 27, 2007, we, in connection with the acquisition of 602 Central Blvd, entered into a £5,500,000 ($9,783,000 at September 30, 2008) financing arrangement with the Royal Bank of Scotland secured by the property. The loan is for a term of seven years and bears interest at a variable rate of interest, adjusted quarterly, based on three month GBP-based LIBOR plus 0.67%, or 6.47% and 6.94% per annum as of September 30, 2008 and December 31, 2007, respectively. Interest payments only are due quarterly for the term of the loan with principal due at maturity. The loan agreement requires us to maintain a rate cap agreement pursuant to which we will be protected against an increase in the three month LIBOR over 6.25% through May 27, 2010.

On May 30, 2008, we entered into a £7,500,000 ($13,340,000 at September 30, 2008) financing arrangement with the Royal Bank of Scotland plc secured by the Thames Valley Five property. The loan is for a term of five years (with a two year extension option) and bears interest at a variable rate of interest, adjusted quarterly, based on three month GBP-based LIBOR plus 1.01%. On August 14, 2008, we entered into the interest rate swap agreement that fixes the GBP-based LIBOR rate at 5.41% plus 1.01% or 6.42% per annum as of September 30, 2008 and expires on May 30, 2013. Interest payments only are due quarterly for the term of the loan with principal due at maturity.

On July 1, 2008, in connection with the acquisition of Enclave on the Lake, we assumed an $18,790,000 fixed-rate mortgage loan from NorthMarq Capital, Inc. that bears interest at a rate of 5.45% per annum and matures on May 1, 2011. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $83,000 were made during the three months ended September 30, 2008. In addition, we incurred financing costs totaling $237,000 in conjunction with the assumption of the loan.

On August 7, 2008, we obtained a $9,000,000 loan from 40/86 Mortgage Capital, Inc., secured by the Lakeside Office Center property acquired on March 5, 2008. The loan is for a term of seven years and bears interest at a fixed rate of 6.03% with interest payments only for the first 36 months and principal and interest for the remaining 48 months of the loan term. In addition, we incurred financing costs of approximately $100,000 associated with obtaining this loan, including $36,000 paid to CBRE Melody, a related party.

On August 8, 2008, we entered into an amended and restated credit agreement with Bank of America, N.A. (“Bank of America”), which amended the terms of our prior credit agreement with Bank of America, to provide us with a new $45,000,000 unsecured revolving line of credit (the “Revolving Credit Facility”), and to replace our prior Bank of America term loan and revolving credit facility which was scheduled to mature in August 2008. The new Revolving Credit Facility was fully drawn upon at closing, with such proceeds utilized to pay down the full $45,000,000 amount outstanding under our prior Bank of America term loan (as of August 8, 2008, no amount was outstanding under our prior $10,000,000 Bank of America revolving credit facility). The new Revolving Credit Facility matures in August 2010 and bears interest at a floating rate of LIBOR plus 2.00% to 2.75%, based upon our leverage ratio as defined in the credit agreement (at our current leverage ratio, the Revolving Credit Facility bears interest at a floating rate of LIBOR plus 2.00%). An upfront fee of $292,500 was paid to Bank of America, and a fee equal to the actual daily amount by which the aggregate commitments exceed the total outstandings (both as defined in the amended and restated credit agreement) times 0.20% per annum if the total outstandings are equal to or more than 50% of the aggregate commitments, or 0.25% per annum otherwise, is accrued on unfunded balances under the Revolving Credit Facility. The loan contains various financial covenants and restrictions including a fixed charge coverage ratio of less than 1.75 to 1.00, as defined in the amended and restated credit agreement. As of August 8, 2008, we were in compliance with all such covenants and restrictions. On August 13, 2008, we paid down the full $45,000,000 amount initially outstanding under the Revolving Credit Facility.

The minimum principal payments due for the notes payable are as follows as of September 30, 2008 (in thousands):

2008 (Three months ending December 31, 2008)	$	949
2009		3,932
2010		4,156
2011		35,334
2012		16,491
2013		17,855
Thereafter		78,585
	$	157,302

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Our organizational documents contain a limitation on the amount of indebtedness that we may incur, so that unless our shares are listed on a national securities exchange, our aggregate borrowing may not exceed 300% of our net assets unless any excess borrowing is approved by a majority of our independent trustees and is disclosed to shareholders in our next quarterly report.

8. Minimum Future Rents Receivable

The following is a schedule of minimum future rentals to be received on non-cancelable operating leases as of September 30, 2008 (in thousands):

2008 (Three months ending December 31, 2008)	$	8,564
2009		32,965
2010		28,349
2011		26,678
2012		22,797
2013		17,968
Thereafter		65,617
	$	202,938

9. Concentrations

Tenant Revenue Concentrations

For the nine months ended September 30, 2008, there are no significant tenant revenue concentrations.

For the nine months ended September 30, 2007, the tenant in REMEC accounted for approximately $1,926,000, or 22%, of total revenues, the tenant in 300 Constitution accounted for approximately $1,466,000, or 16%, of total revenues and a tenant in Deerfield Commons I accounted for approximately $978,000 or 11% of total revenues.

The tenant in 300 Constitution has the right of first offer if we decide to sell the property. The leases under which the tenants occupy the properties expire in April 2017 for the tenant in REMEC and March 2013 for the tenant in 300 Constitution.

Geographic Concentrations

As of September 30, 2008, we owned 46 domestic properties on a consolidated basis: one in each of Georgia, Illinois and Massachusetts; five in each of Texas and North Carolina; four in California and 29 in South Carolina. We also owned three properties on a consolidated basis in the United Kingdom.

23

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Our geographic consolidated revenue concentrations for the nine months ended September 30, 2008 and 2007 are as follows:

	Nine Months Ended September 30,
	2008		2007
Domestic
California	7.33	%	21.61	%
Georgia	7.27		20.43
Massachusetts	5.36		16.45
Texas	14.33		14.57
Illinois	3.78		1.36
North Carolina	9.91		3.48
South Carolina	41.98		13.97
Total Domestic	89.96		91.87
International
United Kingdom	10.04		8.13
Total	100.00	%	100.00	%

Our geographic long-lived consolidated asset concentrations as of September 30, 2008 and December 31, 2007 are as follows:

	September 30, 2008		December 31, 2007
Domestic
California	5.17	%	6.97	%
Massachusetts	4.26		5.79
Georgia	3.52		5.04
Texas	15.67		4.54
Illinois	3.77		5.10
North Carolina	14.25		12.02
South Carolina	39.28		53.91
Total Domestic	85.92		93.37
International
United Kingdom	14.08		6.63
Total	100.00	%	100.00	%

10. Segment Disclosure

Our reportable segments consist of two types of commercial real estate properties for which our management internally evaluates operating performance and financial results: the Domestic Properties and International Properties. Management internally evaluates the operating performance and financial results of our segments based on net operating income. We also have certain general and administrative level activities including legal, accounting, tax preparation and shareholder servicing costs that are not considered separate operating segments. Our reportable segments are on the same basis of accounting as described for our overall company in Note 2.

We evaluate the performance of our segments based on net operating income, defined as: rental income and tenant reimbursements less property and related expenses (operating and maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization, and our general and administrative expenses. The following table compares the net operating income for the three and nine months ended September 30, 2008 and 2007 (in thousands):

24

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Domestic Properties
Revenues:
Rental	$	7,503		$	3,243		$	20,907		$	6,606
Tenant Reimbursements		1,533			639			4,175			1,585
		9,036			3,882			25,082			8,191
Property and Related Expenses:
Operating and Maintenance		1,015			254			2,133			683
General and Administrative		(24	)		9			173			80
Property Management Fee to Related Party		119			54			335			74
Property Taxes		1,218			412			3,134			1,004
		2,328			729			5,775			1,841
Net Operating Income		6,708			3,153			19,307			6,350
International Properties
Revenues:
Rental		1,264			423			2,724			717
Tenant Reimbursements		15			4			75			7
		1,279			427			2,799			724
Property and Related Expenses:
Operating and Maintenance		15			7			75			12
General and Administrative		(3	)		—			47			—
Property Management Fee to Related Party		6			—			13			—
Property Taxes		—			—			—			—
		18			7			135			12
Net Operating Income		1,261			420			2,664			712
Total Reportable Segments
Revenues:
Rental		8,767			3,666			23,631			7,323
Tenant Reimbursements		1,548			643			4,250			1,592
		10,315			4,309			27,881			8,915
Property and Related Expenses:
Operating and Maintenance		1,030			261			2,207			695
General and Administrative		(27	)		9			220			80
Property Management Fee to Related Party		125			54			348			74
Property Taxes		1,218			412			3,134			1,004
		2,346			736			5,909			1,853
Net Operating Income(1)		7,969			3,573			21,972			7,062
Reconciliation of Non-GAAP to Consolidated Net (Loss) Income
Total Segment Net Operating Income		7,969			3,573			21,972			7,062
Interest and Other Income		467			1,160			1,797			2,198
		8,436			4,733			23,769			9,260
Interest Expense		2,728			1,330			7,479			2,348
General and Administrative		707			444			1,878			1,102
Investment Management Fee to Related Party		1,016			405			2,495			904
Depreciation and Amortization		4,417			2,115			11,457			4,585
Loss on transfer of held of sale real estate to continuing operations		3,451			—			3,451			—
(Loss) Income Before Minority Interest, Income Tax and Equity in Earnings of Unconsolidated Entities		(3,883	)		439			(2,991	)		321
Minority Interest		14			(5	)		12			(1	)
Benefit (Provision) for Income Taxes		557			—			41			(14	)
Equity in Earnings of Unconsolidated Entities		379			—			103			—
Net (Loss) Income	$	(2,933	)	$	434		$	(2,835	)	$	306

⁽¹⁾ Total Reportable Segments net operating income is a Non-GAAP financial measure which may be useful as a supplemental measure for evaluating the relationship of each reporting segment to the combined total. This measure should not be looked as an alternative measure of operating performance to our U.S. GAAP presentations provided.

25

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

Condensed Assets	September 30, 2008		December 31, 2007
Domestic Assets	$	527,835	$	334,682
International Assets		67,675		24,236
Non-Segment Assets		30,989		76,833
Total Assets	$	626,499	$	435,751
	Nine Months Ended September 30,
Capital Expenditures	2008		2007
Domestic Capital Expenditures	$	78,002	$	237,601
International Capital Expenditures		51,593		24,292
Total Capital Expenditures	$	129,595	$	261,893

26

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

11. Investment Management and Other Fees to Related Parties

Pursuant to the agreement between us and the Investment Advisor (the “Advisory Agreement”), the Investment Advisor and its affiliates perform services relating to our ongoing initial public offering and the management of our assets. Items of compensation and equity participation are as follows:

Investment Management Fee to Related Party

On October 24, 2006, the board of trustees, including our independent trustees, approved and we entered into the Amended and Restated Agreement of Limited Partnership of CBRE OP (the “Amended Partnership Agreement”) and the Amended and Restated Advisory Agreement (the “Amended Advisory Agreement” and, together with the Amended Partnership Agreement, the “Amended Agreements”). The Amended Advisory Agreement provides an investment management fee of (i) a monthly fee equal to one twelfth of 0.6% of the aggregate cost (before non-cash reserves and depreciation) of all real estate investments within our portfolio and (ii) a monthly fee equal to 7.0% of the aggregate monthly net operating income derived from all real estate investments within our portfolio. The Investment Advisor waived investment management fees of $417,000 and $1,026,000 for the three and nine months ended September 30, 2008. The Investment Advisor waived investment management fees of $118,000 for the three and nine months ended September 30, 2007. All or any portion of the investment management fee not taken as to any fiscal year may be deferred or waived without interest at the option of the Investment Advisor.

The Investment Advisor earned investment management fees of $1,016,000 and $405,000 for the three months ended September 30, 2008 and 2007, respectively and $2,495,000 and $904,000 for the nine months ended September 30, 2008 and 2007, respectively. As of September 30, 2008 and December 31, 2007, the investment management fee payable included in investment management fees payable to related party in our consolidated balance sheets were $381,000 and $429,000, respectively. In connection with services provided to the Investment Advisor, CNL Fund Management Company, the Sub-Advisor and affiliate of the Dealer Manager pursuant to a sub-advisory agreement dated August 21, 2006, was paid by the Investment Advisor $140,000 and $56,000 for the three months ended September 30, 2008 and 2007, respectively; $344,000 and $125,000 for the nine months ended September 30, 2008 and 2007, respectively.

Acquisition Fee to Related Party

The Investment Advisor may earn an acquisition fee of up to 1.0% of (i) the purchase price of real estate investments acquired by us, including any debt attributable to such investments, or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity. The Investment Advisor earned acquisition fees of $2,143,000 and $2,349,000 for the three months ended September 30, 2008 and 2007, respectively; $3,207,000 and $2,572,000 for the nine months ended September 30, 2008 and 2007, respectively. In connection with services provided to the Investment Advisor, the Sub-Advisor, pursuant to a sub advisory agreement, was paid by the Investment Advisor acquisition fees of $401,000 and $439,000 for the three months ended September 30, 2008 and 2007, respectively; $600,000 and $481,000 for the nine months ended September 30, 2008 and 2007, respectively. These fees have been capitalized to investments in real estate and related intangibles.

CB Richard Ellis, UK was paid a service fee in conjunction with the April 27, 2007 acquisition of 602 Central Blvd. totaling £9,000 ($18,000) for the nine months ended September 30, 2007. These fees have been capitalized to investments in real estate and related intangibles.

Management Services to Related Party

Affiliates of the Investment Advisor may also provide leasing, brokerage, property management, or mortgage banking services for us. CB Richard Ellis Group, Inc., an affiliate of the Investment Advisor, received property management fees of approximately $125,000, and $54,000, for the three months ended September 30, 2008 and 2007, respectively; $348,000 and $74,000 for the nine months ended September 30, 2008 and 2007, respectively. As of September 30, 2008 and December 31, 2007, the property management fee payable included in property management fees payable to related party in our consolidated balance sheets were $99,000 and $50,000, respectively. No brokerage fees were paid to affiliates of the Investment Advisor for the three and nine months ended September 30, 2008 and 2007.

CBRE Melody, an affiliate of the Investment Advisor, received mortgage banking fees of $432,800 for the three and nine months ended September 30, 2008. No mortgage banking fees were paid to affiliates during the three and nine months ended September 30, 2007.

CBRE Carmody, an affiliate of the Investment Advisor, received leasing fees of $6,000 for the three and nine months ended September 30, 2008. No leasing fees were paid to affiliates during the three and nine months ended September 30, 2007.

27

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

12. Equity Incentive Plan and Performance Bonus Plan

Equity Incentive Plan

We have adopted a 2004 equity incentive plan. The purpose of the 2004 equity incentive plan is to provide us with the flexibility to use share options and other awards to provide a means of performance-based compensation. Key employees, directors, trustees, officers, advisors, consultants or other personnel of our company and our subsidiaries or other persons expected to provide significant services to our company or our subsidiaries, including employees of the Investment Advisor, would be eligible to be granted share options, restricted shares, phantom shares, distribution equivalent rights and other share-based awards under the 2004 equity incentive plan. No awards of any kind have been made under this plan during the nine months ended September 30, 2008 and 2007, respectively.

Performance Bonus Plan

We have adopted a 2004 performance bonus plan. Annual bonuses under our 2004 performance bonus plan are awarded by our Compensation Committee to selected key employees, including employees of the Investment Advisor, based on corporate factors or individual factors (or a combination of both). Subject to the provisions of the 2004 performance bonus plan, the Compensation Committee will (i) determine and designate those key employees to whom bonuses are to be granted; (ii) determine, consistently with the 2004 performance bonus plan, the amount of the bonus to be granted to any key employee for any performance period; and (iii) determine, consistently with the 2004 performance bonus plan, the terms and conditions of each bonus. Bonuses may be so awarded by the Compensation Committee prior to the commencement of any performance period, during or after any performance period. No bonus shall exceed 200% of the key employee’s aggregate salary for the year. The Compensation Committee may provide for partial bonus payments at target and other levels. Corporate performance hurdles for bonuses may be adjusted by the Compensation Committee in its discretion to reflect (i) dilution from corporate acquisitions and share offerings, and (ii) changes in applicable accounting rules and standards. The Compensation Committee may determine that bonuses shall be paid in cash or shares or other equity-based grants, or a combination thereof. The Compensation Committee may also provide that any such share grants be made under our company’s 2004 equity incentive plan or any other equity-based plan or program we may establish. The Compensation Committee may provide for programs under which the payment of bonuses may be deferred at the election of the employee. No bonuses were awarded and no bonus related expenses were incurred by us during the nine months ended September 30, 2008 and 2007, respectively.

13. Shareholders’ Equity

Under our declaration of trust, we have the authority to issue a total of 1,000,000,000 shares of beneficial interest. Of the total shares authorized, 990,000,000 shares are designated as common shares with a par value of $0.01 per share and 10,000,000 shares are designated as preferred shares.

The registration statement relating to our initial public offering was declared effective on October 24, 2006. CNL Securities Corp. is the dealer manager of our offering. The registration statement covers up to $2,000,000,000 in common shares of beneficial interest, 90% of which will be offered at a price of $10.00 per share, and 10% of which will be offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date, as determined by the Investment Advisor, or another firm we choose for that purpose. On October 14, 2008, our board of trustees approved an extension of our initial public offering until December 31, 2008. Under rules promulgated by the SEC, we could extend our initial public offering until October 24, 2009, and in some circumstances, we could continue our initial public offering until as late as April 22, 2010. As of September 30, 2008, we had issued 48,933,180 common shares in our initial public offering.

On July 30, 2008, we filed another registration statement on Form S-11 with the Securities and Exchange Commission in connection with the proposed follow-on offering of up to $3.0 billion in common shares of beneficial interest, 90% of which we expect will be offered to investors at a price of $10.00 per share, and 10% of which we expect will be offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date, as determined by the Investment Advisor, or another firm we choose for that purpose. As of the date of this Quarterly Report on Form 10-Q, the registration statement has not been declared effective by the Securities and Exchange Commission.

During the nine months ended September 30, 2008 and 2007 we repurchased 283,414 and 38,371 common shares, respectively, under our Share Redemption Program.

28

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

14. Distributions

Earnings and profits, which determine the taxability of distributions to shareholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes including the treatment of loss on extinguishment of debt, revenue recognition, compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation.

The following table reconciles the distributions declared per common share to the distributions paid per common share during the nine months ended September 30, 2008 and 2007:

	2008			2007
Distributions declared per common share	$	0.438		$	0.401
Less: Distributions declared in the current period, and paid in the subsequent period		(0.150	)		(0.138	)
Add: Distributions declared in the prior period, and paid in the current period		0.144			0.125
Distributions paid per common share	$	0.432		$	0.388

Distributions paid to shareholders during the nine months ended September 30, 2008 and 2007 totaled $14,805,000 and $4,008,000, respectively.

15. Fair Value of Financial Instruments

On August 14, 2008, we entered into the interest rate swap agreement that fixes the GBP-based LIBOR rate at 5.41% plus 1.01% or 6.42% per annum as of September 30, 2008 and expires on May 30, 2013. In addition, there is an interest rate cap that is valued quarterly and the net change is recognized in earnings. The interest rate cap has a term of 33 months from August 27, 2007 to May 27, 2010 and has a notional amount of £5,500,000 ($9,783,000 at September 30, 2008) and caps the three month LIBOR at 6.25% during such period. Included in other assets is the fair value of the interest rate cap of $14,000, which includes ($107,000) in earnings for the decrease in fair value of the interest rate cap during the nine months ended September 30, 2008.

The following table summarizes our interest rate cap and its estimated fair value at September 30, 2008 (in thousands):

	As of September 30, 2008
					Fair Value Measurements Using:
	Carrying Value		Total Fair Value		Quoted Markets Prices (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Interest Rate Cap	$	14	$	14	$	—	$	14	$	—
Interest Rate Swap	$	—	$	—	$	—	$	—	$	—

29

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

SFAS No. 157 (see Note 2) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the table above, the statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

We use appropriate valuation techniques based on the available inputs to measure the fair values of our assets and liabilities. When available, we measure fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value. The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the table above.

Level 2 Fair Value Measurements

Interest Rate Cap – The fair value of interest rate caps is estimated using internal discounted cash flow calculations based upon observable market based forward interest rate curves and quotes obtained from counterparties to the agreements.

16. Commitments and Contingencies

We have agreed to a capital commitment of up to $20,000,000 in CBRE Strategic Partners Asia, which extends for 24 months after the close of the final capital commitment. On October 16, 2007, we funded $200,000 of our capital commitment. CBRE Investors, our sponsor, formed CBRE Strategic Partners Asia to purchase, reposition, develop, hold for investment and sell institutional quality real estate and related assets in targeted markets in China, Japan, India, South Korea, Hong Kong, Singapore and other Asia Pacific markets. If we and all other currently committed capital investors had funded our entire commitments in CBRE Strategic Partners Asia as of September 30, 2008, we would have owned an ownership interest of approximately 5.07% in CBRE Strategic Partners Asia. A majority of our trustees (including a majority of our independent trustees) not otherwise interested in this transaction approved the transaction as being fair, competitive and commercially reasonable. CBRE Strategic Partners Asia is managed by CB Richard Ellis Investors SP Asia II, LLC or the Fund Manager, a subsidiary of CBRE Investors.

On May 6, 2008, in connection with our investment with the Duke joint venture we funded a $4,000,000 earnest money deposit in conjunction with the acquisition of the Industrial Portfolio as set forth in Note 4. $2,398,000 was used in conjunction with the June 12, 2008 and September 30, 2008 acquisitions of four warehouse/industrial properties located in Arizona, Florida, Indiana and Texas leaving a balance of $1,602,000 excluding interest earned of $19,000 at September 30, 2008. The remaining balance will be applied to future acquisitions as presented in the following table.

30

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

The following table summarizes the remaining properties expected to be contributed to the Duke joint venture pursuant to the contribution agreement. These properties are currently under construction and none of the properties has an operating history. Closing of the contribution of each property to the Duke joint venture is subject to certain contingencies set forth in the contribution agreement and there is no assurance that any of the properties listed below will be contributed to the Duke joint venture on the specific terms described therein, or at all.

List of Remaining Expected Properties

Market	Property	Tenant	Earnest Money		Net Rentable Sq. Ft.	Estimated Closing Date
Indianapolis, IN	Prime Distribution Center	Prime Distribution	$	832,000	1,200,420	December 2008
Columbus, OH	Kellogg’s	Kellogg’s	$	770,000	1,142,200	December 2008

On July 25, 2008, we entered into a definitive purchase agreement with unrelated third parties, to acquire, subject to customary closing conditions, Avion III and IV, located at 14550 and 14560 Avion Parkway, in Chantilly, Virginia. The contract purchase price for Avion III and IV is $41,500,000 exclusive of transaction costs, financing fees and working capital reserves. We anticipate that the acquisition will be funded from the proceeds of our initial public offering. Each property consists of a three-story office building, with surface parking lots, completed in 2003. Avion III has 71,507 rentable square feet and is 100% leased to Lockheed Martin Corporation, a leading supplier of aerospace and defense products and services. Avion IV has 71,504 rentable square feet and is 100% leased to the U.S. General Services Administration. Both buildings have been improved to meet Sensitive Compartmentalized Information Facilities standards that include enhanced access control systems which meet specific security requirements for handling federal classified information. While we anticipate this acquisition will close during the fourth quarter of 2008, this agreement is subject to a number of contingencies and there can be no assurances that this acquisition will occur. The Company has provided deposits of $1,500,000 ($500,000 on July 28, 2008 and $1,000,000 on August 4, 2008) in connection with the execution of the agreement that is refundable in the event that certain closing conditions are not met.

Litigation – From time to time, we and our properties may be subject to legal proceedings, which arise in the ordinary course of its business. Currently, neither we nor any of our properties are subject to, or threatened with, any legal proceedings for which the outcome is reasonably likely to have a material adverse effect on our results of operations or our financial condition.

Environmental Matters – We are not aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.

31

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

17. Comprehensive Income (Loss)

U.S. GAAP requires that the effect of foreign currency translation adjustments be classified as comprehensive income (loss). The following table sets forth our comprehensive income (loss) for the three and nine months ended September 30, 2008 and 2007 (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2008			2007		2008			2007
Net (Loss) Income	$	(2,933	)	$	434	$	(2,835	)	$	306
Foreign Currency Translation (Loss) Gain		(5,192	)		243		(5,182	)		361
Comprehensive (Loss) Income	$	(8,125	)	$	677	$	(8,017	)	$	667

18. Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code with our taxable year ended December 31, 2004. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our taxable income to our shareholders. It is management’s current intention to adhere to these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate level federal income tax on net income we distribute currently to our shareholders. If we fail to qualify as a REIT in any taxable year, then we will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may not be subject to certain state and local taxes on our income and property and to federal income and excise taxes on our undistributed taxable income, if any.

We have made Taxable REIT Subsidiary (“TRS”) elections for all of our held for sale property subsidiaries. The elections, effective for the tax year beginning January 1, 2007 and future years, were made pursuant to section 856(I) of the Internal Revenue Code. Our TRS is subject to corporate level income taxes which are recorded in our consolidated financial statements. During the three months ended September 30, 2008, all of the held for sale properties were transferred to investments in real estate resulting in an estimated tax loss of $138,000.

The following table reconciles net income available to common shareholders to taxable income available to common shareholders for the nine months ended September 30, 2008 (in thousands):

Net Income Available from TRS(1)	$	(1,918	)
Add: Prior Year Tax Basis Depreciation		697
Less: Prior Year End Prepaid Rent		(54	)
Add: Permanent Difference Between Book Loss and Tax Basis Loss		1,511
Taxable Income for TRS	$	236

⁽¹⁾ Net income available from the TRS is comprised of income from operations of $1,533,000 less book loss of $3,451,000 from the transfer of held for sale real estate to continuing operations.

32

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)

The following table summarizes the provision for income taxes of the TRS for the nine months ended September 30, 2008 (in thousands):

Current	$	(4)
Deferred Income Tax Benefit on Transfer of Held for Sale Real Estate to Continuing Operations		(217	)
Total Benefit for Income Taxes	$	(221	)

The following table reconciles the provision for income taxes of the TRS for the nine months ended September 30, 2008 to the amount computed by applying the Federal Corporate tax rate (in thousands):

Federal Income Tax Benefit at Statutory Federal Rate for Taxable REIT Subsidiary	$	(652	)
State Income Tax Benefit		(96	)
Loss not subject to Federal Tax Benefit		33
Adjustment for Permanent Difference		564
Tax Benefit from Prior Year Loss Carry Forward		(59	)
Graduated Rate Adjustment		(11	)
Total Benefit for Income Taxes	$	(221	)

SFAS No. 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred liabilities of the TRS relate primarily to differences in the book and tax depreciation method of property for federal and state income tax purpose.

The following table summarizes the tax effects of temporary differences of the TRS included in the accounts payable and accrued expenses as of September 30, 2008 and December 31, 2007 (in thousands):

	September 30, 2008		December 31, 2007
Net Deferred Tax Liability, resulting primary from differences in depreciation and amortization in real property	$	—	$	(217	)

In addition, we have incurred income and other taxes related to our continuing operations in the amount of $180,000 for franchise, local and state government, California, Georgia, Texas and North Carolina, and United Kingdom taxes impacting our operating properties during the nine months ended September 30, 2008.

19. Subsequent Events

From October 1, 2008 through October 31, 2008, we received gross proceeds of approximately $34,275,260 from the sale of 3,443,392 common shares in our initial public offering. On October 14, 2008, our board of trustees approved an extension of our initial public offering until December 31, 2008. Under rules promulgated by the SEC, we could extend our initial public offering until October 24, 2009, and in some circumstances, we could continue our initial public offering until as late as April 22, 2010.

On October 10, 2008, we obtained a £5,775,000 loan ($9,849,840 assuming an exchange rate of $1.7056/£1.00) from The Royal Bank of Scotland plc secured by the Albion Mills Retail Park originally acquired on July 11, 2008. This interest-only loan is for a term of five years and bears interest at a variable rate of interest based on the GBP-based three month LIBOR plus 1.31%, or 6.13% per annum as of October 10, 2008. In addition, we incurred financing costs of approximately £60,706 ($103,540) associated with obtaining this loan.

On October 23, 2008, we acquired a fee interest in Maskew Retail Park located on Maskew Avenue, Peterborough, United Kingdom. We acquired Maskew Retail Park for approximately £30,000,000 ($50,685,000 assuming an exchange rate of $1.6895/£1.00), exclusive of customary closing costs and stamp duty fees, which was funded using net proceeds from our initial public offering. Upon closing, we paid our Investment Advisor an acquisition fee of approximately $506,850. This acquisition fee is not included in the £30,000,000 ($50,685,000) acquisition cost of Maskew Retail Park. The property consists of a three unit retail development and surface parking lot completed in 2007. The property is 100% leased to three tenants: B&Q plc, the largest home improvement, hardware and building supply retailer in the United Kingdom, under a lease that expires in September 2027; Matalan Retail Limited, one of the largest clothing and household goods retailers in the United Kingdom, under a lease that expires in September 2022; and Argos Limited, a major household goods and general merchandise retailer, under a lease that expires in April 2023. The estimated acquisition cap rate is approximately 7.7%. The acquisition cap rate equals annualized in-place net operating income divided by total acquisition costs for the property. Annualized in-place net operating income equals, on an annualized cash basis as derived from leases in-place at the time we acquired the property, rental income and tenant reimbursements less property and related expenses (operating maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization and our company-level general and administrative expenses.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Explanatory Note

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements, the notes thereto, and the other financial data included elsewhere in this Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This document contains various “forward-looking statements.” You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “would,” “could,” “should,” “seeks,” “approximately,” “intends,” “plans,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Statements regarding the following subjects may be impacted by a number of risks and uncertainties:

• our business strategy;

• our ability to obtain future financing arrangements;

• estimates relating to our future distributions;

• our understanding of our competition;

• market trends;

• projected capital expenditures;

• the impact of technology on our products, operations and business; and

• the use of the proceeds of our initial public offering and subsequent offerings.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our common shares, along with the following factors that could cause actual results to vary from our forward-looking statements:

• national, regional and local economic climates;

• future terrorist attacks in the United States or abroad;

• changes in supply and demand for office, retail, industrial and multi-family residential properties;

• our ability to maintain rental rates and maximize occupancy;

• our ability to identify acquisitions;

• our pace of acquisitions and/or dispositions of properties;

• our corporate debt ratings and changes in the general interest rate environment;

• the condition of capital and credit markets;

• the actual outcome of the resolution of any conflict;

• our ability to successfully operate acquired properties;

• our ability to qualify as a REIT;

34

• availability of capital (debt and equity);

• unanticipated increases in financing and other costs, including a rise in interest rates;

• our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes and our operating partnership’s ability to satisfy the rules in order for it to qualify as a partnership for U.S. federal income tax purposes;

• accounting principles and policies and guidelines applicable to REITs;

• legislative or regulatory changes adversely affecting REITs and the real estate business; and

• environmental, regulatory and/or safety requirements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

Overview

We are a Maryland real estate investment trust that invests in real estate properties, focusing on office, retail, industrial and multi-family residential properties, as well as other real estate-related assets. We may also utilize our expertise and resources to capitalize on unique opportunities that may exist elsewhere in the marketplace, in which we might also acquire interests in mortgages or other investments where we could seek to acquire the underlying property. We will not invest more than 20% of our total assets in any single investment. In addition, we will seek to maintain a portfolio of geographically diverse assets and may invest up to 30% of our total assets outside of the United States. Investments outside of the United States are expected to be focused in locations in which CBRE Investors has existing operations or previous investment experience, which today consist of metropolitan markets in Western Europe (including London, Paris, Milan and Frankfurt), China (Shanghai and Beijing) and Japan. To the extent that we enter markets outside of the United States in which CBRE Investors does not already have existing operations or previous investment experience, we would expect to do so in partnership, utilizing joint venture or other structures, with entities that have significant existing local expertise in these markets.

As of September 30, 2008, we owned 49 office and industrial properties on a consolidated basis located in seven states (California, Georgia, Illinois, Massachusetts, North Carolina, South Carolina and Texas) and in the United Kingdom, as well as one undeveloped land parcel in Georgia. In addition, we have ownership interests in three unconsolidated entities that, as of September 30, 2008, owned interests in 15 properties.

We are externally managed by CBRE Advisors LLC, (the “Investment Advisor”), and all of our real estate investments are held directly by, or indirectly through wholly owned subsidiaries of, CBRE Operating Partnership, L.P., (“CBRE OP”). Generally, we contribute the proceeds we receive from the issuance of common shares for cash to CBRE OP and CBRE OP, in turn, issues units of limited partnership to us, which entitle us to receive our share of CBRE OP’s earnings or losses and net cash flow. Provided we have sufficient available cash flow, we intend to pay our shareholders quarterly cash dividends. We are structured in a manner that allows CBRE OP to issue limited partnership interests from time to time in exchange for real estate properties. By structuring our acquisitions in this manner, the contributors of real estate to CBRE OP are generally able to defer gain recognition for U.S. federal income tax purposes.

Our business objective is to maximize shareholder value through: (1) maintaining an experienced management team of investment professionals; (2) investing in properties in certain markets where property fundamentals will support stable income returns and where capital appreciation is expected to be above average; (3) acquiring properties at a discount to replacement cost and where there is expected positive rent growth; and (4) repositioning properties to increase their value in the market place.

35

Operating results at our individual properties are impacted by the supply and demand for office, retail, industrial and multifamily space, trends of the national regional economies, the financial health of current and prospective tenants and their customers, capital market trends, construction costs, and interest rate movements. Individual operating property performance is monitored and calculated using certain non-GAAP financial measures such as an analysis of net operating income. An analysis of net operating income as compared to local regional and national statistics may provide insight into short or longer term trends exclusive of capital markets or capital structuring issues. Interest rates are a critical factor in our results of operations. Our properties may be financed with significant amounts of debt, so changes in interest rates may affect both net income and the health of capital markets. For investments outside of the United States, in addition to monitoring local property market fundamentals and capital market trends, we evaluate currency hedging strategies, taxes, the stability of the local government and economy and the experience of our management team in the region.

The commercial real estate debt markets have been negatively impacted by the recent credit market disruptions. Securitized commercial mortgage lenders have virtually ceased lending. Lenders who hold commercial mortgages for investment have significantly tightened underwriting standards and reduced lending amounts. The result is a significant decrease in available debt capital and a significant increase in its cost.

Other than our $45,000,000 Revolving Credit Facility (which was fully undrawn as of September 30, 2008), none of our debt matures prior to 2011 and most of our debt is at fixed interest rates. As a result, our current portfolio should be largely insulated from direct impact of the current debt market environment. However, should the reduced availability of debt and/or the increased cost of borrowing continue, we would fund acquisitions entirely with cash, which could reduce the pace of our acquisitions.

In addition, the state of the debt markets could result in near-term price or value decreases for real estate assets. Although this may benefit us for future acquisitions, it could negatively impact the current value of our existing assets.

Over the past few months, financial markets have exhibited increasing volatility in terms of stock prices, interest rates, credit spreads, commodity prices and foreign exchange rates. In response to current financial market conditions, legislators and financial regulators implemented a number of mechanisms designed to add stability to these markets, including the provision of direct and indirect assistance to distressed financial institutions, assistance by the banking authorities in arranging acquisitions of weakened banks and broker-dealers, implementation of programs by the Federal Reserve to provide liquidity to the commercial paper markets and temporary prohibitions on short sales of certain financial institution securities. It is uncertain what effects any legislation or regulatory initiatives will have on financial markets or the economy. Given this uncertainty, we may not timely anticipate or manage existing, new or additional risks, contingencies or developments associated with our tenants, the real estate capital markets or the leasing markets. Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.

We commenced operations in July 2004, following an initial private placement of our common shares of beneficial interest. We raised aggregate net proceeds (after commissions and expenses) of approximately $55,500,000 from July 2004 to October 2004 in private placements of our common shares.

On October 24, 2006, we commenced an initial public offering of up to $2,000,000,000 in our common shares, 90% of which are offered at a price of $10.00 per share, and 10% of which are offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date, as determined by the Investment Advisor or another firm we choose for that purpose. As of October 31, 2008, we had accepted subscriptions from 11,046 investors, issued 52,376,572 common shares and received $523,215,000 in gross proceeds.

We have elected to be taxed as a REIT for U.S. federal income tax purposes.

The table below provides information regarding the properties we own, excluding those owned through our investment in CBRE Strategic Partners Asia. We purchased all of these properties from unaffiliated third parties. These properties are subject to competition from similar properties within their market areas and their economic performance could be affected by changes in local economic conditions. In evaluating these properties for acquisition, we considered a variety of factors including location, functionality and design, price per square foot, the credit worthiness of tenants, length of lease terms, market fundamentals and the in-place rental rates compared to market rates.

36

Property and Market	Date Acquired	Year Built	Property Type	Our Effective Ownership		Net Rentable Square Feet (in thousands)	Occupancy		Approximate Total Acquisition Cost(1) (in thousands)
Domestic Consolidated Properties:
REMEC Corporate Campus 1 San Diego, CA	9/15/2004	1983	Office	100.00	%	34	100.00	%	$	6,833
REMEC Corporate Campus 2 San Diego, CA	9/15/2004	1983	Office	100.00	%	30	100.00	%		6,125
REMEC Corporate Campus 3 San Diego, CA	9/15/2004	1983	Office	100.00	%	37	100.00	%		7,523
REMEC Corporate Campus 4 San Diego, CA	9/15/2004	1983	Office	100.00	%	31	100.00	%		6,186
300 Constitution Drive Boston, MA	11/3/2004	1998	Warehouse/Distribution	100.00	%	330	100.00	%		19,805
Deerfield Commons(2) Atlanta, GA	6/21/2005	2000	Office	100.00	%	122	100.00	%		21,834
505 Century Dallas, TX	1/9/2006	1997	Warehouse/Distribution	100.00	%	100	72.40	%		6,095
631 International Dallas, TX	1/9/2006	1998	Warehouse/Distribution	100.00	%	73	100.00	%		5,407
660 North Dorothy Dallas, TX	1/9/2006	1997	Warehouse/Distribution	100.00	%	120	100.00	%		6,836
Bolingbrook Point III Chicago, IL	8/29/2007	2006	Warehouse/Distribution	100.00	%	185	100.00	%		18,170
Cherokee Corporate Park(3) Spartanburg, SC	8/30/2007	2000	Warehouse/Distribution	100.00	%	60	100.00	%		3,775
Community Cash Complex 1(3) Spartanburg, SC	8/30/2007	1960	Warehouse/Distribution	100.00	%	205	87.90	%		2,690
Community Cash Complex 2(3) Spartanburg, SC	8/30/2007	1978	Warehouse/Distribution	100.00	%	145	93.57	%		2,225
Community Cash Complex 3(3) Spartanburg, SC	8/30/2007	1981	Warehouse/Distribution	100.00	%	116	100.00	%		1,701
Community Cash Complex 4(3) Spartanburg, SC	8/30/2007	1984	Warehouse/Distribution	100.00	%	33	0.00	%		547
Community Cash Complex 5(3) Spartanburg, SC	8/30/2007	1984	Warehouse/Distribution	100.00	%	53	0.00	%		824
Fairforest Building 1(3) Spartanburg, SC	8/30/2007	2000	Manufacturing	100.00	%	51	100.00	%		2,974
Fairforest Building 2(3) Spartanburg, SC	8/30/2007	1999	Manufacturing	100.00	%	104	100.00	%		5,379
Fairforest Building 3(3) Spartanburg, SC	8/30/2007	2000	Manufacturing	100.00	%	100	100.00	%		5,760
Fairforest Building 4(3) Spartanburg, SC	8/30/2007	2001	Manufacturing	100.00	%	101	100.00	%		5,640
Fairforest Building 5 Spartanburg, SC	8/30/2007	2006	Warehouse/Distribution	100.00	%	316	100.00	%		16,968
Fairforest Building 6(4) Spartanburg, SC	8/30/2007	2005	Manufacturing	100.00	%	101	100.00	%		7,468
Fairforest Building 7 Spartanburg, SC	8/30/2007	2006	Warehouse/Distribution	100.00	%	101	24.64	%		5,626
Greenville/Spartanburg Industrial Park(3) Spartanburg, SC	8/30/2007	1990	Manufacturing	100.00	%	67	100.00	%		3,388
Highway 290 Commerce Park Building 1(3) Spartanburg, SC	8/30/2007	1995	Warehouse/Distribution	100.00	%	150	33.33	%		5,388
Highway 290 Commerce Park Building 5(3) Spartanburg, SC	8/30/2007	1993	Warehouse/Distribution	100.00	%	30	100.00	%		1,420
Highway 290 Commerce Park Building 7(3) Spartanburg, SC	8/30/2007	1994	Warehouse/Distribution	100.00	%	88	100.00	%		4,889
HJ Park Building 1 Spartanburg, SC	8/30/2007	2003	Manufacturing	100.00	%	70	100.00	%		4,216
Jedburg Commerce Park Charleston, SC	8/30/2007	2007	Manufacturing	100.00	%	513	100.00	%		41,967

37

Property and Market	Date Acquired	Year Built	Property Type	Our Effective Ownership		Net Rentable Square Feet (in thousands)	Occupancy		Approximate Total Acquisition Cost(1) (in thousands)
Kings Mountain I(4) Charlotte, NC	8/30/2007	1998	Warehouse/Distribution	100.00	%	100	100.00	%		5,497
Kings Mountain II Charlotte, NC	8/30/2007	2002	Warehouse/Distribution	100.00	%	302	100.00	%		11,311
Mount Holly Building Charleston, SC	8/30/2007	2003	Warehouse/Distribution	100.00	%	101	100.00	%		6,208
North Rhett I Charleston, SC	8/30/2007	1973	Warehouse/Distribution	100.00	%	285	100.00	%		10,302
North Rhett II Charleston, SC	8/30/2007	2001	Warehouse/Distribution	100.00	%	102	100.00	%		7,073
North Rhett III(4) Charleston, SC	8/30/2007	2002	Warehouse/Distribution	100.00	%	80	100.00	%		4,812
North Rhett IV Charleston, SC	8/30/2007	2005	Warehouse/Distribution	100.00	%	316	100.00	%		17,060
Orangeburg Park Building Charleston, SC	8/30/2007	2003	Warehouse/Distribution	100.00	%	101	100.00	%		5,474
Orchard Business Park 2(3) Spartanburg, SC	8/30/2007	1993	Warehouse/Distribution	100.00	%	18	100.00	%		761
Union Cross Building I Winston-Salem, NC	8/30/2007	2005	Warehouse/Distribution	100.00	%	101	100.00	%		6,585
Union Cross Building II Winston-Salem, NC	8/30/2007	2005	Warehouse/Distribution	100.00	%	316	100.00	%		17,216
Highway 290 Commerce Park Building 2(3) Spartanburg, SC	9/24/2007	1995	Warehouse/Distribution	100.00	%	100	100.00	%		4,626
Highway 290 Commerce Park Building 6(3) Spartanburg, SC	11/1/2007	1996	Warehouse/Distribution	100.00	%	105	0.00	%		3,760
Orchard Business Park 1(3) Spartanburg, SC	11/1/2007	1994	Warehouse/Distribution	100.00	%	33	100.00	%		1,378
Lakeside Office Center Dallas, TX	3/5/2008	2006	Office	100.00	%	99	100.00	%		17,965
Kings Mountain III Charlotte, NC	3/14/2008	2007	Warehouse/Distribution	100.00	%	542	0.00	%		25,662
Enclave on the Lake(8) Houston, TX	7/1/2008	1999	Office	100.00	%	171	100.00	%		37,762
Total Domestic Consolidated Properties						6,338	84.68	%		411,111
International Consolidated Properties:
602 Central Boulevard Coventry, UK	4/27/2007	2001	Office	100.00	%	50	100.00	%		23,847
Thames Valley Five Reading, UK	3/20/2008	1998	Office	100.00	%	40	100.00	%		29,529
Albion Mills Retail Park (8) Wakefield, UK	7/11/2008	2000	Retail	100.00	%	55	100.00	%		22,064
Total International Consolidated Properties						145	100.00	%		75,440
Total Consolidated Properties						6,483	85.02	%		486,551
Unconsolidated Properties(5):
Buckeye Logistics Center (6) Phoenix, AZ	6/12/2008	2008	Warehouse/Distribution	80.00	%	605	100.00	%		35,554
Afton Ridge Shopping Center (7) Charlotte, NC	9/18/2008	2006	Retail	90.00	%	296	91.35	%		45,573
Allpoints at Anson Bldg. 1 (6) Indianapolis, IN	9/30/2008	2008	Warehouse/Distribution	80.00	%	631	100.00	%		27,032
12200 President’s Court (6) Jacksonville, FL	9/30/2008	2008	Warehouse/Distribution	80.00	%	772	100.00	%		29,915
201 Sunridge Blvd. (6) Dallas, TX	9/30/2008	2008	Warehouse/Distribution	80.00	%	823	100.00	%		25,623
Aspen Corporate Center 500 (6) Nashville, TN	9/30/2008	2008	Office	80.00	%	180	100.00	%		30,032
Total Unconsolidated Properties(5)						3,307	99.22	%		193,729
Total Properties(5)						9,790	89.82	%	$	680,280

⁽¹⁾ Approximate total acquisition cost represents the pro rata purchase price inclusive of customary closing costs and acquisition fees.

⁽²⁾ Includes ten acres of undeveloped land zoned for office use.

⁽³⁾ Real estate previously held for sale and transferred to Continuing Operations effective September 30, 2008.

⁽⁴⁾ Includes the purchase prices of adjacent land parcels acquired on January 23, 2008.

⁽⁵⁾ Does not include CBRE Strategic Partners Asia properties.

⁽⁶⁾ This property is held through the Duke joint venture.

⁽⁷⁾ This property is held through the Afton Ridge joint venture.

⁽⁸⁾ The estimated acquisition cap rate is approximately 7.2%. Acquisition cap rate equals annualized in-place net operating income divided by total acquisition cost for the property. Annualized in-place net operating income equals, on an annualized cash basis as derived from leases in-place at the time we acquire the property, rental income and tenant reimbursements less property and related expenses (operating maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization and our company-level general and administrative expenses.

38

Property Type Concentration

Our property type concentrations as of September 30, 2008 are as follows (Net Rentable Square Feet and Acquisition Cost in thousands):

	Consolidated Properties				Unconsolidated Properties (1)				Consolidated & Unconsolidated Properties (1)
Property Type	Properties	Net Rentable Square Feet	Approximate Total Acquisition Cost		Properties	Net Rentable Square Feet	Approximate Total Acquisition Cost		Properties	Net Rentable Square Feet	Approximate Total Acquisition Cost
Warehouse/Distribution	31	4,706	$	230,091	4	2,831	$	118,124	35	7,537	$	348,215
Office	9	615		157,604	1	180		30,032	10	795		187,636
Manufacturing	8	1,107		76,792	—	—		—	8	1,107		76,792
Retail	1	55		22,064	1	296		45,573	2	351		67,637
Total	49	6,483	$	486,551	6	3,307	$	193,729	55	9,790	$	680,280

⁽¹⁾ Number of Properties and Net Rentable Square Feet for Unconsolidated Properties are at 100%. Approximate Total Acquisition Cost for Unconsolidated Properties is at our pro rata share of effective ownership.

Geographic Concentration

Our geographic concentrations as of September 30, 2008 are as follows (Net Rentable Square Feet and Acquisition Cost in thousands):

	Consolidated Properties				Unconsolidated Properties (1)				Consolidated & Unconsolidated Properties (1)
	Properties	Net Rentable Square Feet	Approximate Total Acquisition Cost		Properties	Net Rentable Square Feet	Approximate Total Acquisition Cost		Properties	Net Rentable Square Feet	Approximate Total Acquisition Cost
Domestic
South Carolina	29	3,645	$	184,299	—	—	$	—	29	3,645	$	184,299
North Carolina	5	1,360		66,271	1	296		45,573	6	1,656		111,844
Texas	5	564		74,065	1	823		25,623	6	1,387		99,688
Arizona	—	—		—	1	605		35,554	1	605		35,554
Tennessee	—	—		—	1	180		30,032	1	180		30,032
Florida	—	—		—	1	772		29,915	1	772		29,915
Indiana	—	—		—	1	631		27,032	1	631		27,032
California	4	132		26,667	—	—		—	4	132		26,667
Georgia	1	122		21,834	—	—		—	1	122		21,834
Massachusetts	1	330		19,805	—	—		—	1	330		19,805
Illinois	1	185		18,170	—	—		—	1	185		18,170
Total Domestic	46	6,338		411,111	6	3,307		193,729	52	9,645		604,840
International
United Kingdom	3	145		75,440	—	—		—	3	145		75,440
Total	49	6,483	$	486,551	6	3,307	$	193,729	55	9,790	$	680,280

⁽¹⁾ Number of Properties and Net Rentable Square Feet for Unconsolidated Properties are at 100%. Approximate Total Acquisition Cost for Unconsolidated Properties is at our pro rata share of effective ownership.

39

Significant Tenants

The following table details our largest tenants (in thousands):

			Consolidated Properties			Unconsolidated Properties (1)			Consolidated & Unconsolidated Properties (1)
	Tenant	Primary Industry	Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent
1	Amazon.com, Inc (2)	Internet Retail	—	$	—	1,235	$	4,321	1,235	$	4,321
2	SBM Offshore (3)	Petroleum and Mining	171		4,277	—		—	171		4,277
3	Unilever (4)	Consumer Products	—		—	1,595		3,858	1,595		3,858
4	Regus Business Centers	Executive Office Suites	86		2,971	—		—	86		2,971
5	American LaFrance	Vehicle Related Manufacturing	513		2,810	—		—	513		2,810
6	REMEC	Defense and Aerospace	133		2,376	—		—	133		2,376
7	Verizon Wireless (5)	Telecommunications	—		—	180		2,117	180		2,117
8	Capita Business Services	Business Services	50		1,535	—		—	50		1,535
9	Women’s Apparel Group	Internet Retail	330		1,426	—		—	330		1,426
10	CEVA Logistics	Logistics and Distribution	316		1,239	—		—	316		1,239
11	Echostar Satellite	Telecommunications	316		1,200	—		—	316		1,200
12	Wickes Building Supplies	Home Furnishings/Home Improvement	40		1,193	—		—	40		1,193
13	Trans Hold	Logistics and Distribution	316		1,174	—		—	316		1,174
14	TIAA	Financial Services	68		928	—		—	68		928
15	Southeastern Container	Other Manufacturing	301		823	—		—	301		823
16	Compass Group USA	Food Service and Retail	98		762	—		—	98		762
17	Briggs Industries	Home Furnishings/Home Improvement	285		740	—		—	285		740
18	Intier Automotive	Vehicle Related Manufacturing	126		698	—		—	126		698
19	Hoke	Other Manufacturing	104		602	—		—	104		602
20	Lear Corporation	Vehicle Related Manufacturing	88		536	—		—	88		536
	All Other (85 tenants)		2,171		9,957	271		3,076	2,442		13,033
			5,512	$	35,247	3,281	$	13,372	8,793	$	48,619

⁽¹⁾ Net Rentable Square Feet for Unconsolidated Properties is at 100%. Annualized Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership.

⁽²⁾ Our tenants are Amazon.com.azdc, Inc., in our Buckeye Logistics Center property, and Amazon.com.indc, LLC, in our AllPoints at Anson Bldg. 1 property, which are both wholly-owned subsidiaries of Amazon.com.

⁽³⁾ Our tenant is Atlantia Offshore Ltd., a wholly-owned subsidiary.

⁽⁴⁾ Our tenant is CONOPCO, Inc., a wholly-owned subsidiary.

⁽⁵⁾ Verizon Wireless is the d/b/a for Cellco Partnership.

40

Tenant Industries

Our tenants operate across a wide range of industries. The following table details our tenant-industry concentrations (in thousands):

	Consolidated Properties			Unconsolidated Properties (1)			Consolidated & Unconsolidated Properties (1)
Tenant Industry Category	Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent
Internet Retail	330	$	1,426	1,235	$	4,321	1,565	$	5,747
Consumer Products	246		861	1,597		3,895	1,843		4,756
Vehicle Related Manufacturing	863		4,601	—		—	863		4,601
Petroleum and Mining	171		4,277	—		—	171		4,277
Other Manufacturing	1,006		3,650	—		—	1,006		3,650
Business Services	445		3,457	—		—	445		3,457
Logistics and Distribution	910		3,375	—		—	910		3,375
Telecommunications	316		1,200	180		2,117	496		3,317
Executive Office Suites	86		2,971	—		—	86		2,971
Home Furnishings/Home Improvement	445		2,469	35		389	480		2,858
Defense and Aerospace	133		2,376	—		—	133		2,376
Financial Services	187		1,662	—		—	187		1,662
Food Service and Retail	108		782	20		399	128		1,181
Specialty Retail	15		401	75		712	90		1,113
Other Retail	74		288	46		646	120		934
Apparel Retail	—		—	89		813	89		813
Pharmaceutical and Health Care Related	123		769	—		—	123		769
Professional Services	54		682	4		80	58		762
Totals	5,512	$	35,247	3,281	$	13,372	8,793	$	48,619

⁽¹⁾ Net Rentable Square Feet for Unconsolidated Properties is at 100%. Annualized Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership.

Tenant Lease Expirations

The following table sets forth a schedule of expiring leases for our consolidated and unconsolidated properties as of September 30, 2008 (in thousands):

	Consolidated Properties			Unconsolidated Properties (1)			Consolidated & Unconsolidated Properties (1)
	Expiring Net Rentable Square Feet	Expiring Base Rent		Expiring Net Rentable Square Feet	Expiring Base Rent		Expiring Net Rentable Square Feet	Expiring Base Rent
2008 (Three Months Ended December 31, 2008)	435	$	903	—	$	—	435	$	903
2009	669		3,297	—		—	669		3,297
2010	512		4,515	—		—	512		4,515
2011	195		1,097	—		—	195		1,097
2012	379		5,348	22		365	401		5,713
2013	1,294		8,636	20		426	1,314		9,062
2014	146		774	—		—	146		774
2015	710		3,094	—		—	710		3,094
2016	199		1,206	30		236	229		1,442
2017	200		3,421	121		1,302	321		4,723
Thereafter	773		4,484	3,088		12,834	3,861		17,318
Total	5,512	$	36,775	3,281	$	15,163	8,793	$	51,938

⁽¹⁾ Expiring Net Rentable Square Feet for Unconsolidated Properties is at 100%. Expiring Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership.

41

Critical Accounting Policies

Management believes our most critical accounting policies are accounting for lease revenues (including straight-line rent), regular evaluation of whether the value of a real estate asset has been impaired, real estate purchase price allocations and accounting for our derivatives and hedging activities, if any. Each of these items involves estimates that require management to make judgments that are subjective in nature. Management relies on its experience, collects historical data and current market data, and analyzes these assumptions in order to arrive at what it believes to be reasonable estimates. Under different conditions or assumptions, materially different amounts could be reported related to the accounting policies described below. In addition, application of these accounting policies involves the exercise of judgments on the use of assumptions as to future uncertainties and, as a result, actual results could materially differ from these estimates.

Revenue Recognition and Valuation of Receivables

Our revenues, which are composed largely of rental income, include rents reported on a straight-line basis over the initial term of the lease. If our leases provide for rental increases at specified intervals, we will be required to straight-line the recognition of revenue, which will result in the recording of a receivable for rent not yet due under the lease terms. Accordingly, our management must determine, in its judgment, to what extent the unbilled rent receivable applicable to each specific tenant is collectible. We review unbilled rent receivable on a quarterly basis and take into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Should the ability to collect unbilled rent with respect to any given tenant be in doubt, we would be required to record an increase in our allowance for doubtful accounts or record a direct write-off of the specific rent receivable, which would have an adverse effect on our net income for the year in which the reserve is increased or the direct write-off is recorded and would decrease our total assets and shareholders’ equity.

Investments in Real Estate

We record investments in real estate at cost (including third-party acquisition expenses) and we capitalize improvements and replacements when they extend the useful life or improve the efficiency of the asset. We expense costs of repairs and maintenance as incurred. We compute depreciation using the straight-line method over the estimated useful lives of our real estate assets, which we expect to be approximately 39 years for buildings and improvements, three to five years for equipment and fixtures and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

We are required to make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact on our net income because, if we were to shorten the expected useful lives of our investments in real estate, we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis throughout the expected useful lives of the related assets.

We have adopted Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), which establishes a single accounting model for the impairment or disposal of long-lived assets including discontinued operations. SFAS No. 144 requires that the operations related to properties that have been sold or that we intend to sell be presented as discontinued operations in the statement of operations for all periods presented, and properties we intend to sell be designated as “held for sale” on our balance sheet.

When circumstances such as adverse market conditions indicate a possible impairment of the value of a property, we review the recoverability of the property’s carrying value. The review of recoverability is based on our estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. Our forecast of these cash flows considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. These factors contain subjectivity and thus are not able to be precisely estimated. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. We are required to make subjective assessments as to whether there are impairments in the values of our investments in real estate.

42

Real Estate Purchase Price Allocation

We allocate the purchase price to tangible assets of an acquired property (which includes land, building and tenant improvements) based on the estimated fair values of those tangible assets, assuming the building was vacant. Estimates of fair value for land are based on factors such as comparisons to other properties sold in the same geographic area, adjusted for unique characteristics. Estimates of fair values of buildings and tenant improvements are based on present values determined based upon the application of hypothetical leases with market rates and terms.

We record above-market and below-market, in-place lease values for acquired properties 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 market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. We amortize any capitalized above-market lease values as a reduction of rental income over the remaining non-cancelable terms of the respective leases. We amortize any capitalized below-market lease values as an increase to rental income over the initial term and any fixed-rate renewal periods in the respective leases.

We measure the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Management’s estimates of value are made using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis). Factors considered by management in its analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. Management also estimates costs to execute similar leases including leasing commissions, legal and other related expenses to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction.

The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.

We amortize the value of in-place leases to expense over the remaining term of the respective leases, which we primarily expect to range from five to fifteen years. The value of customer relationship intangibles is amortized to expense over the remaining term and any renewal periods in the respective leases, but in no event may the amortization period for intangible assets exceed the remaining depreciable life of the building. Should a tenant terminate its lease, the unamortized portion of the in-place lease value and customer relationship intangibles would be charged to expense.

These assessments have a direct impact on net income and revenues. If we assign more fair value to the in-place leases versus buildings and tenant improvements, assigned costs would generally be depreciated over a shorter period, resulting in more depreciation expense and a lower net income on an annual basis. Likewise, if we estimate that more of our leases in-place at acquisition are on terms believed to be above the current market rates for similar properties, the calculated present value of the amount above market would be amortized monthly as a direct reduction to rental revenues and ultimately reduce the amount of net income.

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Discontinued Operations and Real Estate Held for Sale

        In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“SFAS No. 144”), the income or loss and net gain on dispositions of operating properties and the income or loss on all properties classified as held for sale are reflected in the consolidated statements of operations as discontinued operations for all periods presented. A property is classified as held for sale when certain criteria, as set forth under SFAS No. 144, are met. At such time, we present the respective assets and liabilities separately on the balance sheet and cease to record depreciation and amortization expense. Properties held for sale are reported at the lower of their carrying value or their estimated current sales value less costs to sell. As of December 31, 2007, we had 18 buildings classified as held for sale and during the three months ended September 30, 2008, they were transferred to continuing operations (see Note 5).

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Accounting for Derivative Financial Investments and Hedging Activities

We account for our derivative and hedging activities, if any, in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”) as amended, which requires all derivative instruments to be carried at fair value on the balance sheet. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking each hedge transaction. We periodically review the effectiveness of each hedging transaction, which involves estimating future cash flows. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in other comprehensive income within shareholders’ equity. Calculation of a fair value of derivative instruments also requires management to use estimates. Amounts will be reclassified from other comprehensive income to the income statement in the period or periods the hedged forecasted transaction affects earnings. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges under SFAS No. 133. The changes in fair value hedges are accounted for by recording the fair value of the derivative instruments on the balance sheet as either assets or liabilities, with the corresponding amount recorded in current year earnings.

Accounting for Share-Based Compensation

We have adopted the fair value based method of accounting for share-based compensation. Under this approach, we recognize an expense for the fair value of any share-based compensation at the time it is granted, as well as for transactions with non-employees in which services are performed in exchange for equity instruments.

Investments in Unconsolidated Entities

Our determination of the appropriate accounting method with respect to our investments in CBRE Strategic Partners Asia, which is considered a Variable Interest Entity (“VIE”), is based on Financial Accounting Standards Board (“FASB”), Interpretation No. 46 (revised in December 2003), “Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51” (“FIN46R”). We account for this VIE, of which we are not the primary beneficiary, under the equity method of accounting.

We determine if an entity is a VIE under FIN 46R based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, then a quantitative analysis, if necessary. In a quantitative analysis, we incorporate various estimates, including estimated future cash flows, asset hold periods and discount rates, as well as estimates of the probabilities of various scenarios occurring. If the entity is a VIE, we then determine whether we consolidate the entity as the primary beneficiary. We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. If we made different judgments or utilized different estimates in these evaluations, it could result in differing conclusions as to whether or not an entity is a VIE and whether or not to consolidate such entity.

With respect to our majority limited membership interest in the Duke joint venture and Afton Ridge, we considered EITF 96-16, “Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights” in determining that we did not have control over the financial and operating decisions of such entity due to the existence of substantive participating rights held by the minority limited member who is also the managing member of the Duke joint venture.

We carry our investments in CBRE Strategic Partners Asia, the Duke joint venture and Afton Ridge on the equity method of accounting because we have the ability to exercise significant influence (but not control) over operating and financial policies of each such entity. We eliminate transactions with such equity method entity to the extent of our ownership in each such entity. Accordingly, our share of net income (loss) of these equity method entities is included in consolidated net income (loss). Under the equity method, impairment losses are recognized upon evidence of other-than-temporary losses of value.

Our investments in unconsolidated entities in which we have the ability to exercise significant influence over operating and financial policies, but do not control or entities which are variable interest entities in which we are not the primary beneficiary are accounted for under the equity method. Accordingly, our share of the earnings from these equity method basis companies is included in consolidated net income. Our determination of the appropriate accounting treatment for an investment in an entity requires judgment of several factors, including the size and nature of our ownership interest and the other owners’ substantive rights to make decisions for the entity. If we were to make different judgments or conclusions as to the level of our control or influence, it could result in a different accounting treatment. Accounting for an investment as either consolidated or using the equity method generally would have no impact on our net income or stockholders’ equity in any accounting period, but a different treatment would impact individual income statement and balance sheet items, as consolidation would effectively “gross up” our income statement and balance sheet.

Accounting Pronouncements Adopted January 1, 2008

Effective January 1, 2008, we adopted, on a prospective basis, SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”) as amended by FASB Staff Position SFAS No. 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (“FSP FAS No. 157-1”) and FASB Staff Position SFAS No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS No. 157-2”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in U.S. GAAP and provides for expanded disclosure about fair value measurements. SFAS No. 157 applies prospectively to all other accounting pronouncements that require or permit fair value measurements. FSP FAS No. 157-1 amends SFAS No. 157 to exclude from the scope of SFAS No. 157 certain leasing transactions accounted for under SFAS No. 13, “Accounting for Leases.” FSP FAS No. 157-2 amends SFAS No. 157 to defer the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities except those that are recognized or disclosed at fair value in the financial statements on a recurring basis to fiscal years beginning after November 15, 2008.

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The adoption of SFAS No. 157 did not have a material impact on our consolidated financial statements. Management is evaluating the impact that SFAS No. 157 will have on our non-financial assets and non-financial liabilities since the application of SFAS No. 157 for such items was deferred to January 1, 2009. We believe that the impact of these items will not be material to our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis to which we have not yet applied SFAS No. 157 due to the deferral of SFAS No. 157 for such items include:

• Non-financial assets and liabilities initially measured at fair value in an acquisition or business combination;

• Long-lived assets measured at fair value due to an impairment assessment under SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets;” and

• Asset retirement obligations initially measured under SFAS No. 143, “Accounting for Asset Retirement Obligations.”

Effective January 1, 2008, we adopted, on a prospective basis, SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The adoption of SFAS No. 159 did not have a material impact on our consolidated financial statements since we did not elect to apply the fair value option for any of our eligible financial instruments or other items on the January 1, 2008 effective date.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007) “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) changes the requirements for an acquirer’s recognition and measurement of the assets acquired and the liabilities assumed in a business combination. SFAS No. 141(R) is effective for annual periods beginning after December 15, 2008 and should be applied prospectively for all business combinations entered into after the date of adoption. We anticipate that the adoption of SFAS No. 141 (R) will only have an impact on our financial statements in so far as we will not be able to capitalize indirect deal costs to our acquisitions.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 requires (i) that noncontrolling (minority) interests be reported as a component of shareholders’ equity, (ii) that net income attributable to the parent and to the noncontrolling interest be separately identified in the consolidated statement of operations, (iii) that changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, (iv) that any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value, and (v) that sufficient disclosures are provided that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for annual periods beginning after December 15, 2008 and should be applied prospectively. However, the presentation and disclosure requirements of the statement shall be applied retrospectively for all periods presented. Management does not expect the adoption of the provisions of SFAS No. 160 will have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). This new standard enhances disclosure requirements for derivative instruments in order to provide users of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under Financial Accounting Standards No. 133 “Accounting for Derivative Instruments and Hedging Activities” and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is to be applied prospectively for the first annual reporting period beginning on or after November 15, 2008. We believe that the adoption of SFAS No. 161 will not have a material impact on our financial statement disclosures since we do not currently have any derivative instruments.

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Rental Operations

We evaluate the performance of our segments based on net operating income, defined as: rental income and tenant reimbursements less property and related expenses (operating and maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization, and our company level general and administrative expenses. The following tables compare the net operating income for the three and nine months ended September 30, 2008 and 2007 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Domestic Properties
Revenues:
Rental	$	7,503		$	3,243		$	20,907		$	6,606
Tenant Reimbursements		1,533			639			4,175			1,585
		9,036			3,882			25,082			8,191
Property and Related Expenses:
Operating and Maintenance		1,015			254			2,133			683
General and Administrative		(24	)		9			173			80
Property Management Fee to Related Party		119			54			335			74
Property Taxes		1,218			412			3,134			1,004
		2,328			729			5,775			1,841
Net Operating Income		6,708			3,153			19,307			6,350
International Properties
Revenues:
Rental		1,264			423			2,724			717
Tenant Reimbursements		15			4			75			7
		1,279			427			2,799			724
Property and Related Expenses:
Operating and Maintenance		15			7			75			12
General and Administrative		(3	)		—			47			—
Property Management Fee to Related Party		6			—			13			—
Property Taxes		—			—			—			—
		18			7			135			12
Net Operating Income		1,261			420			2,664			712
Total Reportable Segments
Revenues:
Rental		8,767			3,666			23,631			7,323
Tenant Reimbursements		1,548			643			4,250			1,592
		10,315			4,309			27,881			8,915
Property and Related Expenses:
Operating and Maintenance		1,030			261			2,207			695
General and Administrative		(27	)		9			220			80
Property Management Fee to Related Party		125			54			348			74
Property Taxes		1,218			412			3,134			1,004
		2,346			736			5,909			1,853
Net Operating Income(1)		7,969			3,573			21,972			7,062
Reconciliation of Non-GAAP to Consolidated Net (Loss) Income
Total Segment Net Operating Income		7,969			3,573			21,972			7,062
Interest and Other Income		467			1,160			1,797			2,198
		8,436			4,733			23,769			9,260
Interest Expense		2,728			1,330			7,479			2,348
General and Administrative		707			444			1,878			1,102
Investment Management Fee to Related Party		1,016			405			2,495			904
Depreciation and Amortization		4,417			2,115			11,457			4,585
Loss on transfer of held for sale real estate to continuing operations		3,451			—			3,451			—
(Loss) Income Before Minority Interest, Income Tax and Equity in Earnings of Unconsolidated Entities		(3,883	)		439			(2,991	)		321
Minority Interest		14			(5	)		12			(1	)
Benefit (Provision) for Income Taxes		557			—			41			(14	)
Equity in Earnings of Unconsolidated Entities		379			—			103			—
Net (Loss) Income	$	(2,933	)	$	434		$	(2,835	)	$	306

⁽¹⁾ Total Reportable Segments net operating income is a Non-GAAP financial measure which may be useful as a supplemental measure for evaluating the relationship of each reporting segment to the combined total. This measure should not be looked as an alternative measure of operating performance to our U.S. GAAP presentations provided.

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Consolidated Results of Continuing Operations

Comparison of Three Months Ended September 30, 2008 to Three Months Ended September 30, 2007

Revenues

Rental

Rental revenue increased $5,101,000, or 139%, to $8,767,000 during the three months ended September 30, 2008 compared to $3,666,000 for the three months ended September 30, 2007. The increase was due to the acquisition of 602 Central Blvd., Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park as well as increased occupancy at Deerfield Commons I.

Tenant Reimbursements

Tenant reimbursements increased $905,000, or 141%, to $1,548,000 for the three months ended September 30, 2008 compared to $643,000 for the three months ended September 30, 2007, primarily as a result of increased tenant operating expense recovery for Deerfield Commons I, Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center and Enclave on the Lake.

Expenses

Operating and Maintenance

Property operating and maintenance expenses increased $769,000, or 295%, to $1,030,000 for the three months ended September 30, 2008 compared to $261,000 for the three months ended September 30, 2007. The increase was primarily due to the acquisition of Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center and Enclave on the Lake and increased operating expenses at Deerfield Commons I.

Property Taxes

Property tax expense increased $806,000, or 195%, to $1,218,000 for the three months ended September 30, 2008 compared to $412,000 for the three months ended September 30, 2007. The increase was due to a combination of increased assessments and expenses associated with the Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center and Enclave on the Lake.

Interest

Interest expense increased $1,398,000, or 105%, to $2,728,000 for the three months ended September 30, 2008 compared to $1,330,000 for the three months ended September 30, 2007 as a result of interest expense associated with the 602 Central Blvd., the Carolina Portfolio, Thames Valley Five, Lakeside Office Center and Enclave on the Lake notes payable and the Bank of America term loan.

General and Administrative

General and administrative expense increased $227,000, or 50%, to $680,000 for the three months ended September 30, 2008 compared to $453,000 for the three months ended September 30, 2007. Of the total increase, $100,000 was due to the increase in shareholder servicing fees and report production costs, $125,000 was due to the increase in professional fees, $35,000 was due to increase in organizational costs associated with formation of the Duke joint venture and the Afton Ridge joint venture, $6,000 was due to the increase in directors’ and officers’ insurance, $7,000 was due to the increase in fund level legal expense and offset by the reduction of general audit fees and Sarbanes-Oxley assistance fees of $46,000 for the three months ended September 30, 2008 as compared to September 30, 2007.

Loss on Transfer of Held for Sale Real Estate to Continuing Operations for the Three Months Ended September 30, 2008

During the three months ended September 30, 2008, management determined that greater long-term value could be realized from operating the properties than could be achieved in a sale of the properties in the current market. As a result of the transfer of the previously held for sale real estate to investments in real estate, a loss was recorded in the current period in the amount of $3,451,000 to measure each of the properties at the lower of its carrying amount adjusted for depreciation and amortization expense that would have been recognized had the asset been continuously classified as held for investment, or its fair value at the date of the decision not to sell.

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Property Management Fee and Investment Management Fee

Property management fee and investment management fee increased $682,000, or 148%, to $1,141,000 for three months ended September 30, 2008 compared to $459,000 for the three months ended September 30, 2007. The increase was due to fees earned relative to the management of 602 Central Blvd., Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park.

Depreciation and Amortization

Depreciation and amortization expense increased $2,302,000, or 109%, to $4,417,000 for the three months ended September 30, 2008 as compared to $2,115,000 for the three months ended September 30, 2007. The net increase was related to tenant improvement and leasing commission activities at Deerfield Commons I and 660 N. Dorothy and the acquisitions of 602 Central Blvd., Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park.

Interest and Other Income

Interest and other income decreased $693,000, or 60%, to $467,000 for the three months ended September 30, 2008 compared to $1,160,000 for the three months ended September 30, 2007. The decrease was due to lower year to year cash balances and money market interest rates.

Equity in Earnings of Unconsolidated Entities

Our investments in CBRE Strategic Partners Asia, the Duke joint venture and the Afton Ridge joint venture resulted in earnings of $379,000 for the three months ended September 30, 2008. There were no comparable activities for the three months ended September 30, 2007.

Comparison of Nine Months Ended September 30, 2008 to Nine Months Ended September 30, 2007

Revenues

Rental

Rental revenue increased $16,308,000, or 223%, to $23,631,000 during the nine months ended September 30, 2008 compared to $7,323,000 for the nine months ended September 30, 2007. The increase was due to the acquisition of 602 Central Blvd., Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park as well as increased occupancy at Deerfield Commons I.

Tenant Reimbursements

Tenant reimbursements increased $2,658,000, or 167%, to $4,250,000 for the nine months ended September 30, 2008 compared to $1,592,000 for the nine months ended September 30, 2007, primarily as a result of increased tenant operating expense recovery for Deerfield Commons I, Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center and Enclave on the Lake.

Expenses

Operating and Maintenance

Property operating and maintenance expenses increased $1,512,000, or 217%, to $2,207,000 for the nine months ended September 30, 2008 compared to $695,000 for the nine months ended September 30, 2007. The increase was primarily due to the acquisition of Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center, Thames Valley Five and Enclave on the Lake as well as increased operating expenses at Deerfield Commons I.

Property Taxes

Property tax expense increased $2,130,000, or 212%, to $3,134,000 for the nine months ended September 30, 2008 compared to $1,004,000 for the nine months ended September 30, 2007. The increase was due to a combination of increased assessments and expenses associated with the Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center and Enclave on the Lake.

Interest

Interest expense increased $5,131,000, or 218%, to $7,479,000 for the nine months ended September 30, 2008 compared to $2,348,000 for the nine months ended September 30, 2007 as a result of interest expense associated with the 602 Central Blvd., the Carolina Portfolio, Thames Valley Five, Lakeside Office Center, Enclave on the Lake and the Bank of America term loan.

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General and Administrative

General and administrative expense increased $916,000, or 77%, to $2,098,000 for the nine months ended September 30, 2008 compared to $1,182,000 for the nine months ended September 30, 2007. Of the total increase, $208,000 was due to the increase in general audit fees and Sarbanes-Oxley assistance; $338,000 was due to the increase in professional fees; $180,000 was due to the increase in legal expense; $136,000 was due to the payment of organization costs associated with the formation of the Duke joint venture and the Afton Ridge joint venture, $112,000 was due to the increase in shareholder servicing fees and report production costs; offset by the reductions of directions and officers’ insurance of $58,000 for the nine months ended September 30, 2008 as compared to September 30, 2007.

Loss on Transfer of Held for Sale Real Estate to Continuing Operations for the Nine Months Ended September 30, 2008

During the nine months ended September 30, 2008, management determined that greater long-term value could be realized from operating the properties than could be achieved in a sale of the properties in the current market. As a result of the transfer of the previously held for sale real estate to investments in real estate, a loss was recorded in the current period in the amount of $3,451,000 to measure each of the properties at the lower of its carrying amount adjusted for depreciation and amortization expense that would have been recognized had the asset been continuously classified as held for investment, or its fair value at the date of the decision not to sell.

Property Management Fee and Investment Management Fee

Property management fee and investment management fee increased $1,865,000, or 191%, to $2,843,000 for nine months ended September 30, 2008 compared to $978,000 for the nine months ended September 30, 2007. The increase was due to fees earned relative to the management of 602 Central Blvd., Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park.

Depreciation and Amortization

Depreciation and amortization expense increased $6,872,000, or 150%, to $11,457,000 for the nine months ended September 30, 2008 as compared to $4,585,000 for the nine months ended September 30, 2007. The net increase was related to tenant improvement and leasing commission activities at Deerfield Commons I and 660 N. Dorothy and the acquisitions of 602 Central Blvd., Bolingbrook Point III, the Carolina Portfolio, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park.

Interest and Other Income

Interest and other income decreased $401,000, or 18%, to $1,797,000 for the nine months ended September 30, 2008 compared to $2,198,000 for the nine months ended September 30, 2007. The decrease was due to the lower year to year cash balances and money market interest rates.

Equity in Earnings of Unconsolidated Entities

Our investment in CBRE Strategic Partners Asia, the Duke joint venture and the Afton Ridge joint venture resulted in earnings of $103,000 for the nine months ended September 30, 2008. There were no comparable activities for the nine months ended September 30, 2007.

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Financial Condition, Liquidity and Capital Resources

Overview

Our sources of funds will primarily be the net proceeds of our initial public offering, any subsequent public offerings, operating cash flows and borrowings. We believe that these cash resources will be sufficient to satisfy our cash requirements and we do not anticipate a need to raise funds from other than these sources within the next twelve months. Depending on market conditions, we expect that once the net proceeds of our initial public offering are fully invested, our debt financing will be no greater than 65% of the value of the cost of our assets before non-cash reserves and depreciation. The amount of debt we place on an individual property, or the amount of debt incurred by an individual entity in which we invest, may be more or less than 65% of the value of such property or the value of the assets owned by such entity, depending on market conditions and other factors. In fact, depending on market conditions and other factors, we may choose not to place debt on our portfolio or our assets and may choose not to borrow to finance our operations or to acquire properties. Our declaration of trust limits our borrowing to 300% of our net assets unless any excess borrowing is approved by a majority of our independent trustees and is disclosed to our shareholders in our next quarterly report. Our declaration of trust defines “net assets” as our total assets (other than intangibles) at cost, before deducting depreciation, reserves for bad debts or other non-cash reserves, less total liabilities, calculated at least quarterly by us on a basis consistently applied; provided, however, that during such periods in which we are obtaining regular independent valuations of the current value of its net assets for purposes of enabling fiduciaries of employee benefit plan shareholders to comply with applicable Department of Labor reporting requirements, “net assets” means the greater of (i) the amount determined pursuant to the foregoing and (ii) the assets’ aggregate valuation established by the most recent such valuation report without reduction for depreciation, bad debts or other non-cash reserves. Any indebtedness we do incur will likely be subject to continuing covenants, and we will likely be required to make continuing representations and warranties in connection with such debt. Moreover, some or all of our debt may be secured by some or all of our assets. If we default in the payment of interest or principal on any such debt, breach any representation or warranty in connection with any borrowing or violate any covenant in any loan document, our lender may accelerate the maturity of such debt requiring us to immediately repay all outstanding principal. If we are unable to make such payment, our lender could foreclose on our assets that are pledged as collateral to such lender. The lender could also sue us or force us into bankruptcy. Any such event would have a material adverse effect on the value of our common shares. We believe that, even without any proceeds raised from our initial public offering, we have sufficient cash flow from operations to continue as a going concern for the next twelve months and into the foreseeable future.

In addition to making investments in accordance with our investment objectives, we expect to use our capital resources to make certain payments to the Investment Advisor and the Dealer Manager. During the offering stage, assuming all of the shares in our primary offering are sold, these payments will include payments of up to $126,000,000 for selling commissions, up to $27,000,000 for the dealer manager fee, up to $18,000,000 for the marketing support fee and up to $28,000,000 for organizational and offering expenses. During the acquisition and operational stages, certain services related to the acquisition and management of our investments and our operations will be provided to us by the Investment Advisor pursuant to an advisory agreement entered into in July 2004 which was amended and restated in October 2006. Pursuant to that agreement, we expect to make various payments to the Investment Advisor, including acquisition fees, investment management fees and payments for reimbursements of certain costs incurred by the Investment Advisor in providing related services to us. As the actual amounts to be paid are dependent upon the total equity and debt capital we raise and our results of operations, we cannot determine these amounts at this time.

In order to avoid corporate-level tax on our net taxable income, we are required to pay distributions to our shareholders equal to our net taxable income. In addition, to qualify as a REIT, we are required to pay distributions to our shareholders equal to at least 90% of our net ordinary taxable income. Therefore, once the net proceeds we receive from our initial public offering are substantially fully invested, we will need to raise additional capital in order to grow our business and acquire additional real estate investments. We anticipate borrowing funds to obtain additional capital, but there can be no assurance that we will be able to do so on terms acceptable to us, if at all.

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Historical Cash Flows

Our net cash provided by operating activities increased by $6,538,000 to $13,455,000 for the nine months ended September 30, 2008, compared to $6,917,000 for the nine months ended September 30, 2007. The increase was due to the acquisitions of Bolingbrook Point III, the Carolina Portfolio, Lakeside Office Center, Thames Valley Five, Enclave on the Lake and Albion Mills Retail Park.

Net cash used in investing activities increased by $34,263,000 to $233,897,000 for the nine months ended September 30, 2008, compared to $199,634,000 for the nine months ended September 30, 2007. The increase was due to the acquisitions of Carolina land parcels, Lakeside Office Center, Kings Mountain III, Thames Valley Five, Enclave on the Lake, Albion Mills Retail Park, and the investments in the Duke joint venture and the Afton Ridge joint venture during the nine months ended September 30, 2008.

Net cash provided by financing activities decreased by $46,794,000 to $177,242,000 for the nine months ended September 30, 2008, compared to net cash provided by financing activities of $224,036,000 for the nine months ended September 30, 2007. The decrease was due to the Bank of America line of credit paydown of $110,000,000, increase in distributions to shareholders and minority interest of $10,806,000, increase in shareholder redemptions of $2,232,000, increase in principal payments on notes payable of $2,337,000 and deferred financing costs of $4,000; offset by increase in proceeds, after offering costs, received from the public offering of $65,293,000, increase in proceeds from notes payable of $12,922,000 and security deposit of $370,000.

Non-GAAP Supplemental Financial Measure: Funds from Operations

Management uses Funds from Operations (“FFO”), as a supplemental measure of REIT performance. We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do. The revised White Paper defines FFO as net income or loss computed in accordance with U.S. GAAP, excluding extraordinary items, as defined by U.S. GAAP, and gains and losses from sales of depreciable operating property, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures.

Because FFO excludes depreciation and amortization, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates and operating costs. Management believes that FFO provides useful information to the investment community about our financial performance when compared to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.

FFO does not represent cash generated from operating activities in accordance with U.S. GAAP and should not be considered as an alternative to net income (determined in accordance with U.S. GAAP), as an indication of our financial performance or to cash flow from operating activities (determined in accordance with U.S. GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

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The following table presents our FFO for the three and nine months ended September 30, 2008 and 2007 (in thousands):

	Three Months Ended September 30					Nine Months Ended September 30
	2008			2007		2008			2007
Reconciliation of net (loss) income to funds from operations:
Net (Loss) Income	$	(2,933	)	$	434	$	(2,835	)	$	306
Adjustments:
Minority interest		(14	)		5		(12	)		1
Net effect of FFO adjustment from unconsolidated entities(1)		480			—		704			—
Real estate depreciation and amortization		4,417			2,115		11,457			4,585
Loss from transfer of held for sale real estate to continuing operations		3,451			—		3,451			—
Funds from operations	$	5,401		$	2,554	$	12,765		$	4,892

⁽¹⁾ Represents our share of the FFO adjustments allowable under the NAREIT definition (primarily depreciation).

Financing

In connection with our acquisition of the Carolina Portfolio on August 30, 2007, we assumed 13 loans with principal balances totaling $66,110,000 ($62,944,000 at estimated fair value including the discount of $3,166,000) from various lenders that are secured by first deeds of trust on the properties and the assignment of related rents and leases. Assumption fees and other loan closing costs totaling $765,500 were capitalized as incurred. The loans bear interest at rates ranging from 4.98% to 6.33% per annum and mature between March 1, 2013 and February 1, 2025. The loans require monthly payments of interest and principal, fully amortized over the lives of the loans. Principal payments totaling $2,524,000 were made during the nine months ended September 30, 2008. We indemnify the lenders against environmental costs and expenses and guarantee the loans under certain conditions.

On April 27, 2007, we, in connection with the acquisition of 602 Central Blvd, entered into a £5,500,000 ($9,783,000 at September 30, 2008) financing arrangement with the Royal Bank of Scotland plc secured by the property. The loan is for a term of seven years and bears interest at a variable rate of interest, adjusted quarterly, based on three month GBP-based LIBOR plus 0.67%, or 6.47% and 6.94% per annum as of September 30, 2008 and December 31, 2007, respectively. Interest payments only are due quarterly for the term of the loan with principal due at maturity. The loan agreement requires us to maintain a rate cap agreement pursuant to which we will be protected against an increase in the three month LIBOR over 6.25% through May 27, 2010.

On May 30, 2008, we entered into a £7,500,000 ($13,340,000 at September 30, 2008) financing arrangement with the Royal Bank of Scotland plc secured by the Thames Valley Five property. The loan is for a term of five years (with a two year extension option) and bears interest at a variable rate of interest, adjusted quarterly, based on three month GBP-based LIBOR plus 1.01%. On August 14, 2008, we entered into the interest rate swap agreement that fixes the GBP-based LIBOR rate at 5.41% plus 1.01% or 6.42% per annum as of September 30, 2008. Interest payments only are due quarterly for the term of the loan with principal due at maturity.

On July 1, 2008, in connection with the acquisition of Enclave on the Lake, we assumed an $18,790,000 fixed-rate mortgage loan that bears interest at a rate of 5.45% per annum and matures on May 1, 2011. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $83,000 were made during the three months ended September 30, 2008. In addition, we incurred financing costs totaling $237,000 in conjunction with the assumption of the loan.

On August 7, 2008, we obtained a $9,000,000 loan from 40/86 Mortgage Capital, Inc., secured by the Lakeside Office Center property originally acquired on March 5, 2008. The loan is for a term of seven years and bears interest at a fixed rate of 6.03% with interest payments only for the first 36 months and principal and interest for the remaining 48 months of the loan term. In addition, we incurred financing costs of approximately $100,000 associated with obtaining this loan, including $36,000 paid CBRE Melody, a related party.

On August 8, 2008, we entered into an amended and restated credit agreement with Bank of America, which amended the terms of our prior credit agreement with Bank of America, to provide us with a new $45,000,000 unsecured revolving line of credit (the “Revolving Credit Facility”), and to replace our prior Bank of America term loan and revolving credit facility which was scheduled to mature in August 2008. The new Revolving Credit Facility was fully drawn upon at closing, with such proceeds utilized to pay down the full $45,000,000 amount outstanding under our prior Bank of America term loan (as of August 8, 2008, no amount was outstanding under our prior $10,000,000 Bank of America revolving credit facility). The new Revolving Credit Facility matures in August 2010 and bears interest at a floating rate of LIBOR plus 2.00% to 2.75%, based upon our leverage ratio as defined in the credit agreement (at our current leverage ratio, the Revolving Credit Facility bears interest at a floating rate of LIBOR plus 2.00%). An upfront fee of $292,500 was paid to Bank of America, and a fee equal to the actual daily amount by which the aggregate commitments exceed the total outstandings (both as defined in the amended and restated credit agreement) times 0.20% per annum if the total outstandings are equal to or more than 50% of the aggregate commitments, or 0.25% per annum otherwise, is accrued on unfunded balances under the Revolving Credit Facility. The loan contains various financial covenants and restrictions including a fixed charge coverage ratio of less than 1.75 to 1.00, as defined in the amended and restated credit agreement. As of August 8, 2008, we were in compliance with all such covenants and restrictions. On August 13, 2008, we paid down the full $45,000,000 amount initially outstanding under the Revolving Credit Facility.

Distribution Policy

In order to qualify as a REIT under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, we must make distributions to our shareholders each year in an amount at least equal to 90% of our REIT taxable income.

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It is anticipated that distributions generally will be taxable as ordinary income to our shareholders, although a portion of such distributions may be designated by us as a return of capital or as capital gain. We will furnish annually to each of our shareholders a statement setting forth distributions paid during the preceding year and their characterization as ordinary income, return of capital or capital gains.

To the extent that our cash available for distribution is less than the amount we are required to distribute to qualify as a REIT, we may consider various funding sources to cover any shortfall, including borrowing funds on a short-term, or possibly long-term, basis or selling properties. In addition, we may utilize these funding sources to make distributions that exceed the amount we are required to distribute to qualify as a REIT; however, we will not use offering proceeds for this purpose.

Off-Balance Sheet Arrangements

As of September 30, 2008, we had three investments in unconsolidated entities. These investments are discussed in Note 4 in the accompanying consolidated financial statements.

Contractual Obligations and Commitments

The following table provides information with respect to our consolidated property contractual obligations at September 30, 2008 (in thousands):

Contractual Obligations	Total			Less than One Year			One to Three Years			Three to Five Years			More than Five Years
Note Payable (and interest payments) Collateralized by REMEC Corporate Campus	$	(15,260	)	$	(635	)	$	(1,269	)	$	(13,356	)	$	—
Note Payable (and interest payments) Collateralized by 300 Constitution Drive		(14,081	)		(580	)		(1,162	)		(12,339	)		—
Note Payable (and interest payments) Collateralized by Deerfield Commons I		(13,318	)		(509	)		(1,118	)		(1,286	)		(10,405	)
Note Payable (and interest payments) Collateralized by 602 Central Blvd.		(13,420	)		(633	)		(1,265	)		(1,265	)		(10,257	)
Note Payable (and interest payments) Collateralized by Bolingbrook Point III		(11,998	)		(473	)		(947	)		(947	)		(9,631	)
Note Payable (and interest payments) Collateralized by the Carolina Portfolio		(89,117	)		(6,981	)		(13,961	)		(13,808	)		(54,367	)
Note Payable (and interest payments) Collateralized by Thames Valley Five		(17,882	)		(908	)		(1,817	)		(15,157	)		—
Note Payable (and interest payments) Collateralized by Lakeside Office Center		(12,699	)		(543	)		(1,094	)		(1,299	)		(9,763	)
Note Payable (and interest payments) Collateralized by Enclave on the Lake		(21,360	)		(1,355	)		(20,005	)		—			—
Total	$	(209,135	)	$	(12,617	)	$	(42,638	)	$	(59,457	)	$	(94,423	)

As of September 30, 2008, we were committed to pay $4,934,000 in accrued offering costs to related and other parties. The timing of future payments is uncertain.

As of September 30, 2008, we had an unfunded investment commitment in CBRE Strategic Partners Asia totaling $19,800,000. The timing of future payments is uncertain.

As of September 30, 2008, we had an unfunded investment commitment in the Duke joint venture totaling $79,764,000. The timing of future payments is uncertain.

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Investment Management and Other Fees to Related Parties

Pursuant to the agreement between us and the Investment Advisor (the “Advisory Agreement”), the Investment Advisor and its affiliates perform services relating to our ongoing initial public offering and the management of our assets. Items of compensation and equity participation are as follows:

Investment Management Fee to Related Party

On October 24, 2006, the board of trustees, including our independent trustees, approved and we entered into the Amended and Restated Agreement of Limited Partnership of CBRE OP (the “Amended Partnership Agreement”) and the Amended and Restated Advisory Agreement (the “Amended Advisory Agreement” and, together with the Amended Partnership Agreement, the “Amended Agreements”). The Amended Advisory Agreement provides an investment management fee of (i) a monthly fee equal to one twelfth of 0.6% of the aggregate cost (before non-cash reserves and depreciation) of all real estate investments within our portfolio and (ii) a monthly fee equal to 7.0% of the aggregate monthly net operating income derived from all real estate investments within our portfolio. The Investment Advisor waived investment management fees of $417,000 and $1,026,000 for the three and nine months ended September 30, 2008. The Investment Advisor waived investment management fees of $118,000 for the three and nine months ended September 30, 2007. All or any portion of the investment management fee not taken as to any fiscal year may be deferred or waived without interest at the option of the Investment Advisor.

The Investment Advisor earned investment management fees of $1,016,000 and $405,000 for the three months ended September 30, 2008 and 2007, respectively and $2,495,000 and $904,000 for the nine months ended September 30, 2008 and 2007, respectively. As of September 30, 2008 and December 31, 2007, the investment management fee payable included in investment management fees payable to related party in our consolidated balance sheets were $381,000 and $429,000, respectively. In connection with services provided to the Investment Advisor, CNL Fund Management Company, the Sub-Advisor and affiliate of the Dealer Manager pursuant to a sub-advisory agreement dated August 21, 2006, was paid by the Investment Advisor $140,000 and $56,000 for the three months ended September 30, 2008 and 2007, respectively; $344,000 and $125,000 for the nine months ended September 30, 2008 and 2007, respectively.

Acquisition Fee to Related Party

The Investment Advisor may earn an acquisition fee of up to 1.0% of (i) the purchase price of real estate investments acquired by us, including any debt attributable to such investments, or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity. The Investment Advisor earned acquisition fees of $2,143,000 and $2,349,000 for the three months ended September 30, 2008 and 2007, respectively; $3,207,000 and $2,572,000 for the nine months ended September 30, 2008 and 2007, respectively. In connection with services provided to the Investment Advisor, the Sub-Advisor, pursuant to a sub advisory agreement, was paid by the Investment Advisor acquisition fees of $401,000 and $439,000 for the three months ended September 30, 2008 and 2007, respectively; $600,000 and $481,000 for the nine months ended September 30, 2008 and 2007, respectively. These fees have been capitalized to investments in real estate and related intangibles.

CB Richard Ellis, UK was paid a service fee in conjunction with the April 27, 2007 acquisition of 602 Central Blvd. totaling £9,000 ($18,000) for the nine months ended September 30, 2007. These fees have been capitalized to investments in real estate and related intangibles.

Management Services to Related Party

Affiliates of the Investment Advisor may also provide leasing, brokerage, property management, or mortgage banking services for us. CB Richard Ellis Group, Inc., an affiliate of the Investment Advisor, received property management fees of approximately $125,000, and $54,000, for the three months ended September 30, 2008 and 2007, respectively; $348,000 and $74,000 for the nine months ended September 30, 2008 and 2007, respectively. As of September 30, 2008 and December 31, 2007, the property management fee payable included in property management fees payable to related party in our consolidated balance sheets were $99,000 and $50,000, respectively. No brokerage fees were paid to affiliates of the Investment Advisor for the three and nine months ended September 30, 2008 and 2007.

CBRE Melody, an affiliate of the Investment Advisor, received mortgage banking fees of $432,800 for the three and nine months ended September 30, 2008. No mortgage banking fees were paid to affiliates during the three and nine months ended September 30, 2007.

CBRE Carmody, an affiliate of the Investment Advisor, received leasing fees of $6,000 for the three and nine months ended September 30, 2008. No leasing fees were paid to affiliates during the three and nine months ended September 30, 2007.

Income Taxes

We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2004. As a REIT, we generally will not be subject to U.S. federal income tax on income that we distribute currently to our shareholders. Under the Internal Revenue Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute at least 90% of their annual net taxable income (excluding net capital gains) to their shareholders. If we fail to qualify for taxation as a REIT in any year, our income will be taxed at regular corporate rates, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify. Even if we qualify as a REIT for U.S. federal income tax purposes, we may still be subject to state, local and foreign taxes on our income and property and to U.S. federal income and excise taxes on our undistributed gross income.

Inflation

The real estate market has not been affected significantly by inflation in the past several years due to the relatively low inflation rate. With the exception of leases with tenants in multifamily properties, we expect to include provisions in the majority of our tenant leases designed to protect us from the impact of inflation. These provisions will include reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements, or in some cases, annual reimbursement of operating expenses above a certain allowance. Due to the generally long-term nature of these leases, annual rent increases may not be sufficient to cover inflation and rent may be below market. Leases in multifamily properties generally turn over on an annual basis and do not typically present the same issue regarding inflation protection due to their short-term nature.

Quantitative and Qualitative Disclosures About Market Risk

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risk to which we will be exposed is interest rate risk.

We may be exposed to the effects of interest rate changes primarily as a result of long-term debt used to maintain liquidity and fund expansion of our real estate investment portfolio and operations. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we will borrow primarily at fixed rates or variable rates and, in some cases, with the ability to convert variable rates to fixed rates. We may also enter into derivative financial instruments such as interest rate swaps and caps in order to mitigate our interest rate risk on a related financial instrument. We will not enter into derivative or interest rate transactions for speculative purposes.

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Notes Payable secured by real property is summarized as follows (in thousands):

	Interest Rate as of					Notes Payable as of
Property	September 30, 2008		December 31, 2007		Maturity Date	September 30, 2008			December 31, 2007
REMEC	4.79	%	4.79	%	November 1, 2011	$	13,250		$	13,250
300 Constitution	4.84		4.84		April 1, 2012		12,000			12,000
Deerfield Commons I(1)	5.23		5.23		December 1, 2015		9,725			9,725
602 Central Blvd.(2)	6.47		6.94		April 27, 2014		9,783			10,928
Bolingbrook Point III	5.26		5.26		January 1, 2015		9,000			9,000
Fairforest Bldg. 5(3)	6.33		6.33		February 1, 2024		10,872			11,177
Fairforest Bldg. 6(3)	5.42		5.42		June 1, 2019		3,573			3,754
HJ Park—Bldg. 1(3)	4.98		4.98		March 1, 2013		1,228			1,407
North Rhett I(3)	5.65		5.65		August 1, 2019		4,645			4,871
North Rhett II(3)	5.20		5.20		October 1, 2020		2,541			2,652
North Rhett III(3)	5.75		5.75		February 1, 2020		2,071			2,166
North Rhett IV(3)	5.80		5.80		February 1, 2025		10,841			11,132
Mt Holly Bldg.(3)	5.20		5.20		October 1, 2020		2,541			2,652
Orangeburg Park Bldg.(3)	5.20		5.20		October 1, 2020		2,584			2,697
Kings Mountain I(3)	5.27		5.27		October 1, 2020		2,198			2,294
Kings Mountain II(3)	5.47		5.47		January 1, 2020		6,602			6,911
Union Cross Bldg. I(3)	5.50		5.50		July 1, 2021		3,154			3,278
Union Cross Bldg. II(3)	5.53		5.53		June 1, 2021		9,647			10,031
Thames Valley Five(4)	6.42		—		May 30, 2013		13,340			—
Lakeside Office Center(5)	6.03		—		September 1, 2015		9,000			—
Enclave on the Lake(6)	5.45		—		May 1, 2011		18,707			—
Notes Payable							157,302			119,925
Less Discount							(3,255	)		(3,049	)
Notes Payable Less Discount						$	154,047		$	116,876

⁽¹⁾ Interest only payments are due monthly for the first 60 months of the loan term. Principal and interest payments are due monthly for the remaining 60 months of the loan term.

⁽²⁾ Variable interest rate of 6.47% and 6.94% at September 30, 2008 and December 31, 2007 based on three month GBP based LIBOR plus 0.67%. The loan agreement requires us to maintain a rate cap agreement pursuant to which we will be protected against an increase in the three month LIBOR over 6.25% through May 27, 2010.

⁽³⁾ These notes payable were assumed from the seller of the Carolina Portfolio on August 30, 2007 as part of the property acquisitions and were recorded at estimated fair value which includes the discount.

⁽⁴⁾ Interest rate of 6.42% at September 30, 2008 based on three month GPB based LIBOR plus 1.01%.

⁽⁵⁾ Interest only payments are due monthly for the first 36 months of the loan term. Principal and interest payments are due monthly for the remaining 48 months of the loan term.

⁽⁶⁾ The loan was assumed from the seller of Enclave on the Lake on July 1, 2008.

Upon the maturity of our debt, there is a market risk as to the prevailing rates at the time of refinancing. Changes in market rates on our fixed-rate debt affect the fair market value of our debt but it has no impact on interest expense or cash flow. A 100 basis point increase or decrease in interest rates on our fixed rate debt would not increase or decrease our annual interest expense on fixed rate debt.

The interest rate cap has a term of 33 months from August 27, 2007 to May 27, 2010 and has a notional amount of £5,500,000 ($9,783,000 at September 30, 2008) and caps the three month LIBOR at 6.25% during such period. Included in other assets is the fair value of the interest rate cap of $14,000, which includes ($107,000) in earnings for the decrease in fair value of the interest rate cap during the nine months ended September 30, 2008.

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The fair value of long-term debt was estimated based on current interest rates available to us for debt instruments with similar terms. The following table summarizes our financial instruments and their calculated fair values at September 30, 2008 and December 31, 2007 (in thousands):

	As of September 30, 2008
	Carrying Value			Total Fair Value
Financial Assets (Liabilities):
Interest Rate Cap	$	14		$	14
Notes Payable	$	(154,047	)	$	(148,845	)
Loan Payable	$	—		$	—

A 100 basis point increase or decrease in interest rates would increase or decrease the fair market value of our notes payable by $6,624,000 at September 30, 2008. In addition, a 100 basis point increase or decrease in interest rates would either increase or decrease annual variable interest expense on the 602 Central Boulevard Property by approximately $98,000 (net of the effect of the interest rate cap) and approximately $133,000 on the Thames Valley Five property.

	As of December 31, 2007
	Carrying Value			Total Fair Value
Financial Assets (Liabilities):
Interest Rate Cap	$	121		$	121
Notes Payable	$	(116,876	)	$	(114,174	)
Loan Payable	$	(45,000	)	$	(45,000	)

The fair value of the loan payable of $45,000,000 at December 31, 2007 approximates the carrying value due to its short-term nature.

In addition to changes in interest rates, the value of our real estate is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of lessees, which may affect our ability to refinance our debt if necessary.

Debt Maturity

The following table details our consolidated and unconsolidated debt maturities as of September 30, 2008:

	Consolidated Debt						Unconsolidated Debt (1)							Consolidated & Unconsolidated Debt (1)
	Scheduled Amortization		Term Maturities		Total		Scheduled Amortization		Term Maturities			Total		Scheduled Amortization		Term Maturities			Total
2008 (Three Months Ended December 31, 2008)	$	950	$	—	$	950	$	—		$	—	$	—	$	950		$	—	$	950
2009		3,932		—		3,932		—	—				—		3,932	—				3.932
2010		4,156		—		4,156		—	—				—		4,156	—				4,156
2011		4,305		31,028		35,333		—	—				—		4,305	31,028				35,333
2012		4,491		12,000		16,491		—	—				—		4,491	12,000				16,491
2013		4,515		13,340		17,855		—	79,360				79,360		4,515	92,700				97,215
2014		4,695		9,783		14,478		—	—				—		4,695	9,783				14,478
2015		4,906		26,491		31,397		—	—				—		4,906	26,491				31,397
2016		4,930		—		4,930		—	—				—		4,930	—				4,930
2017		5,215		—		5,215		—	—				—		5,215	—				5,215
Thereafter		22,565		—		22,565		—	—				—		22,565	—				22,565
Total	$	64,660	$	92,642	$	157,302	$	—	$79,360			$	79,360	$	64,660		$	172,002	$	236,662

⁽¹⁾ Unconsolidated debt amounts are at our pro rata share of effective ownership.

57

Subsequent Events

From October 1, 2008 through October 31, 2008, we received gross proceeds of approximately $34,275,260 from the sale of 3,443,392 common shares in our initial public offering. On October 14, 2008, our board of trustees approved an extension of our initial public offering until December 31, 2008. Under rules promulgated by the SEC, we could extend our initial public offering until October 24, 2009, and in some circumstances, we could continue our initial public offering until as late as April 22, 2010.

On October 10, 2008, we obtained a £5,775,000 loan ($9,849,840 assuming an exchange rate of $1.7056/£1.00) from The Royal Bank of Scotland plc secured by the Albion Mills Retail Park originally acquired on July 11, 2008. This interest-only loan is for a term of five years and bears interest at a variable rate of interest based on the GBP-based three month LIBOR plus 1.31%, or 6.13% per annum as of October 10, 2008. In addition, we incurred financing costs of approximately £60,706 ($103,540) associated with obtaining this loan.

On October 23, 2008, we acquired a fee interest in Maskew Retail Park located on Maskew Avenue, Peterborough, United Kingdom. We acquired Maskew Retail Park for approximately £30,000,000 ($50,685,000 assuming an exchange rate of $1.6895/£1.00), exclusive of customary closing costs and stamp duty fees, which was funded using net proceeds from our initial public offering. Upon closing, we paid our Investment Advisor an acquisition fee of approximately $506,850. This acquisition fee is not included in the £30,000,000 ($50,685,000) acquisition cost of Maskew Retail Park. The property consists of a three unit retail development and surface parking lot completed in 2007. The property is 100% leased to three tenants: B&Q plc, the largest home improvement, hardware and building supply retailer in the United Kingdom, under a lease that expires in September 2027; Matalan Retail Limited, one of the largest clothing and household goods retailers in the United Kingdom, under a lease that expires in September 2022; and Argos Limited, a major household goods and general merchandise retailer, under a lease that expires in April 2023. The estimated acquisition cap rate is approximately 7.7%. The acquisition cap rate equals annualized in-place net operating income divided by total acquisition costs for the property. Annualized in-place net operating income equals, on an annualized cash basis as derived from leases in-place at the time we acquired the property, rental income and tenant reimbursements less property and related expenses (operating maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization and our company-level general and administrative expenses.

On October 24, 2008, our board of trustees appointed Philip L. Kianka as our Chief Operating Officer and Executive Vice President. We entered into an indemnification agreement with Mr. Kianka, whereby we have agreed to indemnify Mr. Kianka under certain circumstances in his capacity as an officer of our company.

On October 24, 2008, our board of trustees approved the renewal of our amended and restated advisory agreement, dated October 24, 2006, by and among us and our Investment Advisor, for an additional one-year period, effective October 24, 2008.

On October 24, 2008, we entered into the first amendment (the “First Amendment”) to the amended and restated managing dealer agreement (the “Managing Dealer Agreement”), dated November 1, 2006, with our Dealer Manager, to extend the term of the Managing Dealer Agreement to correspond with our previously announced decision to extend our initial public offering.

58

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of quantitative and qualitative disclosures about market risk, see the “Quantitative and Qualitative Disclosures About Market Risk” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations above.

Item 4. Controls and Procedures

Not Applicable.

Item 4T. Controls and Procedures

Disclosure Controls and Procedures

We have formally adopted a policy for disclosure controls and procedures that provides guidance on the evaluation of disclosure controls and procedures and is designed to ensure that all corporate disclosure is complete and accurate in all material respects and that all information required to be disclosed in the periodic reports submitted by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods and in the manner specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within our company to disclose material information otherwise required to be set forth in our periodic reports. Also, we have an investment in two unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to these entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, as required by the Securities Exchange Act Rule 13a-15(c), our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Controls Over Financial Reporting

No changes in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

59

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

We are not party to any material legal proceeding as of September 30, 2008.

Item 1A. Risk Factors

Other than the risk factor set forth below, there have been no material changes to the risk factors set forth in Item 1A to Part I of our Annual Report on Form 10-K for the year ended December 31, 2007.

Recent turmoil in the credit markets could affect our ability to obtain debt financing on reasonable terms and the values of our assets.

The commercial real estate debt markets have been negatively impacted by the recent credit market disruptions. Securitized commercial mortgage lenders have virtually ceased lending. Lenders who hold commercial mortgages for investment have significantly tightened underwriting standards and reduced lending amounts. The result is a significant decrease in available debt capital and a significant increase in its cost. Other than our $45,000,000 Revolving Credit Facility (which was fully undrawn as of September 30, 2008), none of our debt matures prior to 2011 and most of our debt is at fixed interest rates. As a result, our current portfolio should be largely insulated from direct impact of the current debt market environment. However, should the reduced availability of debt and/or the increased cost of borrowing continue, we would fund acquisitions entirely with cash, which could reduce the pace of our acquisitions. In addition, the state of the debt markets could result in near-term price or value decreases for real estate assets. Although this may benefit us for future acquisitions, it could negatively impact the current value of our existing assets.

Over the past few months, financial markets have exhibited increasing volatility in terms of stock prices, interest rates, credit spreads, commodity prices and foreign exchange rates. In response to current financial market conditions, legislators and financial regulators implemented a number of mechanisms designed to add stability to these markets, including the provision of direct and indirect assistance to distressed financial institutions, assistance by the banking authorities in arranging acquisitions of weakened banks and broker-dealers, implementation of programs by the Federal Reserve to provide liquidity to the commercial paper markets and temporary prohibitions on short sales of certain financial institution securities. It is uncertain what effects any legislation or regulatory initiatives will have on financial markets or the economy. Given this uncertainty, we may not timely anticipate or manage existing, new or additional risks, contingencies or developments associated with our tenants, the real estate capital markets or the leasing markets. Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Securities and Repurchases of Securities

During the three and nine months ended September 30, 2008, we did not sell any equity securities that are not registered under the Securities Act of 1933, as amended, and we repurchased 108,798 and 283,414 common shares, respectively.

Use of Proceeds from Sale of Registered Securities

The registration statement relating to our initial public offering (No. 333-127405) was declared effective on October 24, 2006. CNL Securities Corp. is the Dealer Manager of our offering. The registration statement covers up to $2,000,000,000 in common shares of beneficial interest, 90% of which will be offered at a price of $10.00 per share, and 10% of which will be offered pursuant to our dividend reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the fair market value of a common share on the reinvestment date, as determined by CBRE Advisors LLC, the Investment Advisor, or another firm we choose for that purpose.

We reserve the right to reallocate the shares between the primary offering and our dividend reinvestment plan. From October 24, 2006 (effective date) through September 30, 2008, we received gross offering proceeds of approximately $488,939,000 from the sale of 48,933,180 shares. After payment of approximately $5,827,000 in acquisition fees, payment of approximately $20,000,000 in selling commissions, $7,222,000 in dealer manager fees, $3,068,000 in marketing support fees and payment of approximately $13,260,000 in organization and offering expenses, as of September 30, 2008, we had raised aggregate net offering proceeds of approximately $439,562,000.

On October 14, 2008, our board of trustees approved an extension of our initial public offering until December 31, 2008. Under rules promulgated by the SEC, we could extend our initial public offering until October 24, 2009, and in some circumstances, we could continue our initial public offering until as late as April 22, 2010.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

60

Item 6. Exhibits

10.1	First Amendment to the Amended and Restated Managing Dealer Agreement, by and among CB Richard Ellis Realty Trust and CNL Securities Corp., dated as of October 24, 2008 (Previously filed as Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-53200) filed October 28, 2008 and incorporated herein by reference).
10.2	Amended and Restated Credit Agreement, dated August 8, 2008, by and among CBRE Operating Partnership, L.P., CB Richard Ellis Realty Trust and Bank of America, N.A., (Previously filed as Exhibit 10.2 to Form 10-Q (file 000-53200) filed August 14, 2008 and incorporated herein by reference.)
10.3	Duke/Hulfish, LLC Limited Liability Company Agreement, by and among CBRE Operating Partnership, L.P. and Duke Realty Limited Partnership, dated June 12, 2008, filed herewith.
10.4	Selected Dealer Agreement, by and among, CB Richard Ellis Realty Trust, CNL Securities Corp., CBRE Advisors LLC, CB Richard Ellis Investors, LLC and Ameriprise Financial Services, Inc. dated as of September 26, 2008 (Previously filed as Exhibit 1.1 to Form 8-K (File No. 000-53200) filed September 30, 2008 and incorporated herein by reference).
10.5	Side Letter between CB Richard Ellis Realty Trust, CB Richard Ellis Investors, LLC and CBRE Advisors LLC dated September 26, 2008 (Previously filed as Exhibit 1.2 to Form 8-K (File No. 000-53200) filed September 30, 2008 and incorporated herein by reference).
10.6	Side Letter between CB Richard Ellis Realty Trust and CNL Securities Corp. dated September 26, 2008 (Previously filed as Exhibit 1.3 to Form 8-K (File No. 000-53200) filed September 30, 2008 and incorporated herein by reference).
10.7	First Amendment to the Contribution Agreement, by and between Duke Realty Limited Partnership, Duke/Hulfish LLC and CBRE Operating Partnership, L.P. dated September 12, 2008, filed herewith.
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

61

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CB RICHARD ELLIS REALTY TRUST
Date: November 14, 2008	/s/ JACK A. CUNEO
	Jack A. Cuneo
	President and Chief Executive Officer
Date: November 14, 2008	/s/ LAURIE ROMANAK
	Laurie Romanak
	Chief Financial Officer

62

EX-10.3

Exhibit 10.3

EXECUTION

DUKE/HULFISH, LLC

LIMITED LIABILITY COMPANY AGREEMENT

TABLE OF CONTENTS

		Page
ARTICLE 1. DEFINITIONS		2
ARTICLE 2. FORMATION OF THE COMPANY		14
2.1	Formation	14
2.2	Registered Office and Agent, Principal Office	14
2.3	Purposes	14
2.4	Powers	14
2.5	Warranties, Representations and Covenants - of all Members	16
2.6	Issuances	16
ARTICLE 3. MANAGEMENT		17
3.1	Executive Committee	17
3.2	Managing Member	19
3.3	Delegation of Duties	21
3.4	Fees	21
3.5	Reimbursable Expenses	22
3.6	Managing Member Contact	23
3.7	Removal and Replacement of Managing Member	23
3.8	Annual Budget	24
3.9	Capital Budget	25
ARTICLE 4. CONTRIBUTIONS		25
4.1	Closings and Contributions	25
4.2	Stated Contributions	26
4.3	Company Financing	26
4.4	Additional Capital Contributions	27
4.5	No Further Capital/Loans	29
4.6	Recoupment of Contributions	29
4.7	Partition; No Priority	29
4.8	Certain Duties and Obligations of the Members	29
4.9	No Cessation of Membership upon Bankruptcy, Etc	30
4.10	Limited Liability	30
ARTICLE 5. DISTRIBUTIONS		30
5.1	Distributions	30
5.2	Claw-back	31
5.3	Other Distributions	32
5.4	Withdrawal of Capital	32
ARTICLE 6. CAPITAL ACCOUNTS AND ALLOCATIONS		32
6.1	Capital Accounts	32
6.2	Adjustment of Gross Asset Value	33

i

TABLE OF CONTENTS

(continued)

		Page
6.3	Profits, Losses and Distributive Shares of Tax Items	34
6.4	Tax Returns	36
6.5	Tax Matters Member	36
6.6	Restrictions on Company Activities	37
ARTICLE 7. RECORDS AND REPORTS		38
7.1	Books and Records	38
7.2	Financial Reports	38
ARTICLE 8. DISSOLUTION, LIQUIDATION AND TERMINATION		39
8.1	Dissolution	39
8.2	Death, Legal Incapacity, Etc	39
8.3	Liquidation of Company Interests upon Dissolution	39
8.4	Certificate of Cancellation	40
ARTICLE 9. TRANSFER		40
9.1	Restriction on Transfers	40
9.2	Rights of Unadmitted Assignees	41
ARTICLE 10. AMENDMENTS		41
10.1	Amendments in General	41
ARTICLE 11. LIABILITY, EXCULPATION, INDEMNIFICATION AND INSURANCE		41
11.1	Liability	41
11.2	Exculpation	41
11.3	Fiduciary Duty	42
11.4	Company Indemnification	42
11.5	Expenses	42
11.6	Indemnification	43
11.7	Severability	44
11.8	Insurance	44
11.9	Outside Businesses	44
ARTICLE 12. RIGHT OF FIRST REFUSAL / OFFER		45
12.1	Third Party Offers; Right of First Refusal	45
12.2	Procedure for Closing Upon a Rejection of the Right of First Refusal	45
12.3	Procedure for Closing upon an Acceptance of the Right of First Refusal	46
12.4	Right of First Offer	46

ii

TABLE OF CONTENTS

(continued)

		Page
ARTICLE 13. BUY SELL		48
13.1	Company Buy-Sell Option	48
13.2	Property Buy-Sell Option	52
ARTICLE 14. GENERAL PROVISIONS		54
14.1	Notices	54
14.2	Further Assurances	54
14.3	Binding Effect	54
14.4	Counterparts	54
14.5	Governing Law	54
14.6	Gender and Number; References	54
14.7	Facsimile Signature	55
14.8	Severability	55
14.9	Integration	55
14.10	Captions	55
14.11	Indulgences, Etc	55

Exhibits

Exhibit A	-	Form of Management Agreement
Exhibit B	-	Notice Addresses
Exhibit C	-	Initial Closing Properties
Exhibit D	-	Subsequent Closing Properties
Exhibit E	-	Stated Capital Contribution Amount
Exhibit F	-	Form of Construction Management Agreement

iii

LIMITED LIABILITY COMPANY AGREEMENT

OF

DUKE/HULFISH, LLC

THIS LIMITED LIABILITY COMPANY AGREEMENT of DUKE/HULFISH, LLC (the “Company”), made as of the 12 day of June, 2008, by and between CBRE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “CBRE Member”), and DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership (the “Duke Member”).

WITNESSETH:

WHEREAS, the Company was formed pursuant to the filing of its Certificate of Formation (and as the same may be amended and/or restated from time to time, the “Certificate”) with the Secretary of State of the State of Delaware on April 29,2008;

WHEREAS, pursuant to that certain Contribution Agreement, dated as of the date hereof, among the Duke Member, the CBRE Member and the Company (the “Initial Contribution Agreement”), the Company (either directly or indirectly through one or more Subsidiaries), concurrently with the execution and delivery of this Agreement, shall acquire ownership of (a) certain properties improved with industrial buildings (each, together with any additional properties from time to time acquired by the Company or a Subsidiary, a “Property” and collectively, the “Properties”) or (b) all of the equity interests of one or more newly-formed, bankruptcy-remote Pass Through Entities owning such Properties;

WHEREAS, simultaneously herewith, the CBRE Member and the Duke Member have entered into that certain Qualified Future Asset Investment Agreement, dated as of even date herewith (the “Qualified Future Asset Investment Agreement”) regarding the Duke Member’s contribution or sale of additional Properties to the Company or its Subsidiaries; and

WHEREAS, the Company (either directly or indirectly through one or more Subsidiaries) may enter into additional Contribution Agreements to acquire Properties or all of the equity interests of one or more newly-formed, bankruptcy-remote Pass Through Entities owning such Properties (such additional Contribution Agreements, together with the Initial Contribution Agreement, shall each be referred to as a “Contribution Agreement” and collectively, the “Contribution Agreements”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto do hereby mutually covenant and agree as follows:

1

ARTICLE 1.

DEFINITIONS

The defined terms used in this Agreement shall have the meanings specified below:

“1933 Act” is defined in Section 2.5.

“Accountant(s)” means KPMG LLP or such other firm of independent certified public accountants as may be engaged from time to time by the Company with the approval by the Executive Committee.

“Act” means the Delaware Limited Liability Company Act (6 Del.C. §18-101 et seq.), as it may be amended from time to time.

“Additional Capital Contributions” has the meaning set forth in Section 4.4.

“Adjusted Capital Account Deficit” means, as of any particular date, the deficit balance, if any, in such Member’s Capital Account as of such date after adjusting such Capital Account as follows:

(a) such Capital Account shall be increased to reflect the amounts, if any, which such Member is obligated to restore to the Company or is treated or deemed to be obligated to restore pursuant to Regulations Sections 1.704-1(b)(2)(ii)(b)(3), 1.704-l(b)(2)(ii)(c), 1.704-2(g)(l)(ii) and 1.704-2(i)(5);

(b) such Capital Account shall be reduced to reflect any items described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6);

“Administration Fee” has the meaning set forth in Section 3.4(a).

“Affiliate” means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Person specified. For purposes of this Agreement, the Company, the Duke Member, and the CBRE Member shall not be deemed to be “Affiliates” of one another, and their respective Affiliates shall not be deemed to be “Affiliates” of the other parties to this Agreement or their respective Affiliates.

“Affiliate Agreement” means any agreement between the Company (or any Subsidiary) and any Member or an Affiliate of such Member, other than this Agreement, the Management Agreements, the Initial Contribution Agreement, the Construction Management Agreements, and the Qualified Future Asset Investment Agreement.

“Agreed Value” means, with respect to any Property (or portion thereof), (a) the actual purchase price of any Property (or portion thereof) purchased by the Company or its Subsidiaries or (b) the value of any Property (or portion thereof) sold or contributed to the Company or a Subsidiary (either directly or indirectly through the contribution or sale of all of the equity interests of a newly-formed, bankruptcy-remote Pass Through Entity owning such Property) by the Duke Member as of the date of such contribution as set forth in the applicable Contribution Agreement or determined pursuant to the provisions of such Contribution Agreement.

2

“Agreement” means this Limited Liability Agreement of Duke/Hulfish, LLC, as amended from time to time.

“Annual Budget” has the meaning set forth in Section 3.8.

“Available Cash” means the (i) the aggregate cash receipts of the Company and its Subsidiaries of all kinds (other than in respect of Capital Transactions) including proceeds of any business interruption insurance, rent loss insurance and amounts funded from Company reserves less (ii) the sum of (A) the aggregate cash disbursements for expenses of the Company and its Subsidiaries (including management fees and debt service, but excluding transaction costs incurred by the Company or its Subsidiaries in connection with any Capital Transactions), (B) the aggregate deposits into reserves (other than in respect of Capital Transactions) as set forth in an approved Annual Budget, and (C) capital expenditures not funded from capital contributions or any financing proceeds (consistent with the Annual Budget, the Capital Budget, or as otherwise required by the lender with respect to such financing).

“Building Expansion” means the expansion of a building comprising a Property as required by a Lease of said Property.

“Business Day” means any day other than (a) a Saturday and Sunday and (b) any other day on which commercial banks in New York City are authorized or required to be closed.

“Capital Account” has the meaning set forth in Section 6.1.

“Capital Budget” has the meaning in Section 3.9.

“Capital Transaction” means, in respect of the Company, any Property, or any Subsidiary, (i) any financing or refinancing thereof or (ii) any sale, disposition, taking or loss thereof (including, without limitation, transactions which generate condemnation awards, payment of title insurance proceeds or casualty loss insurance proceeds other than business interruption or rental loss insurance proceeds).

“CBRE Agreement” means any agreement between the Company or a Subsidiary and the CBRE Member or an Affiliate of the CBRE Member.

“CBRE Member” has the meaning set forth in the preamble, and also means (a) the CBRE Member together with any transferee to whom a portion of the CBRE Member’s Interest has been transferred in connection with Section 9.1 or (b) any permitted successor to the CBRE Member’s entire interest in the Company.

“CBRE Member Party” has the meaning set forth in Section 11.6(b).

“Certificate” has the meaning set forth in the recitals.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,

3

“Company” has the meaning set forth in the preamble.

“Company Buy Offer” has the meaning set forth in Section 13.1(a).

“Company Buy-Sell Closing Date” has the meaning set forth in Section 13.1(d).

“Company Buy-Sell Deposit” has the meaning set forth in Section 13.1(c).

“Company Buy-Sell Notice” has the meaning set forth in Section 13.1(a).

“Company Buy-Sell Offer Period” has the meaning set forth in Section 13.1 (b).

“Company Buy-Sell Procedure” has the meaning set forth in Section 13.1(a).

“Company Buy-Sell Purchase Price” has the meaning set forth in Section 13.1(a).

“Company Minimum Gain” has the same meaning as the term “partnership minimum gain” in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

“Company Offeree” has the meaning set forth in Section 13.1(a).

“Company Offeror” has the meaning set forth in Section 13.1(a).

“Company Sell Offer” has the meaning set forth in Section 13.1(a).

“Construction Management Fee” has the meaning set forth in Section 3.4(b).

“Continuing Party” has the meaning set forth in Section 13.1(e).

“Contributing Member” has the meaning set forth in Section 4.4(a).

“Contribution Agreement” has the meaning set forth in the recitals.

“control”, “controlling” or “controlled by” or other similar variations thereof, shall mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of such Person, whether by contract, ownership of voting securities or otherwise.

“Covered Person” means any Representative, the Managing Member or any Member and any Affiliate of the Managing Member or any Member.

“Deadlock” means that the Representatives are unable, after good faith, diligent efforts to resolve any differences, to reach agreement on a Major Decision.

“Depreciation” means, for each taxable year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for the year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of the year or other period, Depreciation

4

will be an amount which bears the same ratio to the beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for the year or other period bears to the beginning adjusted tax basis, provided that if the federal income tax depreciation, amortization, or other cost recovery deduction for the year or other period is zero, Depreciation will be determined with reference to the beginning Gross Asset Value using any reasonable method selected by the Managing Member.

“Development Fee” has the meaning set forth in Section 3.4(c).

“Due Care” means, except as expressly permitted in this Agreement or in any Affiliate Agreement to the contrary:

(a) to act in good faith, in the best interests of the Company and its Members, for the benefit of the Company, within the scope of one’s authority, with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent real estate professional experienced in such matters would use in the conduct of an enterprise of like character with like aims;

(b) to discharge one’s duties with respect to the Company in the interest of providing benefit to the Company and in accordance with this Agreement; and

(c) to not do any of the following:

(i) deal with the assets of the Company solely for one’s own interest or solely for one’s own account;

(ii) act in any transaction involving the Company on behalf of a party, or represent a party, whose interests are adverse to the interests of the Company; or

(iii) receive any consideration for one’s own account from any party conducting business with the Company in connection with a transaction involving the assets of the Company without the consent of the other Member.

“Duke Agreement” means any agreement between the Company or a Subsidiary and the Duke Member or an Affiliate of the Duke Member.

“Duke Member” has the meaning set forth in the preamble, and also means (a) the Duke Member together with any transferee to whom a portion of the Duke Member’s Interest has been transferred in connection with Section 9.1 or (b) any permitted successor to the Duke Member’s entire interest in the Company.

“Duke Member Party” has the meaning set forth in Section 11.6(a).

“Executive Committee” has the meaning set forth in Section 3.1(a).

“First Tier Return” means: (a) during the period from the date hereof through and including the date that is the fifth (5^th) anniversary of the date hereof, a sum equal to six and

5

twenty-five hundredths percent (6.25%) per annum, determined on the basis of a year of 365 or 366 days as the case may be, for the actual number of days in the period for which the First Tier Return is being determined, cumulative and compounded, on an annual basis, to the extent not distributed in any given Fiscal Year pursuant to Section 5.1(a)(ii) or 5.1(b)(iii) in the case of the CBRE Member or pursuant to Section 5.1(a)(iii) or 5.1(b)(iv) in the case of a Duke Member, of the average daily balance of the Unrecovered Capital of the CBRE Member or the Duke Member, as the case may be, from time to time during the period to which the First Tier Return relates, commencing on the dates the CBRE Member and the Duke Member made the contributions contemplated in Section 4.1; and (b) after the date that is the fifth (5^th) anniversary of the date hereof, a sum with respect to each Member equal to the total amount of First Tier Returns due but unpaid to such Member with respect to the period from the date hereof through and including the date that is the fifth (5^th) anniversary of the date hereof. Notwithstanding anything to the contrary in this Agreement, the First Tier Return due but unpaid during the term of this Agreement shall accrue interest, cumulative and compounded, on an annual basis at a rate of 6.25% per annum.

“Fiscal Year” means the calendar year, except that the initial Fiscal Year shall commence on the date hereof and the final Fiscal Year shall end on the date on which the Company is terminated under Article 8.

“Funding Notice” has the meaning set forth in Section 4.4(a).

“GAAP” has the meaning set forth in Section 7.1.

“Gross Asset Value” has the meaning set forth in Section 6.2.

“Initial Closing” has the meaning as defined in Section 4.1(a).

“Initial Closing Properties” has the meaning as defined in Section 4.1(a).

“Interests” means the limited liability company interests of the Company.

“Internal Rate of Return” means the lowest annual interest rate, compounded quarterly but expressed as an annual rate, that causes the discounted present value of all distributions made pursuant to Section 5.1 (exclusive of distributions pursuant to Sections 5.1(a)(i) and 5.1(b)(i)) to the CBRE Member to equal the capital contributions of such Member made pursuant to Article 4 (excluding capital contributions described in Section 4.4(e)). For purposes of this computation, all contributions and distributions shall be deemed to have been made on the actual dates on which such contributions and distributions were made.

“Lease” means, with respect to any Property, the lease of such Property by a tenant.

“Leasing Plan” has the meaning set forth in the definition of Major Decisions below.

“Loans” means, with respect to any Property, any financings obtained by the Company or any Subsidiary with respect to such Property.

“Major Decisions” shall mean each of the following decisions affecting the Company or any Subsidiary thereof:

(a) disposing, transferring, selling, acquiring (other than acquisitions by (or contributions to) the Company or a Subsidiary pursuant to the Qualified Future Asset Investment Agreement) or substituting any Property or entering into any master lease or ground lease with respect to any Property;

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(b) dissolving, terminating and winding up the Company or any Subsidiary;

(c) the issuance of any Interests or other equity interests in the Company to any Person, other than the interests issued to the Duke Member and the CBRE Member on the date hereof, it being understood that any Funding Notice delivered and any capital contribution made or to be made pursuant to Section 4.4 does not constitute, and shall not be deemed to result in, the issuance of any additional Interests hereunder;

(d) merging or consolidating the Company or any of its Subsidiaries with any other entity, converting or reorganizing the Company or any Subsidiary into any other form of entity, or entering into any agreement or transaction that would result in a change of control of the Company or a sale of all or substantially all of the Company’s assets;

(e) any expenditures in excess of $50,000, individually or in the aggregate, in any Fiscal Year, to the extent such expenditure (A) is not reimbursable by a tenant under a Lease, (B) does not constitute a Shortfall Item, (C) is not a Permitted Excess Line Item Expenditure, (D) is not included in an Annual Budget or a Capital Budget, or (E) is not required under a Lease;

(f) issuing: (A) Interests or other equity interests of the Company or any Subsidiary, or (B) bonds, debentures, notes or other evidences of indebtedness (other than in the ordinary course of business) by the Company or any Subsidiary, which may be secured or unsecured and may be subordinated to any indebtedness of the Company or any Subsidiary; in each case for cash, property or other consideration (including securities issued or created by, or interests in, any Person), and including any amendment or modification of any agreement relating thereto;

(g) (A) borrowing money and giving negotiable or nonnegotiable instruments therefor (including any determination pursuant to Section 4.3(a) to borrow money and any Loan), (B) guarantying, indemnifying or acting as surety with respect to payment or performance of obligations of third parties, (C) the incurrence of any other direct or indirect financial obligations by the Company or any Subsidiary, including for reimbursement on letters of credit or other financial obligations, not otherwise in the ordinary course of the Company’s business, and (D) assigning, conveying, transferring, mortgaging, subordinating, pledging, granting security interests in, encumbering or hypothecating any Property (or portion thereof) to secure any indebtedness of the Company or any Subsidiary or any of the other foregoing obligations of the Company or any Subsidiary, including any amendment or modification of any agreement relating thereto;

(h) discontinuing the operations of the Company or any Subsidiary;

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(i) repurchasing or redeeming any Interests or other securities issued by the Company or any Subsidiary;

(j) approving an Annual Budget and any Capital Budget or making any amendment or modification thereto;

(k) if there is any vacancy, or anticipated vacancy for any Properties, approving an annual leasing plan (which may be part of the Annual Budget) (each, a “Leasing Plan”) for the Properties in respect of the upcoming Fiscal Year, which Leasing Plan shall contain (A) a list of space becoming available for the ensuing calendar year, (B) recommendations for base and other rental amounts, tenant improvement allowances or amounts and other concessions for space within the Properties based on then current market rates and conditions for similar properties in the same geographic area, (C) a recommended form of lease agreement or modifications thereto (if applicable), and (D) such other information, reports, guidelines and parameters as the Executive Committee might reasonably request;

(l) approving any leases, modifications or renewals that do not conform to the then applicable Leasing Plan;

(m) taking of any of the following actions on behalf of the Company or any Subsidiary: (A) the voluntary commitment of any act of bankruptcy (or any similar act of insolvency) or the filing of a voluntary petition in bankruptcy; (B) the filing of a voluntary petition or answer seeking reorganization or arrangement with creditors or seeking to take advantage of any insolvency laws; the application for or consent in writing to the appointment of a receiver for the Company or its assets; (C) making a general assignment for the benefit of creditors; or (D) filing an answer consenting to a petition filed against the Company or any Subsidiary in any bankruptcy, reorganization or insolvency proceeding;

(n) approving the advancement of expenses to an Indemnitee under Section 11.5;

(o) selection of counsel for the Company or any Subsidiary; initiating legal proceedings outside of the ordinary course, settlement of litigation with an uninsured cost of $50,000.00 or more;

(p) decisions on significant tax matters and tax elections;

(q) reinvestment of insurance or condemnation proceeds over $250,000.00;

(r) approving any development plans pertaining to a Building Expansion and any modifications thereto (except for any development plans already approved by the landlord under any Lease of a Property);

(s) distributing any cash or property to the Members other than pursuant to Article 5;

(t) confession of judgment;

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(u) entering into new service contracts having an annual payment of more than $50,000, unless included in an Annual Budget or Capital Budget;

(v) entering into any Affiliate Agreement and any amendments or modifications to any Management Agreement, Construction Management Agreements, or any Affiliate Agreement (other than immaterial modifications that do not have any modification of any payment terms), subject to Section 3.1(b)(vii);

(w) the engagement of the Accountant (including any replacement thereof), provided that the initial engagement of KPMG LLP shall be deemed to have been unanimously approved by the Executive Committee as a result of the execution of this Agreement; and

(x) amending this Agreement.

“Management Agreement” means one or more management agreements between the Company or a Subsidiary and the Property Manager, to be entered into concurrently with the execution and delivery of this Agreement and upon any Subsequent Closing, setting forth the applicable Property Manager’s duties in respect of each applicable Property, in the form attached hereto as Exhibit A.

“Managing Member” means, (a) initially, the Duke Member, and (b) upon the delivery by the Executive Committee of the notice described in Section 3.7(b) removing the then Managing Member, the other Member.

“Marketable Property” has the meaning set forth in Section 12.1.

“Marketing Notice” has the meaning set forth in Section 12.4(a).

“Marketing Price” has the meaning set forth in Section 12.4(a).

“Member” means the CBRE Member or the Duke Member, or both, as the context requires.

“Member Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” in Regulations Section 1.704-2(b)(4).

“Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a nonrecourse liability, determined in accordance with Regulations Section 1.704-2(i)(3)

“Member Nonrecourse Deductions” has the same meaning as the term “partner nonrecourse deductions” in Regulations Sections 1.704-2(i)(l) and 1.704-2(i)(2).

“Net Capital Transaction Proceeds” means (a) the net proceeds from any Capital Transaction (including, but not limited to, the proceeds from any eminent domain proceeding or conveyance in lieu thereof or from title insurance or casualty insurance), less (b)(i) payment of all costs and other expenses of the Company or any Subsidiary related thereto (including, but not

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limited to, the satisfaction of any debt secured by the applicable Property) and (ii) the establishment of reasonable reserves by the Managing Member or the Executive Committee pertaining to the Capital Transaction.

“Non-Contributing Member” has the meaning set forth in Section 4.4(a).

“Non-Managing Member” means, as of any moment in time, the Member that is not the Managing Member.

“Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(l).

“Offer” has the meaning set forth in Section 12.1.

“Partial Transferee” has the meaning set forth in Section 9.1(b).

“Pass Through Entity” means any Person that is taxed as a partnership or is a disregarded entity for U.S. federal income tax purposes.

“Percentage Membership Interest” means: (a) 80%, in the case of the CBRE Member; and (b) 20%, in the case of the Duke Member.

“Permitted Excess Line Item Expenditures” is defined in Section 3.8.

“Person” means any individual, general partnership, limited partnership, corporation, joint venture, estate, trust, (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, limited liability company, business trust, cooperative, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company, or other entity.

“Priority Loan” has the meaning set forth in Section 4.4(a).

“Priority Rate” has the meaning set forth in Section 4.4(a).

“Profit” and “Loss” mean, for each taxable year or other period, an amount equal to the Company’s taxable income or loss for the year or other period, determined in accordance with Section 703(a) of the Code (including all items of income, gain, loss or deduction required to be stated separately under Section 703(a)(l) of the Code), with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses will be added to taxable income or loss;

(b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Section 705(a)(2)(B) expenditures under Regulations Section 1.704-l(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses, will be subtracted from taxable income or loss;

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(c) Gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes will be computed by reference to the Gross Asset Value of the property, notwithstanding that the adjusted tax basis of the property differs from its Gross Asset Value;

(d) In lieu of depreciation, amortization and other cost recovery deductions taken into account in computing taxable income or loss, there will be taken into account Depreciation for the taxable year or other period;

(e) Any items which are specially allocated under Section 6.3(b) or Section 6.3(c) will not affect calculations of Profits or Losses; and

if the Gross Asset Value of any Company asset is adjusted under Section 6.2(b) or Section 6.2(c) the adjustment will be taken into account as gain or loss from disposition of the asset for purposes of computing Profits or Losses.

“Promote Distribution” has the meaning set forth in Section 5.1.

“Property” and “Properties” have the meanings set forth in the recitals.

“Property Buy Offer” has the meaning set forth in Section 13.2(a).

“Property Buy-Sell Deposit” has the meaning set forth in Section 13.2(c).

“Property Buy-Sell Notice” has the meaning set forth in Section 13.2(a).

“Property Buy-Sell Offer Period” has the meaning set forth in Section 13.2(b).

“Property Buy-Sell Procedure” has the meaning set forth in Section 13.2(a).

“Property Buy-Sell Purchase Price” has the meaning set forth in Section 13.2(a).

“Property Manager” means, with respect to any Property, Duke Realty Services, LLC (an Indiana limited liability company and an Affiliate of the Duke Member) or any other Person then engaged by the Company or a Subsidiary to manage such Property.

“Property Management Fee” has the meaning set forth in Section 3.4(d).

“Property Offeror” has the meaning set forth in Section 13.2(a).

“Property Offeree” has the meaning set forth in Section 13.2(a).

“Property Sell Offer” has the meaning set forth in Section 13.2(a).

“Qualified Future Asset Investment Agreement” has the meaning set forth in the preamble.

“Recourse Payment” has the meaning set forth in Section 4.3(b).

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“Regulations” means the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Regulations shall include any corresponding provisions of succeeding, similar, substitute, temporary, proposed or final Regulations.

“REIT” means a real estate investment trust as defined in Section 856 of the Code.

“Representative” has the meaning set forth in Section 3.1(a).

“ROFO Deposit” has the meaning set forth in Section 12.4(d).

“ROFO Initiating Member” has the meaning set forth in Section 12.4(a).

“ROFO Non-Initiating Member” has the meaning set forth in Section 12.4(a.

“ROFO Notice” has the meaning set forth in Section 12.4(b).

“ROFO Purchase Price” has the meaning set forth in Section 12.4(b).

“ROFR Deposit” has the meaning set forth in Section 12.3.

“ROFR Initiating Member” has the meaning set forth in Section 12.1.

“ROFR Non-Initiating Member” has the meaning set forth in Section 12.1.

“ROFR Notice” has the meaning set forth in Section 12.1.

“ROFR Response Period” has the meaning set forth in Section 12.2.

“Second Company Buy-Sell Meeting” has the meaning set forth in Section 13.1(a).

“Second Property Buy-Sell Meeting” has the meaning set forth in Section 13.2(a).

“Shortfall” means the insufficiency, as determined by either Member or the Executive Committee, of the Company’s funds for Shortfall Items.

“Shortfall Items” means any (a) payment of debt service on existing liabilities of the Company or a Subsidiary (including, without limitation, on any indebtedness secured by a mortgage or other lien or security title instrument encumbering a Property), (b) payments of other contractual obligations of the Company or a Subsidiary which have been duly approved by the Executive Committee, (c) payments needed to preserve the Company’s or a Subsidiary’s properties and assets, (d) payments required to prevent the Company or any Subsidiary from defaulting under any Lease or other contract to which the Company or a Subsidiary is a party and which has been approved by the Executive Committee (including any such Lease or contract provided for in an Annual Budget), (e) payment of the Company’s or its Subsidiaries’ obligations for taxes, utility services, adjudicated and uninsured tort liability, judgments against the Company or a Subsidiary and amounts owing which are needed to keep in place all of the Company’s insurance policies, as such become due and payable, (f) payments arising from an

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emergency situation or any unanticipated event or circumstance that causes an imminent danger of material financial or other loss to the Company, taken as a whole, (g) payments required to complete construction of a capital improvements project approved by the Executive Committee, (h) payments required to complete a Building Expansion, or (i) payments needed to comply with applicable laws.

“State Acts” is defined in Section 2.5.

“Stated Contribution Amount”, with respect to each Member, has the meaning set forth in Section 4.2.

“Stated Value” means, (a) for any contributed Property, the Agreed Value of such Property and all related closing costs of the Company or a Subsidiary for such Property, (b) and for any purchased Property, the purchase price and all related closing costs of the Company or a Subsidiary for such Property. With respect to a Building Expansion or any other capital improvements made to a Building (other than normal capital improvements necessary for the maintenance and repair of the Property), the Stated Value of the applicable Property shall be increased by the Agreed Value of any land acquired (if applicable) plus all costs (soft and hard) incurred by the Company or a Subsidiary in connection with such Building Expansion or such other capital improvements.

“Subsidiary” means any Person of which more than fifty percent (50%) of the outstanding voting securities are owned, at the time of determination, directly, or indirectly through one or more intermediaries, by the Company; provided, that all Subsidiaries of the Company shall be Pass Through Entities.

“Subsequent Closing” has the meaning set forth in Section 4.1(b).

“Subsequent Closing Properties” has the meaning set forth in Section 4.1(b).

“Third-party Loan” has the meaning set forth in Section 4.3(a).

“Third-party Loan Notice” has the meaning set forth in Section 4.3(a).

“Transfer” means any issuance, sale, transfer, gift, assignment, devise or other disposition of any Interest. The terms “Transfers” and “Transferred” shall have correlative meanings.

“Unrecovered Capital” means, with respect to any Member, such Member’s Stated Contribution Amount less the cumulative distributions to such Member pursuant to Sections 5.1(a)(iv) and 5.1(b)(ii).

“Withdrawing Party” has the meaning set forth in Section 13.1(e).

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ARTICLE 2.

FORMATION OF THE COMPANY

2.1 Formation. The CBRE Member and the Duke Member agree to the formation of the Company pursuant to the Act and agree that the rights, duties and liabilities of the Members shall be as provided in the Act, except as otherwise provided herein. The Company was formed upon the filing of the Certificate with the Secretary of State of Delaware and shall continue until the occurrence of an event described in Section 8.1. Subject to the terms of this Agreement, the Managing Member shall take all actions which may be reasonably necessary or appropriate for the formation and continuation of the Company as a limited liability company under the laws of the State of Delaware.

2.2 Registered Office and Agent, Principal Office. The principal office of the Company is 600 East 96^th Street, Suite 100, Indianapolis, IN 46240, or such other place as the Duke Member may from time to time designate, with the approval of the CBRE Member if such address is other than the principal office of the Duke Member. The registered office of the Company in the State of Delaware is located at, and the registered agent for service of process on the Company in the State of Delaware is, Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The Company may maintain offices at such other place or places within or outside the State of Delaware as the Executive Committee deems advisable; provided that no approval of the Executive Committee shall be required for the maintenance of the Company’s principal office as provided above.

2.3 Purposes. The purposes of the Company are to (a) own, hold and manage the Properties and, from time to time, lease, improve, finance, refinance, mortgage, transfer, sell and/or convey the same and (b) engage in such other activities as are reasonably incidental to the purpose and business of the Company, in each case either directly or indirectly, through one or more of its Subsidiaries.

2.4 Powers. In furtherance of its purposes, but otherwise subject to the other provisions of this Agreement, the Company (together with its Subsidiaries) shall have the power and is authorized:

(a) to acquire and exercise all rights, privileges and other incidents of ownership or possession (including the right to dispose of the same) with respect to the Properties (or the equity interests of any Subsidiaries owning such Properties) or interests therein, with the power to designate one or more Persons to exercise any of said rights, powers and privileges;

(b) to open, maintain and close bank accounts and draw checks and other orders for the payment of money;

(c) to engage attorneys, accountants, consultants or such other Persons as may be necessary or advisable to counsel and advise as to the conduct of the business and affairs of the Company and its Subsidiaries and to pay reasonable compensation for such services;

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(d) to establish, have, maintain or close one or more offices, and in connection therewith, to rent or acquire office space, engage personnel and do such other acts as may be advisable or necessary in connection with such offices and personnel;

(e) to acquire by purchase, exchange, lease or otherwise, and to sell, convey or otherwise dispose of any real or personal property, any Subsidiary, or any interest therein which may be necessary, convenient or incidental to the accomplishment of the purposes of the Company;

(f) to borrow money, on a secured or unsecured basis, or otherwise obtain or guaranty credit, in furtherance of the purposes of the Company, to refinance any Company indebtedness, issue evidences of indebtedness to evidence such borrowings, and secure the same by mortgage, pledge or other lien on any property of the Company or any Subsidiary;

(g) to prepay, in whole or in part, and refinance, recast, increase, modify or extend any indebtedness;

(h) to pay closing costs and other expenses of the Company or the Subsidiaries incurred in the acquisition of the Properties or one or more Pass Through Entities owning such Properties;

(i) to enter into, perform and carry out contracts incident to the foregoing which may be lawfully carried out or performed by a limited liability company under the laws of the State of Delaware;

(j) to invest and reinvest cash of the Company or any Subsidiary in money-market or other short-term investments;

(k) to form or cause to be formed and to own equity interests in one or more Subsidiaries, and to form or cause to be formed and to participate in and own equity interests in Pass Through Entities;

(1) (i) to sue, prosecute, settle or compromise all claims against third parties; (ii) to compromise, settle or accept judgment of claims against the Company or any Subsidiary; and (iii) to execute all documents and make all representations, admissions and waivers in connection with the foregoing;

(m) to distribute, subject to the terms of this Agreement, at any time and from time to time, to Members, cash or investments or other property of the Company or any Subsidiary; and

(n) to engage in any and all other acts which now or hereafter may be lawfully done and which are incidental or appurtenant to or arising from or connected with any of the objectives, purposes or powers of the Company.

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2.5 Warranties, Representations and Covenants – of all Members. Each Member represents and warrants as to each of the following:

(a) that it understands that the Company will not register the issuance of the Interests under the federal Securities Act of 1933, as amended (the “1933 Act”), or any state securities laws (the “State Acts”), in reliance upon exemptions from registration contained in the 1933 Act and the State Acts, and that the Company relies upon these exemptions, in part, because of the Member’s representations, warranties, and agreements contained in this Agreement;

(b) that such Member is acquiring its Interests for its own purpose, with the intention of holding the Interests for investment and with no present intention of dividing or allowing others to participate in this investment or of reselling or otherwise participating, directly or indirectly, in a distribution of the Interests; and it will not make any sale, transfer, or other disposition of the Interests without registration under the 1933 Act and the State Acts unless an exemption from registration is available under the 1933 Act and the State Acts;

(c) that such Member is familiar with the business in which the Company is or will be engaged, and based upon its knowledge and experience in financial and business matters, it is familiar with the investments of the type that it is undertaking to purchase; such Member is fully aware of the problems and risks involved in making an investment of this type and it is capable of evaluating the merits and risks of this investment; such Member acknowledges that, prior to executing this Agreement, it has had the opportunity to ask questions of and receive answers or obtain additional information from a representative of the Company concerning the financial and other affairs of the Company, and, to the extent it believes necessary in light of its knowledge of the Company’s affairs, it has asked these questions and received satisfactory answers;

(d) that the investment that such Member is undertaking corresponds with the nature and size of its present investments and net worth, and it can financially bear the economic risk of this investment, including the ability to afford holding the Interests for an indefinite period or to afford a complete loss of this investment; and

(e) that such Member has taken and shall continue to take all steps and implemented all policies which are necessary to ensure that it is in compliance with all governmental requirements applicable to it and its business, including, without limitation, those governmental requirements relating to the prevention of money laundering and anti-terrorism, including as they relate to the source of funds to such Member, any direct or indirect interest holders in such Member or the Company and to the operations of such Member, any direct or indirect interest holders in such Member or the Company.

2.6 Issuances. As of the date hereof, the Percentage Membership Interest of the CBRE Member is 80%, and the Percentage Membership Interest of the Duke Member is 20%. Other than as set forth in the immediately preceding sentence, the Company has issued no other Interests, and the Company has no other Members. The Company shall not issue any additional Interests or make any adjustments to the Percentage Membership Interests without the unanimous written consent of the Executive Committee.

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ARTICLE 3.

MANAGEMENT

3.1 Executive Committee.

(a) Establishment of Executive Committee. The Company shall have an executive committee (the “Executive Committee”) which shall consist of five (5) individuals (each, a “Representative”), of whom three (3) shall be appointed by the CBRE Member and two (2) by the Duke Member. The CBRE Member and the Duke Member shall have the right to remove and designate replacements of their respective Representatives by written notice to the Company, without the consent of the other Member, effective upon the later of: (i) the date set forth in such notice; and (ii) the Company’s receipt of such notice. The Representatives shall appoint, by majority vote of the then current Representatives, one of the Representatives to preside at meetings of the Executive Committee, and such Representative shall preside over all meetings of the Executive Committee.

(b) Authority of Executive Committee.

(i) The Members hereby establish the Executive Committee, and vest the Executive Committee with the authority to act on behalf of the Company and to make all Major Decisions as set forth in this Agreement. Except with respect to Major Decisions, any action by the Executive Committee shall be authorized if approved by a majority of the Representatives then holding office.

(ii) Any Major Decision shall require the unanimous approval of the entire Executive Committee for authorization or approval.

(iii) Meetings of the Executive Committee shall be held, not less frequently than quarterly, at the principal office of the Company, unless some other place is designated in the notice for such meeting. Any Representative may participate in a meeting through the use of a conference telephone, video conference or similar communication equipment, so long as all Representatives participating in such meeting can hear one another. Accurate minutes of any meeting of the Executive Committee shall be maintained by a representative of the Managing Member, who shall attend each meeting of the Executive Committee but shall not have any voting rights, unless such representative shall also be a Representative of either the CBRE Member or the Duke Member.

(iv) Special meetings of the Executive Committee for any purpose may be called at any time by any Representative, or may be requested by the Managing Member. Unless waived by the Executive Committee, at least six (6) Business Days’ prior written notice of the time and place of any meeting of the Executive Committee shall be delivered personally to each of the Representatives. In the case of a special meeting, such notice shall be delivered by the Representative or the Managing Member calling such meeting, and in the case of a regularly scheduled meeting, such notice shall be delivered by the Company.

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Notice may be delivered by facsimile, e-mail or by a nationally recognized overnight courier service. Notice shall be transmitted to the last known facsimile number, e-mail address or mailing address of the Representative as shown on the records of the Company, and when so delivered, shall be considered due, legal and personal notice to such Representative. With respect to a meeting which has not been duly called or noticed pursuant to the foregoing provisions, all transactions carried out at such meeting shall be valid as if taken at a meeting duly called and noticed if either (A) all Representatives are present at the meeting (either in person or by telephone or video conference), and sign a written consent to the holding of such meeting; or (B) if a Representative attends a meeting (either in person or by telephone or video conference) without notice and does not protest prior to the meeting or at its commencement that notice was not given to him or her.

(v) Any action required or permitted to be taken by the Representatives may be taken without a meeting and will have the same force and effect as if taken by a vote of Representatives at a meeting properly called and noticed, if authorized by a writing signed individually or collectively by all, but not less than all, the Representatives. Such consent shall be filed with the records of the Company.

(vi) The CBRE Member hereby appoints each of Brian Welcker, Chuck Hessel and Philip Kianka to serve as a Representative of the Company until such time as the CBRE Member shall designate another person to serve as Representative in such person’s stead in accordance with the provisions of this Agreement. The Duke Member hereby appoints each of Robert Chapman and Jason Sturman to serve as a Representative of the Company until such time as the Duke Member shall designate another person to serve as Representative in such person’s stead in accordance with the provisions of this Agreement.

(vii) Notwithstanding any other provision of this Agreement, but without limiting the Managing Member’s obligations under Section 3.2(1), any action or decision of the Company under or with respect to:

(A) declaring a default under, or pursuing any remedies with respect to, a Duke Agreement (or CBRE Agreement, if the CBRE Member is the Managing Member) (including any Management Agreement which is a Duke Agreement or a CBRE Agreement, as applicable); or

(B) any Contribution Agreement (including the authorization thereof) or the Qualified Future Asset Investment Agreement,

shall, in the case of clause (A) be taken or made by the Non-Managing Member’s unilateral action (acting through its Representatives) without the consent or approval of the Managing Member or its appointed Representatives, and in the case of clause (B) be taken or made by the CBRE Member’s unilateral action (acting through the Representatives appointed by the CBRE Member) without the consent or approval of the Duke Member or its appointed Representatives; provided, however, if the Managing Member or the Managing Member’s Affiliate is a Property Manager, then the Non-Managing Member (acting through the Representatives appointed by such Non-Managing Member) may not terminate

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any Management Agreement that is a Duke Agreement (if the Duke Member is the Managing Member) or a CBRE Agreement (if the CBRE Member is the Managing Member) without cause without the prior consent of the Managing Member. Notwithstanding any other provision of this Agreement, but without limiting the Managing Member’s obligations under Section 3.2(1), any action or decision of the Company with respect to the removal of the Managing Member pursuant to Section 3.7, shall in each case be taken or made by the other Member’s unilateral action (acting through the Representatives appointed by such other Member) without the consent or approval of the Managing Member or its appointed Representatives.

3.2 Managing Member. The Managing Member (in its capacity as manager as opposed to its capacity as a Member) shall have the duty and responsibility to direct and manage the affairs of the Company and to make all decisions with regard thereto, except where (i) the Executive Committee’s or a Member’s approval is required under this Agreement or (ii) the approval of any of the Members is expressly required by a non-waivable provision of applicable law. The Managing Member agrees to carry out its obligations as a manager with respect to the management of the Company using Due Care. The standard of Due Care shall apply to all duties, obligations, liabilities, powers and authority of the Managing Member as manager. The express reference in any provision of this Agreement to the standard of Due Care shall not be construed to mean that Due Care does not apply to any and all other duties, obligations, liabilities, powers and authority of the Managing Member as manager. The Managing Member shall devote such time and effort to the Company as the Company deems reasonably necessary for the conduct of the Company’s business, including, without limitation, the following, all of which shall be at the Company’s expense:

(a) in accordance with any approved Annual Budget and Capital Budget or where such expenditure is expressly permitted hereunder and would not constitute a Major Decision, to pay any and all necessary or appropriate expenses associated with the operation of the Company and its Subsidiaries;

(b) to operate the Subsidiaries and the Properties with a profit motive;

(c) to perform and discharge all of the Company’s or any Subsidiary’s duties and obligations with respect to the closing, consummation of and performance under any Company financing (including any Loans or Third-party Loans), including, without limitation, the formation and organization or the contribution of equity interests of any Subsidiaries, the contribution of Properties to such Subsidiaries, and the execution and delivery of any and all documents and instruments in connection therewith;

(d) subject to the terms and conditions of this Agreement, to engage in any kind of activity and perform, carry out and ensure compliance with contracts or other obligations of any kind (including without limitation any contracts with respect to any Loans or any documents securing any such Loans) necessary or incidental to or in connection with the accomplishment of the purposes of the Company as may be lawfully carried out or performed by a partnership under the laws of each state in which the Company is then formed or registered or qualified to do business so long as and to the

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extent such activities are contemplated in the then approved Annual Budget or Capital Budget, provided that the Managing Member shall not be obligated to take any action with respect to a Duke Agreement that is reserved for the unilateral action of the CBRE Member pursuant to Section 3.1(b)(vii), except at the request of the CBRE Member;

(e) prepare or cause to be prepared for execution by the Company or any Subsidiary all forms, reports and returns, if any, required to be filed by the Company or any Subsidiary under applicable federal, state or local laws and otherwise required to be prepared by the Managing Member by the terms of this Agreement;

(f) apply for, obtain, and maintain, in the name of the Company or any Subsidiary, all licenses and permits (including deposits and bonds) required of the Company or such Subsidiary in connection with the operation of the Properties, and otherwise cause the Property Manager to ensure that ownership and operation of the Properties is conducted in compliance with all applicable federal, state and local laws, regulations and rules (provided’that any actions or decisions with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, shall require the approval of the Executive Committee);

(g) acquire and enter into any contract of insurance, as directed by the Executive Committee, or which the Managing Member reasonably deems necessary or appropriate for the protection of the Company and its Subsidiaries, for the conservation of its assets or for any purpose convenient or beneficial to the Company and its Subsidiaries;

(h) subject to the terms and conditions of this Agreement, including without limitation Section 3.1 and Section 3.7, to employ such agents as the Managing Member may from time to time reasonably determine to be necessary in connection with the conduct of the Company’s business;

(i) notwithstanding anything to the contrary contained in this Agreement but only in accordance with any approved Leasing Plan, to execute, on behalf of the Company or any Subsidiary, Leases for a Property or renewals or extensions thereof or options with respect thereto;

(j) subject to the terms and conditions of this Agreement, to execute any and all agreements, contracts, documents, certifications and instruments necessary or convenient in connection with the operation of the Company and is Subsidiaries;

(k) to monitor the operations of the Company, the Subsidiaries and the Properties and to report thereon to the Executive Committee on a regular basis and as required by the terms of this Agreement; and

(1) to oversee the activities of the Property Manager or any other Person (including third-party service providers or independent contractors) to whom the Managing Member may have delegated any of its responsibilities under and in accordance with this Agreement and to ensure the performance by any such Person of its

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obligations to the Company and any Subsidiary (including without limitation the obligations of the Property Manager under the Management Agreement), provided that the Managing Member shall not be obligated to take any action with respect to a Duke Agreement that is reserved for the unilateral action of the CBRE Member pursuant to Section 3.1 (b)(vii), except at the request of the CBRE Member.

With respect of matters delegated to the Managing Member pursuant to this Section 3.2, any Person dealing with the Managing Member with respect to the conduct of the affairs of the Company shall not be obligated to ascertain that the terms of this Agreement have been complied with, or be obligated to inquire into the necessity or expediency, of any action of the Managing Member.

3.3 Delegation of Duties. Subject to its obligations under Section 3.2(1), the Managing Member may delegate certain of its responsibilities with respect to the administration of the Properties to any Person as may be approved by the Executive Committee.

3.4 Fees. As compensation for providing services to the Company, the Managing Member or its designated Affiliate shall be entitled to receive the following fees (and only the following fees):

(a) The Managing Member (or its designated Affiliate) shall be entitled to receive an administrative fee (the “Administration Fee”) for its administration of the Company, which fee shall be equal to fifteen basis points (0.15%) per annum of the Stated Value of the Properties then owned by the Company or its Subsidiaries. The Administration Fee shall be payable quarterly in arrears and shall be prorated, with respect to any Property that is not owned for an entire quarter by the Company, in accordance with the number of actual days such Property was owned by the Company or its Subsidiaries. To the extent that the Administration Fee is not paid in any quarter because the Company has insufficient funds to pay the operating expenses (including debt service) of the Company, such Administration Fee shall accumulate with interest, compounded quarterly, on the unpaid Administration Fee, at a rate of six and twenty-five hundredths percent (6.25%) per annum.

(b) The Managing Member (or its designated Affiliate) shall be responsible for managing and coordinating repairs and reconstruction of the Properties and the construction of tenant improvements pursuant to any Lease, including, but not limited to, any Building Expansion. The Managing Member (or its designated Affiliate) shall be paid a construction management fee (the “Construction Management Fee”) for such construction management services, which fee shall be equal to ten percent (10.0%) of the hard costs associated with the construction work. For major construction projects, the Company or a Subsidiary shall enter into a construction management agreement with Managing Member (or its designated Affiliate) in the form attached hereto as Exhibit F. Minor construction projects shall be addressed in the Management Agreement. The amounts and payment schedule for the Construction Management Fee shall be set forth in the applicable construction management agreement or Management Agreement.

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(c) The Managing Member (or its designated Affiliate) shall be responsible for managing and coordinating the development or reconstruction of any building. The Managing Member (or its designated Affiliate) shall be entitled to receive a development management fee (the “Development Fee”) for managing and coordinating the development or reconstruction of any building or Building Expansion, which fee shall be equal to four percent (4.0%) of the total project costs, inclusive of all hard and soft costs, but exclusive of the land value and the Development Fee. The Development Fee shall be payable monthly as the applicable total project costs are paid by the Company.

(d) The Property Manager shall be responsible for property management and leasing of the Properties, pursuant to the Management Agreements. The Property Manager shall be paid a property management fee (the “Property Management Fee”) equal to the greater of (1) two percent (2.0%) of the base rent under each Lease or (2) the amount of Property Management Fees recoverable from a tenant as additional rent under its Lease. The amounts and payment schedule for the Property Management Fee shall be set forth in the applicable Management Agreement. Each Management Agreement that constitutes a Duke Agreement shall be terminable by the Company or its applicable Subsidiary, without payment or penalty, upon the removal of the Duke Member as the Managing Member pursuant to Section 3.7.

(e) The Managing Member shall be entitled to provide routine tax compliance, legal, marketing, energy management, procurement, maintenance and tenant services for the Company and its Subsidiaries with in-house personnel; provided that the costs of such services are included in the Annual Budget or Capital Budget and the costs charged for such services do not exceed the amount which would be charged by an unrelated third-party for such services; and provided further, that the Executive Committee may at any time require the Managing Member to engage an independent third-party service provider for any such services.

3.5 Reimbursable Expenses. If the Managing Member advances money for any of the following operating expenses of the Company or its Subsidiaries (which the Managing Member shall be permitted, but in no way obligated, to do), the Managing Member shall be entitled to reimbursement by the Company therefor, provided that such expenses were reasonable and were reasonably incurred in connection with the Managing Member’s performance of its duties hereunder:

(a) costs of third-party service providers for legal, accounting, tax and similar services rendered for the Company or its Subsidiaries, unless the Managing Member is providing such services directly to the Company or its Subsidiaries and charging the Company or its Subsidiaries for such services;

(b) all other reasonably necessary third-party costs and expenses relating to the Company’s or its Subsidiaries’ operations that the Managing Member is permitted to delegate pursuant to the terms of this Agreement, including without limitation the costs and expenses of acquiring, owning, protecting, maintaining and disposing of the Properties, including appraisal, reporting, audit and legal fees;

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(c) all insurance costs incurred in connection with the operation of the Company and its Subsidiaries;

(d) expenses incurred in connection with making payments of interest or distributions of cash or other property, in each case to the Members, at the direction of the Executive Committee or in accordance with this Agreement;

(e) all third-party expenses relating to bookkeeping and clerical work necessary in complying with the continuous reporting and other requirements of governmental authorities; and

(f) expenses relating to any office or office facilities maintained for the Company or any Subsidiary separate from the office or offices of the Managing Member and detailed in an approved Annual Budget.

3.6 Managing Member Contact. There shall at all times be an executive employee of the Managing Member who shall act as the designated point of contact for the other Member with respect to the Company and its Subsidiaries, which individual will be appointed by the Managing Member and shall initially be Robert Chapman.

3.7 Removal and Replacement of Managing Member.

(a) The Executive Committee may remove the Managing Member from its position as a result of the following in carrying out its duties as manager (and not as a Member) of the Company: (i) gross negligence, (ii) fraud, (iii) willful misconduct, (iv) breach of any express obligation of Managing Member under this Agreement, (v) self-dealing (in contravention of this Agreement), (vi) intentional misappropriation of Company funds or other Company property, (vii) the occurrence of any of the events specified in Section 18-304 of the Act with respect to the Managing Member, (viii) an act or omission of the Managing Member that causes an event of default under any agreement relating to the any Company financing (including, but not limited to, any Loan or Third-party Loan), subject to any cure periods set forth in the applicable agreement with respect to such event of default, or (ix) a default or breach by the Managing Member under any Contribution Agreement or the Qualified Future Asset Investment Agreement; provided, however, the Managing Member shall have thirty (30) days after specific written notice of default to cure a default specified in clauses (i), (iv) and (ix), but in the event that such default cannot be reasonably cured within said thirty (30) days, then said cure period shall be extended up to ninety (90) days, provided further, however, the Managing Member is diligently and continuously pursuing said cure. Notwithstanding anything to the contrary contained herein, the Managing Member shall not be deemed negligent or liable for either (1) failing to make payments on behalf of the Company if adequate funds are not available or (2) taking any action as directed by the Executive Committee or the other Member that is not the Managing Member, so long as the Managing Member acts in a manner that is consistent with such decisions and directives.

(b) Upon the occurrence of an event set forth in Section 3.7(a) above, and upon the expiration of any notice and cure period provided therein, then upon the delivery (or deemed delivery) of a written notice from the Executive Committee to the Managing Member

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that the Executive Committee is removing the Managing Member from its position as the manager of the Company, the Managing Member shall immediately cease to be the “Managing Member” for purposes of this Agreement (and shall cease to be entitled to receive any fees due to the Managing Member or its designated Affiliate pursuant to Section 3.4, other than fees for services performed prior to the effective date of the Managing Member’s removal), and the other Member shall (i) automatically be appointed as the “Managing Member” for all purposes of this Agreement and be obligated to carry out all of the obligations of the Managing Member hereunder, (ii) enter into (or cause a designated Affiliate to enter into) agreements with the Company such that the Managing Member (or its designated Affiliate) will provide the Company with substantially the same services set forth in Section 3.4 upon substantially the same terms as those services provided by the removed Managing Member (or its designated Affiliate) immediately prior to its removal, and (iii) be entitled to receive all fees due to the Managing Member or its designated Affiliate pursuant to Section 3.4, to the extent such services are being provided by the Managing Member (or its designated Affiliate).

3.8 Annual Budget. Not later than sixty (60) days after the date of this Agreement (with respect to the Annual Budget for the Fiscal Year ending December 31, 2008) and November 1^st of each year beginning in 2008, the Managing Member shall deliver to the Executive Committee a draft annual budget (a) for each Property (or each Subsidiary holding such Property) and (b) for the Company on a consolidated basis, in each case for the upcoming Fiscal Year. The draft annual budget will be reviewed by the Executive Committee for approval as to form and content, and the Executive Committee will advise the Managing Member of the Executive Committee’s comments, if any, with respect thereto. Within ten (10) Business Days following receipt of the Executive Committee’s comments, the Managing Member shall revise the draft annual budget to incorporate the comments of the Executive Committee and such revised annual budget, if approved by the Executive Committee as a Major Decision, shall be the “Annual Budget” for the next succeeding Fiscal Year (or the Fiscal Year ending December 31, 2008, in the case of the initial Annual Budget). After an Annual Budget has been approved, the Managing Member shall implement it on behalf of the Company and may incur the expenditures and obligations therein provided. The initial Annual Budget for any future Properties acquired by the Company pursuant to the Qualified Future Asset Investment Agreement shall be prepared and submitted to the Executive Committee for approval at least thirty (30) days prior to the anticipated closing date of said Property. If any Annual Budget for any Fiscal Year after 2008 has not been approved by January 1 of such year, the Company shall continue to operate under the Annual Budget for the previous year with such adjustments as may be necessary to reflect (a) the deletion of non-recurring expense items set forth on the previous Annual Budget and (b) any increased insurance costs, taxes, utility costs, and debt service payments; provided, however, no capital expenditures (other than deposits into any capital reserve accounts) shall be made for such Fiscal Year until an Annual Budget for such Fiscal Year is approved, unless the Executive Committee otherwise specifically consents thereto in writing. The Managing Member may make expenditures for any line items in an Annual Budget in excess of the amount set forth therefor in any then-current Annual Budget (“Permitted Excess Line Item Expenditures”) so long as such excess expenditures, as to any line item, do not exceed ten percent (10%) above the amount of such line item in the then-current Annual Budget and so long as the aggregate amount of Permitted Excess Line Item Expenditures does not exceed five percent (5%) above the total amount of expenditures provided for in the then-current Annual Budget; provided further,

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however, if emergency actions with respect to a Property are necessary to avoid imminent danger of damage or injury to the Property or to an individual, the Managing Member may make such expenditures as may be necessary to alleviate such situation and shall promptly notify the Executive Committee and the Members of the event giving rise to such repairs and the actions taken with respect thereto.

3.9 Capital Budget. At any time that the Company or a Subsidiary is required to (or elects to) undertake significant capital improvements to a Property, including, but not limited to, a Building Expansion or other reconstruction of a building on, or redevelopment of, such Property, the Managing Member shall prepare and submit to the Executive Committee a budget for such capital improvements. The draft capital budget will be reviewed by the Executive Committee for approval as to form and content, whereupon the Executive Committee will advise the Managing Member of the Executive Committee’s comments, if any, with respect thereto. Within ten (10) Business Days following receipt of the Executive Committee’s comments, the Managing Member shall revise the draft capital budget to incorporate the comments of the Executive Committee and such revised capital budget, if approved by the Executive Committee as a Major Decision, shall be the “Capital Budget” for such project. After a Capital Budget has been approved, the Managing Member shall implement it on behalf of the Company or its Subsidiaries and may incur the expenditures and obligations therein provided.

ARTICLE 4.

CONTRIBUTIONS

4.1 Closings and Contributions.

(a) On the initial Closing Date (as defined in the Initial Contribution Agreement), pursuant to the terms and conditions of the Initial Contribution Agreement (the “Initial Closing”), (i) the CBRE Member will contribute cash to the Company and (ii) the Duke Member will contribute to the Company the Properties (either directly or through the contribution of all of the equity interest of one or more newly-formed, bankruptcy-remote Pass Through Entities owning such Properties) described on Exhibit C (the “Initial Closing Properties”) and certain other consideration. Immediately following the contribution of these Properties (either directly or through the contribution of all of the equity interest of one or more newly-formed, bankruptcy-remote Pass Through Entities owning such Properties) by the Duke Member, a special distribution will be made by the Company to the Duke Member in accordance with the Contribution Agreement as described on Exhibit C, which special distribution shall not be deemed to be a distribution under Section 5.1. In addition to the amounts set forth in the first sentence of this Section 4.1(a), on the date of the Initial Closing, the Duke Member will contribute $60,000 and the CBRE Member will contribute $240,000 for initial working capital of the Company.

(b) Subsequent Closings. Pursuant to the terms and subject to the conditions set forth in the Initial Contribution Agreement or in the Qualified Future Asset Investment Agreement, the CBRE Member shall have the right to cause the Duke Member to contribute or sell each of the Properties described on Exhibit D (as to the Initial Contribution Agreement) and

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the other Properties described in the Qualified Future Asset Investment Agreement (collectively, the “Subsequent Closing Properties”) to the Company or its Subsidiaries, in each case pursuant to the Initial Contribution Agreement or a separate Contribution Agreement (each such contribution a “Subsequent Closing”). On each Subsequent Closing, a closing statement will be prepared outlining the contributions and special distributions to be made by the Members in accordance with the applicable Contribution Agreement. Any such special distribution shall not be deemed to be a distribution under Section 5.1.

4.2 Stated Contributions. As a result of the contributions and special distribution described in Section 4.1(a), the Members’ stated contribution amounts (the “Stated Contribution Amount”) as of the date of the Initial Closing will be as set forth on Exhibit E. From time to time, the Stated Contribution Amount of each Member will be (a) increased by the amount of any additional cash or the Agreed Value of Properties contributed by it to the capital of the Company (other than Priority Loans or amounts funded pursuant to Section 4.4(e)), and (b) decreased by the amount of any special distributions made to such Member pursuant to the applicable Contribution Agreement and as described in Sections 4.1 and 5.3.

4.3 Company Financing.

(a) Company-Level Loans for Shortfalls. The Executive Committee may (but shall not be obligated to), as a Major Decision, cause the Company or a Subsidiary to obtain a loan (the “Third-party Loan”) on terms that are commercially reasonable under the circumstances, in an amount sufficient to pay any Shortfall, without providing prior notice thereof to the Members; provided, however, that the Executive Committee shall give notice to the Members promptly following the execution of definitive documentation relating to each such Third-party Loan (“Third-party Loan Notice”), which notice shall set forth the amount of any Third-party Loan, the purpose of such Third-party Loan, and include a copy of such definitive loan documentation. The Executive Committee shall also provide, or cause to be provided, any additional information relating to such Third-party Loans to the Members as the Members may reasonably request.

(b) Property-Level Loans. Without in any way limiting Section 11.6, to the extent any Loan is recourse, requires Member guarantees, or otherwise requires Member liability for repayment of such Loan, then (i) construction completion guaranties shall be provided by the Duke Member, (ii) with respect to other Member guaranties or indemnities required for financing, including, but not limited to, recourse financing, so called “non-recourse carve outs” and environmental liabilities, the CBRE Member and the Duke Member shall be jointly and severally liable, and the ultimate economic burden of any such liability shall be shared eighty percent (80%) by the CBRE Member and twenty percent (20%) by the Duke Member; provided, however, the Managing Member shall indemnify the other Member and the Company for any non-recourse carve out liability that is attributable to the negligence or breach by the Managing Member of its duties and obligations as the Managing Member or the negligence or breach of any of its Affiliates providing services to the Company or its Subsidiaries. At the time that the CBRE Member or the Duke Member or an Affiliate of the CBRE Member or the Duke Member is required to make any payment to a lender pursuant to any such guarantee, indemnity or other similar obligation (any such payment, a “Recourse Payment”), such payment amounts shall be

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immediately reimbursed by the Company. If the Company does not have sufficient funds to reimburse a Member or its Affiliate for a Recourse Payment (or if such funds are not available to reimburse a Member or its Affiliate for a Recourse Payment due to restrictions under any Loan or Company financing), any Member making (or whose Affiliate made) a Recourse Payment may request Additional Capital Contributions from the CBRE Member and the Duke Member in accordance with Section 4.4 and any such Additional Capital Contributions (if paid) shall be used by the Company to reimburse the paying Member or its Affiliate. Any Recourse Payment and/or capital contributions made in connection with a Recourse Payment shall be treated as Additional Capital Contributions made pursuant to Section 4.4. If the CBRE Member or the Duke Member does not make its full Additional Capital Contribution in response to a request made under this Section 4.3(b), then the provisions of Sections 4.4 shall apply and any amounts contributed by the Contributing Member (or an Affiliate of such Contributing Member on such Contributing Member’s behalf) shall be treated as a Priority Loan by such Member. Alternatively, if a non-paying Member fails to make the necessary Additional Capital Contribution to the Company in order to reimburse the paying Member for the non-paying Member’s share of a Recourse Payment (and otherwise fails to pay said paying Member directly for the non-paying Member’s share), then the paying Member shall have the right to pursue all remedies against the non-paying Member, including initiating a lawsuit, in order to recover the amount due, plus interest on the amount due at the Priority Rate until paid. The non-paying Member shall indemnify the paying Member from and against any and all out-of-pocket costs and expenses (including attorneys’ fees) suffered by the paying Member for the non-paying Member’s failure to pay its share of a Recourse Payment pursuant to Section 4.3(b).

4.4 Additional Capital Contributions.

(a) In the event that the Company does not obtain a Third-party Loan on terms acceptable to the Executive Committee to fund a Shortfall, or any Member shall have made a Recourse Payment, either Member or the Executive Committee may (but is not obligated to) deliver a notice (each, a “Funding Notice”) to the Members setting forth the amount of the Recourse Payment or Shortfall (as the case may be) and a description in reasonable detail of the basis of such Recourse Payment or Shortfall (as the case may be), together with supporting calculations and relevant material documentation. The decision to send a Funding Notice may be made by such Member or the Executive Committee without regard to any Member’s ability to pay its share of the Recourse Payment or Shortfall (as the case may be). Each Member shall have the right, but not the obligation, to make (or to cause one of its Affiliates to make on its behalf) capital contributions to the Company in an amount equal to its Percentage Membership Interest of the Recourse Payment or Shortfall (as the case may be) within ten (10) Business Days after receipt of a Funding Notice (“Additional Capital Contributions”). If a Member (the “Non-Contributing Member”) fails to fund the full amount of its Percentage Membership Interest of the Recourse Payment or Shortfall (as the case may be) within the ten (10) Business Day period, any amounts funded (directly or indirectly) by the other Member (the “Contributing Member”) towards its Percentage Membership Interest of the Recourse Payment or Shortfall (as the case may be) shall not be considered an Additional Capital Contribution, but rather, at such Member’s option, shall either (i) be refunded to the Contributing Member in its entirety, or (ii) be treated as a Priority Loan to the Company. In the event that the Contributing Member chooses to have the amount of Recourse Payment or Shortfall (as the case may be) funded by

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such Member treated as a Priority Loan, such Member shall also have the option, but not the obligation, to fund the portion of the Recourse Payment or Shortfall (as the case may be) that was not contributed by the Non-Contributing Member as a loan to the Company. Any such loans shall be made within ten (10) Business Days after the Contributing Member receives notice or acquires knowledge of the fact that the Non-Contributing Member has elected not to fund the full amount of its Percentage Membership Interest of the Recourse Payment or Shortfall (as the case may be). The outstanding principal of any loans made by a Contributing Member under this Section 4.4 shall accrue interest at a rate equal to eighteen percent (18%) per annum, compounded monthly (the “Priority Rate”), which interest shall be added to the principal (such principal and interest, together, the “Priority Loan”). All Priority Loans shall be repaid in accordance with Article 5; provided, however, that the Priority Loan of a Contributing Member shall be extinguished and be deemed paid in full upon the Non-Contributing Member funding an amount equal to its Percentage Membership Interest multiplied by the then outstanding amount of such Contributing Member’s Priority Loan, the proceeds of which shall be immediately distributed to the Contributing Member in accordance with Section 5.3(b) and the remaining unpaid balance of the Priority Loan shall be converted to and deemed to be an Additional Capital Contribution by the Contributing Member. Notwithstanding anything to the contrary contained herein, the Duke Member shall not have the right to send a Funding Notice during any period of time that the Duke Member has failed to pay a Rent Subsidy (as defined in the applicable Contribution Agreement) with respect to any Property.

(b) Subject to Section 4.4(a), any Additional Capital Contributions necessary to fund Building Expansions shall be payable in installments in accordance with the applicable construction schedule and construction agreement.

(c) In connection with each Subsequent Closing, the Duke Member may, in accordance with the terms of the Initial Contribution Agreement or the Qualified Future Asset Investment Agreement, in lieu of contributing any Subsequent Closing Property to the Company (or a Subsidiary), sell such Subsequent Closing Property to the Company (or a Subsidiary) for an amount in cash equal to the Agreed Value of such Subsequent Closing Property, and the CBRE Member and the Duke Member shall contribute an aggregate amount in cash equal to the Agreed Value of such Subsequent Closing Property, pro rata in accordance with their respective Percentage Membership Interests; provided, however, that there is no adverse tax consequence or other adverse financial consequence to the Company or its Members.

(d) The remedies provided in Section 4.4(a) with respect to the refund of any Additional Capital Contributions or the making of Priority Loans and in Section 4.3(b) (for failure of a non-paying Member to pay its share of Recourse Payments) are the only remedies available to a Contributing Member (or a paying Member, as applicable) with respect to any Non-Contributing Member’s (or non-paying Member’s, as applicable) failure to make an Additional Capital Contribution, and, except as otherwise expressly provided in this Section 4.4 or 4.3(b), no Member shall have any liability for any failure to make all or any portion of any Additional Capital Contribution requested to be made by such Member pursuant to Sections 4.4(a) and 4.4(b); provided, however, that notwithstanding the foregoing, each Member shall be and remain liable for the payment of all amounts due from such Member pursuant to any

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guaranties or indemnities given to the Company (or any other Person) by such Member in connection with any Loan or any financing of the Company.

(e) If a Member has a right to make a Priority Loan, then, in the alternative, (i) the Contributing Member shall have the right to contribute to the capital of the Company the same amount that such Non-Contributing Member would have been entitled to contribute under Section 4.4(a) as a Priority Loan (but any such contribution will not be treated as an Additional Capital Contribution), (ii) any such contribution shall accrue a preferential return at the Priority Rate and (iii) notwithstanding the provisions of Section 5.1 or any other provision of this Agreement to the contrary, the amount of such contribution and the preferential return thereon shall be repaid to the Contributing Member at the same time that such Contributing Member would have received payments of principal and interest if such contribution had been a Priority Loan.

4.5 No Further Capital/Loans. Except as expressly provided in this Article 4, no Member shall be required or entitled to contribute (or obtain a credit for) any other or further capital to the Company, nor shall any Member be required or entitled to loan any funds to the Company, except with the unanimous written consent of the Members.

4.6 Recoupment of Contributions. No Member shall receive any recoupment or payment, on account of or with respect to the contributions made by it pursuant to this Agreement, except as and to the extent expressly provided in this Agreement. Except as expressly provided herein, no Member shall be entitled to interest on, or with respect to, any such contribution. No Member shall be entitled to withdraw any part of such Member’s contributions and no Member shall be entitled to receive any distributions from the Company, except as provided in this Agreement.

4.7 Partition; No Priority. Each Member waives any and all rights that it may have to maintain an action for partition of the Company’s property. Except as otherwise provided herein (including, but not limited to, Article 5), no Member shall have priority over any other Member as to the return of the amount of its Stated Contribution Amount or any capital contributions made by it to the Company.

4.8 Certain Duties and Obligations of the Members. Neither any Member nor any Affiliate of any Member shall enter into any transaction with the Company or its Subsidiaries unless: (a) the transaction is expressly permitted hereunder; (b) with respect to services to be provided by any Affiliate of any Member, the fees for such services are no greater than the fees charged generally by qualified, unaffiliated third-parties performing similar services in the geographical area in which the services are to be performed and the other terms of the agreement pursuant to which such services will be performed are generally no more onerous to the Company or its Subsidiaries than the terms of agreements used by qualified, unaffiliated third-parties performing similar services in the geographical area in which the particular services are to be rendered; (c) with respect to purchases and sales of property, the price paid for such property is no greater than the price that an unaffiliated third-party would pay for such property and the other terms of the agreement pursuant to which such property is purchased or sold are generally no more onerous to the Company or its Subsidiaries than the terms of agreements used by unaffiliated third-parties purchasing or selling similar property in the geographical area in

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which such property is located; or (d) the transaction is approved by the Executive Committee upon disclosure of any direct or indirect interest such Member or any Affiliate thereof may have in the transaction. Any such agreement that is not approved by the Executive Committee shall be void as to the Company and its Subsidiaries; provided, however, the Executive Committee may ratify such agreement after it has been executed by the Company or a Subsidiary, upon which ratification such contract shall be binding as to the Company or the applicable Subsidiary as if such ratification occurred prior to the execution of the agreement. Each Member hereby agrees that it shall not recommend that the Company or any Subsidiary enter into, or otherwise permit the Company or any Subsidiary to enter into, an agreement with any Person that is an Affiliate of such Member without first disclosing to the other Member in writing that such Person is an Affiliate of such Member.

4.9 No Cessation of Membership upon Bankruptcy, Etc. Subject to Section 3.7, a Person shall not cease to be a Member of the Company upon the happening, with respect to such Person, of any of the events specified in Section 18-304 of the Act. Upon the occurrence of any such event specified in Section 18-304 of the Act, the business of the Company shall be continued without dissolution.

4.10 Limited Liability. No Member shall be liable for the debts and obligations of the Company and shall not be required to restore any deficit balance in its Capital Account. No Member shall be responsible for the debts or losses of any other Member.

ARTICLE 5.

DISTRIBUTIONS

5.1 Distributions.

(a) Distributions of Available Cash shall be made at the end of each fiscal quarter of the Company to the CBRE Member and the Duke Member in the following order of priority:

(i) to Members that have made Priority Loans (including contributions described in Section 4.4(e)), pro rata in accordance with amounts owed to each Member with respect to such Priority Loans (including contributions described in Section 4.4(e)) until all Priority Loans (including contributions described in Section 4.4(e)) have been repaid;

(ii) to the CBRE Member, until the cumulative distributions to the CBRE Member pursuant to Sections 5.1(a)(ii) and 5.1(b)(iii) equal the CBRE Member’s cumulative First Tier Return from the inception of the Company to the end of such fiscal quarter;

(iii) to the Duke Member, until the cumulative distributions to the Duke Member pursuant to Sections 5.1(a)(iii) and 5.1(b)(iv) equal the Duke Member’s cumulative First Tier Return from the inception of the Company to the end of such fiscal quarter;

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(iv) to the Members in proportion to their Unrecovered Capital until such time as the Members have each received a return of all of such Member’s Unrecovered Capital;

(v) the balance to the Members in accordance with their Percentage Membership Interests.

(b) Subject to Section 8.3(b)(ii), distributions of Net Capital Transaction Proceeds shall be made within five (5) days after the receipt thereof by the Company in the following order of priority:

(i) to Members that have made Priority Loans (including contributions described in Section 4.4(e)) pro rata in accordance with amounts owed to each Member with respect to such Priority Loans (including contributions described in Section 4.4(e)) until all Priority Loans (including contributions described in Section 4.4(e)) have been repaid;

(ii) to the Members in proportion to their Unrecovered Capital until such time as the Members have each received a return of all of such Member’s Unrecovered Capital;

(iii) to the CBRE Member until the cumulative distributions to the CBRE Member pursuant to Sections 5.1(a)(ii), and 5.1(b)(iii) equal the CBRE Member’s cumulative First Tier Return from the inception of the Company to the date of such distribution;

(iv) to the Duke Member until the cumulative distributions to the Duke Member pursuant to Sections 5.1(a)(iii), and 5.1(b)(iv) equal the Duke Member’s cumulative First Tier Return from the inception of the Company to the date of such distribution;

(v) to the Members in accordance with their Percentage Membership Interests until the cumulative distributions received by the CBRE Member pursuant to Sections 5.1(a)(ii), 5.1(a)(iv), 5.1(a)(v), 5.1(b)(ii), 5.1(b)(iii), and 5.1(b)(v) equal an amount needed to attain an Internal Rate of Return for the CBRE Member equal to 10%; and

(vi) the balance, twenty-five percent (25%) to the Duke Member (the “Promote Distribution”) and seventy-five percent (75%) to the Duke Member and the CBRE Member, pro rata according to their respective Percentage Membership Interests.

5.2 Claw-back. If, after giving effect to all distributions pursuant to Sections 5.1(a)(ii), 5.1(a)(iv), 5.1(a)(v), 5.1(b)(ii), 5.1(b)(iii), and 5.1(b)(v), the distributions received by the CBRE Member pursuant to Sections 5.1(a)(ii), 5.1(a)(iv), 5.1(a)(v), 5.1(b)(ii), 5.1(b)(iii), and 5.1(b)(v), are not sufficient to provide the CBRE Member with an Internal Rate of Return equal to 10% per annum, then the Duke Member shall refund to the Company all Promote Distributions received by the Duke Member during the term of this Agreement (which have not previously been returned to the Company under this Section 5.2) which refunded amount shall be distributed to the Members pursuant to Section 5.1(b).

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5.3 Other Distributions.

(a) The Managing Member shall, in connection with the Initial Closing or any Subsequent Closings as described in Sections 4.1 and 4.2, make a special distribution of a portion of the proceeds received from the CBRE Member in connection with each such Initial Closing or Subsequent Closing to the Duke Member, in each case in accordance to with the applicable Contribution Agreement.

(b) Upon the receipt of the full amount of the Additional Capital Contributions made pursuant to Section 4.4 for the purposes of (i) refunding a Recourse Payment made by one or more Members, (ii) funding by a Member of such Member’s portion of a Shortfall, or (iii) in connection with the extinguishment of a Priority Loan as set forth in Section 4.4(a), the Managing Member shall make a special distribution of such Additional Capital Contributions to the Member who has made such Recourse Payment, in an amount sufficient to reimburse the Member for such Recourse Payment.

(c) Upon the receipt of a ROFR Deposit, ROFO Deposit, a Company Buy-Sell Deposit, or a Property Buy-Sell Deposit, the Managing Member shall cause the Company to make a distribution of such amounts to the Members according to the priority as set forth in Section 5.1(b).

(d) The Managing Member shall make such other distributions of cash or property as may be directed by the Executive Committee, any such direction to be made as a Major Decision.

5.4 Withdrawal of Capital. Except as specifically provided in this Agreement, no Member shall have the right to (a) withdraw from the Company all or any part of its Stated Contribution Amount or capital contributions made to the Company, or (b) demand and receive property or cash of the Company in return of such Member’s Stated Contribution Amount or capital contributions made to the Company.

ARTICLE 6.

CAPITAL ACCOUNTS AND ALLOCATIONS

6.1 Capital Accounts.

(a) A separate capital account (“Capital Account”) will be maintained for each Member. The Capital Account of each Member will be determined and adjusted as follows:

(i) Each Member’s Capital Account will be credited with the amount of money and Gross Asset Value of any property contributed by the Member to the Company, the Member’s distributive share of Profits, any items in the nature of income or gain that are specially allocated to the Member under Section 6.3(b) or Section 6.3(c), and the amount of any Company liabilities that are assumed by the Member or secured by any Company property distributed to the Member.

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(ii) Each Member’s Capital Account will be debited with the amount of cash and the Gross Asset Value of any Company property distributed to the Member under any provision of this Agreement, the Member’s distributive share of Losses, any items in the nature of deduction or loss that are specially allocated to the Member under Section 6.3(b) or Section 6.4(c), and the amount of any liabilities of the Member assumed by the Company or which are secured by any property contributed by the Member to the Company.

(iii) If any Interest is Transferred in accordance with the terms of this Agreement, the transferee will succeed to the Capital Account of the transferor to the extent it relates to the transferred Interest.

(b) The provisions of this Section 6.1 and the other provisions of this Agreement relating to the maintenance of Capital Accounts have been included in this Agreement to comply with Section 704(b) of the Code and the Regulations promulgated thereunder and will be interpreted and applied in a manner consistent with Section 704(b) of the Code and the Regulations promulgated thereunder. The Managing Member may modify the manner in which the Capital Accounts are maintained under this Section 6.1 to comply with those provisions, as well as upon the occurrence of events that might otherwise cause this Agreement not to comply with those provisions; provided, however, without the unanimous consent of all the Members, the Managing Member may not make any modification to the way Capital Accounts are maintained if such modification would have the effect of changing the amount of distributions to which any Member would be entitled during the operation, or upon the liquidation, of the Company.

6.2 Adjustment of Gross Asset Value. “Gross Asset Value”, with respect to any asset, is the adjusted basis of that asset for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed (or deemed contributed under Code Sections 704(b) and 752 and the Regulations promulgated thereunder) by a Member to the Company shall be the Agreed Value (together with any associated transaction costs borne by the Company or a Subsidiary capitalized for US federal income tax purposes) of the asset on the date of the contribution, as detailed in the relevant Contribution Agreement or as otherwise determined by the Executive Committee.

(b) The Gross Asset Values of all Company assets shall be adjusted to equal the respective fair market values of the assets, as determined by the Executive Committee, as of (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution, (ii) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company if an adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company, and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g).

(c) The Gross Asset Value of any Company asset distributed to any Member shall be the gross fair market value of the asset on the date of distribution.

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(d) The Gross Asset Values of Company assets shall be increased or decreased to reflect any adjustment to the adjusted basis of the assets under Code Section 734(b), 732(d) or 743(b), but only to the extent that the adjustment is taken into account in determining Capital Accounts under Regulations Sections 1.704-1(b)(2)(iv)(m), provided that Gross Asset Values will not be adjusted under this Section 6.2.(d) to the extent that the Managing Member determines that an adjustment under Section 6.2(b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment under this Section 6.2(d).

(e) After the Gross Asset Value of any asset has been determined or adjusted under Section 6.2(a), Section 6.2(b) or Section 6.2(d), the Gross Asset Value shall be adjusted by the Depreciation taken into account with respect to the asset for purposes of computing Profits or Losses.

6.3 Profits, Losses and Distributive Shares of Tax Items.

(a) Profits and Losses. After giving affect to the special allocations set forth in Section 6.3(b) and Section 6.3(c), Profits and Losses for any Fiscal Year shall be allocated among the Members such that each Member’s Capital Account balance (computed after taking into account all distributions with respect to such taxable period and increased by such Member’s Company Minimum Gain and Member Nonrecourse Debt Minimum Gain) would, as nearly as possible, be equal to the amount that each Member would receive if all of the remaining assets of the Company were sold for cash equal to their Gross Asset Values, all liabilities of the Company were satisfied (limited, with respect to nonrecourse liabilities, to the Gross Asset Values of the assets securing such liability), and the net assets of the Company were distributed in accordance with Section 8.3(b)(ii) to the Members immediately after making such allocation; provided, however, that the Losses allocated to a Member shall not exceed the maximum amount that can be so allocated without causing such Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year.

(b) Special Allocations. The following special allocations shall be made in the following order and priority before determinations and allocations of Profits and Losses:

(i) Company Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any taxable year or other period for which allocations are made, before any other allocation under this Agreement, each Member shall be specially allocated items of Company income and gain for that period (and, if necessary, subsequent periods) in proportion to, and to the extent of, an amount equal to such Member’s share of the net decrease in Company Minimum Gain during such year determined in accordance with Regulations Section 1.704-2(g)(2). The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3(b)(1) is intended to comply with the minimum gain chargeback requirements of the Regulations, and shall be interpreted consistently with the Regulations.

(ii) Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net decrease in Member Nonrecourse Debt Minimum Gain with respect to a Member Nonrecourse Debt during any taxable year or other period for which allocations are made, any Member with a share of such Member Nonrecourse Debt Minimum Gain

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(determined under Regulations Section 1.704-2(i)(5)) shall be specially allocated items of Company income and gain for that period (and, if necessary, subsequent periods) in an amount equal to such Member’s share of the net decrease in the Member Nonrecourse Debt Minimum Gain during such year determined in accordance with Regulations Section 1.704-2(i)(4). The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3(b)(2) is intended to comply with the minimum gain chargeback requirements of the Regulations Section 1.704-2(f) and shall be interpreted consistently with the Regulations.

(iii) Qualified Income Offset. A Member who unexpectedly receives any adjustment, allocation or distribution described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),(5) or (6) shall be specially allocated items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of the Member as quickly as possible.

(iv) Nonrecourse Deductions. Nonrecourse Deductions for any taxable year or other period for which allocations are made shall be allocated among the Members in accordance with their Percentage Membership Interests.

(v) Member Nonrecourse Deductions. Notwithstanding anything to the contrary in this Agreement, any Member Nonrecourse Deductions for any taxable year or other period for which allocations are made shall be allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which the Member Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i).

(vi) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset under Code Sections 734(b) or 743(b) is required to be taken into account in determining Capital Accounts under Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis), and the gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted under Regulations Section 1.704-1(b)(2)(iv)(m).

(c) Curative Allocations. The allocations set forth in Section 6.3(b) (the “Regulatory Allocations”) are intended to comply with certain requirements of Regulations Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations may effect results which would be inconsistent with the manner in which the Members intend to divide Company distributions. Accordingly, the Managing Member is authorized to divide other allocations or Profits, Losses, and other items among the Members, to the extent that they exist, so that the net amount of the Regulatory Allocations and the special allocations to each Member is zero. The Managing Member will have discretion to accomplish this result in any reasonable manner that is consistent with Code Section 704 and the related Regulations.

(d) Tax Allocations-Code Section 704(c). For federal, state and local income tax purposes, Company income, gain, loss, deduction or expense (or any item thereof) for each Fiscal Year shall be allocated to and among the Members to reflect the allocations made

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pursuant to the provisions of this Section 6.3 for such Fiscal Year. In accordance with Code Section 704(c) and the related Regulations, income, gain, loss and deduction with respect to any property contributed to the capital of the Company, solely for tax purposes, shall be allocated among the Members so as to take account of any variation between the adjusted basis to the Company of the property for federal income tax purposes and the initial Gross Asset Value of the property (computed in accordance with Section 6.2). If the Gross Asset Value of any Company asset is adjusted under Section 6.2(b), subsequent allocations of income, gain, loss and deduction with respect to that asset shall take account of any variation between the adjusted basis of the asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the related Regulations, using the so-called “traditional method.” Allocations under this Section 6.3(d) are solely for purposes of federal, state and local taxes and will not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses or other items or distributions under any provision of this Agreement.

6.4 Tax Returns.

(a) The Managing Member shall cause the Accountant to prepare and file all necessary federal and state income tax returns for the Company and its Subsidiaries. Each Member shall furnish to the Managing Member all pertinent information in its possession relating to Company’s and its Subsidiaries’ operations that is necessary to enable such income tax returns to be prepared and filed. Prior to filing any U.S. federal (or material state income or franchise tax) returns, the Managing Member shall provide a draft copy to the other Member for its review and consent (which consent shall not be unreasonably withheld, delayed or conditioned).

(b) The Managing Member shall deliver to the Members within ninety (90) days after the end of each Fiscal Year, at the Company’s sole expense, any information relating to the Company or its Subsidiaries for the preparation by the Members of their Federal and state and local income and other tax returns and shall deliver to the Members any other information (i) promptly upon the request therefor by either Member or (ii) required to be furnished to the Members by law within the time period for furnishing such information.

6.5 Tax Matters Member. The Duke Member shall be the “tax matters partner” of the Company pursuant to section 6231(a)(7) of the Code. As tax matters partner, such Member shall take such action as may be necessary to cause each other Member to become a “notice partner” within the meaning of section 6223 of the Code. Such Member shall inform each other Member of all significant matters that may come to its attention in its capacity as tax matters partner by giving notice thereof within ten (10) days after becoming aware thereof and, within such time, shall forward to each other Member copies of all significant written communications it may receive in such capacity.

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6.6 Restrictions on Company Activities. It is mutually agreed and understood that certain actions, if taken by the Company or its Subsidiaries, could have seriously adverse tax or other economic consequences to the Members. In order to avoid such consequences, the Members hereby agree as follows:

(a) The Members acknowledge (i) that Duke Realty Corporation is an Affiliate of the Duke Member and is a REIT and that Duke Realty Corporation’s ability to maintain its status as a REIT may be affected by the nature of the income and assets of the Company and (ii) that CB Richard Ellis Realty Trust is an Affiliate of the CBRE Member and is a REIT and that CB Richard Ellis Realty Trust’s ability to maintain its status as a REIT may be affected by the nature of the income and assets of the Company. Accordingly, so long as any Affiliate of the Duke Member or any Affiliate of the CBRE Member is a REIT, except with the express written consent of the Duke Member and the CBRE Member, (i) the Company shall be operated in such a manner as would allow the Company (if the Company were treated as a REIT) to satisfy the income, asset, and distribution tests of Sections 856 and 857 (provided, however, that for purposes of the foregoing, the Company shall not be permitted to take into consideration the “qualified temporary investment income” and “new capital” provisions of Section 856 of the Code), (ii) the Company shall not take any action which could, in the reasonable judgment of either the Duke Member or the CBRE Member, subject Duke Realty Corporation or CB Richard Ellis Realty Trust to any additional taxes under Section 857 or Section 4981 of the Code, and (iii) no services shall be provided directly by the Company to, or for the benefit of, tenants of the Property unless such services are provided by a “taxable REIT subsidiary” as defined in Section 856(l) of the Code or an “independent contractor” as defined in Section 856(d)(3) of the Code with respect to Duke Realty Corporation and CB Richard Ellis Realty Trust. The Members agree to discuss the types of services that might be provided directly by the Company or its Subsidiaries to, or for the benefit of, tenants of the Property and to jointly determine (1) which services, if any, shall be so provided to, or for the benefit of, tenants of the Company, and (2) whether the Members or their Affiliates should form a jointly owned taxable REIT subsidiary to provide any such services and appropriate charges for any services provided by a taxable REIT subsidiary. Within 25 days of the close of each calendar quarter, the Managing Member shall deliver to the Members information showing the Company’s (A) total gross income for the foregoing quarter (with a designation of the amount of the Company’s gross income that qualifies for purposes of the REIT 75% and 95% gross income tests) and (B) gross assets as of the close of the foregoing quarter (with a designation showing the gross assets that qualify and do not qualify for purposes of the various REIT asset tests of Section 856 of the Code). The Managing Member shall promptly notify the Members of any and all Company events reasonably relevant to the REIT provisions of the Code including, but not limited to, (w) the acquisition or holding of any direct or indirect interest in an entity treated as a corporation for U.S. federal income tax purposes, (x) the acquisition of any direct or indirect interest in a debt obligation intended to be treated as a “real estate asset” or “straight debt” under the REIT provisions of the Code, (y) the acquisition or holding of any direct or indirect interest in an asset that may be treated as “foreclosure property” under the REIT provisions of the Code, and (z) the generation of any income from a transaction that may be treated as a “prohibited transaction” under the REIT provisions of the Code. The Company shall not acquire any direct or indirect interest in an entity treated as a corporation for U.S. federal income tax purposes, unless the

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corporation agrees (at the option of a Member) to make an election to be treated as taxable REIT subsidiary with respect to itself and one or both Members.

(b) Without the prior approval of all Members, the Company shall not elect to be treated as other than a partnership for federal, state or local tax purposes.

ARTICLE 7.

RECORDS AND REPORTS

7.1 Books and Records. The Managing Member shall maintain or cause to be maintained, at no expense to the Company, books of account in which shall be entered fully and accurately the transactions of the Company and its Subsidiaries, kept on the accrual method of accounting and in accordance with generally accepted accounting principles in the United States (“GAAP”). Such books of account, an executed copy of this Agreement, each Contribution Agreement, the Qualified Future Asset Investment Agreement and any other Duke Agreement, together, and a certified copy of the Certificate (all such documents, together with the minutes and actions of the Executive Committee and the Members, and the financial statements and Federal, State and local tax returns of the Company and its Subsidiaries, collectively, the “Books and Records”), shall at all times be maintained at the principal office of the Company and maintained under the Managing Member’s control environment. The Books and Records as well as the Managing Member’s control environment shall be open to inspection and audit during regular business hours upon 3 days’ prior written notice by any Member or such Member’s duly authorized representative for any purpose reasonably related to its interest in the Company.

7.2 Financial Reports. The Managing Member shall, at the Company’s expense, furnish to the Members (i) on or before the 20th day of each month, an unaudited statement setting forth and describing in reasonable detail the receipts and expenditures of the Company and its Subsidiaries during the preceding month and comparing the results of operations of the Company for such month and for the year to date to the corresponding periods in the Annual Budget, (ii) on or before 25 days after the end of each fiscal quarter, unaudited quarterly financial statements setting forth the Company’s consolidated balance sheet dated as of such fiscal quarter end, together with related unaudited consolidated and consolidating statements of cash flows and results of operations and each Member’s Capital Account, (iii) on or before 45 days after the end of the Company’s Fiscal Year, drafts of the financial statements set forth in clause (iv) of this Section 7.2, and (iv) on or before 60 days after the end of the Company’s Fiscal Year, audited financial statements setting forth the Company’s consolidated balance sheet dated as of such Fiscal Year end, together with related audited consolidated and consolidating statements of cash flows and results of operations and each Member’s Capital Account and, with respect to each Property, the Company’s equity investment in such Property, and (iv) from time to time, all other information relating to Company and its business and affairs reasonably requested by any Member.

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ARTICLE 8.

DISSOLUTION, LIQUIDATION AND TERMINATION

8.1 Dissolution. Except as otherwise provided herein, the Company shall be dissolved upon the first to occur of the following events:

(a) the approval of the Executive Committee (as a Major Decision); or

(b) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act; or

(c) the election of either the CBRE Member or the Duke Member at any time after December 31, 2033.

8.2 Death, Legal Incapacity, Etc. The bankruptcy, dissolution or reorganization of a Member or the occurrence of any other event that causes a Member to cease to be a Member of the Company, shall not cause the dissolution or termination of the Company, and the Company, notwithstanding such event, shall continue without dissolution upon the terms and conditions provided in this Agreement, and each Member, including, without limitation, each substituted Member, by executing this Agreement, agrees to such continuation of the Company without dissolution.

8.3 Liquidation of Company Interests upon Dissolution.

(a) Upon dissolution, the Company shall be liquidated in an orderly manner in accordance with the provisions of this Section 8.3. The Executive Committee shall appoint one or more liquidators to act as the liquidator(s) in effecting such liquidation. Unless otherwise agreed by the CBRE Member and the Duke Member, the liquidator(s) are directed to sell the Properties and the other assets of the Company to third parties who are not Affiliates of CBRE Member or Duke Member. All reasonable out-of-pocket expenses incurred by the liquidator(s) in connection with winding up the Company, and all other liabilities or losses of the Company or the liquidator(s) incurred in accordance with the terms of this Agreement, together with reasonable compensation for the services of the liquidators, shall be borne by the Company. Subject to the provisions of the preceding sentences, the liquidator(s) shall not be liable to any Member or the Company for any loss attributable to any act or omission of the liquidator(s) taken in good faith in connection with the winding up of the Company and the distribution of Company assets; provided that such act or omission does not constitute gross negligence or willful misconduct on the part of the liquidator(s). The liquidator(s) may consult with legal counsel, accountants, or other advisors with respect to the winding up of the Company and distribution of its assets and shall be justified in acting or omitting to act in accordance with the advice or opinion of such legal counsel, accountants, or other advisors, provided that the liquidator(s) shall have used reasonable care in selecting such legal counsel, accountants, or other advisors and are acting in good faith at all times. Except as otherwise set forth in this Agreement, the Company shall not be liable for the return or repayment of the Stated Contribution Amounts or capital contributions of any Members.

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(b) Upon termination of the Company, the Company’s liabilities and obligations to creditors shall be paid from cash on hand or from the liquidation of the Company’s assets, and, after payment or provision for payment of all debts of the Company, the following provisions shall govern with respect to the distribution of the remaining assets to the Members:

(i) The liquidators shall establish any reserves that the liquidators deem reasonably necessary for contingent or unforeseen obligations of the Company, such reserves to be held until the expiration of such period as the liquidators deem advisable.

(ii) All remaining Company assets shall then be distributed to the CBRE Member and Duke Member in cash according to the priority set forth in Section 5.1(b) (and shall be treated as having been distributed pursuant to Section 5.1(b) for all purposes of this Agreement), subject to the provisions set forth in Section 5.2.

8.4 Certificate of Cancellation. Upon completion of the distribution of the assets of the Company pursuant to Section 8.3, the Company shall be terminated, and the liquidator(s) shall file a Certificate of Cancellation with the Secretary of State of Delaware under the Act, cancel any other filings made pursuant to this Agreement with the Secretary of State of Delaware or any other governmental entity (to the extent necessary to terminate the existence of the Company), and take such other actions as may be necessary to terminate the existence of the Company.

ARTICLE 9.

TRANSFER

9.1 Restriction on Transfers.

(a) General Restriction. Except as set forth in Section 9.1(b), no Member may (i) Transfer, directly or indirectly, all or any portion of its Interests, or (ii) pledge, mortgage, hypothecate, grant a security interest in, or otherwise encumber (each an “Encumbrance”) all or any portion of its Interest in each case without the prior written consent of the other Member. Any attempted Transfer or Encumbrance, other than in strict accordance with this Section 9.1, shall be null, void, and of no force or effect.

(b) Permitted Transfers. Notwithstanding the limitations set forth in Section 9.1(a), each Member may Transfer, directly or indirectly, or otherwise grant Encumbrances in, all or any portion of its Interests to: (i) one or more Affiliates of such Member; (ii) any entity which may result from a merger or consolidation by or with such Member or a controlling Affiliate of such Member; (iii) any entity to which such Member or a controlling Affiliate of such Member is selling all or substantially all of its assets; provided, that, in no event shall any such Transfer or Encumbrance relieve any Member of any of its obligations under this Agreement, including, but not limited to, any obligations under Section 5.2, nor shall it be in violation of any Loans. At the election of the Transferring Member, and upon the consummation of any such Transfer, such transferee shall be admitted as a Member. In the event that a Member enters into a permitted Transfer of a portion (but not all) of its Interest to a party (a “Partial Transferee”), then (1) any notices required to be sent to a Partial Transferee shall be satisfied by sending notice to the transferring Member pursuant to Section 14.1, and (2) all decisions,

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consents, approvals and similar decisions required of Partial Transferee (including, but not limited to, appointing Representatives to the Executive Committee), shall be made by the transferring Member, and the Executive Committee and other Member may rely on the transferring Member’s decision as the Partial Transferee’s decision. Nothing in this Section 9.1 shall be deemed to limit the ability of any Member to exercise its Company Buy-Sell Procedure pursuant to Section 13.1. No provision of this Agreement shall restrict any Transfer of shares of Duke Realty Corporation or CB Richard Ellis Realty Trust.

9.2 Rights of Unadmitted Assignees. Except as otherwise provided in Section 9.1(b), a Person to whom any Interests are Transferred pursuant to the terms of this Agreement shall be admitted to the Company as a Member upon the consent of the other Member to such Transfer, which may be given or withheld in the other Member’s sole and absolute discretion. In connection with any Transfer of any Interest, and any admission of any transferee as a Member, the Member making such Transfer and the transferee shall furnish the other Member with such documents evidencing the Transfer as the other Member may request (in form and substance satisfactory to the other Members), including a ratification by the transferee of this Agreement and explicit assumption of the duties and obligations of the transferring Member and a legal opinion that the Transfer complies with applicable federal and state securities laws. In connection with the Consummation of a Transfer set forth in Section 9.1, the Members shall amend and restate this Agreement to provide for the substitution of such transferee as a Member.

ARTICLE 10.

AMENDMENTS

10.1 Amendments in General. Except as otherwise provided in this Agreement, this Agreement may be amended only by an instrument in writing signed by the CBRE Member and the Duke Member.

ARTICLE 11.

LIABILITY, EXCULPATION, INDEMNIFICATION AND INSURANCE

11.1 Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations, and liabilities of the Company, and no Covered Person shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Covered Person.

11.2 Exculpation.

(a) Covered Persons shall be liable only for acts or omissions caused by their gross negligence, recklessness, willful misconduct or dishonesty in the performance of their duties under this Agreement. In addition, no Covered Person shall be liable to the Company or to any Member by reason of: (i) any failure to withhold income tax under federal or state tax laws with respect to income allocated to the Members; or (ii) any change in the federal or state tax laws or regulations or in the interpretations thereof as they apply to the Company or the Members, whether such change or interpretation occurs through legislative, judicial or administrative action.

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(b) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value or any associated liabilities with respect to any Properties, the profits or losses or with respect to the Properties from which distributions to Members might properly be paid, or any other facts relating to the Properties.

11.3 Fiduciary Duty. To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement, provided that nothing in this Agreement shall limit the duties or obligations of any Covered Person to the Company or any other Covered Person set forth in any other agreement or at law or in equity.

11.4 Company Indemnification. The Company shall indemnify, to the fullest extent permitted by applicable law, each Covered Person and each Covered Person’s affiliates, directors, trustees, members, managers, shareholders, officers, partners, controlling persons, employees and agents (including any individual who serves at their request as director, officer, manager, partner, trustee or the like of another Person, including the Company) and/or the legal representatives and controlling persons of any of them (each of the foregoing being an “Indemnitee”) against any liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees and expenses reasonably incurred by such Indemnitee in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative body, in which such Indemnitee may be or may have been threatened, while acting in a manner believed to be within the scope of authority conferred on such Indemnitee by this Agreement, except with respect to any matter as to which such Indemnitee shall have been adjudicated not to have acted in good faith in the reasonable belief that such Indemnitee’s action was within the scope of authority conferred on such Indemnitee by this Agreement, and furthermore, in the case of any criminal proceeding, so long as such Indemnitee had no reasonable cause to believe that the conduct was unlawful; provided, however, that (i) no Indemnitee shall be indemnified hereunder against any liability to the Company or its Members or any expense of such Indemnitee arising by reason of its willful misconduct, bad faith, gross negligence, dishonesty or reckless disregard of its duties hereunder, and (ii) with respect to any action, suit or other proceeding voluntarily prosecuted by any Indemnitee as plaintiff, indemnification shall be mandatory only if the prosecution of such action, suit or other proceeding by such Indemnitee was authorized by the Company.

11.5 Expenses. To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnitee in defending any claim, demand, action, suit or

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proceeding shall, from time to time, be advanced by the Company with the approval of the Executive Committee (as a Major Decision) prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined that the Indemnitee is not entitled to be indemnified as authorized in Section 11.4.

11.6 Indemnification.

(a) Notwithstanding anything to the contrary as set forth in Sections 11.1, 11.2, 11.3, 11.4 and 11.5, and subject to Section 4.4(d), the Duke Member shall indemnify the Company, each Representative, the CBRE Member and any Affiliate thereof and each of their respective affiliates, directors, trustees, members, managers, shareholders, officers, partners, controlling persons, employees and agents and/or the legal representatives and controlling persons of any of them from and against any and all liabilities, expenses, losses, costs, actions, suits, proceedings, claims or damages (including attorneys’ fees) suffered by any such Person by reason of the Duke Member’s or its Affiliates’ (including any Property Manager that is an Affiliate of the Duke Member) or any of their respective partners’, employees’, agents’ or representatives’ (each, an “Duke Member Party”): (i) willful misconduct, bad faith, fraud, gross negligence, dishonesty, or breach of this Agreement, in the performance or failure to perform by the Duke Member or its Affiliates of their respective obligations and duties under this Agreement or any Duke Agreement; and (ii) any act or omission of a Duke Member Party, which results in the triggering of any guaranty now or hereafter delivered to any holder of any Loan secured by any of the Properties or any part thereof, other than acts or omissions taken by the Representatives appointed by the Duke Member in connection with an act of the Executive Committee, or acts or omissions of the Duke Member in connection with a decision by the Members. The provisions of this Section 11.6(a) shall survive any termination of this Agreement and any amendment to such provisions shall not reduce the Duke Member’s indemnity obligations with respect to any act or omission occurring prior to the date of such amendment.

(b) Notwithstanding anything to the contrary as set forth in Sections 11.1, 11.2, 11.3, 11.4 and 11.5, and subject to Section 4.4(d), the CBRE Member shall indemnify the Company, each Representative, the Duke Member and any Affiliate thereof and each of their respective affiliates, directors, trustees, members, managers, shareholders, officers, partners, controlling persons, employees and agents and/or the legal representatives and controlling persons of any of them from and against any and all liabilities, expenses, losses, costs, actions, suits, proceedings, claims or damages (including attorneys’ fees) suffered by any such Person by reason of the CBRE Member’s or its Affiliates’ (including any Property Manager that is an Affiliate of the CBRE Member) or any of their respective partners’, employees’, agents’ or representatives’ (each, a “CBRE Member Party”): (i) willful misconduct, bad faith, fraud, gross negligence, dishonesty, or breach of this Agreement, in the performance or failure to perform by the CBRE Member or its Affiliates of their respective obligations and duties under this Agreement or any CBRE Agreement; and (ii) any act or omission of a CBRE Member Party, which results in the triggering of any guaranty now or hereafter delivered to any holder of any Loan secured by any of the Properties or any part thereof, other than acts or omissions taken by the Representatives appointed by the CBRE Member in connection with an act of the Executive

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Committee, or acts or omissions of the CBRE Member in connection with a decision by the Members. The provisions of this Section 11.6(a) shall survive any termination of this Agreement and any amendment to such provisions shall not reduce the CBRE Member’s indemnity obligations with respect to any act or omission occurring prior to the date of such amendment.

(c) Notwithstanding any other provision of this Agreement to the contrary, in no event will any Member nor any Affiliate thereof nor any of their respective affiliates, directors, trustees, members, managers, shareholders, officers, partners, controlling persons, employees or agents and/or the legal representatives and controlling persons of any of them, be liable for any special, incidental, consequential (including, but not limited to, damages for lost profits or loss of revenue), indirect, or punitive damages, in connection with any claims, losses, damages or injuries arising out of any act or omission for which indemnity is provided for herein, regardless of whether the other Member was advised of the possibility of such damages.

11.7 Severability. To the fullest extent permitted by applicable law, if any portion of this Article 11 shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify each Member and may indemnify each employee or agent of the Company as to costs, charges and reasonable expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Company, to the fullest extent permitted by any applicable portion of this Article 11 that shall not have been invalidated.

11.8 Insurance. The Company and its Subsidiaries may purchase and maintain insurance, to the extent and in such amounts as the Executive Committee shall determine to be necessary or appropriate, in its sole discretion, on behalf of the Covered Persons and such other Persons as the Executive Committee shall determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the activities of the Company and its Subsidiaries, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. The Company and its Subsidiaries may enter into indemnity contracts with Covered Persons and such other Persons as the Executive Committee shall determine and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations under Section 11.5 as it shall determine to be necessary or appropriate in its sole discretion.

11.9 Outside Businesses. The Members, the Representatives, the Managing Member and any Affiliate of the foregoing Persons may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Company and its Subsidiaries, and the Company, its Subsidiaries and the Members shall have no rights by virtue of this Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Company or its Subsidiaries, shall not be deemed wrongful or improper. Subject to the Qualified Future Asset Investment Agreement, none of the Members, Representatives or any Affiliate of the foregoing Persons shall be obligated to present any particular investment opportunity to the Company or its Subsidiaries even if such opportunity is

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of a character that, if presented to the Company or its Subsidiaries, could be taken by the Company or its Subsidiaries, and any Member, Representative or Affiliate of the foregoing Persons shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment opportunity.

ARTICLE 12.

RIGHT OF FIRST REFUSAL / OFFER

12.1 Third Party Offers; Right of First Refusal. If a Property has been owned by the Company or a Subsidiary for more than four (4) years (each such Property, a “Marketable Property”), and either Member receives a bona fide, written cash offer (i.e., not seller financed) from an unaffiliated third party for the purchase of the Marketable Property (including, an offer that was received after a solicitation by such Member for an offer from such unaffiliated third party) (such offer, the “Offer”), the Member receiving such Offer shall provide a copy of the Offer to the other Member and an Executive Committee meeting shall be held to discuss the Offer. If the Executive Committee cannot agree on the Offer, then the Member that desires for the Company to accept the Offer (the “ROFR Initiating Member”) may provide notice of the terms of such Offer (the “ROFR Notice”) to the other member that does not desire for the Company to accept the Offer (the “ROFR Non-Initiating Member”) in accordance with Section 14.1, which ROFR Notice shall include a statement that the ROFR Initiating Member is exercising its rights under Article 12 of this Agreement.

12.2 Procedure for Closing Upon a Rejection of the Right of First Refusal. The ROFR Non-Initiating Member shall have thirty (30) days from the date of its receipt of the ROFR Notice (the “ROFR Response Period”) to provide notice of its decision whether or not to purchase the Marketable Property from the Company or a Subsidiary on the same terms as those set forth in the Offer. Failure of the ROFR Non-Initiating Member to deliver the notice of its decision as set forth in the previous sentence within the 30 day period shall be deemed to be a decision by the ROFR Non-Initiating Member to not purchase the Marketable Property from the Company or such Subsidiary on the same terms as those set forth in the Offer. If the ROFR Non-Initiating Member declines (or is deemed to have declined) to purchase the Marketable Property from the Company or such Subsidiary on the same terms as those set forth in the Offer, the ROFR Initiating Member may, but shall not be obligated to, direct the Company (through the ROFR Initiating Member’s appointed Representatives) to consummate the sale of the Marketable Property to the unaffiliated third party within 180 days from the ROFR Response Period, upon terms and conditions substantially as set forth in the Offer, provided, that in no event shall the final purchase price of the Marketable Property be less than 97% of the highest price stated in the Offer. The ROFR Non-Initiating Member shall use its commercially reasonable efforts (including by directing its appointed Representatives to use their commercially reasonable efforts) to assist the Company in consummating such sale. If the sale of the Marketable Property is to be consummated after 180 days from the ROFR Response Period, or upon terms and conditions that are not substantially as set forth in the Offer (including, but not limited to, having a final purchase price of less than 97% of the highest price stated in the Offer), then the ROFR Initiating Member must again submit the revised terms of the Offer as a new “Offer” pursuant to the terms of this Article 12, before such Marketable Property may be sold.

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12.3 Procedure for Closing upon an Acceptance of the Right of First Refusal. If the ROFR Non-Initiating Member agrees to purchase the Marketable Property from the Company or such Subsidiary on the same terms as those set forth in the Offer, the ROFR Non-Initiating Member and the ROFR Initiating Member shall cause the Company to consummate the sale of the Marketable Property within 60 days after the expiration of the ROFR Response Period. ROFR Non-Initiating Member shall provide an earnest money deposit in the amount of the earnest money set forth in the Offer with a nationally recognized title insurance company (the “ROFR Deposit”). The closing shall take place on the terms set forth in the Offer, and, to the extent not inconsistent with the Offer, the customs and procedures followed in the market where the Marketable Property is located for the sale of industrial/warehouse property shall govern the rights and obligations of the parties as to adjustments, the allocation of closing costs and other matters with respect to closing, which shall be determined by the Executive Committee in its reasonable discretion. If the sale of the Marketable Property is not consummated within such 60 day period as a result of a default by the ROFR Non-Initiating Member, the ROFR Initiating Member shall have the right to (a) terminate the sale of the Marketable Property to the ROFR Non-Initiating Member (upon which termination the Company shall receive the ROFR Deposit as liquidated damages and shall distribute the ROFR Deposit to the Members pursuant to the priority set forth in Section 5.1(b), it being agreed by the parties that the damages to the Company from the default of the ROFR Non-Initiating Member are uncertain at this time, and that the ROFR Deposit is a fair estimation of the damages that would be suffered by the Company and its Members and is not a penalty and (b) sell the Marketable Property to the unaffiliated third party within 180 days from the expiration of the 60 day period set forth in the first sentence of this Section 12.3, and the ROFR Non-Initiating Member shall be deemed to have declined to purchase the Marketable Property upon the terms and conditions set forth in the Offer, and shall have such rights and obligations as set forth in Section 12.2.

12.4 Right of First Offer.

(a) During the term of this Agreement, any Member (the “ROFO Initiating Member”) may, by written notice (the “Marketing Notice”) to the other Member (the “ROFO Non-Initiating Member”) and the Company, propose the sale of any Marketable Property. The Marketing Notice shall contain a proposed marketing plan for the Marketable Property, including the offering price (the “Marketing Price”), the material terms of a brokerage contract and a marketing strategy. Following the issuance of such notice, the Executive Committee shall consider the proposed marketing plan for such Marketable Property and, if appropriate, possible alternatives. If the Executive Committee agrees on a marketing plan, then the Managing Member shall cause such Marketable Property to be marketed and sold in accordance with that marketing plan. If the Executive Committee fails to agree unanimously upon a marketing plan within thirty (30) days after the receipt by the Company of the Marketing Notice, and the ROFO Initiating Member nevertheless desires to go forward with the sale of such Marketable Property, then the following provisions of this Section 12.4 shall apply, provided that the ROFO Notice (as defined below) must be given no later than sixty (60) days following the Marketing Notice.

(b) The ROFO Initiating Member shall deliver a written notice (the “ROFO Notice”) to the ROFO Non-Initiating Member setting forth the terms upon which the ROFO Initiating Member is willing to sell such Marketable Property as of the date the ROFO Notice is

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given, which terms shall include the value in U.S. dollars at which the ROFO Initiating Member values such Marketable Property (the “ROFO Purchase Price”). The notice shall grant the ROFO Non-Initiating Member the right to purchase such Marketable Property for a price equal to such ROFO Purchase Price. Once given, a ROFO Notice may not be revoked or withdrawn by the ROFO Initiating Member without the written consent of the ROFO Non-Initiating Member, which consent may be withheld in its sole and absolute discretion. The ROFO Non-Initiating Member shall notify the ROFO Initiating Member in writing within ten (10) Business Days after the date the ROFO Notice is given of its election to either waive its option to purchase such Marketable Property or to exercise such option (such notice referred to herein as a “ROFO Purchase Notice”). The ROFO Non-Initiating Member’s failure to notify the ROFO Initiating Member of its election within such ten (10) Business Day period shall be deemed an election to waive its option to purchase such Marketable Property.

(c) If the ROFO Non-Initiating Member waives its option to purchase such Marketable Property, then the ROFO Initiating Member shall have the right, for a period of 180 days commencing on the date that the ROFO Non-Initiating Member notifies the ROFO Initiating Member in writing of such waiver (or the date on which the ROFO Non-Initiating Member is deemed to have given such waiver), and without obtaining the consent of the ROFO Non-Initiating Member, to pursue the sale of such Marketable Property to any person that is not affiliated with the ROFO Initiating Member. In that regard, the ROFO Initiating Member may (on behalf of the Company) engage the services of an independent real estate brokerage firm to solicit offers from third parties unaffiliated with the ROFO Initiating Member to purchase such Marketable Property, whose fees share be borne (i) by the Company, upon the sale of such Marketable Property by the Company or (ii) by the ROFO Initiating Member, upon the failure of the ROFO Initiating Member to sell such Marketable Property within the 180-day period. The terms of any such engagement shall be commercially reasonable, shall provide for full disclosure of all sale activity, indications of interest and offers to both the ROFO Initiating Member and the ROFO Non-Initiating Member and shall not encumber such Marketable Property or the Company in any way beyond the 180-day period. The ROFO Initiating Member shall be required to sign a listing agreement consistent herewith. So long as the purchase price for such sale is equal to or greater than 97% of the ROFO Purchase Price (including the sum of all liabilities of such Marketable Property), then the Managing Member shall cause the Company to consummate such sale. Any purchase and sale agreement and documents related to the sale shall contain customary representations and warranties, covenants, and exposure to potential liabilities customary for such transactions. If any Loan with respect to such Marketable Property is assumed, closing documents shall also include the buyer’s delivery to the Company and the Members of (i) an indemnification against any claims against the Company and the Members with respect to such Loans for the period on and after the closing date and (ii) a release of the Company and any guarantors of such Loan from the lenders with respect to such Loans for any liabilities related to the period on and after the closing date.

(d) If the ROFO Non-Initiating Member elects to purchase such Marketable Property, then the sale of such Marketable Property shall be on the same terms as in the ROFO Notice and the ROFO Non-Initiating Member shall deposit with a nationally recognized title insurance company an earnest money deposit equal to three percent (3%) of the ROFO Purchase Price (the “ROFO Deposit”) at the same time it delivers the ROFO Purchase Notice. The

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Members hereby agree that: (i) the ROFO Non-Initiating Member would be irreparably injured in the event of a breach or threatened breach by the Company or the ROFO Initiating Member of its obligations to consummate the sale of such Marketable Property to the ROFO Non-Initiating Member within the specified time period; (ii) monetary damages would not be an adequate remedy for such breach, (iii) the ROFO Non-Initiating Member shall be entitled (without the need to post any bond) to seek and obtain a decree or order of specific performance to enforce the observance and performance of such sale and an injunction restraining such breach or threatened breach, and (iv) the existence of any claims that the Company or the ROFO Initiating Member may have against the ROFO Non-Initiating Member, whether under this Agreement or any other agreement, shall not be a defense to (or reason for the delay of) the enforcement by the ROFO Non-Initiating Member of its rights or remedies under this Agreement. Notwithstanding any to the contrary in the foregoing, if the ROFO Non-Initiating Member defaults on its purchase of such Marketable Property, the ROFO Initiating Member may: (x) elect (on behalf of the Company) to have the Company receive the ROFO Deposit, which shall be distributed to the Members in accordance with the priority set forth in Section 5.l(b), it being agreed by the parties that the ROFO Deposit shall constitute liquidated damages, and the damages to the Company and its Members from the default of the ROFO Non-Initiating Member are uncertain at this time, and that the portion of the ROFO Deposit receivable by the ROFO Initiating Member is a fair estimation of the damages that would be suffered by the ROFO Initiating Member and is not a penalty; and (y) deem the ROFO Non-Initiating Member to have waived its option to purchase such Marketable Property, and pursue the sale of such Marketable Property to any person that is not affiliated with the ROFO Initiating Member in accordance with the provisions of Section 12.4(c) (except that the 180-day period set forth therein shall commence on the date the ROFO Non-Initiating member defaults on its purchase of such Marketable Property).

ARTICLE 13.

BUY SELL

13.1 Company Buy-Sell Option.

(a) If at any time (i) a Deadlock occurs with respect to a Major Decision which is not resolved through an additional meeting of the Executive Committee (the “Second Company Buy-Sell Meeting”) or (ii) the Executive Committee has delivered a removal notice to the Managing Member pursuant to Section 3.7(b), then either Member (the “Company Offeror”) may institute the following reciprocal buy-sell procedure (the “Company Bay-Sell Procedure”) within one hundred (100) days after the Second Company Buy-Sell Meeting or the delivery of the removal notice, by giving notice to the other Member (the “Company Offeree”) in accordance with Section 14.1 (the “Company Buy-Sell Notice”), which notice shall specify (i) that the Company Offeror is triggering the Company Buy-Sell Procedure pursuant to this Section 13.1, and (ii) the value in U.S. dollars in which the Company Offeror values the entire Company; provided, however, that no Company Buy-Sell Procedure may be instituted by a Member that has elected (on behalf of the Company) to receive, in the immediately preceding 12-month period, the Company Buy-Sell Deposit pursuant to another Company Buy-Sell Procedure. The delivery of the Company Buy-Sell Notice shall simultaneously constitute (x) an offer to buy the Company Offeree’s Interest for a sum (the “Company Buy-Sell Purchase Price”) equal to the greater of (1) Ten and No/100 Dollars ($10.00) and (2) the amount that

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would be distributed to the Company Offeree pursuant to Section 5.1(b) upon a sale of the Company to a third party for the amount set forth in the Company Buy-Sell Notice (the “Company Buy Offer”), and (y) an offer to sell the Company Offeror’s Interest for a sum equal to greater of (1) Ten and No/100 Dollars ($10.00) and (2) the amount that would be distributed to the Company Offeror pursuant to Section 5.1 (b) upon a sale of the Company to a third party for the amount set forth in the Company Buy-Sell Notice (the “Company Sell Offer”). The parties hereby agree that the value set forth in the Company Buy-Sell Notice shall be automatically (x) increased by the amount of any capital contributions (including Priority Loans) made by the Members to the Company pursuant to this Agreement or any Contribution Agreement and (y) decreased by the amount of any distributions made by the Company to the Members pursuant to this Agreement (other than Section 5.1(a)), in each case during the period from the delivery of the Company Buy-Sell Notice to the consummation of the Company Buy-Sell Procedure (whether by the consummation of the sale of the Company or the receipt by the Company of the Company Buy-Sell Deposit).

(b) Upon receipt of the Company Buy-Sell Notice, the Company Offeree shall have the option to elect to accept either the Company Buy Offer or the Company Sell Offer, in each case within 30 days from the date it receives the Company Buy-Sell Notice. If the Company Offeree does not respond within such 30-day period (the “Company Buy-Sell Offer Period”), the Company Offeree shall be deemed to have accepted the Company Buy Offer.

(c) Upon the acceptance (or deemed acceptance) of the Company Buy Offer, the Company Offeror shall deposit with a nationally recognized title insurance company an earnest money deposit equal to one and a half percent (1.5%) of the amount which the Company Offeror values the entire Company (the “Company Buy-Sell Deposit”) (or replace the Company Buy-Sell Deposit with its own funds, if such Company Buy-Sell Deposit has been previously deposited by the Company Offeree), and the Company Offeree and the Company Offeror shall consummate the sale of the Company Offeree’s Interest within 60 days from the Company Offeree’s acceptance (or deemed acceptance) of the Company Buy Offer. The Members hereby agree that: (i) the Company Offeror would be irreparably injured in the event of a breach or threatened breach by the Company Offeree of its obligations to consummate the sale of the Company Offeree’s Interest within the specified time period; (ii) monetary damages would not be an adequate remedy for such breach, (iii) the Company Offeror shall be entitled (without the need to post any bond) to seek and obtain a decree or order of specific performance to enforce the observance and performance of such sale and an injunction restraining such breach or threatened breach, and (iv) the existence of any claims that the Company Offeree may have against the Company Offeror, whether under this Agreement or any other agreement, shall not be a defense to (or reason for the delay of) the enforcement by the Company Offeror of its rights or remedies under this Agreement. Notwithstanding any to the contrary in the foregoing, if the Company Offeror defaults on its purchase of the Company Offeree’s Interest, the Company Offeree may elect to either (1) have the Company receive the Company Buy-Sell Deposit, which shall be distributed to the Members in accordance with the priority set forth in Section 5.1 (b), it being agreed by the parties that the portion of the Company Buy-Sell Deposit that would be received by the Company Offeree shall constitute liquidated damages, and the damages to the Company Offeree from the default of the Company Offeror are uncertain at this time, and that the portion of the Company Buy-Sell Deposit receivable by the Company Offeree is a fair

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estimation of the damages that would be suffered by the Company Offeree and is not a penalty or (2) treat the Company Offeror as having made a Company Sell Offer to the Company Offeree, and the Company Offeree may exercise its right to purchase the Company Offeror’s Interest at a purchase price based on the valuation of the Company set forth in the initial Company Buy-Sell Notice by written notice to the Company Offeror within 12 Business Days after the Company Offeror’s default, and the parties shall proceed to consummate the sale of the Company Offeror’s Interest, in accordance with Section 13.1(d) below.

(d) Upon the acceptance of the Company Sell Offer by the Company Offeree, the Company Offeree shall deposit with a nationally recognized title insurance company the Company Buy-Sell Deposit (or replace the Company Buy-Sell Deposit with its own funds, if such Company Buy-Sell Deposit has been previously deposited by the Company Offeror), and the Company Offeree and the Company Offeror shall consummate the sale of the Company Offeror’s Interest within 60 days from the Company Offeree’s acceptance of the Company Sell Offer (the “Company Buy-Sell Closing Date”). The Members hereby agree that: (i) the Company Offeree would be irreparably injured in the event of a breach or threatened breach by the Company Offeror of its obligations to consummate the sale of the Company Offeror’s Interest within the specified time period; (ii) monetary damages would not be an adequate remedy for such breach, (iii) the Company Offeree shall be entitled (without the need to post any bond) to seek and obtain a decree or order of specific performance to enforce the observance and performance of such sale and an injunction restraining such breach or threatened breach, and (iv) the existence of any claims that the Company Offeror may have against the Company Offeree, whether under this Agreement or any other agreement, shall not be a defense to (or reason for the delay of) the enforcement by the Company Offeree of its rights or remedies under this Agreement. Notwithstanding any to the contrary in the foregoing, if the Company Offeree defaults on its purchase of the Company Offeror’s Interest, the Company Offeror may elect to either (1) have the Company receive the Company Buy-Sell Deposit, which shall be distributed to the Members in accordance with the priority set forth in Section 5.1(b), it being agreed by the parties that the portion of the Company Buy-Sell Deposit that would be received by the Company Offeror shall constitute liquidated damages, and the damages to the Company Offeror from the default of the Company Offeree are uncertain at this time, and that the portion of the Company Buy-Sell Deposit receivable by the Company Offeror is a fair estimation of the damages that would be suffered by the Company Offeror and is not a penalty or (2) treat the Company Offeree as having made a Company Buy Offer to the Company Offeror, and the Company Offeror may exercise its right to purchase the Company Offeree’s Interest at a purchase price based on the valuation of the Company set forth in the initial Company Buy-Sell Notice by written notice to the Company Offeree within 12 Business Days after the Company Offeree’s default, and the parties shall proceed to consummate the sale of the Company Offeree’s Interest, in accordance with Section 13.1(c) above.

(e) Effective as of the Company Buy-Sell Closing Date, the Member selling its Interest (the “Withdrawing Party”) shall cease to be a Member of the Company and the provisions of this Section 13.1(e) shall apply. The purchasing Member (the “Continuing Party”) shall also obtain, as a condition to the occurrence of the foregoing events on the Company Buy-Sell Closing Date, a release from any personal recourse liabilities, if any, for the Withdrawing Party (or any affiliates of a Withdrawing Party that have executed and delivered

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guaranties, indemnities or other recourse obligations that are not limited to the Company) for any Loan to the Company which is not paid in full on the Company Buy-Sell Closing Date; provided, however, if the Continuing Party is unable to obtain a release from liability for the Withdrawing Party or its affiliates for any such personal or recourse liabilities, the Continuing Party shall deliver to the Withdrawing Party on the Company Buy-Sell Closing Date an indemnity from the Continuing Party and the Company for the benefit of the Withdrawing Party (or its applicable affiliates) for claims, actions, damages, costs, expenses, and liabilities of the Company arising after the Company Buy-Sell Closing Date from such Loan, excepting therefrom any such claims, actions, damages, costs, expenses, and liabilities arising out of the negligence, willful misconduct, misrepresentation or fraud of the Withdrawing Party (or any other indemnified affiliates); provided, however, if the Continuing Member shall not be financially capable of performing such indemnity obligations as determined by the Withdrawing Party in the exercise of its reasonable discretion, then the Continuing Party shall provide another entity reasonably acceptable to the Withdrawing Party to join in and be responsible for performing such indemnity obligations of the Continuing Party as a condition precedent to the obligations of the Withdrawing Party to so withdraw.

The Company Buy-Sell Purchase Price shall not include real estate closing prorations, which shall be separately adjusted between the parties pursuant to this Section 13.1(e). The Company Buy-Sell Deposit shall be credited against the Company Buy-Sell Purchase Price at closing. The Continuing Party shall pay the Company Buy-Sell Purchase Price (less the Company Buy-Sell Deposit) to the Withdrawing Party to the Company by wire transfer of immediately available U.S. funds, and the Members shall execute and deliver amendments to this Agreement and any statement with regard to the Company filed in any public records, reflecting the withdrawal of the Withdrawing Party from the Company as of the Company Buy-Sell Closing Date.

The Continuing Party and the Withdrawing Party shall cooperate with one another in structuring the transaction in which the Withdrawing Party’s Interest is purchased so long as such transaction structure does not adversely impact the Withdrawing Party in any manner (including structuring such transaction as a redemption of the Withdrawing Member’s Interest by the Company with a simultaneous capital contribution by the Continuing Member or other affiliated party). Any such structure that results in a tax and accounting treatment such transaction with respect to the Withdrawing Party that is no less favorable than a sale of the Withdrawing Party’s Interest for a price equal to the amount that would be distributable to the Withdrawing Party upon a sale of all of the Properties for the value specified in the Company Buy-Sell Notice (subject to the other specific provisions of this Article 13 concerning payment of costs, distributions etc.), shall be deemed not to adversely impact the Withdrawing Party. The Withdrawing Party shall provide customary representations and warranties as to (i) its title to its Interests (including such title being free and clear of any liens or encumbrances of any nature) and (ii) the existence, good standing and authority of the Withdrawing Party to convey its Interest to the Continuing Party, but shall not be obligated to provide any representations or warranties concerning the assets of the Company. In addition, traditional real estate closing prorations shall be made, and the Company Buy-Sell Purchase Price payable to the Withdrawing Party shall be increased or decreased by the net amount thereof due to or from the Withdrawing Party.

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13.2 Property Buy-Sell Option.

(a) If at any time a Deadlock occurs with respect to a Major Decision that relates solely to a particular Property, other than a Deadlock relating solely to a sale of a Property that has been owned by the Company or a Subsidiary for less than four years) which is not resolved through an additional meeting of the Executive Committee (the “Second Property Buy-Sell Meeting”), then either Member (the “Property Offeror”) may institute the following reciprocal buy-sell procedure (the “Property Buy-Sell Procedure”) within sixty (60) days after the Second Property Buy-Sell Meeting, by giving notice to the other Member (the “Property Offeree”) in accordance with Section 14.1 (the “Property Buy-Sell Notice”), which notice shall specify (i) that the Property Offeror is triggering the Property Buy-Sell Procedure pursuant to this Section 13.2, and (ii) the value in U.S. dollars at which the Property Offeror values the Property (the “Property Buy-Sell Purchase Price”); provided, however, that no Property Buy- Sell Procedure may be instituted by a Member that has elected (on behalf of the Company) to receive, in the immediately preceding 12-month period, the Property Buy-Sell Deposit pursuant to another Property Buy-Sell Procedure with respect to the same Property. The delivery of the Property Buy-Sell Notice shall simultaneously constitute (x) an offer to buy the Property from the Company for a sum equal to the Property Buy-Sell Purchase Price (the “Property Buy Offer”), and (y) an offer (on behalf of the Company) to sell to the Property Offeree the Property for a sum equal to the Property Buy-Sell Purchase Price (the “Property Sell Offer”).

(b) Upon receipt of the Property Buy-Sell Notice, the Property Offeree shall have the option to elect to accept either the Property Buy Offer or the Property Sell Offer, in each case within 30 days from the date it receives the Property Buy-Sell Notice. If the Property Offeree does not respond within such 30-day period (the “Property Buy-Sell Offer Period”), the Property Offeree shall be deemed to have accepted the Property Buy Offer.

(c) Upon the acceptance (or deemed acceptance) of the Property Buy Offer, the Property Offeror shall deposit with a nationally recognized title insurance company an earnest money deposit equal to three percent (3%) of the Property Purchase Price (the “Property Buy-Sell Deposit”) (or replace the Property Buy-Sell Deposit with its own funds, if such Property Buy-Sell Deposit has been previously deposited by the Property Offeree), and the Property Offeree and the Property Offeror shall consummate the sale of the Property within 60 days from the acceptance of the Property Buy Offer. The Members hereby agree that: (i) the Property Offeror would be irreparably injured in the event of a breach or threatened breach by the Company or the Property Offeree of its obligations to consummate the sale of the Property within the specified time period; (ii) monetary damages would not be an adequate remedy for such breach, (iii) the Property Offeror shall be entitled (without the need to post any bond) to seek and obtain a decree or order of specific performance to enforce the observance and performance of such sale and an injunction restraining such breach or threatened breach, and (iv) the existence of any claims that the Company or the Property Offeree may have against the Property Offeror, whether under this Agreement or any other agreement, shall not be a defense to (or reason for the delay of) the enforcement by the Property Offeror of its rights or remedies under this Agreement. Notwithstanding any to the contrary in the foregoing, if the Property Offeror defaults on its purchase of the Property, the Property Offeree may elect (on behalf of the Company) to either (1) have the Company receive the Property Buy-Sell Deposit, which shall be

52

distributed to the Members in accordance with the priority set forth in Section 5.1(b), it being agreed by the parties that the Property Buy-Sell Deposit shall constitute liquidated damages, and the damages to the Company and its Members from the default of the Property Offeror are uncertain at this time, and that the portion of the Property Buy-Sell Deposit receivable by the Property Offeree is a fair estimation of the damages that would be suffered by the Property Offeree and is not a penalty or (2) treat the Property Offeror as having made a Property Sell Offer (on behalf of the Company) to the Property Offeree, and the Property Offeree may exercise its right to purchase the Property from the Company at the Property Buy-Sell Purchase Price by written notice to the Property Offeror within 12 Business Days after the Property Offeror’s default, and the parties shall proceed to consummate the sale of the Property to the Property Offeree, in accordance with Section 13.2(d) below.

(d) Upon the acceptance (or deemed acceptance) of the Property Sell Offer, the Property Offeree shall deposit with a nationally recognized title insurance company the Property Buy-Sell Deposit (or replace the Property Buy-Sell Deposit with its own funds, if such Property Buy-Sell Deposit has been previously deposited by the Property Offeror), and the Property Offeree and the Property Offeror shall consummate the sale of the Property within 60 days from the acceptance of the Property Sell Offer. The Members hereby agree that: (i) the Property Offeree would be irreparably injured in the event of a breach or threatened breach by the Company or the Property Offeror of its obligations to consummate the sale of the Property within the specified time period; (ii) monetary damages would not be an adequate remedy for such breach, (iii) the Property Offeree shall be entitled (without the need to post any bond) to seek and obtain a decree or order of specific performance to enforce the observance and performance of such sale and an injunction restraining such breach or threatened breach, and (iv) the existence of any claims that the Company or the Property Offeror may have against the Property Offeree, whether under this Agreement or any other agreement, shall not be a defense to (or reason for the delay of) the enforcement by the Property Offeree of its rights or remedies under this Agreement. Notwithstanding any to the contrary in the foregoing, if the Property Offeree defaults on its purchase of the Property, the Property Offeror may elect (on behalf of the Company) to either (1) have the Company receive the Property Buy-Sell Deposit, which shall be distributed to the Members in accordance with the priority set forth in Section 5.1(b), it being agreed by the parties that the Property Buy-Sell Deposit shall constitute liquidated damages, and the damages to the Company and its Members from the default of the Property Offeree are uncertain at this time, and that the portion of the Property Buy-Sell Deposit receivable by the Property Offeror is a fair estimation of the damages that would be suffered by the Property Offeror and is not a penalty or (2) treat the Property Offeree as having made a Property Buy Offer to the Company, and the Property Offeror (on behalf of the Company) may exercise the right to purchase the Property (on behalf of the Company) at the Property Buy-Sell Purchase Price by written notice to the Property Offeree within 12 Business Days after the Property Offeree’s default, and the parties shall proceed to consummate the sale of the Property, in accordance with Section 13.2(c) above.

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ARTICLE 14.

GENERAL PROVISIONS

14.1 Notices. Except as specifically provided elsewhere in this Agreement, all notices, requests, consents and statements to the Company or any Member shall be deemed to have been properly given if mailed from within the United States by first class mail, postage prepaid, or if sent by prepaid hand courier, or if mailed by a nationally recognized next-day overnight courier service to the address set forth in Exhibit B or such other address or addresses as may be specified by written notice by such person in accordance with this Section 14.1. Except as specifically provided elsewhere in this Agreement, notice by courier shall be deemed effective upon receipt, notice by first class mail shall be deemed effective three (3) Business Days after being deposited in the United States mail, and notice by nationally recognized next-day overnight delivery shall be deemed effective one (1) Business Day after deposited with the overnight carrier. Any notice by an attorney representing the Member giving notice shall be deemed given by such Member.

14.2 Further Assurances. Each Member hereby agrees to execute all certificates, counterparts, amendments, instruments or documents that may be required by the Company under the laws governing limited liability companies of the various states in which the Company does business, in order to effectuate the purposes of the Company and the intents of the parties hereto, in each case as set forth in this Agreement.

14.3 Binding Effect. This Agreement and all of the terms and provisions hereof shall be binding upon, and shall inure to the benefit of, the Members and their respective successors and permitted assigns, except as expressly otherwise provided herein.

14.4 Counterparts. This Agreement or any amendment thereto may be signed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one Agreement (or amendment, as the case may be).

14.5 Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the Act and the laws of the State of Delaware, without regard to its conflict of laws rules. In the event of any conflict between any provisions of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence. It is agreed that the parties hereto intend to form and continue a limited liability company hereby, but in the event that the Company shall fail to substantially comply with the requirements for the formation and continuation of a limited liability company under the laws of the State of Delaware, the Company shall be administered pursuant to the provisions of the Act as if it were a limited liability company.

14.6 Gender and Number; References. Where the context so permits, reference in this Agreement (a) to any particular gender shall be deemed to denote any other gender, (b) to the singular shall be deemed to denote the plural, and (c) to the plural shall be deemed to denote the singular; in each case as the context may require. References in this Agreement to the preamble, recitals, Sections, Articles, Exhibits, Annexes or Schedules shall be to the preamble, recitals, sections, articles, exhibits or schedules to this Agreement unless expressly provided otherwise.

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14.7 Facsimile Signature. For all purposes under this Agreement, a signature tendered by facsimile is as effective as an executed original signature.

14.8 Severability. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions because of a conflict between such provision and any constitution or statute or rule of public policy in such jurisdiction applicable to the Company or the Members, such circumstance shall not have the effect of rendering such provision invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance to the extent that such provision is not in conflict with the constitution, statutes or rules of public policy of such other jurisdiction or in such other circumstance, and this Agreement shall be reformed and construed in any jurisdiction under which the Company exists such that such provision would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

14.9 Integration. This Agreement, the Initial Contribution Agreement and the Qualified Future Asset Investment Agreement contain the entire understanding among the Members and supersede any prior understandings, term sheets, inducements or conditions, expressed or implied, written or oral, among them respecting the subject matter contained herein. Except as set forth in this Agreement, the Initial Contribution Agreement and the Qualified Future Asset Investment Agreement, there are no representations, agreements, arrangements or understandings, oral or written, between and among the parties hereto relating to the subject matter of this Agreement which are not fully expressed herein or therein. The express terms hereof and thereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof and thereof.

14.10 Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.

14.11 Indulgences, Etc. Neither the failure nor any delay on the part of any party hereto to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party granting such waiver.

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement, as of the date first above written.

MEMBERS:	DUKE MEMBER:
	DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership
	By:	DUKE REALTY CORPORATION, an Indiana corporation, General Partner
		By:	/s/ Nicholas C. Anthony
		Name:	Nicholas C. Anthony
		Title:	Senior Vice President
	CBRE MEMBER:
	CBRE OPERATING PARTNERSHIP, L.P., a Delaware limited liability partnership
	By:	CB RICHARD ELLIS REALTY TRUST, a Maryland real estate investment trust, its general partner
		By:
		Name:
		Title:

[Signature Page to Duke/Hulfish, LLC]

IN WITNESS WHEREOF, the undersigned have executed this Agreement, as of the date first above written.

MEMBERS:	DUKE MEMBER;
	DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership
	By:	DUKE REALTY CORPORATION, an Indiana corporation, General Partner
		By:
		Name:
		Title:
	CBRE MEMBER:
	CBRE OPERATING PARTNERSHIP, L.P., a Delaware limited liability partnership
	By:	CB RICHARD ELLIS REALTY TRUST, a Maryland real estate investment trust, its general partner
		By:	/s/ Jack A. Cuneo
		Name:	Jack A. Cuneo
		Title:	President

[Signature Page to Duke/Hulfish, LLC]

EX-10.7

Exhibit 10.7

FIRST AMENDMENT TO CONTRIBUTION AGREEMENT

THIS FIRST AMENDMENT TO CONTRIBUTION AGREEMENT (this “First Amendment”) is made and entered into this 12th day of September, 2008 by and between DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership (“Duke”), DUKE/HULFISH, LLC, a Delaware limited liability company (the “Company”) and CBRE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“CBOP”).

W I T N E S S E T H:

WHEREAS, Duke, the Company and CBOP, entered into that certain Contribution Agreement dated May 5, 2008 (the “Agreement”), for the contribution of certain Projects (as more particularly defined therein) to the Company; and

WHEREAS, Duke and Company desire to enter into this First Amendment for the purpose of adding that certain Project located at Aspen Grove Corporate Center, with a street address of 500 Duke Drive, Franklin, Tennessee 37067 (“Verizon”) and evidencing their mutual understanding and agreement with respect thereto as more specifically set forth herein below.

NOW, THEREFORE, for and in consideration of the premises hereto, the keeping and performance of the covenants and agreements hereinafter contained, and for Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Duke, the Company and CBOP intending to be legally bound, agree and amend the Agreement as follows:

1. Defined Terms. All terms used herein and denoted by their initial capitalization shall have the meanings set forth in the Agreement unless set forth herein to the contrary.

2. The Land. The definition of the Land and Exhibits B-1 through B-6 are each amended to include the legal description of Verizon attached hereto as Exhibit B-7.

3. The Buildings. The definition of the Buildings and Exhibit C are amended by inserting the information contained in Exhibit C-1 attached hereto.

4. Aggregate Agreed Value. The Aggregate Agreed Value in Article 2(a) of the Agreement is amended by deleting the sum of TWO HUNDRED FORTY-EIGHT MILLION NINE HUNDRED THOUSAND FIVE HUNDRED AND 00/100 DOLLARS ($248,900,500.00) and inserting in lieu thereof the sum of TWO HUNDRED EIGHTY-TWO MILLION THREE HUNDRED NINETY-NINE THOUSAND FOUR HUNDRED FORTY TWO AND 00/100 DOLLARS ($282,399,442.00). Exhibit D is amended by deleting Exhibit D to the Agreement and inserting in lieu thereof Exhibit D attached hereto.

5. Outstanding Diligence Items. The definition of Outstanding Diligence Items and Exhibit E-1 are each amended to include the information for Verizon contained in Exhibit E-2 attached hereto.

6. Tenant Estoppel Certificate. Article 8(a)(iii) of the Agreement is amended to provide that:

With respect to Verizon, the Tenant Estoppel Certificate shall be in the form of Exhibit F-1 attached hereto.

7. Verizon Inspection Date. The first sentence in Article 4(b) of the Agreement is amended by inserting the words “and Verizon” immediately following the words “Amazon at Anson.” In addition the following two sentences are inserted at the end of Article 4(b):

With respect to Verizon, CBOP shall have until 5:00 p.m. Eastern Time on September 19, 2008 (the “Verizon Inspection Date”), to terminate this First Amendment by written notice to Duke, if CBOP is not satisfied with Verizon due to the information contained on a Phase I environmental report or a property condition report, in which case the terms and conditions set forth in this First Amendment shall terminate, but the Agreement shall continue in full force and effect and shall revert to its original terms prior to being amended by this First Amendment. If CBOP fails to deliver written notice to Duke of its election to terminate this First Amendment on or prior to Verizon Inspection Date, then CBOP’s termination right under this Article 4(b) shall be deemed to have been waived by CBOP, and the parties shall proceed with Verizon transaction pursuant to the remaining terms and conditions of this First Amendment.

8. Title and Survey. CBOP shall have until 5:00 p.m. Eastern Time on the business day immediately following the execution and delivery of this First Amendment to object to matters of title and survey pursuant to the terms of Article 5(b) of the Agreement with respect to Verizon only.

9. Title Policy Contingency. Article 8(a)(iv) of the Agreement is amended to provide that:

With respect to Verizon, the Title Insurer shall be prepared, and irrevocably committed, to issue an ALTA Leasehold Title Insurance Policy, to be dated effective no earlier than the Closing Date, that (i) is in the form customarily used for similar transactions in state in which Verizon is located, (ii) is in at least the face amount of the Agreed Value, (iii) shows leasehold interest in the Project to be vested of record in Company, (iv) provides for no title exceptions other than the Permitted Title Exceptions, and (v) insures the option to purchase contained in the Lease Agreement with The Industrial Development Board of Williamson County, Tennessee.

10. Additional CBOP Conditions. The definition of Additional CBOP Conditions and Exhibit O are each amended to include the conditions for Verizon contained in Exhibit O-1, attached hereto.

11. Closing Date.

Article 10(a) of the Agreement is deleted in its entirety, and the following inserted in lieu thereof:

Notwithstanding anything to the contrary, the Closing Date for Verizon and Unilever Texas and shall occur on the same day, and the Closing Date for Amazon at Anson and Unilever Florida shall occur on the same day. The Closing of the contribution of each Project shall take place in escrow with the Escrow Agent, or at such other location as the Members shall mutually designate. Each Closing shall take place at 10 a.m. Eastern Time on the date that is ten (10) days after the conditions precedent have been satisfied with respect to the applicable Project(s) or on such earlier date and at such other location as the Members may agree (each a “Closing Date”).

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12. Closing Deliveries. Article 10(b) of the Agreement is amended by inserting the following provision as subsection (xxi):

(xxi) With respect to Verizon, in lieu of a Deed and accompanying transfer tax or certificate of value, Duke will deliver an assignment (“Assignment of the Pilot Lease”) of that certain Lease Agreement between The Industrial Development Board of Williamson County, Tennessee and Duke Realty Partnership in substantially the form of Exhibit “R” attached hereto (the “Pilot Lease”).

(xxii) With respect to Verizon, a fully executed counterpart of the Pilot Lease.

13. Lease Exhibit Representation and Warranty. Article 14(c) and Exhibit I are each amended to include the information for Verizon contained in Exhibit I attached hereto.

14. Agreements Representation and Warranty. Article 14(c) and Exhibit J are each amended to include the information for Verizon contained in Exhibit J attached hereto.

15. Miscellaneous. This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors, successors-in-title, representatives and permitted assigns. In the event of any inconsistency or conflict between the terms of this First Amendment and of the Agreement, the terms of this First Amendment shall control. Time is of the essence of all of the terms of this First Amendment. The Agreement, as amended by this First Amendment, constitutes and contains the sole and entire agreement of the parties hereto with respect to the subject matter hereof and no prior or contemporaneous oral or written representations or agreements between the parties and relating to the subject matter hereof shall have any legal effect. Except as hereinabove provided, all other terms and conditions of the Agreement shall remain unchanged and in full force and effect, and are hereby ratified and confirmed by the parties hereto. This First Amendment may not be changed, modified, discharged or terminated orally in any manner other than by an agreement in writing signed by Duke, CBOP and Company or their respective heirs, representatives, successors and permitted assigns. This First Amendment may be signed in multiple counterparts, which, when taken together, shall constitute a fully executed and binding original First Amendment. Signatures of the parties to the First Amendment via facsimile shall be treated as and have the same binding effect as original signatures hereon.

[Signature page follows]

3

IN WITNESS WHEREOF, Duke, the Company and CBOP have caused this First Amendment to be duly authorized, executed, sealed and delivered as of the day and year first above written.

DUKE:
DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership
By:	Duke Realty Corporation, an Indiana corporation, its general partner
	By:	/s/ Nicholas C. Anthony
	Name:	Nicholas C. Anthony
	Title:	Senior Vice President

THE COMPANY:
DUKE/HULFISH, LLC, a Delaware limited liability company
By:	Duke Realty Limited Partnership an Indiana limited partnership, its managing member
	By:	Duke Realty Corporation, an Indiana corporation, its general partner
		By:	/s/ Nicholas C. Anthony
		Name:	Nicholas C. Anthony
		Title:	Senior Vice President

CBOP:
CBRE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
By:	CB Richard Ellis Realty Trust, a Maryland real estate investment trust, its general partner
By:	/s/ Jack A. Cuneo
Name:	Jack A. Cuneo
Title:	President

4

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO 17 CFR 240.13A-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jack A. Cuneo, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CB Richard Ellis Realty Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ JACK A. CUNEO

Jack A. Cuneo

President and Chief Executive Officer

Date: November 14, 2008

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO 17 CFR 240.13A-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Laurie Romanak, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CB Richard Ellis Realty Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ LAURIE ROMANAK

Laurie Romanak

Chief Financial Officer

Date: November 14, 2008

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CB Richard Ellis Realty Trust (the “Company”) on Form 10-Q for the period ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack A. Cuneo, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ JACK A. CUNEO

Jack A. Cuneo

President and Chief Executive Officer

November 14, 2008

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CB Richard Ellis Realty Trust (the “Company”) on Form 10-Q for the period ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Laurie Romanak, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ LAURIE ROMANAK

Laurie Romanak

Chief Financial Officer

November 14, 2008