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 June 30, 2010

¨ 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.)

47 Hulfish Street, Suite 210, Princeton, New Jersey 08542

(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    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 143,457,935 as of August 6, 2010.

CB RICHARD ELLIS REALTY TRUST

INDEX

10-Q PART AND ITEM NO.
PART I. FINANCIAL INFORMATION
1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2010 and 2009	2
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009	3
	Condensed Consolidated Statements of Shareholders’ Equity and Non-Controlling Interest for the Six Months Ended June 30, 2010 and 2009	4
	Notes to the Condensed Consolidated Financial Statements for the Three and Six Months Ended June 30, 2010 and 2009	5
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
3.	Quantitative and Qualitative Disclosures About Market Risk	75
4.	Controls and Procedures	75
4T.	Controls and Procedures	75
PART II. OTHER INFORMATION
1.	Legal Proceedings	76
1A.	Risk Factors	76
2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
3.	Defaults Upon Senior Securities	77
4.	(Removed and Reserved)	77
5.	Other Information	77
6.	Exhibits	78
SIGNATURES		79

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CB RICHARD ELLIS REALTY TRUST

Condensed Consolidated Balance Sheets

as of June 30, 2010 and December 31, 2009 (unaudited)

(In Thousands, Except Share Data)

	June 30, 2010			December 31, 2009
ASSETS
Investments in Real Estate:
Land	$	157,697		$	140,892
Site Improvements		46,069			45,859
Buildings and Improvements		534,812			456,285
Tenant Improvements		34,195			28,095
		772,773			671,131
Less: Accumulated Depreciation and Amortization		(39,781	)		(31,558	)
Net Investments in Real Estate		732,992			639,573
Investments in Unconsolidated Entities		316,485			214,097
Cash and Cash Equivalents		166,019			112,631
Restricted Cash		1,983			1,923
Accounts and Other Receivables, Net of Allowance of $237 and $183, respectively		3,424			4,246
Deferred Rent		5,646			3,570
Acquired Above-Market Leases, Net of Accumulated Amortization of $7,383 and $5,886, respectively		18,461			17,996
Acquired In-Place Lease Value, Net of Accumulated Amortization of $30,145 and $25,566, respectively		72,123			61,375
Deferred Financing Costs, Net of Accumulated Amortization of $1,864 and $1,380, respectively		3,956			2,342
Lease Commissions, Net of Accumulated Amortization of $367 and $263, respectively		1,499			889
Other Assets		2,254			377
Total Assets	$	1,324,842		$	1,059,019
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Notes Payable, Less Discount of $4,157 and $4,615, Plus Premium of $602 and $0, respectively	$	217,299		$	203,451
Note Payable at Fair Value		8,374			8,974
Loan Payable		15,000			_
Security Deposits		585			593
Accounts Payable and Accrued Expenses		11,619			11,000
Accrued Offering Costs Payable to Related Parties		1,192			1,114
Acquired Below-Market Leases, Net of Accumulated Amortization of $8,069 and $6,687, respectively		14,001			14,108
Property Management Fee Payable to Related Party		109			106
Investment Management Fee Payable to Related Party		950			757
Distributions Payable		19,266			14,750
Interest Rate Swaps at Fair Value—Non-Qualifying Hedges		1,802			1,410
Interest Rate Swaps at Fair Value—Qualifying Hedges		1,516			293
Total Liabilities		291,713			256,556
COMMITMENTS AND CONTINGENCIES (NOTE 17)
NON-CONTROLLING INTEREST
Operating Partnership Units		2,464			2,464
SHAREHOLDERS’ EQUITY
Common Shares of Beneficial Interest, $0.01 par value, 990,000,000 shares authorized; 137,215,254 and 106,465,683 issued and outstanding as of June 30, 2010 and December 31, 2009, respectively		1,373			1,065
Additional Paid-in-Capital		1,207,842			933,088
Accumulated Deficit		(162,015	)		(121,832	)
Accumulated Other Comprehensive Loss		(16,535	)		(12,322	)
Total Shareholders’ Equity		1,030,665			799,999
Total Liabilities and Shareholders’ Equity	$	1,324,842		$	1,059,019

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 Six Months Ended June 30, 2010 and 2009 (unaudited)

(In Thousands, Except Share Data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
REVENUES
Rental	$	14,634			9,847		$	29,636		$	20,189
Tenant Reimbursements		2,817			2,038			5,735			3,984
Total Revenues		17,451			11,885			35,371			24,173
EXPENSES
Operating and Maintenance		1,411			1,145			2,986			2,372
Property Taxes		2,551			1,698			5,172			3,364
Interest		3,238			2,638			6,333			5,445
General and Administrative		1,839			885			2,678			1,928
Property Management Fee to Related Party		176			112			340			254
Investment Management Fee to Related Party		2,687			1,783			5,118			3,486
Acquisition Expenses		4,841			998			5,219			998
Depreciation and Amortization		6,717			6,148			13,960			11,870
Total Expenses		23,460			15,407			41,806			29,717
OTHER INCOME AND EXPENSES
Interest and Other Income		91			140			689			261
Net Settlement Payments on Interest Rate Swaps		(230	)		(152	)		(444	)		(233	)
(Loss) Gain on Interest Rate Swaps and Cap		(115	)		525			(503	)		357
Loss on Note Payable at Fair Value		(5	)		(128	)		(78	)		(693	)
Loss on Early Extinguishment of Debt		—			—			(73	)		—
Total Other Income and (Expenses)		(259	)		385			(409	)		(308	)
LOSS BEFORE PROVISION FOR INCOME TAXES AND EQUITY IN INCOME (LOSS) OF UNCONSOLIDATED ENTITIES		(6,268	)		(3,137	)		(6,844	)		(5,852	)
PROVISION FOR INCOME TAXES		(70	)		(58	)		(85	)		(87	)
EQUITY IN INCOME (LOSS) OF UNCONSOLIDATED ENTITIES		2,109			(1,051	)		2,846			(1,849	)
NET LOSS		(4,229	)		(4,246	)		(4,083	)		(7,788	)
Net Loss Attributable to Non-Controlling Operating Partnership Units		8			8			7			21
NET LOSS ATTRIBUTABLE TO CB RICHARD ELLIS REALTY TRUST SHAREHOLDERS	$	(4,221	)	$	(4,238	)	$	(4,076	)	$	(7,767	)
Basic and Diluted Net Income (Loss) Per Share—Attributable CB Richard Ellis Realty Trust Shareholders	$	(0.03	)	$	(0.06	)	$	(0.03	)	$	(0.11	)
Weighted Average Common Shares Outstanding—Basic and Diluted		128,444,105			74,543,506			120,399,165			70,844,927

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 Six Months Ended June 30, 2010 and 2009 (unaudited)

(In Thousands)

	Six Months Ended June 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(4,083	)	$	(7,788	)
Adjustments to Reconcile Net Loss to Net Cash Flows Provided by Operating Activities:
Equity in (Income) Loss of Unconsolidated Entities		(2,846	)		1,849
Distributions from Unconsolidated Entities		13,406			4,135
Loss on Interest Rate Swaps and Cap		503			(357	)
Loss on Note Payable at Fair Value		78			693
Loss on Early Extinguishment of Debt		53			—
Gain on Transfer of Real Estate		(154	)		—
Depreciation and Amortization of Building and Improvements		8,694			6,725
Amortization of Deferred Financing Costs		431			302
Amortization of Acquired In-Place Lease Value		5,162			5,070
Amortization of Above and Below Market Leases		115			397
Amortization of Lease Commissions		105			75
Amortization of Discount on Notes Payable		460			367
Share Based Compensation		240			—
Changes in Assets and Liabilities:
Accounts and Other Receivables		822			779
Deferred Rent		(2,076	)		(320	)
Other Assets		(377	)		731
Accounts Payable and Accrued Expenses		(191	)		(1,774	)
Investment and Property Management Fees Payable to Related Party		196			(26	)
Net Cash Flows Provided By Operating Activities		20,538			10,858
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of Real Estate Property		(140,523	)		(15,753	)
Investments in Unconsolidated Entities		(74,953	)		(37,332	)
Distributions from Unconsolidated Entities		5,737			230
Purchase Deposits		(1,500	)		(3,627	)
Restricted Cash		(60	)		66
Lease Commissions		(715	)		(110	)
Improvements to Investments in Real Estate		(639	)		(289	)
Net Cash Flows Used in Investing Activities		(212,653	)		(56,815	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Common Shares—Public Offering		301			151
Proceeds from Additional Paid-in-Capital—Public Offering		295,140			148,809
Redemption of Common Shares		(7,672	)		(6,519	)
Payment of Offering Costs		(26,318	)		(16,691	)
Payment of Distributions		(18,076	)		(11,271	)
Distribution to Non-Controlling Interest		(74	)		(74	)
Borrowing on Loan Payable		15,000			—
Principal Payments on Notes Payable		(10,763	)		(2,132	)
Deferred Financing Costs		(2,143	)		(6	)
Security Deposits		(9	)		46
Net Cash Flows Provided by Financing Activities		245,386			112,313
EFFECT OF FOREIGN CURRENCY TRANSLATION		117			568
Net Increase in Cash and Cash Equivalents		53,388			66,924
Cash and Cash Equivalents, Beginning of the Period		112,631			30,330
Cash and Cash Equivalents, End of the Period	$	166,019		$	97,254
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for Interest	$	5,422		$	4,870
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distributions Declared and Payable	$	19,266		$	11,181
Proceeds from Dividend Reinvestment Program	$	13,515		$	7,784
Accrued Acquisition Costs Related to Real Property	$	86		$	19
Accrued Acquisition Costs Related to Investment in Unconsolidated Entities Due to Related Party	$	659		$	—
Deconsolidation of Real Estate Transferred to Duke joint venture	$	(41,888	)	$	—
Notes Payable Assumed on Acquisitions of Real Estate	$	26,766		$	—
Increase in Investment in Duke joint venture from Transfer of Consolidated Real Estate	$	42,042		$	—
Share Awards Increase in APIC	$	240		$	—
Accrued Offering Costs	$	1,340		$	3,883

See accompanying notes to condensed consolidated financial statements.

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CB RICHARD ELLIS REALTY TRUST

Condensed Consolidated Statements of Shareholders’ Equity and Non-Controlling Interest

For the Six Months Ended June 30, 2010 and 2009 (unaudited)

(In Thousands, Except Share Data)

	Common Shares					Additional Paid-in- Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholder’s Equity			Temporary Equity Non-Controlling Interest Operating Partnership Units			Total Shareholder’s and Temporary Equity
	Shares		Amount
Balance at January 1, 2010	106,465,683		$	1,065		$	933,088		$	(121,832	)	$	(12,322	)	$	799,999		$	2,464		$	802,463
Net Income	—			—			—			(4,076	)		—			(4,076	)		(7	)		(4,083	)
Foreign Currency Translation Loss	—			—			—			—			(2,992	)		(2,992	)		(6	)		(2,998	)
Swaps Fair Value Adjustment	—			—			—			—			(1,221	)		(1,221	)		(3	)		(1,224	)
Total Comprehensive Loss	—			—			—			(4,076	)		(4,213	)		(8,289	)		(16	)		(8,305	)
Net Contributions From Public Offering of Common Shares, $0.01 Par Value	31,570,748			316			308,730			—			—			309,046			—			309,046
Trustee Common Shares	24,000			—			240			—			—			240			—			240
Costs Associated with Public Offering	—			—			(26,462	)		—			—			(26,462	)		—			(26,462	)
Redemption of Common Shares	(845,177	)		(8	)		(7,664	)		—			—			(7,672	)		—			(7,672	)
Adjustment to Record Non-Controlling Interest at Redemption Value	—			—			(90	)		—			—			(90	)		90			—
Distributions	—			—			—			(36,107	)		—			(36,107	)		(74	)		(36,181	)
Balance at June 30, 2010	137,215,254		$	1,373		$	1,207,842		$	(162,015	)	$	(16,535	)	$	1,030,665		$	2,464		$	1,033,129
	Common Stock					Additional Paid-in- Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Permanent Shareholders’ Equity			Temporary Equity Non-controlling Interest Operating Partnership Units			Total Shareholder’s and Temporary Equity
	Shares		Amount
Balance at January 1, 2009	64,490,068		$	645		$	560,110		$	(54,221	)	$	(19,327	)	$	487,207		$	2,464		$	489,671
Net Loss				—			—			(7,767	)		—			(7,767	)		(21	)		(7,788	)
Foreign Currency Translation Loss	—			—			—			—			9,312			9,312			30			9,342
Total Comprehensive Loss	—			—			—			(7,767	)		9,312			1,545			9			1,554
Net Contributions From Public Offering of Common Shares, $0.01 Par Value	15,948,990			159			156,586			—			—			156,745			—			156,745
Costs Associated with Public Offering	—			—			(16,049	)		—			—			(16,049	)		—			(16,049	)
Redemption of Common Shares	(732,311	)		(7	)		(6,512	)		—			—			(6,519	)		—			(6,519	)
Adjustment to Record Non-controlling Interest at Redemption Value	—			—			(65	)		—			—			(65	)		65			—
Distributions	—			—			—			(21,246	)		—			(21,246	)		(74	)		(21,320	)
Balance at June 30, 2009	79,706,747		$	797		$	694,070		$	(83,234	)	$	(10,015	)	$	601,618		$	2,464		$	604,082

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 Six Months Ended June 30, 2010 and 2009 (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 (the “Internal Revenue Code”), beginning with its taxable period ended December 31, 2004. The Company was formed 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.

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 limited 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 limited 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. On September 30, 2008, the real estate assets held by Carolina TRS were reclassified as held for investment and were transferred to CBRE OP.

The registration statement relating to our initial public offering was declared effective by the Securities Exchange Commission (the “SEC”) on October 24, 2006. CNL Securities Corp. acted as the dealer manager of this offering. The registration statement covered up to $2,000,000,000 in common shares of beneficial interest, 90% of which were offered at a price of $10.00 per share, and 10% of which were 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. During the period October 24, 2006 through January 29, 2009, the Company issued 60,808,967 additional common shares of beneficial interest. We terminated the initial public offering effective as of the close of business on January 29, 2009.

The registration statement relating to our follow-on public offering was declared effective by the SEC on January 30, 2009. CNL Securities Corp. is the dealer manager (the “Dealer Manager”) of this offering. The registration statement covers up to $3,000,000,000 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. We reserve the right to reallocate the shares between the primary offering and our dividend reinvestment plan. From January 30, 2009 (effective date) through June 30, 2010, the Company received gross offering proceeds of approximately $728,540,691 from the sale of 72,998,556 shares.

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. As of June 30, 2010, the Company, as the sole general partner of CBRE OP, owned approximately 99.82% of the common partnership units therein. REIT Holdings, an affiliate of the Investment Advisor, holds the remaining interest through 246,361 limited partnership units representing approximately a 0.18% ownership interest in the total limited partnership units. 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 and trustees, 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,” “the Company” “our,” and “us” refer to the activities of and the assets and liabilities of the business and operations of CB Richard Ellis Realty Trust and its subsidiaries.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (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, 2009.

In the opinion of management, all adjustments of a normal recurring nature considered necessary in all material respects to present fairly our financial position, results of our operations and cash flows as of and for the three and six months and ended June 30, 2010 have been made. The results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of the results of operations to be expected for the entire year. We have evaluated subsequent events for recognition or disclosure through August 13, 2010, which was the date we filed this Form 10-Q with the SEC.

Principles of Consolidation

Because we are the sole general partner and majority owner of CBRE OP and have majority control over their management and major operating decisions, the accounts of CBRE OP are consolidated in our financial statements. The interests of REIT Holdings are reflected in non-controlling interest in the accompanying 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 June 30, 2010 and December 31, 2009.

Investments in Unconsolidated Entities

Our determination of the appropriate accounting method with respect to our investment in CB Richard Ellis Strategic Partners Asia II-A, L.P. (“CBRE Strategic Partners Asia”), which is not considered a Variable Interest Entity (“VIE”), is partially based on CBRE Strategic Partners Asia’s sufficiency of equity investment at risk which was triggered by a substantial paydown during 2009 of its subscription line of credit backed by investor capital commitments to fund its operations. We account for this investment under the equity method of accounting.

We determine if an entity is a VIE 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 we consolidate such entity.

With respect to our majority limited membership interest in the Duke/Hulfish, LLC joint venture (the “Duke joint venture”), the Afton Ridge Joint Venture, LLC (“Afton Ridge”), the Goodman Princeton Holdings (Jersey) Limited joint venture (the “UK JV”) and the Goodman Princeton Holdings (LUX) SARL joint venture (the “European JV”) we considered the Codification Topic “Consolidation” (“FASB ASC 810”) in determining that we did not have control over the financial and operating decisions of such entities due to the existence of substantive participating rights held by the minority limited members who are also the managing members of the Duke joint venture and Afton Ridge, and the investment advisors/managers of the UK JV and the European JV, respectively.

We carry our investments in CBRE Strategic Partners Asia, the Duke joint venture, Afton Ridge, the UK JV and the European JV 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.

6

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

We eliminate transactions with such equity method entities 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). CBRE Strategic Partners Asia is a limited partnership that qualifies for specialized industry accounting for investment companies. Specialized industry accounting allows investment companies to carry their investments at fair value, with changes in the fair value of the investments recorded in the statement of operations. On the basis of the guidance in ASC 970-323, the Company accounts for its investment in CBRE Strategic Partners Asia under the equity method. As a result, and in accordance with ASC 810-10-25-15 the specialized accounting treatment, principally the fair value basis applied by CBRE Strategic Partners Asia under the investment company guide, is retained in the recognition of equity method earnings in the statement of operations of the Company. See Note 15 “Fair Value of Financial Instruments and Investments” for further discussion of the application of the fair value accounting to our investment in CBRE Strategic Partners Asia.

Use of Estimates

The preparation of financial statements, in conformity with U.S. GAAP, 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

We currently operate in two geographic areas, the United States and the United Kingdom. We view our operations as three reportable segments, a Domestic Industrial segment, a Domestic Office segment and an International Office/Retail segment, which participate in the acquisition, development, ownership, and operation of high quality real estate in their respective segments.

Cash Equivalents

We consider short-term investments with maturities of three months or less when purchased to be cash equivalents. As of June 30, 2010 and December 31, 2009, 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 June 30, 2010 and December 31, 2009, our restricted cash balance was $1,983,000 and $1,923,000, respectively, which represents amounts set aside as impounds for future property tax payments, property insurance payments and tenant improvement payments as required by our agreements with our lenders.

Discontinued Operations and Real Estate Held for Sale

In a period in which a property has been disposed of or is classified as held for sale, the statements of operations for current and prior periods report the results of operations of the property as discontinued operations.

At such time as a property is deemed held for sale, such property is carried at the lower of: (1) its carrying amount or (2) fair value less costs to sell. In addition, a property being held for sale ceases to be depreciated. We classify operating properties as property held for sale in the period in which all of the following criteria are met:

¡ management, having the authority to approve the action, commits to a plan to sell the asset;

¡ the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

¡ an active program to locate a buyer and other actions required to complete the plan to sell the asset has been initiated;

¡ the sale of the asset is probable and the transfer of the asset is expected to qualify for recognition as a completed sale within one year;

¡ the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

¡ given the actions required to complete the plan to sell the asset, it is unlikely that significant changes to the plan would be made or that the plan would be withdrawn.

As of June 30, 2010 and December 31, 2009, we did not have any properties held for sale.

7

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Accounting for Derivative Financial Instruments and Hedging Activities

All of our derivative instruments are 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. 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. We have certain interest rate swap derivatives that are designated as qualifying cash flow hedges and follow the accounting treatment discussed above. We also have certain interest rate swap derivatives that do not qualify for hedge accounting, and accordingly, changes in fair values are recognized in current earnings.

We disclose the fair values of derivative instruments and their gains and losses in a tabular format. We also provide more information about our liquidity by disclosing derivative features that are credit risk-related. Finally, we cross-reference within these footnotes to enable financial statement users to locate important information about derivative instruments (see Note 14 “Derivative Instruments” and Note 15 “Fair Value of Financial Instruments and Investments” for a further discussion of our derivative financial instruments).

Investments in Real Estate

Our investments in real estate are 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 and 25 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 June 30, 2010 and December 31, 2009, we owned, on a consolidated basis, 62 and 60 real estate investments, respectively.

On March 31, 2010, we completed the transfer of our wholly-owned Miramar I and II properties into the Duke joint venture.

On April 8, 2010, we acquired 5160 Hacienda Drive, a single tenant corporate headquarters and research and development building located in Dublin, CA, in the eastern portion of the San Francisco Bay area. The purchase price was $38,500,000.

On May 7, 2010, we acquired 10450 Pacific Center Court, a single tenant office building located in San Diego, CA. The purchase price was $32,750,000.

On June 21, 2010, we acquired 225 Summit Avenue, a single tenant corporate headquarters office building located in Montvale, NJ, in the New York metropolitan area. The purchase price was $40,600,000.

On June 24, 2010, we acquired One Wayside Road, a single tenant corporate headquarters office building located in Burlington, MA, a suburb of Boston. The purchase price was $55,525,000.

We adopted the provisions of Accounting Standard Codification Topic “Business Combinations” (“FASB ASC 805”) which required us to expense the related acquisition costs of acquisitions made during the years following December 31, 2008. The adoption of the provisions of FASB ASC 805 affects our consolidated financial statements, results of operations and cash flows from operations. We expensed $4,841,000 and $998,000, $5,219,000 and $998,000 of acquisition costs during the three and six months ended June 30, 2010 and 2009, respectively.

8

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Other Assets

Other assets include the following as of June 30, 2010 and December 31, 2009 (in thousands):

	June 30, 2010		December 31, 2009
Purchase deposits	$	1,500	$	—
Prepaid insurance		612		260
Prepaid real estate taxes		—		76
Interest rate cap at fair value		—		1
Other		142		40
Total	$	2,254	$	377

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 swap and cap agreements. Cash accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000 through December 31, 2013.

We have not experienced any losses to date on our invested cash and restricted cash. The interest rate cap and swap 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.

Non-Controlling Interest

We owned a 99.82%, 99.77%, and 99.69% partnership interest in CBRE OP as of June 30, 2010, December 31, 2009 and June 30, 2009, respectively. The remaining 0.18%, 0.23% and 0.31% partnership interest as of June 30, 2010, December 31, 2009 and June 30, 2009, respectively, was owned by REIT Holdings in the form of 246,361 non-controlling operating partnership units which were exchangeable on a one for one basis for common shares of CBRE REIT, with an estimated aggregate redemption value of $2,464,000.

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. In spite of intensive leasing efforts and preliminary interest exhibited by a variety of tenants since our acquisition in 2008, the Kings Mountain III property remains vacant. Due to the challenging economic environment, we recognized an impairment of our consolidated investment in Kings Mountain III in the amount of $9,160,000 during the year ended December 31, 2009 which reduced our carrying value of the property to $15,300,000. Based on the adjusted basis in the Kings Mountain III property no further impairment was recognized during the three and six months ended June 30, 2010. No impairment of consolidated investments was recognized during the three and six months ended June 30, 2010 and 2009.

Purchase Accounting for Acquisition of Investments in Real Estate

We apply the acquisition method to all acquired real estate investments. The purchase consideration of the real estate is allocated to the acquired tangible assets, consisting primarily of land, site improvements, 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

9

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

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), site improvements, 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 consideration 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.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). In the accompanying consolidated balance sheets, accumulated other comprehensive income (loss) consists of foreign currency translation adjustments and swap fair value adjustments for qualifying hedges.

Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, beginning with our taxable period ended December 31, 2004. To qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains) 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 the 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. Except as discussed below, we believe that we have met all of the REIT distribution and technical requirements for the six months ended June 30, 2010 and the year ended December 31, 2009. Management intends to continue to adhere to these requirements and maintain our REIT qualification.

10

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

In order for distributions to be deductible for U.S. federal income tax purposes and count towards our distribution requirement, they must not be “preferential dividends.” A distribution will not be treated as preferential if it is pro rata among all outstanding shares of stock within a particular class. IRS guidance, however, allows a REIT to offer shareholders participating in its dividend reinvestment program (“DRIP”) up to a 5% discount on shares purchased through the DRIP without treating such reinvested dividends as preferential. Our DRIP offers a 5% discount. In 2007, 2008 and the first two quarters of 2009, common shares issued pursuant to our DRIP were treated as issued as of the first day following the close of the quarter for which the distributions were declared, and not on the date that the cash distributions were paid to shareholders not participating in our DRIP. Because we declare dividends on a daily basis, including with respect to common shares issued pursuant to our DRIP, the IRS could take the position that distributions paid by us during these periods were preferential on the grounds that the discount provided to DRIP participants effectively exceeded the authorized 5% discount or, alternatively, that the overall distributions were not pro rata among all shareholders. In addition, in the years 2007 through 2009 we paid certain individual retirement account (“IRA”) custodial fees in respect of IRA accounts that invested in our common shares. The payment of certain of such amounts could be treated as dividend distributions to the IRAs, and therefore as preferential dividends as such amounts were not paid in respect of our other outstanding common shares. Although we believe that the effect of the operation of our DRIP and the payment of such fees was immaterial, the REIT rules do not provide an exception for de minimis preferential dividends.

Accordingly, we submitted a request to the IRS for a closing agreement under which the IRS would grant us relief for preferential dividends that may have been paid as a result of the manner in which we operated our DRIP and in respect of our payment of certain of such custodial fees. There can be no assurance that the IRS will accept our proposal for a closing agreement. Even if the IRS accepts the proposal, we may be required to pay a fine if the IRS were to view the prior operation of our DRIP or the payment of such fees as preferential dividends. We cannot predict whether such a penalty would be imposed or, if so, the amount of the penalty. If the IRS does not agree to our proposal for a closing agreement and treats the foregoing amounts as preferential dividends, we may be able to rectify its failure to meet the REIT distribution requirements for a year by paying “deficiency dividends,” which would be paid in respect of all of its common shares pro rata and which would be included in our deduction for dividends paid in the prior years. If required, such deficiency dividends could be as much as approximately $22 million. In such a case, we would be able to avoid losing our qualification as a REIT or being taxed on amounts distributed as deficiency dividends. However, we would be required to pay an interest-like penalty based on the amount of its deficiency dividends. Amounts paid as deficiency dividends should generally be treated as taxable income for U.S. federal income tax purposes.

Revenue Recognition and Valuation of Receivables

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 $6,535,000 and $6,785,000 as security for such leases at June 30, 2010 and December 31, 2009, 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 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 $237,000 and $183,000 as of June 30, 2010 and December 31, 2009, respectively. During the six months ended June 30, 2010, we wrote off $310,000 of the uncollectible rent receivables for the tenant Randal C. Espey at the Deerfield Commons I property, tenants Cell Arch Technologies, Inc. and Keogh Consulting, Inc. at the Lakeside Office Center, and the tenant Romeo Rim, Inc. at the Cherokee Corporate Park. $363,000 of allowance for doubtful accounts was recognized during the six months ended June 30, 2010. In addition, the unamortized tangible and intangible asset balances totaling $27,000 were also written off during the six months ended June 30, 2010, of which ($10,000), $5,000, $8,000 and $24,000 are related to above/below market leases, lease commissions, tenant improvements and in place lease value, respectively.

11

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Offering Costs

Offering costs totaling $26,462,000 and $16,049,000 were incurred during the six months ended June 30, 2010 and 2009, respectively, and are recorded as a reduction of additional paid-in-capital in the consolidated statement of shareholders’ equity. Offering costs incurred through June 30, 2010 totaled $118,964,000. Of the total amount, $106,504,000 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; $442,000 was incurred to the Investment Advisor for reimbursable marketing costs and $8,049,000 was incurred to other service providers. Each party will be paid the amount incurred from proceeds of the public offering. As of June 30, 2010 and December 31, 2009, the accrued offering costs payable to related parties included in our consolidated balance sheets were $1,192,000 and $1,114,000, respectively. Offering costs payable to unrelated parties of $148,000 and $83,000 at June 30, 2010 and December 31, 2009, respectively, were included in accounts payable and accrued expenses.

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 or premiums 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 and European real estate operations are recorded in its functional currency, namely the Great Britain Pound (“GBP”) and the Euro (“EUR”) and are 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 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 $1.4940 and $1.6156 at June 30, 2010 and December 31, 2009, respectively.

The profit and loss weighted average exchange rate of the USD to the GBP was approximately $1.4911 and $1.5775, and $1.5380 and $1.4762, respectively, for the three and six months ended June 30, 2010 and 2009.

The carrying value of our European assets and liabilities fluctuate due to changes in the exchange rate between the USD and the EUR. The exchange rate of the USD to the EUR was $1.2228 at June 30, 2010. We acquired our first property in Europe on June 10, 2010.

The profit and loss weighted average exchange rate of the USD to the EUR was approximately $1.2301 for the period ended June 30, 2010. We acquired our first property in Europe on June 10, 2010.

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. As modified by the second amended and restated agreement of limited partnership of CBRE OP entered into on January 30, 2009 (the “Second Amended Partnership Agreement”), the holder is entitled to receive distributions made by CBRE OP in an amount equal to 15% of all net sales proceeds on dispositions of properties or other assets (including by liquidation, merger or otherwise) after the other partners including us, have received in the aggregate, cumulative distributions from property income, sales proceeds or other services equal to (i) the total capital contributions made to CBRE OP and (ii) a 7% annual, uncompounded return on such capital contributions. The terms of the termination provision relating to the Class B interest requires its forfeiture in the event the Advisor unilaterally terminates the agreement between the Company, CBRE OP and the Investment Advisor (the “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 control transaction takes place.

12

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Earnings Per Share Attributable to CB Richard Ellis Realty Trust Shareholders

Basic net income (loss) per share is computed by dividing income (loss) by the weighted average number of common shares outstanding during each period. The computation of diluted net income (loss) further assumes the dilutive effect of stock options, stock warrants and contingently issuable shares, if any. No stock options, stock warrants or contingently issuable shares have been issued since the inception of the REIT and through June 30, 2010 that are not fully vested. As a result, there is no difference in basic and diluted shares.

Fair Value of Financial Instruments and Investments

We elected to apply the fair value option for one of our eligible mortgage notes payable that was newly issued debt during the year ended December 31, 2008. The measurement of the elected mortgage note payable at its fair value and its impact on the statement of operations is described in Note 15 “Fair Value of Financial Instruments and Investments” and Note 16 “Fair Value Option-Note Payable.”

We generally determine or calculate the fair value of financial instruments using appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating available market discount rate information for similar types of instruments and our estimates for non-performance and liquidity risk. These techniques are significantly affected by the assumptions used, including the discount rate, credit spreads, and estimates of future cash flow. The Investment Manager of CBRE Strategic Partners Asia applies valuation techniques for our investment carried at fair value based upon the application of the income approach, the replacement cost approach or third party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to our ownership interest therein. The financial assets and liabilities recorded at fair value in our consolidated financial statements are the two interest rate swaps, one interest rate cap, our investment in CBRE Strategic Partners Asia (a real estate entity which qualifies as an investment company under the Investment Company Act), and one mortgage note payable that is economically hedged by one of the interest rate swaps.

The remaining financial assets and liabilities which are only disclosed at fair value are comprised of all other notes payable, the unsecured line of credit and other debt instruments. We determined the fair value of our secured notes payable and other debt instruments by performing discounted cash flow analyses using an appropriate market discount rate. We calculate the market discount rate by obtaining period-end treasury rates for fixed-rate debt, or London Inter-Bank Offering Rate (“LIBOR”) rates for variable-rate debt, for maturities that correspond to the maturities of our debt and then adding an appropriate credit spread derived from information obtained from third-party financial institutions. These credit spreads take into account factors such as our credit standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt.

The carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to their short-term maturities.

We adopted the fair value measurement criteria described herein for our non-financial assets and non-financial liabilities on January 1, 2009. The adoption of the fair value measurement criteria to our non-financial assets and liabilities did not have a material impact to our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis 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; and

¡ Asset retirement obligations initially measured under the Codification Topic “Asset Retirement and Environmental Obligations” (“FASB ASC 410”).

Non-controlling (Minority) Interests in the Operating Partnership

Effective January 1, 2009, we adopted FASB ASC 810. The new accounting provisions require that amounts formerly reported as minority interests in our consolidated financial statements be reported as non-controlling interests. In connection with the issuance of this adoption, certain revisions were also made to the Codification Topic “Distinguishing Liabilities from Equity” (“FASB ASC 480-10-S99-3A”). These revisions clarify that non-controlling interests with redemption provisions outside of the control of the issuer and non-controlling interests with redemption provisions that permit the issuer to settle in either cash or common shares at the option of the issuer are subject to evaluation to determine the appropriate balance sheet classification and measurement of such instruments.

13

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

With respect to the operating partnership units, FASB ASC 480-10-S99-3A requires non-controlling interests with redemption provisions that permit the issuer to settle in either cash or common shares at the option of the issuer to be further evaluated under the Codification Sub-Topic “Derivatives and Hedging—Conditions Necessary for Equity Classification” (“FASB ASC 815-40-25-10”) (Paragraphs 815-40-25-39 through 815-40-25-42) to determine whether permanent equity or temporary equity classification on the balance sheet is appropriate. Since the operating partnership units contain such a provision, the Company evaluated this guidance and determined that the operating partnership units do not meet the requirements to qualify for equity presentation. As a result, upon the adoption of FASB ASC 810 and the related revisions to FASB ASC 480-10-S99-3A, the operating partnership units are presented in the temporary equity section of the consolidated balance sheets and reported at the higher of their proportionate share of the net assets of CBRE OP or fair value, with period to period changes in value reported as an adjustment to shareholder’s equity. Under the terms of the Second Amended Partnership Agreement the fair value of the operating partnership units is determined as an amount equal to the redemption value as defined therein.

Subsequent Events

Effective for the second quarter of 2009, we adopted the provisions of FASB ASC 855-10—Subsequent Events (“FASB ASC 855-10”), as amended by Accounting Standard Update 2010-09. ASC 855-10 establishes principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. The adoption of ASC 855-10 did not have a material impact on our financial statements.

In preparing our accompanying financial statements, management has evaluated subsequent events through the financial statement issuance date.

Adoption of Accounting Standards

Consolidations

In December 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-17, “Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” which incorporates Statement of Financial Accounting Standards (SFAS) No. 167, “Amendments to FASB Interpretation No. 46(R),” issued by the FASB in June 2009. The amendments in ASU 2009–17 replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a VIE with an approach focused on identifying which reporting entity has the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (i) the obligation to absorb losses of such entity or (ii) the right to receive benefits from such entity. ASU 2009-17 also requires additional disclosures about a reporting entity’s involvement in VIEs, which enhances the information provided to users of financial statements. We adopted ASU 2009-17 effective January 1, 2010. As a result of the fact that we have no variable interests in VIEs, the adoption of ASU 2009-17 did not have a material impact on our financial statements.

Fair Value Measurements and Disclosures

In January 2010, the FASB issued ASU 2010-06 which was an update to the Fair Value Measurements and Disclosure topic of the FASB Accounting Standards Codification (the “Codification”). ASU 2010-06 clarifies disclosure requirements relating to the level of disaggregation of disclosures relating to classes of assets and liabilities and disclosures about inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value estimates for Level 2 or Level 3 assets and liabilities. These requirements of ASU 2010-06 are effective for interim and annual disclosures for interim and annual reporting periods beginning after December 15, 2009. The adoption of these requirements of the ASU did not have a material impact on our financial statements.

New Accounting Standards

ASU 2010-06 also requires additional disclosures regarding the transfers of classifications among the fair value classification levels as well as the reasons for those changes and a separate presentation of purchases, sales, issuances and settlements in the presentation of the roll-forward of Level 3 assets and liabilities. Those disclosures are effective for interim and annual reporting periods for fiscal years beginning after December 15, 2010. The adoption of this portion of ASU 2010-06 is not expected to have a material impact on our financial statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

3. Acquisition and Transfer of Real Estate

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. Acquisition costs are expensed as incurred.

Acquisition related expenses of $3,567,000 and $3,576,000 associated with the acquisition of consolidated real estate were expensed during the three and six months ended June 30, 2010. The purchase allocation to the assets and liabilities are preliminary and subject to revision based on the finalization of the valuations 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 six months ended June 30, 2010 (in thousands):

Property	Land		Site Improvements		Building Improvements		Tenant Improvements		Acquired In- Place Lease Value		Above Market Lease Value		Below Market Lease Value			Preminum on Notes			Purchase Price		Notes Payable Assumed			Net Assets Acquired
5160 Hacienda Drive	$	8,100	$	554	$	20,564	$	1,775	$	5,768	$	1,739	$	—		$	—		$	38,500	$	—		$	38,500
10450 Pacific Center Court		5,000		497		20,145		1,171		4,193		1,744		—			—			32,750		—			32,750
225 Summit Avenue		7,100		964		24,679		2,207		6,704		—		(1,054	)		—			40,600		—			40,600
One Wayside Road		7,000		491		38,138		2,317		7,718		803		(340	)		(602	)		55,525		(26,766	)		28,759
	$	27,200	$	2,506	$	103,526	$	7,470	$	24,383	$	4,286	$	(1,394	)	$	(602	)	$	167,375	$	(26,766	)	$	140,609

Building Improvements are depreciated over 39 years; Site Improvements are depreciated over 15 and 25 years; Tenant Improvements, Acquired In-Place Lease Value, Above Market Lease Value and Below Market Lease Value are amortized over the remaining lease terms at the time of acquisition.

The following table summarizes the net assets transferred to the Duke joint venture on March 31, 2010 relating to the contribution of our 100% ownership interests in the Miramar I and Miramar II properties (in thousands):

Property	Land		Site Improvements			Building Improvements			Tenant Improvements			Acquired In- Place Lease Value			Above Market Lease Value			Net Assets Transferred
Miramar I	$	3,347	$	1,000		$	7,607		$	716		$	3,380		$	950		$	17,000
Miramar II		4,477		1,142			13,110			827			4,550			1,373			25,479
Total Assets		7,824		2,142			20,717			1,543			7,930			2,323			42,479
Accumulated Depreciation and Amortization		—		(36	)		(133	)		(55	)		(284	)		(83	)		(591	)
Net Assets	$	7,824	$	2,106		$	20,584		$	1,488		$	7,646		$	2,240		$	41,888

The contribution resulted in the deconsolidation of the Miramar I and Miramar II properties from our balance sheet on March 31, 2010 based on the contribution from consolidated subsidiaries to an unconsolidated investee entity, the Duke joint venture. As a result of the contribution, our investment in the Duke joint venture increased by $42,378,000 (inclusive of proration credits of $281,000 transferred to the Duke joint venture). We recorded a gain on the contribution of $154,000. Included in operations for the three months ended March 31, 2010, were revenues of $1,348,000 and operating expenses of $817,000. There were no comparable amounts of operations during the six months ended June 30, 2010 as the two contributed properties were not acquired until December 31, 2009.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Unaudited pro forma results, assuming the above noted acquisitions had occurred as of January 1, 2010 and January 1, 2009, for the purpose of the 2010 and 2009 pro forma disclosures, respectively, are presented below.

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Revenue	$	20,207		$	19,578		$	42,538		$	39,559
Operating Loss		(5,197	)		(5,042	)		(3,795	)		(4,862	)
Net Loss		(3,410	)		(5,751	)		(1,442	)		(7,082	)
Basic and Diluted Loss Per Share	$	(0.03	)	$	(0.08	)	$	(0.01	)	$	(0.10	)
Weighted Average Shares Outstanding for Basic and Diluted Loss		128,444,105			74,543,506			120,399,165			70,844,927

4. Investments in Unconsolidated Entities

Investments in unconsolidated entities at June 30, 2010 and December 31, 2009 consist of the following (in thousands):

	June 30, 2010		December 31, 2009
CBRE Strategic Partners Asia	$	5,432	$	8,142
Duke Joint Venture		236,710		185,088
Afton Ridge Joint Venture		20,249		20,867
UK JV		26,835		—
European JV		27,259		—
	$	316,485	$	214,097

The following is a summary of the investments in unconsolidated entities for the six months ended June 30, 2010 and for the year ended December 31, 2009 (in thousands):

	For the Six Months Ended June 30, 2010			For the Year Ended December  31, 2009
Investment Balance, January 1	$	214,097		$	131,703
Contributions		117,989			91,536
REIT Basis Adjustments		(617	)		43
Company’s Equity in Net Income (including adjustments for basis differences)		2,846			2,743
Other Comprehensive Income (Loss) of Unconsolidated Entities		1,314			(142	)
Distributions		(19,144	)		(11,786	)
Investment Balance, End of Period	$	316,485		$	214,097

CBRE Strategic Partners Asia

We have agreed to a capital commitment of $20,000,000 in CBRE Strategic Partners Asia, which extends for 36 months (to January 31, 2011) after the close of the final capital commitment. The investment commitment period was extended in January 2010 for a one year period from January 31, 2010 through January 31, 2011. As of June 30, 2010, we have contributed $12,097,000 of our capital commitment which was funded using net proceeds from our public offerings. 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 June 30, 2010, CBRE Strategic Partners Asia, with its parallel fund, CB Richard Ellis Strategic Partners Asia II, L.P., had aggregate investor commitments of approximately $394,200,000 from institutional investors including CBRE Investors. We own an ownership

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

interest of approximately 5.07% in CBRE Strategic Partners Asia. As of June 30, 2010, CBRE Strategic Partners Asia had acquired ownership interests in 10 properties, five in China and five in Japan and had sold two properties in China; one residential property and one mixed—use property. 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 approximately $2,562,000 and $5,208,000, based on our 5.07% ownership interest at June 30, 2010 and December 31, 2009, respectively.

On March 4, 2010, we received a distribution of net sales proceeds from CBRE Strategic Partners Asia totaling $2,435,000 from the February 23, 2010 sale of a residential property located in Beijing, China. The cash distributions in connection with the Beijing residential property sale are subject to recall and reinvestment into appropriate investments until the expiration of the CBRE Strategic Partners Asia commitment period on January 31, 2011.

On May 26, 2010, we received a distribution of net sales proceeds from CBRE Strategic Partners Asia totaling $3,146,000 from the sale of a joint venture interest in a mixed use project located in Tianjin, China. The cash distributions from this transaction are not subject to recall.

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. Accordingly, our share of the income or loss of these equity method entities is included in consolidated net income or loss. CBRE Strategic Partners Asia is a limited partnership that qualifies for specialized industry accounting for investment companies. Specialized industry accounting allows investment companies to carry their investments at fair value, with changes in the fair value of the investments recorded in the statement of operations. On the basis of the guidance in ASC 970-323, the Company accounts for its investment in CBRE Strategic Partners Asia under the equity method. As a result, and in accordance with ASC 810-10-25-15 the specialized accounting treatment, principally the fair value basis applied by CBRE Strategic Partners Asia under the investment company guide, is retained in the recognition of equity method earnings in the statement of operations of the Company. See Note 15 “Fair Value of Financial Instruments and Investments” for further discussion of the application of the fair value accounting to our investment in CBRE Strategic Partners Asia.

Consolidated Balance Sheets of CBRE Strategic Partners Asia as of June 30, 2010 (unaudited) and December 31, 2009 (in thousands):

	June 30, 2010		December 31, 2009
Assets
Real Estate	$	200,873	$	332,712
Other Assets		10,719		11,224
Total Assets	$	211,592	$	343,936
Liabilities and Equity
Notes Payable	$	40,082	$	68,686
Loan Payable		50,535		102,716
Other Liabilities		11,872		10,509
Total Liabilities		102,489		181,911
Company’s Equity		5,432		8,142
Other Investors’ Equity		103,671		153,883
Total Liabilities and Equity	$	211,592	$	343,936

Consolidated Statements of Operations of CBRE Strategic Partners Asia for the three and six months ended June 30, 2010 and 2009 (unaudited) (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2010		2009			2010			2009
Total Revenues and Appreciation (Depreciation)	$	6,611	$	12,001		$	5,997		$	12,295
Total Expenses		5,865		39,991			8,531			60,165
Net Income (Loss)		746		(27,990	)		(2,534	)		(47,870	)
Company’s Equity in Net Income (Loss)	$	28	$	(1,430	)	$	(148	)	$	(2,449	)

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

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 an amendment to the contribution agreement to acquire a fully leased office building for $37,111,000 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, September 30, 2008 and December 10, 2008, the Duke joint venture acquired fee interests in seven properties pursuant to the contribution agreement. All of the properties acquired were new built-to-suit, 100% leased, single-tenant buildings that did not have an operating history. The Duke joint venture obtained financing from 40/86 Mortgage Capital, Inc. for each of the seven properties. The financings, totaling $150,000,000, carry an interest rate of 5.58%, a term of five years and are cross-collateralized among the properties. The seven buildings were completed in 2008.

On May 13, 2009, the Duke joint venture acquired each of (i) 22535 Colonial Pkwy., located at 22535 Colonial Pkwy., Katy, TX, a suburb of Houston, (ii) Celebration Office Center III, located at 1390 Celebration Blvd., Celebration, FL, a suburb of Orlando, and (iii) Fairfield Distribution Ctr. IX located 4543-4561 Oak Fair Blvd., Tampa FL. The Duke joint venture acquired 22535 Colonial Pkwy. for approximately $14,700,000, Celebration Office Center III for approximately $17,050,000 and Fairfield Distribution Ctr. IX for approximately $9,300,000, exclusive of customary closing costs which were both expensed as incurred. We made cash contributions totaling approximately $32,840,000 to the Duke joint venture in connection with these acquisitions, using the net proceeds from our current public offering.

On October 15, 2009, the Duke joint venture acquired Northpoint III, located at 3300 Exchange Place, Lake Mary, FL, a suburb of Orlando, for approximately $18,240,000, exclusive of customary closing costs and acquisition fees which were both expensed, as incurred. We made cash contributions totaling approximately $14,592,000 to the Duke joint venture in connection with the acquisition.

On December 7, 2009, the Duke joint venture acquired Goodyear Crossing Ind. Park II, located at 16920 W. Commerce Drive, Goodyear, AZ, a suburb of Phoenix, for approximately $45,645,000, exclusive of customary closing costs and acquisition fees which were both expensed as incurred. We made cash contributions of approximately $36,516,000 to the Duke joint venture in connection with the acquisition.

On March 31, 2010, the Duke joint venture acquired 3900 North Paramount Parkway, 3900 South Paramount Parkway and 1400 Perimeter Park Drive in Morrisville, NC, a suburb of Raleigh, for approximately $35,250,000, exclusive of customary closing costs and acquisition fees which are both expensed as incurred. We made contributions of approximately of $28,125,000 ($19,649,000 was made in cash and $8,476,000 in-kind as discussed below) to the Duke joint venture in connection with the acquisition.

On March 31, 2010, we contributed our Miramar I and Miramar II properties, located at 2300 and 2200 SW 145^th Avenue in Miramar, FL, a suburb of Miami, to the Duke joint venture for approximately our cost of $42,650,000. Our cost of $42,650,000, of which $8,476,000 was considered an in-kind contribution by us to the Duke joint venture representing our 20% divestiture of the Miramar I and Miramar II properties, was part of a structured transaction as an offset to the $28,125,000 owed by us for our 80% share of the Duke joint venture’s purchase of 3900 North Paramount Parkway, 3900 South Paramount Parkway and 1400 Perimeter Park Drive.

As of June 30, 2010, the Duke joint venture has purchased approximately $465,766,000 of assets, exclusive of acquisition fees and closing costs, and holds interests in 17 properties, six located in Florida, three located in North Carolina, two located in Indiana, two located in Texas, two located in Arizona and one in each of Ohio and Tennessee.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

The following table provides further detailed information concerning the properties held in the Duke joint venture at June 30, 2010:

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)
Buckeye Logistics Center / Phoenix, AZ	Warehouse/ Distribution	604,678	Amazon.com(4)	06/2018	$	43,601,000	$	34,880,800	$	20,000,000	$	349,000
201 Sunridge Blvd. / Dallas, TX	Warehouse/ Distribution	822,550	Unilever(5)	09/2018		31,626,000		25,300,800		19,400,000		253,000
12200 President’s Court / Jacksonville, FL	Warehouse/ Distribution	772,210	Unilever(5)	09/2018		36,956,000		29,564,800		21,600,000		296,000
AllPoints at Anson Bldg. 1 / Indianapolis, IN	Warehouse/ Distribution	630,573	Amazon.com(4)	07/2018		33,401,000		26,720,800		17,000,000		267,000
Aspen Corporate Center 500 / Nashville, TN	Office	180,147	Verizon Wireless(6)	10/2018		37,111,000		29,688,800		21,200,000		297,000
125 Enterprise Parkway / Columbus, OH	Warehouse/ Distribution	1,142,400	Kellogg’s	03/2019		47,905,000		38,324,000		26,800,000		383,000
AllPoints Midwest Bldg. 1 / Indianapolis, IN	Warehouse/ Distribution	1,200,420	Prime Distribution	05/2019		51,800,000		41,440,000		24,000,000		414,000
22535 Colonial Pkwy. / Houston, TX	Office	89,750	Det Norske Veritas	06/2019		14,700,000		11,760,000		—		176,000
Celebration Office Center III / Orlando, FL	Office	100,924	Disney Vacation Development	04/2016		17,050,000		13,640,000		—		205,000
Fairfield Distribution Ctr. IX / Tampa, FL	Warehouse/ Distribution	136,212	Iron Mountain	08/2025		9,300,000		7,440,000		—		112,000
Northpoint III / Orlando, FL	Office	108,499	Florida Power	10/2021		18,240,000		14,592,000		—		219,000
Goodyear Crossing Ind. Park II / Phoenix, AZ	Warehouse/ Distribution	820,384	Amazon.com(4)	09/2019		45,645,000		36,516,000		—		548,000
3900 N. Paramount Pkwy. / Raleigh, NC	Office	100,987	PPD Development	11/2023		13,970,000		11,176,000		—		168,000
3900 S. Paramount Pkwy. / Raleigh, NC	Office	119,170	PPD Development/ LSSI	11/2023 10/2012		16,319,000		13,055,200		—		196,000
1400 Perimeter Park Drive / Raleigh, NC	Office	44,916	PPD Development	11/2023		4,962,000		3,969,600		—		60,000
Miramar I/ Miami, FL(7)	Office	94,060	DeVry	11/2017		17,056,000		13,644,800		—		—
Miramar II/ Miami, FL(7)	Office	128,540	Royal Caribbean	05/2016		26,124,000		20,899,200		—		—
		7,096,420			$	465,766,000	$	372,612,800	$	150,000,000	$	3,943,000

⁽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 public offerings.

⁽³⁾ Acquisition fees paid to our Investment Advisor are included in the total acquisition cost for the properties acquired prior to January 1, 2009, but are included as acquisition expenses for properties acquired subsequent to December 31, 2008.

⁽⁴⁾ Our tenants Amazon.com.indc, LLC, Amazon.com.axdc, Inc. and Amazon.com.azdc, Inc. are wholly-owned subsidiaries of Amazon.com. AllPoints at Anson Bldg. 1, Buckeye Logistics Center and Goodyear Crossing Ind. Park II are among Amazon’s largest fulfillment centers in North America by square footage.

⁽⁵⁾ 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.

⁽⁶⁾ Our tenant Cellco Partnership does business as Verizon Wireless.

⁽⁷⁾ Consolidated properties acquired on December 31, 2009 and contributed to the Duke joint venture on March 31, 2010.

We entered into an operating agreement for the Duke joint venture with Duke on June 12, 2008. 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 decisions.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

For a period of three years from the date of the operating agreement, the Duke joint venture will have the right of first offer 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. As of June 30, 2010, we have no further required capital commitments to fund the Duke joint venture, but may continue to participate in future available properties at our discretion.

We carry our investment in the Duke joint venture on the equity method of accounting because it is an entity under common control with Duke. 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.

Consolidated Balance Sheet of the Duke joint venture as of June 30, 2010 (unaudited) (in thousands):

	June 30, 2010		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	396,312	$	2,228	$	398,540
Other Assets		52,454		—		52,454
Total Assets	$	448,766	$	2,228	$	450,994
Liabilities and Equity
Notes Payable	$	150,000		—	$	150,000
Other Liabilities		5,663		—		5,663
Total Liabilities		155,663		—		155,663
Company’s Equity		234,482		2,228		236,710
Other Investor’s Equity		58,621		—		58,621
Total Liabilities and Equity	$	448,766	$	2,228	$	450,994

⁽¹⁾ REIT Basis Adjustments include those costs incurred by the Company outside of the Duke joint venture that are directly capitalizable to its investment in real estate assets acquired through the Duke joint venture including acquisition fees paid to our Investment Advisor prior to January 1, 2009. Thereafter such acquisition fees were expensed as incurred.

Consolidated Balance Sheet of the Duke joint venture as of December 31, 2009 (in thousands):

	December 31, 2009		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	339,746	$	2,906	$	342,652
Other Assets		41,979		—		41,979
Total Assets	$	381,725	$	2,906	$	384,631
Liabilities and Equity
Notes Payable	$	150,000		—	$	150,000
Other Liabilities		4,295		—		4,295
Total Liabilities		154,295		—		154,295
Company’s Equity		182,182		2,906		185,088
Other Investor’s Equity		45,248		—		45,248
Total Liabilities and Equity	$	381,725	$	2,906	$	384,631

⁽¹⁾ REIT Basis Adjustments include those costs incurred by the Company outside of the Duke joint venture that are directly capitalizable to its investment in real estate assets acquired through the Duke joint venture including acquisition fees paid to our Investment Advisor prior to January 1, 2009. Thereafter such acquisition fees were expensed as incurred.

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CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Consolidated Statement of Operations of the Duke joint venture for the three and six months ended June 30, 2010 and 2009, (unaudited) (in thousands);

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Total Revenues	$	12,467		$	6,819		$	22,427		$	13,030
Operating Expenses		2,704			1,316			5,082			2,477
Interest		2,144			2,144			4,288			4,288
Depreciation and Amortization		4,932			3,047			9,018			5,836
Net Income	$	2,687		$	312		$	4,039		$	429
Company’s Share in Net Income	$	2,149		$	312		$	2,993		$	429
Adjustments for Company Basis		(29	)		(22	)		(61	)		(54	)
Company’s Equity in Net Income	$	2,120		$	290		$	2,932		$	375

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. CK Afton Ridge acts as the managing member of Afton Ridge and is entitled to receive fees, including management, construction management and property management fees. We have joint approval rights over all major policy decisions.

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, but is included as additional cost basis at our wholly-owned investment subsidiary.

The purchase agreement with the seller contained a two year master lease agreement whereby rental revenues were guaranteed by the seller on the 9% unoccupied space at the date of the acquisition up to a maximum of $1,102,000. In addition, leasing commissions and tenant improvement allowances were to be reimbursed under the purchase agreement up to $934,000 over the same two year period for leasing activities incurred by Afton Ridge to lease this unoccupied space. As of June 30, 2010, $691,000 in rental revenue guarantee payments and $521,000 in leasing commission and tenant reimbursement payments, respectively, have been received by Afton Ridge and treated as purchase price adjustments in the period when the contingency was resolved on the Afton Ridge standalone financial statements. Our pro rata share of such purchase price adjustments have been treated as a reduction of our investment in 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 95% leased. 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.

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.

We carry our investment in Afton Ridge on the equity method of accounting because it is an entity under common control with CK Afton Ridge. 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 investees to the extent of our ownership in such entities.

21

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Consolidated Balance Sheet of Afton Ridge as of June 30, 2010 (unaudited) (in thousands):

	June 30, 2010		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	46,978	$	613	$	47,591
Other Assets		4,221		—		4,221
Total Assets	$	51,199	$	613	$	51,812
Liabilities and Equity
Note Payable	$	25,500		—	$	25,500
Other Liabilities		3,882		—		3,882
Total Liabilities		29,382		—		29,382
Company’s Equity		19,636		613		20,249
Other Investor’s Equity		2,181		—		2,181
Total Liabilities and Equity	$	51,199	$	613	$	51,812

⁽¹⁾ REIT Basis Adjustments include those costs incurred by the Company outside of Afton Ridge that are directly capitalizable to its investment in real estate assets acquired through Afton Ridge including acquisition fees paid to our Investment Advisor prior to January 1, 2009. Thereafter such acquisitions fees were expensed as incurred.

Consolidated Balance Sheet of Afton Ridge as of December 31, 2009 (in thousands):

	December 31, 2009		REIT  Basis Adjustments(1)		Total
Assets
Real Estate Net	$	47,743	$	623	$	48,366
Other Assets		4,073		—		4,073
Total Assets	$	51,816	$	623	$	52,439
Liabilities and Equity
Note Payable	$	25,500		—	$	25,500
Other Liabilities		3,822		—		3,822
Total Liabilities		29,322		—		29,322
Company’s Equity		20,244		623		20,867
Other Investor’s Equity		2,250		—		2,250
Total Liabilities and Equity	$	51,816	$	623	$	52,439

⁽¹⁾ REIT Basis Adjustments include those costs incurred by the Company outside of Afton Ridge that are directly capitalizable to its investment in real estate assets acquired through Afton Ridge including acquisition fees paid to our Investment Advisor prior to January 1, 2009. Thereafter such acquisitions fees were expensed as incurred.

Consolidated Statements of Operations of Afton Ridge for the three and six months ended June 30, 2010 and 2009 (unaudited) (in thousands);

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Total Revenues	$	1,265		$	1,272		$	2,565		$	2,555
Operating Expenses		299			338			650			639
Interest		376			376			752			752
Depreciation and Amortization		450			456			902			906
Net Income	$	140		$	102		$	261		$	258
Company’s Share in Net Income	$	126		$	92		$	235		$	233
Adjustments for REIT Basis		(3	)		(5	)		(10	)		(10	)
Company’s Equity in Net Income	$	123		$	87		$	225		$	223

22

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

UK JV and European JV

On June 10, 2010, we entered into two joint ventures with subsidiaries of the Goodman Group (ASX: GMG), or Goodman, one of which will seek to invest in logistics focused warehouse/distribution properties in the United Kingdom, or the UK JV, and the other which will seek to invest in logistics focused warehouse/distribution properties in France, Belgium, the Netherlands, Luxembourg and Germany, or the European JV. We own an 80% interest in each joint venture and Goodman owns a 20% interest in each joint venture. The terms of each joint venture are described in more detail below.

UK JV

The shareholders’ agreement pertaining to the UK JV is by and among RT Princeton UK Holdings, LLC (our wholly-owned subsidiary), Goodman Jersey Holding Trust and Goodman Princeton Holdings (Jersey) Limited, the UK JV, for the purpose of acquiring and holding, either directly or indirectly, up to £400,000,000 in logistics focused warehouse/distribution properties. On June 10, 2010, we initially funded the UK J.V. with capital contributions of $26,180,000. The UK JV has acquired an initial portfolio of two properties, as described further in the table below, which were previously owned by a subsidiary of Goodman and which were purchased by the UK JV simultaneously with the closing of the UK JV.

Property and Market	Year Built	Property Type	Tenant	Net Rentable Sq. Feet	Percentage Leased		Lease Expiration	Approximate Total Acquisition Cost (in thousands)
Amber Park, South Normanton, UK	1990	Warehouse/Distribution	UniDrug Distribution Group	208,423	100	%	3/2017	$	15,642
Brackmills, Northampton, UK	1984	Warehouse/Distribution	GE Lighting Operations Limited	186,618	100	%	3/2017	$	16,759

The initial investment term of the UK JV is three years. A board of directors, comprised of members representing us and Goodman, in each case with an equal number of votes, has the responsibility for the supervision, management and major operating decisions of the UK JV and its business, except with respect to certain reserved matters which will require the unanimous approval of us and Goodman.

During the investment period, the UK JV has a right of first offer, with respect to certain logistics development or logistics investment assets considered for investment in the UK by Goodman or us. If a deadlock has arisen pertaining to a major decision regarding a specific property, either shareholder may exercise a buy-sell option in relation to the relevant property. After the initial investment period, either shareholder wishing to exit the UK JV may exercise a buy-sell option.

The UK JV will pay certain fees to certain Goodman subsidiaries in connection with the services they provide to the UK JV, including but not limited to investment advisory, development management and property management services. Goodman may also be entitled to a promoted interest in the UK JV.

Consolidated Balance Sheet of UK JV as of June 30, 2010 (unaudited) (in thousands):

	June 30, 2010
Assets
Real Estate Net	$	33,391
Other Assets		966
Total Assets	$	34,357
Liabilities and Equity
Other Liabilities	$	813
Total Liabilities		813
Company’s Equity		26,835
Other Investor’s Equity		6,709
Total Liabilities and Equity	$	34,357

23

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Consolidated Statements of Operations of UK JV for the period June 10, 2010 through June 30, 2010 (unaudited) (in thousands); there were no activities for the three and six months ended June 30, 2009:

	For the Period June 10, 2010 Through June 30, 2010
Total Revenues	$	162
Operating Expenses		338
Net Loss	$	(176	)
Company’s Equity in Net Loss	$	(141	)

European JV

The shareholders’ agreement pertaining to the European JV is by and among RT Princeton CE Holdings, LLC (our wholly-owned subsidiary), Goodman Europe Development Trust acting by its trustee Goodman Europe Development Pty Ltd. and Goodman Princeton Holdings (LUX) S.À.R.L., the European JV, for the purpose of acquiring and holding, either directly or indirectly, up to €400,000,000 in logistics focused warehouse/ distribution properties. On June 10, 2010, we initially funded the European JV with capital contributions of $26,802,000. The European JV has acquired an initial portfolio of two properties, as described further in the table below, which were previously owned by a subsidiary of Goodman and which were purchased by the European JV simultaneously with the closing of the European JV and expects to acquire a third property upon its completion, which is expected to be in the third quarter of 2010.

Property and Market	Year Built	Property Type	Tenant	Net Rentable Sq. Feet	Percentage Leased		Lease Expiration	Approximate Total Acquisition Cost (in thousands)
Düren, Düren Germany	2008	Warehouse/Distribution	Metsä Tissue GmbH	391,494	100	%	01/2013	$	16,435
Shönberg, Shönberg, Germany	2009	Warehouse/Distribution	LK Logistik GmbH	443,215	100	%	04/2015	$	17,274
Langenbach, Munich, Germany(1)	N/A	Warehouse/Distribution	DSV Stuttgart GmbH & Co. KG	225,106	100	%	07/2015		—

⁽¹⁾ The European JV expects to acquire Langenbach upon its completion which is expected to occur during the third quarter of 2010. This acquisition is subject to certain contingencies and there can be no assurance that this acquisition will occur.

The initial investment term of the European JV is three years. A board of directors, comprised of members representing us and Goodman, in each case with an equal number of votes, has the responsibility for the supervision, management and major operating decisions of the European JV and its business, except with respect to certain reserved matters which will require the unanimous approval of us and Goodman.

During the investment period, the European JV has a right of second offer (after another investment vehicle managed by Goodman) with respect to certain logistics development or logistics investment assets considered for investment by Goodman, and has a right of first offer with respect to certain logistics development or logistics investment assets considered for investment by us. If a deadlock has arisen pertaining to a major decision regarding a specific property, either shareholder may exercise a buy-sell option in relation to the relevant property. After the initial investment period, either shareholder wishing to exit the European JV may exercise a buy-sell option. The European JV will pay certain fees to certain Goodman subsidiaries in connection with the services they provide to the European JV, including but not limited to investment advisory, development management and property management services. Certain Goodman subsidiaries may also be entitled to a promoted interest in the European JV.

24

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Consolidated Balance Sheet of European JV as of June 30, 2010 (unaudited) (in thousands):

	June 30, 2010
Assets
Real Estate Net	$	34,361
Other Assets		2,856
Total Assets	$	37,217
Liabilities and Equity
Other Liabilities	$	3,144
Total Liabilities		3,144
Company’s Equity		27,259
Other Investor’s Equity		6,814
Total Liabilities and Equity	$	37,217

Consolidated Statements of Operations of European JV for the period June 10, 2010 through June 30, 2010 (unaudited) (in thousands); there were no activities for the three and six months ended June 30, 2009:

	For the Period June 10, 2010 Through June 30, 2010
Total Revenues	$	182
Operating Expenses		210
Net Loss	$	(28	)
Company’s Equity in Net Loss	$	(22	)

5. 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 June 30, 2010 (in thousands):

	Acquired In-Place Lease Value		Below Market Lease Value		Above Market Lease Value
2010 (Six months ending December 31, 2010)	$	5,548	$	1,437	$	1,632
2011		10,870		2,871		3,251
2012		9,303		2,134		3,203
2013		7,817		1,354		2,383
2014		6,613		1,259		1,284
2015		6,392		1,222		1,213
Thereafter		25,580		3,724		5,495
	$	72,123	$	14,001	$	18,461

The amortization of the above and below-market lease values included in rental revenue were ($762,000) and $685,000, respectively, for the three months ended June 30, 2010, ($1,173,000) and $1,193,000, respectively, for the three months ended June 30, 2009. The amortization of in-place lease value included in amortization expense was $2,382,000 and $2,675,000 for the three months ended June 30, 2010 and 2009, respectively.

25

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

The amortization of the above and below-market lease values included in rental revenue were ($1,497,000) and $1,382,000, respectively, for the six months ended June 30, 2010, ($1,866,000) and $1,469,000, respectively, for the six months ended June 30, 2009. The amortization of in-place lease value included in amortization expense was $5,162,000 and $5,070,000 for the six months ended June 30, 2010 and 2009, respectively.

6. Debt

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

Property	Interest Rate as of				Maturity Date	Notes Payable as of
	June 30, 2010		December 31, 2009			June 30, 2010			December 31, 2009
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)	—		1.25		—		—			8,886
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		10,101			10,330
Fairforest Bldg. 6(3)	5.42		5.42		June 1, 2019		3,124			3,257
HJ Park—Bldg. 1(3)	4.98		4.98		March 1, 2013		783			914
North Rhett I(3)	5.65		5.65		August 1, 2019		4,078			4,246
North Rhett II(3)	5.20		5.20		October 1, 2020		2,264			2,345
North Rhett III(3)	5.75		5.75		February 1, 2020		1,832			1,903
North Rhett IV(3)	5.80		5.80		February 1, 2025		10,113			10,328
Mt Holly Bldg.(3)	5.20		5.20		October 1, 2020		2,264			2,345
Orangeburg Park Bldg(3)	5.20		5.20		October 1, 2020		2,302			2,385
Kings Mountain I(3)	5.27		5.27		October 1, 2020		1,959			2,030
Kings Mountain II(3)	5.47		5.47		January 1, 2020		5,829			6,057
Union Cross Bldg. I(3)	5.50		5.50		July 1, 2021		2,843			2,935
Union Cross Bldg. II(3)	5.53		5.53		June 1, 2021		8,689			8,972
Thames Valley Five(4)(5)	6.42		6.42		May 30, 2013		11,205			12,117
Lakeside Office Center(6)	6.03		6.03		September 1, 2015		9,000			9,000
Enclave on the Lake(7)	5.45		5.45		May 1, 2011		18,092			18,274
Albion Mills Retail Park(4)(8)(9)	5.25		5.25		October 10, 2013		8,621			9,323
Avion Midrise III & IV(10)	5.52		5.52		April 1, 2014		21,561			21,765
12650 Ingenuity Drive(11)	5.62		5.62		October 1, 2014		13,244			13,424
Maskew Retail Park(4)(12)	5.68		5.68		August 10, 2014		20,879			22,578
One Wayside Road(13)	5.66		—		August 1, 2015		14,606			—
One Wayside Road(13)	5.92		—		August 1, 2015		12,111			—
Notes Payable							229,475			217,389
Plus Premium							602			—
Less Discount							(4,157	)		(4,615	)
Less Albion Mills Retail Park Fair Value Adjustment							(247	)		(349	)
Notes Payable Net of Premiums / Discounts and Fair Value Adjustment						$	225,673		$	212,425

⁽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⁾ This loan was fully paid off on March 11, 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⁾ These loans are subject to certain financial covenants (interest coverage and loan to value).

26

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

⁽⁵⁾ We entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 5.41% plus 1.01% or 6.42% per annum as of June 30, 2010 which expires on May 30, 2013. The stated rates on the mortgage note payable were 1.66% and 1.59% at June 30, 2010 and December 31, 2009, respectively, and were based on GBP-based LIBOR plus a spread of 1.01%.

⁽⁶⁾ 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.

⁽⁷⁾ The loan was assumed from the seller of Enclave on the Lake on July 1, 2008 and was recorded at estimated fair value which includes the discount.

⁽⁸⁾ The Albion Mills Retail Park notes payable balance is presented at cost basis. This loan is carried on our balance sheet at fair value (see Note 15).

⁽⁹⁾ We entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.94% plus 1.31% or 5.25% per annum as of June 30, 2010 which expires on October 10, 2013. The stated rates on the mortgage note payable were 1.96% and 1.88% at June 30, 2010 and December 31, 2009, respectively, and were based on GBP-based LIBOR plus a spread of 1.31%.

⁽¹⁰⁾ The loan was assumed from the seller of Avion Midrise III & IV on November 18, 2008 and was recorded at estimated fair value which includes the discount.

⁽¹¹⁾ The loan was assumed from the seller of 12650 Ingenuity Drive on August 5, 2009 and was recorded at estimated fair value which includes the discount.

⁽¹²⁾ We entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.42% plus 2.26 or 5.68% per annum as of June 30, 2010 which expires on August 10, 2014. The stated rates on the mortgage note payable was 2.91% and 2.83% at June 30, 2010 and December 31, 2009, respectively, and were based on GBP-based LIBOR plus a spread of 2.26%.

⁽¹³⁾ The two loans were assumed from the seller of One Wayside Road on June 24, 2010 and were recorded at estimated fair value which include the premiums.

Notes Payable / Loans Payable

On April 27, 2007, we, in connection with the acquisition of 602 Central Blvd., entered into a £5,500,000 financing arrangement with the Royal Bank of Scotland secured by the property. The loan was for a term of seven years with interest at a variable rate, adjusted quarterly, based on three month GBP-based LIBOR plus 0.67%, per annum. On March 11, 2010, we paid off the £5,500,000 ($8,281,000 at March 11, 2010) loan and expensed certain closing costs plus the unamortized deferred financing costs associated with obtaining the loan totaling $73,000. The interest rate cap agreement was cancelled concurrent with the loan payoff.

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 $1,868,000 were made during the six months ended June 30, 2010. We indemnify the lenders against environmental costs and expenses and guarantee the loans under certain conditions.

On May 30, 2008, we entered into a £7,500,000 ($11,205,000 at June 30, 2010) 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 adjusted quarterly, based on six month GBP-based LIBOR plus 1.01%. In addition, we incurred financing costs of approximately £67,000 ($100,000 at June 30, 2010) associated with obtaining this loan. On August 14, 2008, we entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 5.41% plus 1.01% or 6.42% per annum as of June 30, 2010, and expires on May 30, 2013. Interest only payments 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 $18,281,000 ($18,790,000 face value less discount of $509,000) loan from NorthMarq Capital, Inc. that bears interest at a fixed 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 $182,000 were made during the six months ended June 30, 2010. In addition, we incurred financing costs totaling $241,000 in conjunction with the assumption of the loan.

27

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

On October 10, 2008, we entered into a £5,771,000 ($8,621,000 at June 30, 2010) financing agreement with the Royal Bank of Scotland plc secured by Albion Mills Retail Park property. The loan is for a term of five years and bears interest at a variable rate adjusted quarterly, based on six month GBP-based LIBOR plus 1.31%. In addition, we incurred financing costs of approximately £75,000 ($112,000 at June 30, 2010) associated with obtaining this loan. On November 25, 2008, we entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.94% plus 1.31% or 5.25% per annum as of June 30, 2010 and expires on October 10, 2013. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

On November 18, 2008, in connection with the acquisition of Avion Midrise III & IV, we assumed $20,851,000 ($22,186,000 face value less discount of $1,335,000) fixed rate mortgage loan from Capmark Finance, Inc. that bears interest at a rate of 5.52% per annum and matures on April 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $204,000 were made during the six months ended June 30, 2010. In addition, we incurred financing costs totaling $344,000 in conjunction with the assumption of the loan.

On August 5, 2009, in connection with the acquisition of 12650 Ingenuity Drive, we assumed a $12,572,000 ($13,539,000 face value less a discount of $967,000) fixed rate mortgage loan from PNC Bank, National Association that bears interest at a rate of 5.62% and matures on October 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $180,000 were made during the six months ended June 30, 2010. In addition, we incurred financing costs totaling $284,000 in conjunction with the assumption of the loan.

On August 10, 2009, we entered into a £13,975,000 ($20,879,000 at June 30, 2010) financing agreement with the Abbey National Treasury Services plc secured by the Maskew Retail Park property. On September 24, 2009, we drew the full amount of the loan and concurrently entered into an interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.42% plus 2.26% or 5.68% per annum for the five-year term of the loan. Interest only payments are due quarterly for the term of the loan with principal due at maturity. In addition, we incurred financing costs of approximately £268,000 ($401,000 at June 30, 2010) associated with obtaining this loan.

On May 26, 2010, we entered into a $70,000,000 revolving credit facility through our subsidiaries with Wells Fargo Bank, N.A., or the Wells Fargo Credit Facility. The initial maturity date of the Wells Fargo Credit Facility is May 26, 2014, however we may extend the maturity date to May 26, 2015, subject to certain conditions. $15,000,000 of the Wells Fargo Credit Facility was initially drawn upon closing on May 26, 2010 and is included in Loans Payable on our consolidated balance sheet, with the remaining $55,000,000 available for disbursement during the term of the facility. We have the right to prepay any outstanding amount of the Wells Fargo Credit Facility, in whole or in part, without premium or penalty at any time during the term of this Wells Fargo Credit Facility, however, we generally may not reduce the outstanding principal balance below a minimum outstanding amount of $15,000,000, without reducing the total $70,000,000 Wells Fargo Credit Facility capacity. The Wells Fargo Credit Facility bears interest at a floating rate of 300 basis points over the LIBOR, however the interest rate shall be at least 4.00% for any of the outstanding balance that is not subject to an interest rate swap with an initial term of at least two years. Upon closing on May 26, 2010, we entered into an interest rate swap agreement with Wells Fargo Bank, N.A. to effectively fix the interest rate on the initial $15,000,000 outstanding loan amount at 5.10% for the four-year term of the facility. The interest rate swap was designated as a qualifying cash flow hedge at the start date of the hedge relationship as described in Note 14 “Derivative Instruments.” The Wells Fargo Credit Facility is secured by our 13201 Wilfred, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, Crest Ridge Corporate Center I and West Point Trade Center properties. In addition, CBRE OP provides a limited guarantee for the Wells Fargo Credit Facility. The Wells Fargo Credit Facility is subject to certain customary financial covenants, including certain negative financial covenants, which we believe we were in compliance with as of May 26, 2010. A commitment fee of $1,050,000 was paid to Wells Fargo Bank, N.A. at closing. We will also pay certain other customary fees in connection with the Wells Fargo Credit Facility including fees related to the unused loan amount, extension, administrative and other fees, the amount of which in some cases is subject to certain terms and conditions.

On June 24, 2010, we assumed two loans in connection with the acquisition of One Wayside Road (i) $14,888,000 ($14,633,000 at face value plus a premium of $255,000) fixed rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.66% and matures on August 1, 2015 and (ii) $12,479,000 ($12,132,000 at face value plus a premium of $347,000) fixed rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.92% and matures on August 1, 2015. Principal and interest payments are due monthly for the remaining loan terms and principal payments totaling $48,000 were made during June 2010 on the two loans. In addition, we incurred financing costs totaling $342,000 in conjunction with the assumption of the loan.

28

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

The minimum principal payments due for the notes payable and loan payable are as follows as of June 30, 2010 (in thousands):

2010 (Six months ending December 31, 2010)	$	2,742
2011		36,766
2012		18,001
2013		25,945
2014		73,123
2015		55,188
Thereafter		32,710
	$	244,475

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 matured 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 outstanding (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 at least 1.75 to 1.00, as defined in the amended and restated credit agreement. As of June 30, 2010, there was no amount outstanding under the Revolving Credit Facility. The Revolving Credit Facility matured on August 8, 2010 in accordance with its terms.

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.

7. Minimum Future Rents Receivable

The following is a schedule of minimum future rentals to be received on non-cancelable operating leases from consolidated properties as of June 30, 2010 (in thousands):

2010 (Six months ending December 31, 2010)	$	32,976
2011		66,668
2012		60,703
2013		53,967
2014		50,937
2015		48,609
Thereafter		206,009
	$	519,869

8. Concentrations

Tenant Revenue Concentrations

For the six months ended June 30, 2010, there were no significant revenue concentrations.

For the six months ended June 30, 2009, the tenant in Enclave on the Lake accounted for approximately $2,870,000 or approximately 12% of total revenues from consolidated properties. The lease under which the tenant occupies our Enclave on the Lake property expires in February 2012.

29

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Geographic Concentrations

As of June 30, 2010 we owned 62 consolidated properties located in eleven states (California, Florida, Georgia, Illinois, Massachusetts, Minnesota, New Jersey, North Carolina, South Carolina, Texas and Virginia) and in the United Kingdom.

As of June 30, 2009, we owned 53 consolidated properties located in nine states (California, Georgia, Illinois, Massachusetts, Minnesota, North Carolina, South Carolina, Texas and Virginia) and in the United Kingdom.

Our geographic revenue concentrations from consolidated properties for the six months ended June 30, 2010, and 2009 are as follows:

	Six Months Ended June 30,
	2010		2009
Domestic
South Carolina	18.70	%	30.01	%
California	16.11		5.77
Texas	13.04		21.18
Florida	12.43		—
Minnesota	7.80		0.04
Virginia	6.46		9.18
Massachusetts	5.93		4.46
North Carolina	4.35		4.60
Georgia	3.58		5.60
Illinois	1.22		3.04
New Jersey	0.33		0.00
Total Domestic	89.95		83.88
International
United Kingdom	10.05		16.12
Total	100.00	%	100.00	%

Our geographic long-lived asset concentrations from consolidated properties as of June 30, 2010 and December 31, 2009 are as follows:

	June 30, 2010		December 31, 2009
Domestic
South Carolina	20.47	%	23.95	%
California	17.15		9.90
Massachusetts	11.23		5.22
Texas	8.03		9.43
North Carolina	6.33		7.35
Florida	6.32		13.26
Minnesota	5.25		6.12
New Jersey	4.93		0.00
Virginia	4.72		5.53
Illinois	2.01		2.33
Georgia	1.64		1.95
Total Domestic	88.08		85.04
International
United Kingdom	11.92		14.96
Total	100.00	%	100.00	%

30

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

9. Segment Disclosure

Our reportable segments consist of three types of commercial real estate properties, namely, Domestic Industrial Properties, Domestic Office Properties and International Office/Retail 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 in Note 2—“Basis of Presentation and Summary of Significant Accounting Policies.”

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, property management fees, property level general and administrative expenses 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 six months ended June 30, 2010 and 2009 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Domestic Industrial Properties
Revenues:
Rental	$	5,487	$	4,303	$	11,300	$	8,989
Tenant Reimbursements		1,295		1,003		2,553		2,103
Total Revenues		6,782		5,306		13,853		11,092
Property and Related Expenses:
Operating and Maintenance		395		313		733		670
General and Administrative		116		94		162		139
Property Management Fee to Related Party		77		87		138		180
Property Taxes		1,455		1,090		2,886		2,146
Total Expenses		2,043		1,584		3,919		3,135
Net Operating Income		4,739		3,722		9,934		7,957
Domestic Office Properties
Revenues:
Rental		7,612		3,713		14,861		7,485
Tenant Reimbursements		1,467		940		3,046		1,701
Total Revenues		9,079		4,653		17,907		9,186
Property and Related Expenses:
Operating and Maintenance		957		739		2,114		1,528
General and Administrative		84		43		171		101
Property Management Fee to Related Party		27		27		60		64
Property Taxes		1,096		608		2,286		1,218
Total Expenses		2,164		1,417		4,631		2,911
Net Operating Income		6,915		3,236		13,276		6,275

31

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
International Office/Retail Properties
Revenues:
Rental		1,535			1,831			3,475			3,715
Tenant Reimbursements		55			95			136			180
Total Revenues		1,590			1,926			3,611			3,895
Property and Related Expenses:
Operating and Maintenance		59			93			139			174
General and Administrative		86			15			121			67
Property Management Fee to Related Party		72			(2	)		142			10
Total Expenses		217			106			402			251
Net Operating Income		1,373			1,820			3,209			3,644
Reconciliation to Consolidated Net Loss
Total Segment Net Operating Income		13,027			8,778			26,419			17,876
Interest Expense		3,238			2,638			6,333			5,445
General and Administrative		1,553			733			2,224			1,621
Investment Management Fee to Related Party		2,687			1,783			5,118			3,486
Acquisition Expenses		4,841			998			5,219			998
Depreciation and Amortization		6,717			6,148			13,960			11,870
		(6,009	)		(3,522	)		(6,435	)		(5,544	)
Other Income and Expenses
Interest and Other Income		91			140			689			261
Net Settlement Payments on Interest Rate Swaps		(230	)		(152	)		(444	)		(233	)
Loss on Interest Rate Swaps and Cap		(115	)		525			(503	)		357
Loss on Note Payable at Fair Value		(5	)		(128	)		(78	)		(693	)
Loss on Early Extinguishment of Debt		—			—			(73	)		—
Loss Before Provision for Income Taxes and Equity in Income (Loss) of Unconsolidated Entities		(6,268	)		(3,137	)		(6,844	)		(5,852	)
Provision for Income Taxes		(70	)		(58	)		(85	)		(87	)
Equity in Income (Loss) of Unconsolidated Entities		2,109			(1,051	)		2,846			(1,849	)
Net Loss		(4,229	)		(4,246	)		(4,083	)		(7,788	)
Net Loss Attributable to Non-Controlling Operating Partnership Units		8			8			7			21
Net Loss Attributable to CB Richard Ellis Realty Trust Shareholders	$	(4,221	)	$	(4,238	)	$	(4,076	)	$	(7,767	)

Condensed Assets	June 30, 2010		December 31, 2009
Domestic Industrial Properties	$	340,533	$	346,681
Domestic Office Properties		402,123		279,658
International Office/Retail Properties		101,451		115,223
Non-Segment Assets		480,735		317,457
Total Assets	$	1,324,842	$	1,059,019
	Six Months Ended June 30,
Capital Expenditures	2010		2009
Domestic Industrial Properties	$	817	$	15,647
Domestic Office Properties		167,001		35
International Office/Retail Properties		—		379
Non-Segment Assets		110		—
Total Capital Expenditures	$	167,928	$	16,061

32

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

10. Investment Management and Other Fees to Related Parties

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

Offering Costs Relating to Public Offerings

Offering costs totaling $13,522,000 and $8,153,000, $24,936,000 and $13,292,000 were incurred during the three and six months ended June 30, 2010 and 2009, respectively, and are recorded as a reduction of additional paid-in-capital in the consolidated statement of shareholders’ equity. Of the total amounts, $13,464,000, $8,102,000, $24,833,000 and $13,219,000 were incurred to CNL Securities Corp., as dealer manager and $58,000, $52,000, $103,000 and $73,000 were incurred to the Investment Advisor for reimbursable marketing for the three and six months ended June 30, 2010 and 2009, respectively. Each party will be paid the amount incurred from proceeds of the public offering. As of June 30, 2010 and December 2009 the accrued offering costs payable to related parties included in our consolidated balance sheets were $1,192,000 and $1,114,000.

Investment Management Fee to Related Party

Prior to October 24, 2006, the Investment Advisor received an annual fee equal to 0.75% of the book value of the total assets, as defined in the Advisory Agreement, based on the assets of CBRE OP. The investment management fee was calculated monthly based on the average of total assets, as defined, during such period. On October 24, 2006, the Board of Trustees, including our independent trustees, approved and the Company 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. On January 30, 2009, we entered into that certain second amended and restated advisory agreement (the “Second Amended Advisory Agreement”) with CBRE OP and the Investment Advisor. The Second Amended Advisory Agreement modified, among other things, the investment management fee to consist of (a) a monthly fee equal to one twelfth of 0.5% of the aggregate costs (before non-cash reserves and depreciation) of all real estate investment in our portfolio and (b) a monthly fee equal to 5.0% of the aggregate monthly net operating income derived from all real estate investments in our portfolio. 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 $2,687,000 and $1,783,000 for the three months ended June 30, 2010 and 2009, respectively; and $5,118,000 and $3,486,000 for the six months ended June 30, 2010 and 2009, respectively. As of June 30, 2010 and December 31, 2009, the investment management fees payable to related party in our consolidated balance sheets were $950,000 and $757,000, 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 $371,000 and $246,000 for the three months ended June 30, 2010 and 2009, respectively; and $707,000 and $481,000 for the six months ended June 30, 2010 and 2009, respectively.

Acquisition Fee and Expenses to Related Party

On January 30, 2009, we entered into that certain Second Amendment Advisory Agreement that permits the Investment Advisor to earn an acquisition fee of up to 1.5% 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 $3,304,000 and $723,000 for the three months ended June 30, 2010 and 2009, respectively; and $3,600,000 and $723,000 for the six months ended June 30, 2010 and 2009, 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 $618,000 and $135,000 for the three months ended June 30, 2010 and 2009, respectively; and $673,000 and $135,000 for the six months ended June 30, 2010 and 2009, respectively. The Investment Advisor earned $330,000 and $72,000 in acquisition related expenses during the three months ended June 30, 2010 and 2009, respectively; and $373,000 and $72,000 for the six months ended June 30, 2010 and 2009, respectively. Prior to the adoption of “Business Combinations” on January 1, 2009, these acquisitions fees and expenses were capitalized to investments in real estate and related intangibles.

33

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

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 $176,000 and $112,000 for the three months ended June 30, 2010 and 2009, respectively; and $340,000 and $254,000 for the six months ended June 30, 2010 and 2009, respectively. As of June 30, 2010 and December 31, 2009 the property management fees payable to related party included in our consolidated balance sheets were $109,000 and $106,000, respectively. No brokerage fees were paid to affiliates of the Investment Advisor for the three and six months ended June 30, 2010 and 2009; and $210,000 in $0 mortgage banking fees were paid to CBRE Capital Markets, as affiliate of the Investment Advisor, for three and six months ended June 30, 2010. No mortgage banking fees were paid to CBRE Capital Markets during the three and six months ended June 30, 2009

Affiliates of the Investment Advisor received leasing fees of $373,000 and $0 for the three months ended June 30, 2010 and 2009, respectively; and $468,000 and $67,000 for the six months ended June 30, 2010 and 2009.

No management services fees were paid to CB Richard Ellis, UK for the three and six months ended June 30, 2010 and 2009, respectively.

11. 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. Our key employees, directors, trustees, officers, advisors, consultants or other personnel and our subsidiaries or other persons expected to provide significant services 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. On April 20, 2010, the board’s independent trustees, Charles E. Black, Martin A. Reid and James M. Orphanides were awarded equity grants by the Company under the 2004 equity incentive plan on the following terms: (i) each award was for $80,000 in common shares of the Trust (or 8,000 shares at $10.00 per share) for a total of $240,000; (ii) each award vested in its entirety, upon issuance; and (iii) the independent trustee would not be able to redeem any of the common shares prior to the third anniversary of date of issuance, but retains the rights to dividends declared and paid during such restriction period. We recognized a stock based compensation expense of $240,000 during the three and six months ended June 30, 2010 as a result of granting these awards to our independent trustees.

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 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 three months ended March 31, 2010 and 2009, respectively.

34

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

12. 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 by the SEC on October 24, 2006. CNL Securities Corp. acted as the dealer manager of this offering. The registration statement covered up to $2,000,000,000 in common shares of beneficial interest, 90% of which were offered at a price of $10.00 per share, and 10% of which were 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 January 29, 2009, we had issued 60,808,967 common shares in our initial public offering. We terminated the initial public offering effective as of the close of business on January 29, 2009. The registration statement relating to our follow-on public offering was declared effective by the SEC on January 30, 2009. CNL Securities Corp. is the dealer manager of this offering. The registration statement covers up to $3,000,000,000 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. We reserve the right to reallocate the shares between the primary offering and our dividend reinvestment plan. From January 30, 2009 (effective date) through June 30, 2010, we received gross offering proceeds of approximately $728,540,691 from the sale of 72,998,556 shares.

During the six months ended June 30, 2010 and 2009, we repurchased 845,178 common shares, and 732,311 common shares, respectively, under our Share Redemption Program for $7,673,000 and $6,519,000, respectively.

13. 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 six months ended June 30, 2010 and 2009:

	Six Months Ended June 30,
	2010			2009
Distributions declared per common share	$	0.300		$	0.300
Less: Distributions declared in the current period, and paid in the subsequent period		(0.150	)		(0.150	)
Add: Distributions declared in the prior year, and paid in the current year		0.150			0.150
Distributions paid per common share	$	0.300		$	0.300

Distributions paid to shareholders during the six months ended June 30, 2010 and 2009 totaled $31,591,000, and $19,055,000, respectively.

We issued 1,422,679 and 816,347 common shares pursuant to our dividend reinvestment plan for the six months ended June 30, 2010 and 2009, respectively.

35

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

14. Derivative Instruments

The following table sets forth the terms of our interest rate swap derivative instruments at June 30, 2010 (amounts in thousands):

Type of Instrument	Notional Amount		Fair Value			Pay Fixed Rate		Receive Variable Rate		Maturity Date
Non-qualifying Interest Rate Swap on Thames Valley Five debt(1)	$	11,205	$	(1,198	)	5.41	%	0.71	%	May 30, 2013
Non-qualifying Interest Rate Swap on Albion Mills Retail Park debt(1)	$	8,537	$	(604	)	3.94	%	0.65	%	October 10, 2013
Qualifying Interest Rate Swap on Maskew Retail Park debt(1)	$	20,879	$	(1,190	)	3.42	%	0.65	%	August 10, 2014
Qualifying Interest Rate Swap on Wells Fargo Credit Facility	$	15,000	$	(326	)	2.10	%	0.35	%	May 26, 2014

⁽¹⁾ Based on three month GBP-based LIBOR BBA Index with variable rate reset dates every 90 days during the term of swaps.

The following table sets forth the terms of our interest rate swap derivative instruments at December 31, 2009 (amounts in thousands):

Type of Instrument	Notional Amount		Fair Value			Pay Fixed Rate		Receive Variable Rate		Maturity Date
Non-qualifying Interest Rate Swap on Thames Valley Five debt(1)	$	12,117	$	(1,049	)	5.41	%	0.61	%	May 30, 2013
Non-qualifying Interest Rate Swap on Albion Mills Retail Park debt(1)	$	9,231	$	(361	)	3.94	%	0.56	%	October 10, 2013
Qualifying Interest Rate Swap on Maskew Retail Park debt(1)	$	22,578	$	(293	)	3.42	%	0.58	%	August 10, 2014
Qualifying Interest Rate Swap on Wells Fargo Credit Facility	$	—	$	—		—		—		—

⁽¹⁾ Based on three month GBP-based LIBOR BBA Index with variable rate reset dates every 90 days during the term of swaps.

We marked our two non-qualifying economic hedge interest rate swap instruments to their estimated fair value of ($1,802,000) and ($1,410,000) on the consolidated balance sheet at June 30, 2010 and December 31, 2009 included in Liabilities as Interest Rate Swaps at Fair Value. We recognized a loss on interest rate swaps of $503,000 for the six months ended June 30, 2010 versus a gain of $357,000 for the six months ended June 30, 2009 included in Loss on Interest Rate Swaps and Cap on the Consolidated Statement of Operations.

Our $20,879,000 notional amount interest rate swap has been designated as a qualifying cash flow hedge of the LIBOR base payments due under our Maskew Retail Park variable rate note payable from its inception on September 24, 2009. The estimated fair value of the interest rate swap value of ($1,190,000) and ($293,000) as of June 30, 2010 and December 31, 2009, respectively, has resulted in a swap fair value adjustment being recorded to other comprehensive loss totaling $897,000 for the six months ended June 30, 2010. There was no measured ineffectiveness for the qualifying hedge during the six months ended June 30, 2009.

Our $15,000,000 notional amount interest rate swap has been designated as a qualifying cash flow hedge of the LIBOR base payments due under our Wells Fargo Credit Facility variable rate loan payable from its inception on May 26, 2010. The estimated fair value of the interest rate swap value of ($326,000) and $0 as of June 30, 2010 and December 31, 2009, respectively, has resulted in a swap fair value adjustment being recorded to other comprehensive loss totaling $326,000 for the six months ended June 30, 2010. There was no measured ineffectiveness for the qualifying hedge during the six months ended June 30, 2009.

As discussed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” all of our derivative instruments are used as economic hedges to swap identified variable rate debt interest payments to fixed rate payments through the use of interest rate swap agreements. Our Maskew Retail Park and Wells Fargo Credit Facility hedges are our only qualifying cash flow hedges in accordance with the accounting for derivative instruments and hedging activities. Further disclosures regarding our derivative financial instruments are included in Note 15 (Fair Value of Financial Instruments and Investments) of these consolidated financial statements.

36

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

15. Fair Value of Financial Instruments and Investments

We apply the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical financial instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as instruments that have little to no pricing observability as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. We have classified the Albion Mills Retail Park notes payable as Level 3 as of June 30, 2010 and December 31, 2009 due to the lack of current market activity and our reliance on unobservable inputs to estimate the fair value of the mortgage note payable.

As of June 30, 2010 and December 31, 2009, we held certain items that are required to be measured at fair value on a recurring basis. These included cash equivalents, an interest rate cap, interest rate swap derivative contracts and our equity method investment in CBRE Strategic Partners Asia. Cash equivalents consist of short-term, highly liquid, income-producing investments, all of which have maturities of 90 days or less, including money market funds and U.S. Government obligations. Derivative instruments are related to our economic hedging activities with respect to interest rates.

The fair values of the interest rate cap and swap derivative agreements are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rate fell above the strike rate of the interest rate cap agreement, and by discounting the future expected cash payments and receipts on the pay and receive legs of the interest rate swap agreements that swap the estimated variable rate mortgage note payment stream for a fixed rate payment stream over the period of the loan. The variable interest rates used in the calculation of projected receipts on the interest rate cap agreement and on the interest rate swap agreements are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements (where appropriate). Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of June 30, 2010 and December 31, 2009, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We have consistently applied these valuation techniques in all periods presented and believe we have obtained the most accurate information available for the types of derivative contracts we hold.

Our investment in CBRE Strategic Partners Asia is based on the Level 3 valuation inputs applied by the Investment Manager of this investment company utilizing the following approaches for valuing the underlying real estate related investments within the investment company:

¡ The income approach is generally based on a discounted cash flow analysis. Such an analysis for a real property includes projecting net cash flows from the property from a buyer’s perspective and computing the present value of the cash flows using a market discount rate. The cash flows include a projection of the net sales proceeds at the end of our estimate of a market participant holding period, computed using market reversionary capitalization rates and projected cash flows from the property for the year following the holding period.

¡ The replacement cost approach to property valuation is a theoretical breakdown of the property into land and building components. The theory is that the value of a property can be estimated by summing the land value and the depreciated value of any improvements. While the replacement cost of the improvements can be determined by adding the labor, material, and other costs, land values must be derived from an analysis of comparable data. The cost approach is considered reliable when used on newer structures, but the method tends to become less reliable for older properties.

¡ For investments owned more than one year, except for investments under construction or incurring significant renovation, it is CBRE Strategic Partners Asia’s policy to obtain a third-party appraisal. For investments in real estate under construction or incurring significant renovation, the valuation analysis is prepared by the Investment Manager.

37

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

The following items are measured at fair value on a recurring basis at June 30, 2010 and December 31, 2009 (in thousands):

	As of June 30, 2010
							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 (Liabilities)
Cash and Cash Equivalents	$	140,032		$	140,032		$	140,032	$	—		$	—
Interest Rate Swaps at Fair Value—Non Qualifying Hedges	$	(1,802	)	$	(1,802	)	$	—	$	(1,802	)	$	—
Interest Rate Swaps at Fair Value—Qualifying Hedges	$	(1,516	)	$	(1,516	)	$	—	$	(1,516	)	$	—
Investment in CBRE Strategic Partners Asia	$	5,432		$	5,432		$	—	$	—		$	5,432
Note Payable at Fair Value	$	(8,374	)	$	(8,374	)	$	—	$	—		$	(8,374	)
	As of December 31, 2009
							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 (Liabilities)
Cash and Cash Equivalents	$	79,997		$	79,997		$	79,997	$	—		$	—
Interest Rate Cap at Fair Value	$	1		$	1		$	—	$	1		$	—
Interest Rate Swaps at Fair Value—Non Qualifying Hedges	$	(1,410	)	$	(1,410	)	$	—	$	(1,410	)	$	—
Interest Rate Swaps at Fair Value—Qualifying Hedges	$	(293	)	$	(293	)	$	—	$	(293	)	$	—
Investment in CBRE Strategic Partners Asia	$	8,142		$	8,142		$	—	$	—		$	8,142
Note Payable at Fair Value	$	(8,974	)	$	(8,974	)	$	—	$	—		$	(8,974	)

The following table presents our activity for the variable rate note payable and our investment in CBRE Strategic Partners Asia measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2010 (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Note Payable			Investment in CBRE Strategic Partners Asia
Balance at January 1, 2010	$	(8,974	)	$	8,142
Transfers to Level 3		—			—
Contributions		—			3,019
Distributions		—			(5,581	)
Total Loss on Fair Value Adjustment		(77	)		(148	)
Translation Adjustment in Other Comprehensive Income		677			—
Balance at June 30, 2010	$	(8,374	)	$	5,432
The Amount of Total Loss for the Period Included in Earnings Attributable to the Change in Unrealized Gain and Equity in Income of Unconsolidated Entities Relating to Note Payable and Investment in Unconsolidated Entities Held at June 30, 2010	$	(77	)	$	(148	)

Losses (realized and unrealized) included in earnings related to the interest rate cap and non-qualifying swaps, as well as for the elected fair value note payable for the three months ended June 30, 2010 and 2009 are reported as components of “Other Income and Expense” on the consolidated statements of operations.

38

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Disclosure of Fair Value Financial Instruments

For disclosure purposes only, the following table summarizes our notes payable and their estimated fair value at June 30, 2010 and December 31, 2009 (in thousands):

	Book Value				Fair Value
Financial Instrument	June 30, 2010		December 31, 2009		June 30, 2010		December 31, 2009
Notes Payable	$	217,299	$	203,451	$	221,547	$	201,113
Note Payable at Fair Value	$	8,374	$	8,974	$	8,374	$	8,974

For purposes of this fair value disclosure, we based our fair value estimate for notes payable on our internal valuation that includes a representative sample of our lenders’ market interest rate quotes as of June 30, 2010 and December 31, 2009 for debt with similar risk characteristics and maturities. We based the Note Payable carried at fair value on a third party appraiser’s valuation which used similar techniques as our internal valuation model as of June 30, 2010 and December 31, 2009.

16. Fair Value Option—Note Payable

During the fourth quarter of 2008 we elected to apply the fair value option on a note payable which bears interest at a variable rate and is currently subject to an economic hedge by an interest rate swap with similar terms and the same notional amount. We have elected to apply the fair value option on the Albion Mills Retail Park variable rate note payable to match the fair value treatment of interest rate swap derivative on the same note payable thereby achieving a reduction in the artificial volatility in net income or loss that occurs when related financial assets and liabilities are measured and reported on a different basis in the consolidated financial statements.

We applied the fair value option for the Albion Mills Retail Park note payable at each reporting period. Included in loss on notes payable at fair value in the statement of operations were $5,000 and $128,000 for the three months ended June 30, 2010 and 2009, respectively, and $78,000 and $693,000 for the six months ended June 30, 2010 and 2009, respectively. In addition, there were ($677,000) and $916,000 translation (gains) and losses recorded to Other Comprehensive Loss at June 30, 2010 and December 31, 2009, respectively.

17. Commitments and Contingencies

We have agreed to a capital commitment of up to $20,000,000 in CBRE Strategic Partners Asia, which extends to January 31, 2011. As of June 30, 2010, we funded $12,097,000 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 June 30, 2010, 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 June 10, 2010, the European JV entered into a purchase and sale agreement to acquire, subject to customary closing conditions, 85146 Langenbach (“Langenbach”), located in Lagenbach, Germany, a suburb of Munich. The European JV will acquire Lagenbach for approximately $19,450,951, exclusive of customary closing costs. We own an 80% interest in the European JV and Goodman owns a 20% interest. We expect to fund our pro rata share of the acquisition using the net proceeds from our current public offering. Lagenbach, scheduled to be completed in the third quarter of 2010, will be a 225,106 square foot, warehouse/distribution center with no operating history. We expect that the property will be 100% leased to a subsidiary of DSV Road Holding A/S, or DSV, to be utilized as a logistics facility through July 2015. DSV is a global third-party logistics services company. While the European JV expects this acquisition to close during the third quarter of 2010, the agreement to acquire the property is subject to certain contingencies and there can be no assurance that the acquisition will occur.

On June 23, 2010, we entered into a purchase and sale agreement to acquire, subject to customary closing conditions, Millers Ferry Road, located at Millers Ferry Road and Mars Road in Wilmer, TX, a suburb of Dallas. We will acquire Millers Ferry Road for

39

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

approximately $44,000,000, exclusive of customary closing costs. We anticipate that the acquisition will be funded using the net proceeds from our current public offering. Millers Ferry Road, scheduled to be completed in the second quarter of 2011, will be a 1,020,000 square foot, warehouse/distribution center with no operating history. We expect that the property will be 100% leased to Whirlpool Corporation to be utilized as a regional distribution center through December 2020. Whirlpool Corporation is a leading global manufacturer and marketer of major home appliances. While we anticipate this acquisition will close during the second quarter of 2011, the agreement to acquire the property is subject to a number of contingencies, including, but not limited to, substantial completion of the construction of the property and acceptance by the tenant of the space and therefore there can be no assurances that this acquisition will occur.

Litigation—From time to time, we and our properties may be subject to legal proceedings, which arise in the ordinary course of our business. Currently, neither our company 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 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.

18. 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 loss for the three months ended June 30, 2010 and 2009, (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Net Loss	$	(4,229	)	$	(4,246	)	$	(4,083	)	$	(7,788	)
Foreign Currency Translation Gain (Loss)		414			10,652			(2,998	)		9,342
Swap Fair Value Adjustments		(644	)		—			(1,224	)		—
Total Comprehensive (Loss) Income		(4,459	)		6,406			(8,305	)		1,554
Comprehensive Loss (Income) Attributable to Non-Controlling Interest		9			(9	)		16			9
Comprehensive (Loss) Income Attributable to CB Richard Ellis Realty Trust Shareholders	$	(4,450	)	$	6,415		$	(8,289	)	$	1,545

19. Income Taxes

We elected to be taxed as a REIT under the Internal Revenue Code commencing 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 generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gain). It is our current intention to adhere to these requirements and maintain our REIT qualification. As a REIT, we generally will not be subject to corporate level U.S. 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 U.S. 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 be subject to certain state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed taxable income, if any (see Note 2 “Basis of Presentation and Summary of Significant Accounting Policies” for a further discussion of income taxes).

On March 31, 2009, the Carolina TRS was dissolved. We had made a taxable REIT subsidiary election for all held for sale properties during the tax years beginning January 1, 2007. On September 30, 2008 all held for sale properties were reclassified as held for investment and transferred to CBRE OP.

ASC 740 Income Taxes (formerly SFAS No. 109 “Accounting for Income Taxes”) 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. We did not have a liability for any unrecognized tax benefits.

40

CB RICHARD ELLIS REALTY TRUST

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)

Included as a component of our tax provision, we have incurred income and other taxes (franchise, local and state government and international) related to our continuing operations in the amount of $70,000 and $58,000, $85,000 and $87,000 for California, Georgia, Minnesota, Texas and North Carolina impacting our operations during the three and six months ended June 30, 2010 and 2009, respectively. The United Kingdom taxes real property operating results at a statutory rate of 22%. The United Kingdom taxable losses to date have generated a deferred tax asset of approximately $316,000 consisting of these net operating loss carryforwards. We have provided for a full valuation allowance of ($316,000) as of six months ended June 30, 2010 on deferred tax assets because it is not likely that future operating profits in the United Kingdom would be sufficient to absorb the net operating losses.

20. Subsequent Events

From July 1, 2010 through August 6, 2010, we received gross proceeds from our current public offering of approximately $65,784,736 from the sale of 6,622,631 common shares.

On July 6, 2010, we entered into a purchase and sale agreement to acquire, subject to customary closing conditions, 100 Tice Blvd., located at 100 Tice Blvd. in Woodcliff Lake, New Jersey, a suburb of New York City. We will acquire 100 Tice Blvd. for approximately $67,600,000, of which approximately $42,600,000 will be paid by assuming an existing mortgage loan held by Hartford Life and Accident Insurance Company and Principal Life Insurance Company. We anticipate that the remainder of the purchase price will be funded using the net proceeds from our current public offering. 100 Tice Blvd. is a 208,911 square foot office building that is 100% leased to Eisai Inc. through December 2021 and is used as Eisai’s North American headquarters. Eisai Inc. is the U.S. operating subsidiary of the Japanese company Eisai Co., Ltd. Eisai Inc. is a producer of pharmaceuticals for the treatment of Alzheimer’s disease and cancers. While we anticipate this acquisition to close during the third quarter of 2010, the agreement to acquire the property is subject to a number of contingencies and therefore there can be no assurances that this acquisition will occur.

On July 27, 2010, we contributed an additional $507,000 of our CBRE Strategic Partners Asia capital commitment which was funded using net proceeds from our current public offering.

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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 unaudited condensed 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 current 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;

¡ the continued volatility and disruption of capital and credit markets;

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

¡ adverse changes in the real estate markets, including increasing vacancy, decreasing rental revenue and increasing insurance costs;

¡ availability and credit worthiness of prospective tenants;

¡ 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;

¡ availability of capital (debt and equity);

¡ our ability to refinance existing indebtedness or incur additional indebtedness;

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

¡ the actual outcome of the resolution of any conflict;

¡ our ability to successfully operate acquired properties;

¡ availability of and ability to retain qualified personnel;

¡ CBRE Advisors LLC remaining as our Investment Advisor;

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¡ future terrorist attacks in the United States or abroad;

¡ 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;

¡ foreign currency fluctuations;

¡ accounting principles and policies and guidelines applicable to REITs;

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

¡ environmental, regulatory and/or safety requirements; and

¡ other factors discussed under Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2009 and those factors that may be contained in any filing we make with the SEC, including Part II, Item 1A of this Form 10-Q.

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 (primarily warehouse/distribution) 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. We intend to invest primarily in properties located in geographically-diverse major metropolitan areas in the United States. In addition, we currently intend to invest up to 30% of our total assets in properties outside of the United States. Our international investments may be in markets in which CBRE Investors has existing operations or previous investment experience, or may be in partnership with other entities that have significant local-market expertise. We expect that our international investments will focus on properties typically located in significant business districts and suburban markets.

As of June 30, 2010, we owned, on a consolidated basis, 62 office, retail, and industrial (primarily warehouse/distribution) properties located in 11 states (California, Florida, Georgia, Illinois, Massachusetts, Minnesota, New Jersey, North Carolina, South Carolina, Texas and Virginia) and in the United Kingdom, encompassing approximately 9,086,000 rentable square feet, as well as one undeveloped land parcel in Georgia. In addition, we have ownership interests in five unconsolidated entities that, as of June 30, 2010, owned interests in 30 properties. Excluding those properties owned through our investment in CBRE Strategic Partners Asia, we owned on an unconsolidated basis, 22 industrial, office and retail properties located in seven states (Arizona, Florida, Indiana, North Carolina, Ohio, Tennessee and Texas) and in the United Kingdom and Europe encompassing approximately 8,633,000 rentable square feet.

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.

Our initial public offering was terminated effective as of the close of business on January 29, 2009. As of the close of business on January 29, 2009, we had sold a total of 60,808,967 common shares in the initial public offering, including 1,487,943 common shares which were issued pursuant to our dividend reinvestment plan, and received $607,345,702 in gross proceeds. We withdrew from registration a total of 140,243,665 common shares that were registered but not sold in connection with the initial public offering.

The registration statement relating to our follow-on public offering was declared effective by the Securities and Exchange Commission (the “SEC”) on January 30, 2009. CNL Securities Corp. is the dealer manager of our offering. The registration statement covers up to $3,000,000,000 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. We reserve the right to reallocate the shares between the primary offering and our dividend reinvestment plan. From January 30, 2009 (effective date) through June 30, 2010, we received gross offering proceeds of approximately $728,540,691 from the sale of 72,998,556 shares.

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., (the “CBRE OP”). Generally, we contribute the

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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. We have elected to be taxed as a real estate investment trust, (“REIT”), for U.S. federal income tax purposes. As a REIT, our company generally will not be subject to U.S. federal income tax on that portion of income that is distributed to shareholders if at least 90% of our company’s REIT taxable income is distributed to our shareholders.

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. 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 and credit 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 and credit 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.

Beginning in the second half of 2007, U.S. economic activity weakened due initially to stresses in the residential housing and financial sectors. The weak economic environment continued through 2008 and 2009, and the timing of a full economic recovery remains uncertain at this time. The currently-weak economic environment may result in declining demand for office, industrial and retail space, increasing tenant bankruptcies, lower average occupancy rates and effective rents, including potentially in our real estate portfolio which may impact our net income, funds from operations and cash flow.

Additionally, during the first half of 2009, the capital markets experienced significant distress during which many financial industry participants, including commercial real estate owners, operators, investors and lenders, found it challenging to obtain cost-effective debt capital to finance new investment activity or to refinance maturing debt. Since then, however, we have found that the capital market environment has continued to improve. This has driven a limited resumption of commercial real estate transaction activity and demand, which has however been concentrated on the highest quality, well-leased and well-located properties.

The table below provides information relating to our properties, excluding those owned through our investment in CBRE Strategic Partners Asia, as of June 30, 2010. 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.

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As of June 30, 2010, we owned the following properties:

Property and Market	Date Acquired	Year Built	Property Type	Our Effective Ownership		Net Rentable Square  Feet (in thousands)	Percentage Leased		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	97.76	%		21,834
505 Century(3) Dallas, TX	1/9/2006	1997	Warehouse/Distribution	100.00	%	100	72.40	%		6,095
631 International(3) Dallas, TX	1/9/2006	1998	Warehouse/Distribution	100.00	%	73	100.00	%		5,407
660 North Dorothy(3) Dallas, TX	1/9/2006	1997	Warehouse/Distribution	100.00	%	120	87.50	%		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	0.00	%		3,775
Community Cash Complex 1(3) Spartanburg, SC	8/30/2007	1960	Warehouse/Distribution	100.00	%	205	32.83	%		2,690
Community Cash Complex 2(3) Spartanburg, SC	8/30/2007	1978	Warehouse/Distribution	100.00	%	145	6.90	%		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	100.00	%		547
Community Cash Complex 5(3) Spartanburg, SC	8/30/2007	1984	Warehouse/Distribution	100.00	%	53	84.85	%		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 Spartanburg, SC	8/30/2007	2005	Manufacturing	100.00	%	101	100.00	%		7,469
Fairforest Building 7(3) Spartanburg, SC	8/30/2007	2006	Warehouse/Distribution	100.00	%	101	83.78	%		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	100.00	%		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	0.00	%		4,889
HJ Park Building 1 Spartanburg, SC	8/30/2007	2003	Manufacturing	100.00	%	70	100.00	%		4,216
Jedburg Commerce Park(3) Charleston, SC	8/30/2007	2007	Manufacturing	100.00	%	513	100.00	%		41,991
Kings Mountain I 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	0.00	%		6,208

45

Property and Market	Date Acquired	Year Built	Property Type	Our Effective Ownership		Net Rentable Square  Feet (in thousands)	Percentage Leased		Approximate Total Acquisition Cost(1) (in thousands)
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	0.00	%	7,073
North Rhett III 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	0.00	%	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	90.63	%	17,994
Kings Mountain III(3) Charlotte, NC	3/14/2008	2007	Warehouse/Distribution	100.00	%	542	0.00	%	25,728
Enclave on the Lake Houston, TX	7/1/2008	1999	Office	100.00	%	171	100.00	%	37,827
Avion Midrise III Washington, DC	11/18/2008	2002	Office	100.00	%	71	100.00	%	21,111
Avion Midrise IV Washington, DC	11/18/2008	2002	Office	100.00	%	72	100.00	%	21,112
13201 Wilfred Minneapolis, MN	6/29/2009	1999	Warehouse/Distribution	100.00	%	335	100.00	%	15,340
3011, 3055 & 3077 Comcast Place Oakland, CA	7/1/2009	1988	Office	100.00	%	220	100.00	%	49,000
140 Depot Street Boston, MA	7/31/2009	2007	Warehouse/Distribution	100.00	%	238	100.00	%	18,950
12650 Ingenuity Drive Orlando, FL	8/5/2009	1999	Office	100.00	%	125	100.00	%	25,350
Crest Ridge Corporate Center 1 Minneapolis, MN	8/17/2009	2009	Office	100.00	%	116	100.00	%	28,419
West Point Trade Center Jacksonville, FL	12/30/2009	2009	Warehouse/Distribution	100.00	%	602	100.00	%	29,000
5160 Hacienda Drive(3) Oakland, CA	4/8/2010	1988	Office	100.00	%	202	100.00	%	38,500
10450 Pacific Center Court(3) San Diego, CA	5/7/2010	1985	Office	100.00	%	134	100.00	%	32,750
225 Summit Ave(3) Metro New York, NY	6/21/2010	1966	Office	100.00	%	143	100.00	%	40,600
One Wayside Road Boston, MA	6/24/2010	1998	Office	100.00	%	200	100.00	%	55,525
Total Domestic Consolidated Properties						8,796	81.06	%	786,953
International Consolidated Properties:
602 Central Blvd.(3) Coventry, UK	4/27/2007	2001	Office	100.00	%	50	0.00	%	23,847
Thames Valley Five Reading, UK	3/20/2008	1998	Office	100.00	%	40	100.00	%	29,572
Albion Mills Retail Park Wakefield, UK	7/11/2008	2000	Retail	100.00	%	55	100.00	%	22,098
Maskew Retail Park Peterborough, UK	10/23/2008	2007	Retail	100.00	%	145	100.00	%	53,740
Total International Consolidated Properties						290	82.77	%	129,257
Total Consolidated Properties						9,086	81.12	%	916,210

46

Property and Market	Date Acquired	Year Built	Property Type	Our Effective Ownership		Net Rentable Square  Feet (in thousands)	Percentage Leased		Approximate Total Acquisition Cost(1) (in thousands)
Unconsolidated Properties(4):
Buckeye Logistics Center(5) Phoenix, AZ	6/12/2008	2008	Warehouse/Distribution	80.00	%	605	100.00	%		35,573
Afton Ridge Shopping Center(6) Charlotte, NC	9/18/2008	2007	Retail	90.00	%	296	94.83	%		44,530
AllPoints at Anson Bldg. 1(5) Indianapolis, IN	9/30/2008	2008	Warehouse/Distribution	80.00	%	631	100.00	%		27,150
12200 President’s Court(5) Jacksonville, FL	9/30/2008	2008	Warehouse/Distribution	80.00	%	772	100.00	%		29,995
201 Sunridge Blvd.(5) Dallas, TX	9/30/2008	2008	Warehouse/Distribution	80.00	%	823	100.00	%		25,690
Aspen Corporate Center 500(5) Nashville, TN	9/30/2008	2008	Office	80.00	%	180	100.00	%		30,033
125 Enterprise Parkway(5) Columbus, OH	12/10/2008	2008	Warehouse/Distribution	80.00	%	1,142	100.00	%		38,088
AllPoints Midwest Bldg. I(5) Indianapolis, IN	12/10/2008	2008	Warehouse/Distribution	80.00	%	1,200	100.00	%		41,428
Celebration Office Center(3)(5) Orlando, FL	5/13/2009	2009	Office	80.00	%	101	100.00	%		13,640
22535 Colonial Pkwy(3)(5) Houston, TX	5/13/2009	2009	Office	80.00	%	90	100.00	%		11,596
Fairfield Distribution Ctr. IX(3)(5) Tampa, FL	5/13/2009	2008	Warehouse/Distribution	80.00	%	136	100.00	%		7,151
Northpoint III(3)(5) Orlando, FL	10/15/2009	2001	Office	80.00	%	108	100.00	%		14,592
Goodyear Crossing Ind. Park II(3)(5) Phoenix, AZ	12/07/2009	2009	Warehouse/Distribution	80.00	%	820	100.00	%		36,516
3900 North Paramount Parkway(3)(5) Raleigh, NC	3/31/2010	1999	Office	80.00	%	101	100.00	%		11,176
3900 South Paramount Parkway(3)(5) Raleigh, NC	3/31/2010	1999	Office	80.00	%	119	100.00	%		13,055
1400 Perimeter Park Drive(3)(5) Raleigh, NC	3/31/2010	1991	Office	80.00	%	45	100.00	%		3,970
Miramar I(3)(5)(7) Fort Lauderdale, FL	3/31/2010	2001	Office	80.00	%	94	100.00	%		13,645
Miramar II(3)(5)(7) Fort Lauderdale, FL	3/31/2010	2001	Office	80.00	%	129	100.00	%		20,899
Total Domestic Unconsolidated Properties						7,392	99.79	%		418,727
International Unconsolidated Properties
Amber Park(3)(8) South Normanton, UK	6/10/2010	1997	Warehouse/Distribution	80.00	%	208	100.00	%		12,514
Brackmills(3)(8) Northhampton, UK	6/10/2010	1980	Warehouse/Distribution	80.00	%	187	100.00	%		13,407
Düren(3)(9) Düren, Germany	6/10/2010	2008	Warehouse/Distribution	80.00	%	392	100.00	%		13,148
Shönberg(3)(9) Shönberg, Germany	6/10/2010	2009	Warehouse/Distribution	80.00	%	454	100.00	%		13,819
Total International Unconsolidated Properties						1,241	100.00	%		52,888
Total Unconsolidated Properties(4)						8,633	99.82	%		471,615
Total Properties(4)						17,719	90.23	%	$	1,387,825

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

⁽²⁾ Includes undeveloped land zoned for future use.

⁽³⁾ This property is unencumbered and not secured by mortgage debt.

⁽⁴⁾ Does not include CBRE Strategic Partners Asia properties.

⁽⁵⁾ This property is held through the Duke joint venture.

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

47

⁽⁷⁾ Consolidated properties acquired on December 31, 2009 and contributed to the Duke joint venture.

⁽⁸⁾ This property is held through the UK JV.

⁽⁹⁾ This property is held through the European JV.

Property Type Concentration

Our property type concentrations as of June 30, 2010 are as follows (Net Rentable Square Feet and Approximate Total 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
Office	18	1,897	$	470,108	9	967	$	132,606	27	2,864	$	602,714
Warehouse/Distribution	34	5,881		293,447	12	7,370		294,479	46	13,251		587,926
Retail	2	201		75,838	1	296		44,530	3	497		120,368
Manufacturing	8	1,107		76,817	—	—		—	8	1,107		76,817
Total	62	9,086	$	916,210	22	8,633	$	471,615	84	17,719	$	1,387,825

⁽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. Does not include our investment in CBRE Strategic Partners Asia.

Geographic Concentration

Our geographic concentrations as of June 30, 2010 are as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):

	Consolidated Properties				Unconsolidated Properties(1)				Consolidated & Unconsolidated Properties(1)
Domestic	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
South Carolina	29	3,647	$	184,324	—	—	$	—	29	3,647	$	184,324
Florida	2	725		54,350	6	1,340		99,922	8	2,065		154,272
California	7	688		146,917	—	—		—	7	688		146,917
North Carolina	5	1,360		66,337	4	561		72,731	9	1,921		139,068
Texas	5	563		74,159	2	913		37,286	7	1,476		111,445
Massachusetts	3	769		94,280	—	—		—	3	769		94,280
Arizona	—	—		—	2	1,425		72,089	2	1,425		72,089
Indiana	—	—		—	2	1,831		68,578	2	1,831		68,578
Minnesota	2	452		43,759	—	—		—	2	452		43,759
Virginia	2	143		42,223	—	—		—	2	143		42,223
New Jersey	1	142		40,600	—	—		—	1	142		40,600
Ohio	—	—		—	1	1,142		38,088	1	1,142		38,088
Tennessee	—	—		—	1	180		30,033	1	180		30,033
Georgia	1	122		21,834	—	—		—	1	122		21,834
Illinois	1	185		18,170	—	—		—	1	185		18,170
Total Domestic	58	8,796		786,953	18	7,392		418,727	76	16,188		1,205,680
International
United Kingdom	4	290		129,257	2	395		25,921	6	685		155,178
Germany	—	—		—	2	846		26,967	2	846		26,967
Total International	4	290		129,257	4	1,241		52,888	8	1,531		182,145
Total	62	9,086	$	916,210	22	8,633	$	471,615	84	17,719	$	1,387,825

⁽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. Does not include our investment in CBRE Strategic Partners Asia.

48

Significant Tenants

The following table details our largest tenants as of June 30, 2010 (in thousands):

	Tenant	Primary Industry	Consolidated Properties			Unconsolidated Properties(1)			Consolidated & Unconsolidated Properties(1)
			Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent
1	Amazon.com(2)	Internet Retail	—	$	—	2,056	$	7,705	2,056	$	7,705
2	Nuance	Software	201		5,263	—		—	201		5,263
3	Comcast	Telecommunications	220		4,578	—		—	220		4,578
4	SBM Offshore(3)	Petroleum and Mining	171		4,277	—		—	171		4,277
5	Barr Laboratories	Pharmaceutical and Health Care Related	143		4,061	—		—	143		4,061
6	Unilever(4)	Consumer Products	—		—	1,595		3,864	1,595		3,864
7	PPD Development	Pharmaceutical and Health Care Related	—		—	251		3,616	251		3,616
8	Carl Zeiss	Pharmaceutical and Health Care Related	202		3,337	—		—	202		3,337
9	Prime Distribution Services	Logistics and Distribution	—		—	1,200		2,958	1,200		2,958
10	American LaFrance	Vehicle Related Manufacturing	513		2,892	—		—	513		2,892
11	Kellogg’s	Consumer Product	—		—	1,142		2,817	1,142		2,817
12	B&Q	Home Furnishings/ Home Improvement	104		2,496	—		—	104		2,496
13	Syngenta Seed	Agriculture	116		2,472	—		—	116		2,472
14	Time Warner	Telecommunications	134		2,412	—		—	134		2,412
15	Dr. Pepper	Food service and Retail	602		2,388	—		—	602		2,388
16	REMEC	Defense and Aerospace	133		2,376	—		—	133		2,376
17	US General Services Administration	Government	72		2,197	—		—	72		2,197
18	Verizon Wireless(5)	Telecommunications	—		—	180		2,180	180		2,180
19	Royal Caribbean	Travel/Leisure	—		—	129		2,139	129		2,139
20	Kaplan(6)	Education	125		2,117	—		—	125		2,117
21	Best Buy	Specialty Retail	238		1,657	30		317	268		1,974
22	Regus Business Centers	Executive Office Suites	86		1,862	—		—	86		1,862
23	Disney Vacation Development	Entertainment	—		—	101		1,800	101		1,800
24	Lockheed Martin	Defense and Aerospace	72		1,793	—		—	72		1,793
25	DeVry	Education	—		—	94		1,517	94		1,517
	Other (98 tenants)		4,241		19,849	1,840		10,540	6,081		30,389
			7,373	$	66,027	8,618	$	39,453	15,991	$	105,480

⁽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. Does not include our investment in CBRE Strategic Partners Asia.

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

⁽³⁾ Our tenant is Atlantic Offshore Ltd., a wholly-owned subsidiary of SBM Offshore.

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

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

⁽⁶⁾ Our tenant is Iowa College Acquisitions Corp., an operating subsidiary of Kaplan, Inc. The lease is guaranteed by Kaplan Inc.

49

Tenant Industries

Our tenants operate across a wide range of industries. The following table details our tenant-industry concentrations as of June 30, 2010 (in thousands):

	Consolidated Properties			Unconsolidated Properties(1)			Consolidated & Unconsolidated Properties(1)
Primary Tenant Industry Category	Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent		Net Rentable Square Feet	Annualized Base Rent
Pharmaceutical and Health Care Related	696	$	8,970	462	$	4,753	1,158	$	13,723
Telecommunications	670		8,223	180		2,180	850		10,403
Consumer Products	156		893	3,325		9,198	3,481		10,091
Internet Retail	330		1,426	2,056		7,705	2,386		9,131
Logistics and Distribution	614		2,099	1,791		4,651	2,405		6,750
Software	201		5,263	—		—	201		5,263
Home Furnishings/Home Improvement	549		4,740	35		391	584		5,131
Petroleum and Mining	171		4,277	—		—	171		4,277
Defense and Aerospace	204		4,170	—		—	204		4,170
Travel and Leisure	—		—	229		3,939	229		3,939
Vehicle Related Manufacturing	709		3,919	—		—	709		3,919
Education	125		2,117	94		1,517	219		3,634
Business Services	561		2,318	103		1,214	664		3,532
Food Service and Retail	743		3,225	16		300	759		3,525
Specialty Retail	284		2,699	75		712	359		3,411
Other Manufacturing	841		2,808	—		—	841		2,808
Agriculture	116		2,472	—		—	116		2,472
Government	72		2,197	—		—	72		2,197
Executive Office Suites	86		1,862	—		—	86		1,862
Financial Services	182		1,604	—		—	182		1,604
Utilities	—		—	108		1,280	108		1,280
Apparel Retail	—		—	91		842	91		842
Other Retail	22		123	47		645	69		768
Professional Services	41		622	6		126	47		748
Total	7,373	$	66,027	8,618	$	39,453	15,991	$	105,480

⁽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. Does not include our investment in CBRE Strategic Partners Asia.

50

Tenant Lease Expirations

The following table sets forth a schedule of expiring leases for our consolidated and unconsolidated properties as of June 30, 2010 (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
2010 (Six months ending December 31, 2010)	166	$	373	—	$	—	166	$	373
2011	174		893	—		—	174		893
2012	691		9,892	33		557	724		10,449
2013	1,296		8,126	411		1,566	1,707		9,692
2014	102		521	15		254	117		775
2015	856		3,760	458		1,288	1,314		5,048
2016	301		1,618	259		4,684	560		6,302
2017	200		3,421	605		5,235	805		8,656
2018	715		8,385	3,088		12,840	3,803		21,225
2019	1,697		13,239	3,253		11,216	4,950		24,455
2020	326		5,687	—		—	326		5,687
Thereafter	849		15,218	496		7,021	1,345		22,239
Total	7,373	$	71,133	8,618	$	44,661	15,991	$	115,794
Weighted Average Expiration (years)			8.22			8.82			8.45

⁽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. Does not include our investment in CBRE Strategic Partners Asia.

Property Portfolio Size

Our portfolio size at the end of each quarter since commencement of our initial public offering through June 30, 2010 is as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):

	Consolidated Properties				Unconsolidated Properties(1)				Consolidated & Unconsolidated Properties(1)
Cumulative Property Portfolio as of:	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
9/30/2006	9	878	$	86,644	—	—	$	—	9	878	$	86,644
12/31/2006	9	878		86,644	—	—		—	9	878		86,644
3/31/2007	9	878		86,644	—	—		—	9	878		86,644
6/30/2007	10	928		110,491	—	—		—	10	928		110,491
9/30/2007	42	5,439		348,456	—	—		—	42	5,439		348,456
12/31/2007	44	5,576		353,594	—	—		—	44	5,576		353,594
3/31/2008	47	6,257		426,856	—	—		—	47	6,257		426,856
6/30/2008	47	6,257		426,856	1	605		35,636	48	6,862		462,492
9/30/2008	49	6,483		486,777	6	3,307		193,773	55	9,790		680,550
12/31/2008	52	6,771		582,682	8	5,649		273,205	60	12,420		855,887
3/31/2009	52	6,771		582,717	8	5,649		273,130	60	12,420		855,847
6/30/2009	53	7,106		598,103	11	5,976		305,308	64	13,082		903,411
9/30/2009	57	7,805		719,822	11	5,976		305,202	68	13,781		1,025,024
12/31/2009	60	8,630		791,314	13	6,904		356,158	73	15,534		1,147,472
3/31/2010	58	8,407		748,835	18	7,392		418,818	76	15,799		1,167,653
6/30/2010	62	9,086		916,210	22	8,633		471,615	84	17,719		1,387,825

⁽¹⁾ Net Rentable Square Feet for unconsolidated properties is at 100%. Approximate Total Acquisition Cost is at our pro rata share of effective ownership and does not include our investment in CBRE Strategic Partners Asia.

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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.

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. In spite of intensive leasing efforts and preliminary interest exhibited by a variety of tenants since our acquisition in 2008, the Kings Mountain III property remains vacant. Due to the currently challenging economic environment, we recognized impairment for our consolidated investment in Kings Mountain III in the amount of $9,160,000 during the year ended December 31, 2009 which reduced our carrying value of the property to $15,300,000. The impairment reflects our estimates of the fair value of the Kings Mountain III property which is based on an appraisal using the sales comparable method which is a Level 3 Valuation Method as described in Note 15 “Fair Value of Financial Instruments and Investments.” No impairment for consolidated investments was recognized during six months ended June 30, 2010.

Revenue Recognition and Valuation of Receivables

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 $6,535,000 and $6,785,000 as security for such leases at June 30, 2010 and December 31, 2009.

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 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 $237,000 and $183,000 as of June 30, 2010 and December 31, 2009, respectively. During the six months ended June 30, 2010, we wrote off $310,000 of the uncollectible rent receivables for the tenant Randal C. Espey at the Deerfield Commons I property, tenants Cell Arch Technologies, Inc. and Keogh Consulting, Inc. at the Lakeside Office Center, and the tenant Romeo Rim, Inc. at the Cherokee Corporate Park. $363,000 of allowance for doubtful accounts was recognized during the six months ended June 30, 2010. In addition, the unamortized tangible and intangible asset balances totaling $27,000 were also written off during the six months ended June 30, 2010, of which ($10,000), $5,000, $8,000 and $24,000 are related to above/below market leases, lease commissions, tenant improvements and in place lease value, respectively.

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.

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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, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“FASB ASC 360-10),” which establishes a single accounting model for the impairment or disposal of long-lived assets including discontinued operations. This accounting provision 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.

Purchase Accounting for Acquisition of Investments in Real Estate

We apply the acquisition method to all acquired real estate investments. The purchase consideration of the real estate is allocated to the acquired tangible assets, consisting primarily of land, site improvements, 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), site improvements, 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 consideration 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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Discontinued Operations and Real Estate Held for Sale

In a period in which a property has been disposed of or is classified as held for sale, the statements of operations for current and prior periods report the results of operations of the property as discontinued operations.

At such time as a property is deemed held for sale, such property is carried at the lower of: (1) its carrying amount or (2) fair value less costs to sell. In addition, a property being held for sale ceases to be depreciated. We classify operating properties as property held for sale in the period in which all of the following criteria are met:

¡ management, having the authority to approve the action, commits to a plan to sell the asset;

¡ the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

¡ an active program to locate a buyer and other actions required to complete the plan to sell the asset has been initiated;

¡ the sale of the asset is probable and the transfer of the asset is expected to qualify for recognition as a completed sale within one year;

¡ the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

¡ given the actions required to complete the plan to sell the asset, it is unlikely that significant changes to the plan would be made or that the plan would be withdrawn.

As of June 30, 2010 and December 31, 2009, we did not have any properties held for sale.

Accounting for Derivative Financial Investments and Hedging Activities

All of our derivative instruments are 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. 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. We have certain interest rate swap derivatives that are designated as qualifying cash flow hedges and follow the accounting treatment discussed above. We also have certain interest rate swap derivatives that do not qualify for hedge accounting, and accordingly, changes in fair values are recognized in current earnings.

We disclose the fair values of derivative instruments and their gains and losses in a tabular format. We also provide more information about our liquidity by disclosing derivative features that are credit risk-related. Finally, we cross-reference within footnotes to enable financial statement users to locate important information about derivative instruments.

Investments in Unconsolidated Entities

Our determination of the appropriate accounting method with respect to our investment in CB Richard Ellis Strategic Partners Asia II-A, L.P. (“CBRE Strategic Partners Asia”), which is not considered a Variable Interest Entity (“VIE”), is partly based on CBRE Strategic Partners Asia’s sufficiency of equity investment at risk which was triggered by a substantial paydown during 2009 of its subscription line of credit backed by investor capital commitments to fund its operations. We account for this investment under the equity method of accounting.

We determine if an entity is a VIE 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

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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 we consolidate such entity.

With respect to our majority limited membership interest in the Duke/Hulfish, LLC joint venture (the “Duke joint venture”), the Afton Ridge Joint Venture, LLC (“Afton Ridge”), the Goodman Princeton Holdings (Jersey) Limited joint venture (the “UK JV”) and the Goodman Princeton Holdings (LUX) SARL joint venture (the “European JV”) we considered the Codification Topic “Consolidation” (“FASB ASC 810”) in determining that we did not have control over the financial and operating decisions of such entities due to the existence of substantive participating rights held by the minority limited members who are also the managing members of the Duke joint venture and Afton Ridge, and the investment advisors/managers of the UK JV and European JV, respectively.

We carry our investments in CBRE Strategic Partners Asia, the Duke joint venture, Afton Ridge, the UK JV and the European JV 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 entities 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). CBRE Strategic Partners Asia is a limited partnership that qualifies for specialized industry accounting for investment companies. Specialized industry accounting allows investment companies to carry their investments at fair value, with changes in the fair value of the investments recorded in the statement of operations. On the basis of the guidance in ASC 970-323 the Company accounts for its investment in CBRE Strategic Partners Asia under the equity method. As a result, and in accordance with ASC 810-10-25-15 the specialized accounting treatment, principally fair value basis, applied by CBRE Strategic Partners Asia under the investment company guide is retained in the recognition of equity method earnings in the statement of operations of the Company. See Note 15 “Fair Value of Financial Instruments and Investments” for further discussion of the application of the fair value accounting to our investment in CBRE Strategic Partners Asia.

Use of Estimates

The preparation of financial statements, in conformity with U.S. GAAP, 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.

Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, beginning with our taxable period ended December 31, 2004. To qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains) 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 the 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. Except as discussed in Note 2 “Basis of Presentation in Summary of Significant Accounting Policies—Income Taxes,” we believe that we have met all of the REIT distribution and technical requirements for the six months ended June 30, 2010 and 2009. Management intends to continue to adhere to these requirements and maintain our REIT qualification.

Fair Value of Financial Instruments and Investments

We elected to apply the fair value option for one of our eligible mortgage notes payable that was newly issued debt during the year ended December 31, 2008. The measurement of the elected mortgage note payable at its fair value and its impact on the statement of operations is described in Notes 15 “Fair Value of Financial Instruments and Investments” and Note 16 “Fair Value Option—Note Payable.”

We generally determine or calculate the fair value of financial instruments using the appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating available market discount rate information for similar types of instruments and our estimates for non-performance and liquidity risk. These techniques are significantly affected by the assumptions used, including the discount rate, credit spreads, and estimates of future cash flow. The Investment Manager of CBRE Strategic Partners Asia applies valuation techniques for our investment carried at fair value based upon the application of the income approach, the replacement cost approach or third party appraisals to the underlying assets held in the unconsolidated entity in determining the

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net asset value attributable to our ownership interest therein. The financial assets and liabilities recorded at fair value in our consolidated financial statements are the two interest rate swaps, one interest rate cap, our investment in CBRE Strategic Partners Asia (a real estate entity which qualifies as an investment company under the Investment Company Act) and one mortgage note payable that is economically hedged by one of the interest rate swaps.

The remaining financial assets and liabilities which are only disclosed at fair value are comprised of all other notes payable, the unsecured line of credit and other debt instruments. We determined the fair value of our secured notes payable and other debt instruments by performing discounted cash flow analyses using an appropriate market discount rate. We calculate the market discount rate by obtaining period-end treasury rates for fixed-rate debt, or London Inter-Bank Offering Rate (“LIBOR”) rates for variable-rate debt, for maturities that correspond to the maturities of our debt and then adding an appropriate credit spread derived from information obtained from third-party financial institutions. These credit spreads take into account factors such as our credit standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt.

The carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to their short-term maturities.

We adopted the fair value measurement criteria described herein for our non-financial assets and non-financial liabilities on January 1, 2009. The adoption of the fair value measurement criteria to our non-financial assets and liabilities did not have a material impact on our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis 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 and

¡ Asset retirement obligations initially measured under the Codification Topic “Asset Retirement and Environmental Obligations” (“FASB ASC 410”).

Non-controlling (Minority) Interests in the Operating Partnership

Effective January 1, 2009, we adopted FASB ASC 810. The new accounting provisions require that amounts formerly reported as minority interests in our consolidated financial statements be reported as non-controlling interests. In connection with the issuance of this adoption, certain revisions were also made to the. Codification Topic “Distinguishing Liabilities from Equity” (“FASB ASC 480-10-S99-3A”). These revisions clarify that non-controlling interests with redemption provisions outside of the control of the issuer and non-controlling interests with redemption provisions that permit the issuer to settle in either cash or common shares at the option of the issuer are subject to evaluation to determine the appropriate balance sheet classification and measurement of such instruments.

With respect to the operating partnership units, FASB ASC 480-10-S99-3A requires non-controlling interests with redemption provisions that permit the issuer to settle in either cash or common shares at the option of the issuer to be further evaluated under the Codification Sub-Topic “Derivatives and Hedging—Conditions Necessary for Equity Classification” (“FASB ASC 815-40-25-10”) (Paragraphs 815-40-25-39 through 815-40-25-42) to determine whether permanent equity or temporary equity classification on the balance sheet is appropriate. Since the operating partnership units contain such a provision, the Company evaluated this guidance and determined that the operating partnership units do not meet the requirements to qualify for equity presentation. As a result, upon the adoption of FASB ASC 810 and the related revisions to FASB ASC 480-10-S99-3A, the operating partnership units are presented in the temporary equity section of the consolidated balance sheets and reported at the higher of their proportionate share of the net assets of CBRE OP or fair value, with period to period changes in value reported as an adjustment to shareholder’s equity. Under the terms of the second amended and restated agreement of limited partnership of CBRE OP (the “Second Amended Partnership Agreement”) the fair value of the operating partnership units is determined as an amount equal to the redemption value as defined therein.

Operating Property Acquisitions

Effective January 1, 2009, we adopted the provisions of FASB ASC 805 which requires an acquiring entity to recognize acquired assets and assumed liabilities in a transaction at fair value as of the acquisition date and changes the accounting treatment for certain items, including acquisition costs, which is required to be expensed as incurred. The provision of “Business Combinations” is required to be applied on a prospective basis.

The adoption of the provisions of the FASB ASC 805 could have an impact on the cost allocation of future acquisitions and requires us to expense acquisition costs for future property acquisitions. The adoption of the provisions of the new accounting standard FASB ASC 805 had an effect on our consolidated financial statements, results of operations and cash flows for the three and six months ended June 30, 2010. We expensed $4,841,000 and $998,000, $5,219,000 and $998,000 of acquisition costs during the three and six months ended June 30, 2010 and 2009, respectively.

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Subsequent Events

Effective for the second quarter of 2009, we adopted the provisions of FASB ASC 855-10—Subsequent Events (“FASB ASC 855-10”), as amended by Accounting Standard Update 2010-09. ASC 855-10 establishes principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. The adoption of ASC 855-10 did not have a material impact on our financial statements.

In preparing our accompanying financial statements, management has evaluated subsequent events through the financial statement issuance date.

Adoption of Accounting Standards

Consolidations

In December 2009, the Financial Accounting Standards Board “FASB” issued Accounting Standards Update (“ASU”) 2009-17, “Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” which incorporates Statement of Financial Accounting Standards (SFAS) No. 167, “Amendments to FASB Interpretation No. 46(R)” issued by the FASB in June 2009. The amendments in ASU 2009-17 replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a VIE with an approach focused on identifying which reporting entity has the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (i) the obligation to absorb losses of such entity or (ii) the right to receive benefits from such entity. ASU 2009-17 also requires additional disclosures about a reporting entity’s involvement in VIEs, which enhances the information provided to users of financial statements. We adopted ASU 2009-17 effective January 1, 2010. As a result of the fact that we have no variable interests in VIEs, the adoption of ASU 2009-17 did not have a material impact on our financial statements.

Fair Value Measurements and Disclosures

In January 2010, the FASB issued ASU 2010-06 which was an update to the Fair Value Measurements and Disclosure topic of the FASB Accounting Standards Codification (the “Codification”). ASU 2010-06 clarifies disclosure requirements relating to the level of disaggregation of disclosures relating to classes of assets and liabilities and disclosures about inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value estimates for Level 2 or Level 3 assets and liabilities. These requirements of ASU 2010-06 are effective for interim and annual disclosures for interim and annual reporting periods beginning after December 15, 2009. The adoption of these requirements of the ASU did not have a material impact on our financial statements.

New Accounting Standards

ASU 2010-06 also requires additional disclosures regarding the transfers of classifications among the fair value classification levels as well as the reasons for those changes and a separate presentation of purchases, sales, issuances and settlements in the presentation of the roll-forward of Level 3 assets and liabilities. Those disclosures are effective for interim and annual reporting periods for fiscal years beginning after December 15, 2010. The adoption of this portion of ASU 2010-06 is not expected to have a material impact on our financial statements.

Treatment of Management Compensation, Expense Reimbursements

Management of our operations is conducted by the Investment Advisor. Fees related to services provided by our Investment Advisor are accounted for based on the nature of such service and the relevant accounting literature. Fees for services performed that represent our period costs, such as cash payments for investment management fees paid to the Investment Advisor, are expensed as incurred. In addition, an affiliate of the Investment Advisor owns a partnership interest which represents a profits interest in CBRE OP related to these services.

Subject to certain limitations, we are obligated to reimburse the Investment Advisor for the organizational and offering costs incurred on our behalf. This treatment is consistent with Staff Accounting Bulletin, or SAB, Topic 1.B.1, which requires that we include all of the costs associated with our operations and formation in our financial statements. These costs will then be analyzed and segregated between those which are organizational in nature, those which are offering-related salaries and other general and administrative expenses of the Investment Advisor and its affiliates, and those which qualify as offering expenses in accordance with SAB Topic 5.A. Organizational costs are expensed as incurred in accordance with AICPA Statement of Position 98-5, “Reporting on the Costs of Start-Up Activities.” Offering-related salaries and other general and administrative costs of the Investment Advisor and its affiliates will be expensed as incurred and third-party offering expenses will be taken as a reduction against the net proceeds of the offering within additional paid-in capital (“APIC”), in accordance with SAB Topic 5.A.

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Offering costs totaling $13,522,000 and $8,153,000, $24,936,000 and $13,292,000 were incurred during the three and six months ended June 30, 2010 and 2009, respectively, and are recorded as a reduction of APIC in the consolidated statement of shareholders’ equity. Of the total amounts, $13,464,000, $8,102,000, $24,833,000 and $13,219,000 were incurred to CNL Securities Corp., as dealer manager, and $58,000, $52,000, $103,000 and $73,000 were incurred to the Investment Advisor for reimbursable marketing expenses for the three and six months ended June 30, 2010 and 2009, respectively. Each party will be paid the amount incurred from proceeds of the public offering. As of June 30, 2010 and December 2009, the accrued offering costs payable to related parties included in our consolidated balance sheet were $1,192,000 and $1,114,000.

Prior to October 24, 2006, the Investment Advisor received an annual fee equal to 0.75% of the book value of the total assets, as defined in the Advisory Agreement, based on the assets of CBRE OP. The investment management fee was calculated monthly based on the average of total assets, as defined, during such period. On October 24, 2006, the Board of Trustees, including our independent trustees, approved and the Company 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. On January 30, 2009, we entered into that certain second amended and restated advisory agreement (the “Second Amended Advisory Agreement”) with CBRE OP and the Investment Advisor. The Second Amended Advisory Agreement modified, among other things, the investment management fee to consist of (a) a monthly fee equal to one twelfth of 0.5% of the aggregate costs (before non-cash reserves and depreciation) of all real estate investment in our portfolio and (b) a monthly fee equal to 5.0% of the aggregate monthly net operating income derived from all real estate investments in our portfolio. 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 $2,687,000 and $1,783,000 for the three months ended June 30, 2010 and 2009, respectively; and $5,118,000 and $3,486,000 for the six months ended June 30, 2010 and 2009, respectively. As of June 30, 2010 and December 31, 2009, the investment management fees payable to related party in our consolidated balance sheets were $950,000 and $757,000, 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 $371,000 and $246,000 for the three months ended June 30, 2010 and 2009, respectively; and $707,000 and $481,000 for the six months ended June 30, 2010, respectively.

On January 30, 2009, we entered into that certain Second Amendment Advisory Agreement that permits the Investment Advisor to earn an acquisition fee of up to 1.5% 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 $3,304,000 and $723,000 for the three months ended June 30, 2010 and 2009, respectively; and $3,600,000 and $723,000 for the six months ended June 30, 2010 and 2009, 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 $618,000 and $135,000 for the three months ended June 30, 2010 and 2009, respectively; and $673,000 and $135,000 for the six months end June 30, 2010 and 2009, respectively. The Investment Advisor earned $330,000 and $72,000 in acquisition related expenses during the three months ended June 30, 2010 and 2009, respectively; and $373,000 and $72,000 for the six months ended June 30, 2010 and 2009, respectively. Prior to the adoption of “Business Combinations” on January 1, 2009, these acquisitions fees and expenses were capitalized to investments in real estate and related intangibles.

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Rental Operations

Our reportable segments consist of three types of commercial real estate properties for which our management internally evaluates operating performance and financial results: the Domestic Industrial Properties, Domestic Office Properties and International Office/Retail Properties. All periods presented have been revised to report our segment results under our new reportable segment structure. 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 six months ended June 30, 2010 and 2009 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Domestic Industrial Properties
Revenues:
Rental	$	5,487	$	4,303	$	11,300	$	8,989
Tenant Reimbursements		1,295		1,003		2,553		2,103
Total Revenues		6,782		5,306		13,853		11,092
Property and Related Expenses:
Operating and Maintenance		395		313		733		670
General and Administrative		116		94		162		139
Property Management Fee to Related Party		77		87		138		180
Property Taxes		1,455		1,090		2,886		2,146
Total Expenses		2,043		1,584		3,919		3,135
Net Operating Income		4,739		3,722		9,934		7,957
Domestic Office Properties
Revenues:
Rental		7,612		3,713		14,861		7,485
Tenant Reimbursements		1,467		940		3,046		1,701
Total Revenues		9,079		4,653		17,907		9,186
Property and Related Expenses:
Operating and Maintenance		957		739		2,114		1,528
General and Administrative		84		43		171		101
Property Management Fee to Related Party		27		27		60		64
Property Taxes		1,096		608		2,286		1,218
Total Expenses		2,164		1,417		4,631		2,911
Net Operating Income		6,915		3,236		13,276		6,275

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	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
International Office/Retail Properties
Rental		1,535			1,831			3,475			3,715
Tenant Reimbursements		55			95			136			180
Total Revenues		1,590			1,926			3,611			3,895
Property and Related Expenses:
Operating and Maintenance		59			93			139			174
General and Administrative		86			15			121			67
Property Management Fee to Related Party		72			(2	)		142			10
Total Expenses		217			106			402			251
Net Operating Income		1,373			1,820			3,209			3,644
Reconciliation to Consolidated Net Loss
Total Segment Net Operating Income(1)		13,027			8,778			26,419			17,876
Interest Expense		3,238			2,638			6,333			5,445
General and Administrative		1,553			733			2,224			1,621
Investment Management Fee to Related Party		2,687			1,783			5,118			3,486
Acquisition Expenses		4,841			998			5,219			998
Depreciation and Amortization		6,717			6,148			13,960			11,870
		(6,009	)		(3,522	)		(6,435	)		(5,544	)
Other Income and Expenses
Interest and Other Income		91			140			689			261
Net Settlement Payments on Interest Rate Swaps		(230	)		(152	)		(444	)		(233	)
Loss on Interest Rate Swaps and Cap		(115	)		525			(503	)		357
Loss on Note Payable at Fair Value		(5	)		(128	)		(78	)		(693	)
Loss on Early Extinguishment of Debt		—			—			(73	)		—
Loss Before Provision for Income Taxes and Equity in Income (Loss) of Unconsolidated Entities		(6,268	)		(3,137	)		(6,844	)		(5,852	)
Provision for Income Taxes		(70	)		(58	)		(85	)		(87	)
Equity in Income (Loss) of Unconsolidated Entities		2,109			(1,051	)		2,846			(1,849	)
Net Loss		(4,229	)		(4,246	)		(4,083	)		(7,788	)
Net Loss Attributable to Non-Controlling Operating Partnership Units		8			8			7			21
Net Loss Attributable to CB Richard Ellis Realty Trust Shareholders	$	(4,221	)	$	(4,238	)	$	(4,076	)	$	(7,767	)

⁽¹⁾ Total Segment 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 viewed as an alternative measure of operating performance to our U.S. GAAP presentations provided. Segment “Net Operating Income” is defined as operating revenues (rental income, tenant reimbursements and other property income) less property and related expenses (property expenses, including real estate taxes) before depreciation and amortization expense. The Net Operating Income segment information presented consists of the same Net Operating Income segment information disclosed in Note 9 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

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Consolidated Results of Operations

Comparison of Three Months Ended June 30, 2010 to Three Months Ended June 30, 2009

Revenues

Rental

Rental revenue increased $4,787,000, or 49%, to $14,634,000 during the three months ended June 30, 2010 compared to $9,847,000 for the three months ended June 30, 2009. The increase was due to the ownership of 13201 Wilfred Lane, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, 12650 Ingenuity Drive, Crest Ridge Corporate Center 1, West Point Trade Center (“2009 Acquisitions”) for the three months ended June 30, 2010 and the acquisitions of 5160 Hacienda Drive, 10450 Pacific Center Court, 225 Summit Avenue, One Wayside Road, (the “2010 Acquisitions”, and together with the “2009 Acquisitions”, the “2009 & 2010 Acquisitions”) during the three months ended June 30, 2010.

Tenant Reimbursements

Tenant reimbursements increased $779,000, or 38%, to $2,817,000 for the three months ended June 30, 2010 compared to $2,038,000 for the three months ended June 30, 2009, due to tenant reimbursement revenue from the 2009 & 2010 acquisitions.

Expenses

Operating and Maintenance

Property operating and maintenance expenses increased $266,000, or 23%, to $1,411,000 for the three months ended June 30, 2010 compared to $1,145,000 for the three months ended June 30, 2009. The increase was due to the 2009 & 2010 Acquisitions and increased operating and maintenance expenses associated with our vacant properties.

Property Taxes

Property tax expense increased $853,000, or 50%, to $2,551,000 for the three months ended June 30, 2010 compared to $1,698,000 for the three months ended June 30, 2009. The increase in property taxes was due to the 2009 & 2010 Acquisitions and increased property taxes in the Carolina portfolio

Interest

Interest expense increased $600,000, or 23%, to $3,238,000 for the three months ended June 30, 2010 compared to $2,638,000 for the three months ended June 30, 2009 as a result of placing debt on Maskew Retail Park during 2009, the assumption of debt during the 2009 acquisition of 12650 Ingenuity Drive, the assumption of debt during the 2010 acquisition of One Wayside Road and interest related to the Wells Fargo Credit Facility.

General and Administrative

General and administrative expense increased $954,000, or 108%, to $1,839,000 for the three months ended June 30, 2010 compared to $885,000 for the three months ended June 30, 2009. Of the total increase, $114,000 was due to the increase in legal expenses; $6,000 was due to the increase in officer and director fees; $84,000 was due to the increase in shareholder servicing fees and reports production costs; $224,000 was due to the increase in professional fees; $536,000 was largely due to the increase in organizational costs which were slightly offset by the reduction of general audit fees and Sarbanes-Oxley assistance of $10,000.

Property Management Fee and Investment Management Fee to Related Party

Property management fee and investment management fee to related party increased $969,000, or 51%, to $2,864,000 for three months ended June 30, 2010 compared to $1,895,000 for the three months ended June 30, 2009. The increase was due to additional investment management fees to related party earned relative to an increase in assets under management.

Acquisition Expenses

Acquisition expenses increased $3,843,000, or 385%, to $4,841,000 for three months ended June 30, 2010 compared to $998,000 for the three months ended June 30, 2009. The net increase was related to the 2010 acquisitions of consolidated and unconsolidated properties.

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Depreciation and Amortization

Depreciation and amortization expenses increased $569,000, or 9%, to $6,717,000 for the three months ended June 30, 2010 as compared to $6,148,000 for the three months ended June 30, 2009. The net increase is primarily due to depreciation and amortization expense related to the 2009 and 2010 acquisitions.

Interest and Other Income

Interest and other income decreased $49,000, or 35%, to $91,000 for the three months ended June 30, 2010 compared to $140,000 for the three months ended June 30, 2009. The decrease was due to significantly lower money market interest rates.

Net Settlement Payments on Interest Rate Swaps

During the three months ended June 30, 2010, we made net payments on interest rate swaps of $230,000 compared to $152,000 during the three months ended June 30, 2009. The increase is a result of lower variable interest rates for the three months ended June 30, 2010 as compared to the three months ended June 30 2009.

Loss on Interest Rate Swaps and Cap

Loss on interest rate swaps and cap increased $640,000, or 122%, to ($115,000) for the three months ended June 30, 2010 compared $525,000 for the three months ended June 30, 2009. The increase was due to valuation losses on interest rate swaps as a result of lower variable interest rates for Thames Valley Five and Albion Mills Retail Park.

Loss on Note Payable on Fair Value

Loss on notes payables decreased by $123,000, or 96%, to ($5,000) for the three months ended June 30, 2010 compared to ($128,000) for the three months ended June 30, 2009. The year to year change is attributable to a stabilization of UK interest rate spreads used to value the loan.

Provision for Income Taxes

Provision for income taxes increased $12,000, or 21%, to $70,000 for the three months ended June 30, 2010 compared to $58,000 for the three months ended June 30, 2009 resulting primarily from payment of annual state representation fees during the three months ended June 30, 2010.

Equity in income of Unconsolidated Entities

Equity in income of unconsolidated entities increased $3,160,000, or 301%, to $2,109,000 for the three months ended June 30, 2010 compared to ($1,051,000) for the three months ended June 30, 2009. The increase was primarily due to the acquisition of additional properties by the Duke joint venture and improved CBRE Strategic Partners Asia performance during the three months ended June 30, 2010.

Non-Controlling Interest

Non-controlling interest remained at $8,000 for the three months ended June 30, 2010 compared to $8,000 for the three months ended June 30, 2009.

Comparison of Six Months Ended June 30, 2010 to the Six Months Ended June 30, 2009

Revenues

Rental

Rental revenue increased $9,447,000, or 47%, to $29,636,000 during the six months ended June 30, 2010 compared to $20,189,000 for the six months ended June 30, 2009. The increase was due to the ownership of 13201 Wilfred Lane, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, 12650 Ingenuity Drive, Crest Ridge Corporate Center 1, West Point Trade Center (“2009 Acquisitions”) for the six months ended June 30, 2010, and the acquisitions of 5160 Hacienda Drive, 10450 Pacific Center Court, 225 Summit Avenue, One Wayside Road, (the “2010 Acquisitions”, together with the “2009 Acquisitions”, the “2009 & 2010 Acquisitions”) during the six months ended June 30, 2010.

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Tenant Reimbursements

Tenant reimbursements increased $1,751,000, or 44%, to $5,735,000 for the six months ended June 30, 2010 compared to $3,984,000 for the six months ended June 30, 2009, due to tenant reimbursement revenue from the 2009 & 2010 acquisitions.

Expenses

Operating and Maintenance

Property operating and maintenance expenses increased $614,000, or 26%, to $2,986,000 for the six months ended June 30, 2010 compared to $2,372,000 for the six months ended June 30, 2009. The increase was due to the 2009 & 2010 Acquisitions and increased operating and maintenance expenses associated with our vacant properties.

Property Taxes

Property tax expense increased $1,808,000, or 54%, to $5,172,000 for the six months ended June 30, 2010 compared to $3,364,000 for the six months ended June 30, 2009. The increase in property taxes was due to the 2009 & 2010 Acquisitions and increased property taxes in the Carolina portfolio.

Interest

Interest expense increased $888,000, or 16%, to $6,333,000 for the six months ended June 30, 2010 compared to $5,445,000 for the six months ended June 30, 2009 as a result of placing debt on Maskew Retail Park during 2009, the assumption of debt during the 2009 acquisition of 12650 Ingenuity Drive, the assumption of debt during the 2010 acquisition of One Wayside Road and interest related to the Wells Fargo Credit Facility.

General and Administrative

General and administrative expense increased $750,000, or 39%, to $2,678,000 for the six months ended June 30, 2010 compared to $1,928,000 for the six months ended June 30, 2009. Of the total increase, $11,000 was due to the increase in legal expenses; $15,000 was due to the increase in officer and director fees; $61,000 increase in shareholder servicing fees and reports production costs; $175,000 was due to the increase in professional fees; $535,000 was largely due to the increase in organizational costs which were slightly offset by the reduction of general audit fees and Sarbanes-Oxley assistance $47,000.

Property Management Fee and Investment Management Fee to Related Party

Property management fee and investment management fee to related party increased $1,718,000, or 46%, to $5,458,000 for six months ended June 30, 2010 compared to $3,740,000 for the six months ended June 30, 2009 .The increase was due to additional investment management fees to related party earned relative to an increase in assets under management.

Acquisition Expenses

Acquisition expenses increased $4,221,000, or 423%, to $5,219,000 for six months ended June 30, 2010 compared to $998,000 for the six months ended June 30, 2009. The net increase was related to the acquisitions of 5160 Hacienda Drive, 10450 Pacific Center Court, 225 Summit Valley, One Wayside, 1400 Perimeter Parkway, 3900 N. Paramount, 3900 S. Paramount, Miramar I & II, UK JV and European JV.

Depreciation and Amortization

Depreciation and amortization expense increased $2,090,000, or 18%, to $13,960,000 for the six months ended June 30, 2010 as compared to $11,870,000 for the six months ended June 30, 2009. The net increase is primarily due to depreciation and amortization expense related to the 2009 and 2010 acquisitions.

Interest and Other Income

Interest and other income increased $428,000, or 164%, to $689,000 for the six months ended June 30, 2010 compared to $261,000 for the six months ended June 30, 2009 as a result of placing debt on Maskew Retail Park during 2009 and the assumption of debt during the 2009 acquisition of 12650 Ingenuity Drive, in addition the assumption of debt during the 2010 acquisition of One Wayside Road.

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Net Settlement Payments on Interest Rate Swaps

During the six months ended June 30, 2010, we made net payments on interest rate swaps of $444,000 compared to $233,000 during the six months ended June 30, 2009. The increase is a result of lower variable interest rates for the six months ended June 30, 2010 as compared to the six months ended June 30 2009.

Loss on Interest Rate Swaps and Cap

Loss on interest rate swaps and cap increased $860,000, or 241%, to ($503,000) for the six months ended June 30, 2010 compared $357,000 for the six months ended June 30, 2009. The increase was due to valuation losses on interest rate swaps as a result of lower variable interest rates for Thames Valley Five and Albion Mills Retail Park.

Loss on Note Payable on Fair Value

Loss on notes payables decreased by $615,000, or 89%, to ($78,000) for the six months ended June 30, 2010 compared to ($693,000) for the six months ended June 30, 2009. The year to year change is attributable to a stabilization of UK interest rate spreads used to value the loan.

Loss on Early Extinguishment of Debt

During the six months ended June 30, 2010, we repaid in full the existing loan at 602 Central Blvd. and incurred expense of $73,000. There was no extinguishment of debt activity during the six months ended June 30, 2009.

Provision for Income Taxes

Provision for income taxes decreased $2,000, or 2%, to $85,000 for the six months ended June 30, 2010 compared to $87,000 for the six months ended June 30, 2009 resulting primarily from reduced state tax payments in North Carolina.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities increased $4,695,000, or 254%, to $2,846,000 for the six months ended June 30, 2010 compared to ($1,849,000) for the six months ended June 30, 2009. The increase was primarily due to the acquisition of additional properties by the Duke joint venture and improved CBRE Strategic Partners Asia performance during the six months ended June 30, 2010.

Non-Controlling Interest

Non-controlling interest decreased $14,000 to $7,000 for the six months ended June, 2010 compared to $21,000 for the six months ended June 30, 2009.

Financial Condition, Liquidity and Capital Resources

Overview

Liquidity is a measurement of the ability to meet cash requirements, including funding investments and ongoing commitments, to repay borrowings as well as paying dividends, fees and other costs associated with our public offerings and other general business needs. Our sources of funds will primarily be the net proceeds of our initial public and follow-on 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. Cash flow from operations is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent and operating escalations and recoveries from our tenants and the level of operating and other costs. Depending on market conditions, we expect that once the net proceeds of our initial public and follow-on offerings are fully invested, our debt financing will be approximately 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,

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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 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 $189,000,000 for selling commissions, up to $54,000,000 for the dealer manager fee, up to $27,000,000 for the marketing support fee and up to $20,750,000 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 and again in January 2009. 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 generally are required to pay annual distributions to our shareholders equal to at least 90% of our net ordinary taxable income. Therefore, once the net proceeds we receive from our public offerings 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.

Historical Cash Flows

Our net cash provided by operating activities increased by $9,680,000 to $20,538,000 for the six months ended June 30, 2010, compared to $10,858,000 for the six months ended June 30, 2009. The increase was due to an increase in operating distributions from the Duke joint venture of $9,271,000 and increased tenant billing collections from both consolidated and unconsolidated properties; offset by lower interest income, the payment of annual property taxes for North Carolina, South Carolina and Texas properties and the expensing of acquisition costs of $5,219,000 during the six months ended June 30, 2010.

Net cash used in investing activities increased by $155,838,000 to $212,653,000 for the six months ended June 30, 2010, compared to $56,815,000 for the six months ended June 30, 2009. The increase was due to the acquisitions of 5160 Hacienda Drive, 10450 Pacific Center Court, 225 Summit, One Wayside Rd. and investments in the UK JV and European JV during the six months ended June 30, 2010.

Net cash provided by financing activities increased by $133,073,000 to $245,386,000 for the six months ended June 30, 2010, compared to $112,313,000 for the six months ended June 30, 2009. The increase was due to an increase in proceeds from the public offering of $146,480,000, and the $15,000,000 draw down of the Wells Fargo Credit Facility, offset by an increase in principal payments on notes payable of $8,631,000 (602 Central Blvd. note payable of $8,281,000 was paid off on March 11, 2010), an increase in offering costs of $9,627,000, an increase in distributions to shareholders and non-controlling interest holders of $6,805,000, an increase in shareholder redemptions of $1,153,000, an increase in deferred financing costs of $2,137,000 and a decrease in security deposits of $55,000.

Non-GAAP Supplemental Financial Measure: Funds from Operations

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry

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analysts and investors consider presentations of operating results for REITs that use historical cost accounting to be insufficient by themselves. Consequently, the National Association of Real Estate Investment Trusts, or NAREIT, created Funds from Operations, or FFO, as a supplemental measure of REIT operating performance.

FFO is a non-GAAP measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net income. FFO, as we define it, is presented as a supplemental financial measure. Management believes that FFO is a useful supplemental measure of REIT performance. FFO does not present, nor do we intend for it to present, a complete picture of our financial condition and/or operating performance. We believe that net income, as computed under GAAP, appropriately remains the primary measure of our performance and that FFO, when considered in conjunction with net income, improves the investing public’s understanding of the operating results of REITs and makes comparisons of REIT operating results more meaningful.

We compute FFO in accordance with standards established by NAREIT. Modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business and provide greater transparency to the investing public as to how our management team considers our results of operations. As a result, our FFO may not be comparable to FFO as 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 NAREIT White Paper on FFO defines FFO as net income or loss computed in accordance with GAAP, excluding extraordinary items, as defined by 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.

Management believes that NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time, and that depreciation charges required by GAAP do not always reflect the underlying economic realities. Likewise, the exclusion from NAREIT’s definition of FFO of gains and losses from the sales of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods. Thus, FFO provides a performance measure that, when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates and operating costs. Management also 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.

In addition to presenting FFO in accordance with the NAREIT definition, we also disclose FFO, as adjusted, which excludes the effects of acquisition costs, non-cash impairment charges and unrealized (gain) loss in an unconsolidated entity. We believe that adjusting FFO to exclude these acquisition costs, impairment charges and unrealized (gain) loss in an unconsolidated entity more appropriately presents our results of operations on a comparative basis. The items that we exclude from net income are subject to significant fluctuations from period to period that cause both positive and negative effects on our results of operations, often in inconsistent and unpredictable directions. The economics underlying these excluded items are not the primary factors in management’s decision-making process. Period to period fluctuations in these items can be driven by accounting for short-term factors that are not relevant to long-term investment decisions, long-term capital structures or long-term tax planning and tax structuring decisions. Therefore, while our FFO, as adjusted, clearly differs from NAREIT’s definition of FFO, and may not be comparable to similarly named measures of other REITs and real estate companies, we believe that it provides a meaningful supplemental measure of our operating performance. We believe that investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy, thus fostering a greater degree of transparency into our management process.

Neither FFO, nor FFO as adjusted, represents cash generated from operating activities in accordance with GAAP and should not be considered as alternatives to (i) net income (determined in accordance with GAAP), as indications of our financial performance, or (ii) to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. We believe that to further understand our performance, each of FFO and FFO, as adjusted, should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our Consolidated Financial Statements.

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The following table presents our FFO for the three and six months ended June 30, 2010 and 2009 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Reconciliation of net loss to funds from operations
Net Loss Attributable to CB Richard Ellis Realty Trust Shareholders	$	(4,221	)	$	(4,238	)	$	(4,076	)	$	(7,767	)
Adjustments:
Non-controlling interest		(8	)		(8	)		(7	)		(21	)
Real estate depreciation and amortization		6,717			6,148			13,960			11,870
Realized gain from transfer of real estate to unconsolidated entities		—			—			(154	)		—
Net effect of FFO adjustment from unconsolidated entities(1)		4,382			3,516			8,097			6,777
FFO	$	6,870		$	5,418		$	17,820		$	10,859
Other Adjustments:
Acquisition / Organization Expenses(2)		5,529			998			5,912			998
Unrealized (gain) loss in unconsolidated entity		(373	)		1,424			(349	)		2,291
FFO, as adjusted	$	12,026		$	7,840		$	23,383		$	14,148

⁽¹⁾ Represents our share of the FFO adjustments allowable under the NAREIT definition (primarily depreciation) for each of our unconsolidated entities multiplied by our ownership interest in each of these unconsolidated entities during the three and six months ended June 30, 2010 and multiplied by the percentage of income or loss recognized by us for each of these unconsolidated entities during the three and six months ended June 30, 2009.

⁽²⁾ In addition to organization and acquisition costs incurred in our consolidated results, this adjustment also includes our portion of acquisition costs incurred within our unconsolidated entities.

Financing

Notes Payable

On April 27, 2007, we, in connection with the acquisition of 602 Central Blvd., entered into a £5,500,000 financing arrangement with the Royal Bank of Scotland secured by the property. The loan was for a term of seven years with interest at a variable rate, adjusted quarterly, based on three month GBP-based LIBOR plus 0.67%, per annum. On March 11, 2010, we paid off the £5,500,000 ($8,281,000 at March 11, 2010) loan and expensed certain closing costs plus the unamortized deferred financing costs associated with obtaining the loan totaling $73,000. The interest rate cap agreement was cancelled concurrent with the loan payoff.

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 $1,868,000 were made during the six months ended June 30, 2010. We indemnify the lenders against environmental costs and expenses and guarantee the loans under certain conditions.

On May 30, 2008, we entered into a £7,500,000 ($11,205,000 at June 30, 2010) 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 adjusted quarterly, based on six month GBP-based LIBOR plus 1.01%. In addition, we incurred financing costs of approximately £67,000 ($100,000 at June 30, 2010) associated with obtaining this loan. On August 14, 2008, we entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 5.41% plus 1.01% or 6.42% per annum as of June 30, 2010, and expires on May 30, 2013. Interest only payments 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 $18,281,000 ($18,790,000 face value less discount of $509,000) loan from NorthMarq Capital, Inc. that bears interest at a fixed 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 $182,000 were made during the six months ended June 30, 2010. In addition, we incurred financing costs totaling $241,000 in conjunction with the assumption of the loan.

On October 10, 2008, we entered into a £5,771,000 ($8,621,000 at June 30, 2010) financing agreement with the Royal Bank of Scotland plc secured by Albion Mills Retail Park property. The loan is for a term of five years and bears interest at a variable rate adjusted quarterly, based on six month GBP-based LIBOR plus 1.31%. In addition, we incurred financing costs of approximately

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£75,000 ($112,000 at June 30, 2010) associated with obtaining this loan. On November 25, 2008, we entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.94% plus 1.31% or 5.25% per annum as of June 30, 2010 and expires on October 10, 2013. Interest only payments are due quarterly for the term of the loan with principal due at maturity.

On November 18, 2008, in connection with the acquisition of Avion Midrise III & IV, we assumed $20,851,000 ($22,186,000 face value less discount of $1,335,000) fixed rate mortgage loan from Capmark Finance, Inc. that bears interest at a rate of 5.52% per annum and matures on April 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $204,000 were made during the six months ended June 30, 2010. In addition, we incurred financing costs totaling $344,000 in conjunction with the assumption of the loan.

On August 5, 2009, in connection with the acquisition of 12650 Ingenuity Drive, we assumed a $12,572,000 ($13,539,000 face value less a discount of $967,000) fixed rate mortgage loan from PNC Bank, National Association that bears interest at a rate of 5.62% and matures on October 1, 2014. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $180,000 were made during the six months ended June 30, 2010. In addition, we incurred financing costs totaling $284,000 in conjunction with the assumption of the loan.

On August 10, 2009, we entered into a £13,975,000 ($20,879,000 at June 30, 2010) financing agreement with the Abbey National Treasury Services plc secured by the Maskew Retail Park property. On September 24, 2009, we drew the full amount of the loan and concurrently entered into an interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.42% plus 2.26% or 5.68% per annum for the five-year term of the loan. Interest only payments are due quarterly for the term of the loan with principal due at maturity. In addition, we incurred financing costs of approximately £268,000 ($400,000 at June 30, 2010) associated with obtaining this loan.

On June 24, 2010, we assumed two loans in connection with the acquisition of One Wayside Road (i) $14,888,000 ($14,633,000 at face value plus a premium of $255,000) fixed rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.66% and matures on August 1, 2015 and (ii) $12,479,000 ($12,132,000 at face value plus a premium of $347,000) fixed rate mortgage loan from State Farm Life Insurance Company that bears interest at a rate of 5.92% and matures on August 1, 2015. Principal and interest payments are due monthly for the remaining loan term and principal payments totaling $48,000 were made during June 2010. In addition, we incurred financing costs totaling $342,000 in conjunction with the assumption of the loan.

Loan Payable

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 matured 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 at least 1.75 to 1.00, as defined in the amended and restated credit agreement. As of June 30, 2010, there was no amount outstanding under the Revolving Credit Facility. The Revolving Credit Facility matured on August 8, 2010 in accordance with its terms.

On May 26, 2010, we entered into a $70,000,000 revolving credit facility through our subsidiaries with Wells Fargo Bank, N.A., or the Wells Fargo Credit Facility. The initial maturity date of the Wells Fargo Credit Facility is May 26, 2014, however we may extend the maturity date to May 26, 2015, subject to certain conditions. $15,000,000 of the Wells Fargo Credit Facility was initially drawn upon closing on May 26, 2010 and is included in Loans Payable on our consolidated balance sheet, with the remaining $55,000,000 available for disbursement during the term of the facility. We have the right to prepay any outstanding amount of the Wells Fargo Credit Facility, in whole or in part, without premium or penalty at any time during the term of this Wells Fargo Credit Facility, however, we generally may not reduce the outstanding principal balance below a minimum outstanding amount of $15,000,000, without reducing the total $70,000,000 Wells Fargo Credit Facility capacity. The Wells Fargo Credit Facility bears interest at a floating rate of 300 basis points over the LIBOR, however the interest rate shall be at least 4.00% for any of the outstanding balance that is not subject

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to an interest rate swap with an initial term of at least two years. Upon closing on May 26, 2010, we entered into an interest rate swap agreement with Wells Fargo Bank, N.A. to effectively fix the interest rate on the initial $15,000,000 outstanding loan amount at 5.10% for the four-year term of the facility. The interest rate swap was designated as a qualifying cash flow hedge at the start date of the hedge relationship as described in Note 14 “Derivative Instruments.” The Wells Fargo Credit Facility is secured by our 13201 Wilfred, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, Crest Ridge Corporate Center I and West Point Trade Center properties. In addition, CBRE OP provides a limited guarantee for the Wells Fargo Credit Facility. The Wells Fargo Credit Facility is subject to certain customary financial covenants, including certain negative financial covenants, which we believe we were in compliance with as of May 26, 2010. A commitment fee of $1,050,000 was paid to Wells Fargo Bank, N.A. at closing. We will also pay certain other customary fees in connection with the Wells Fargo Credit Facility including fees related to the unused loan amount, extension, administrative and other fees, the amount of which in some cases is subject to certain terms and conditions.

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.

Distribution Policy

In order to qualify as a REIT under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, we generally must make distributions to our shareholders each year in an amount at least equal to 90% of our REIT taxable income (as determined without regard to the dividends paid deduction and excluding net capital gain).

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.

2010 Quarters	First		Second
Total distributions declared and paid	$	16,841,000	$	19,266,000
Distributions per share	$	0.15	$	0.15
Amount of distributions per share funded by cash flows provided by operating entities	$	0.1212	$	0.0540
Amount of distributions per share funded by uninvested proceeds from financings of our properties	$	0.0288	$	0.0960

2009 Quarters	First		Second		Third		Fourth
Total distributions declared and paid	$	10,066,000	$	11,181,000	$	12,767,000	$	14,750,000
Distributions per share	$	0.15	$	0.15	$	0.15	$	0.15
Amount of distributions per share funded by cash flows provided by operating entities	$	0.0903	$	0.0643	$	0.1309	$	0.0434
Amount of distributions per share funded by uninvested proceeds from financings of our properties	$	0.0597	$	0.0857	$	0.0191	$	0.1066

For the quarter ended June 30, 2010, distributions were funded 35.98% by cash flows provided by operating activities and 64.02% from uninvested proceeds from financings of our properties. In addition, distributions totaling $7,318,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during the quarter ended June 30, 2010.

For the quarter ended March 31, 2010, distributions were funded 80.79% by cash flows provided by operating activities and 19.21% from uninvested proceeds from financings of our properties. In addition, distributions totaling $6,197,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during the quarter ended March 31, 2010.

Our 2009 distributions were funded 53.78% by cash flows provided by operating activities and 46.22% from uninvested proceeds from financings of our properties. In addition, distributions totaling $17,600,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during 2009.

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.

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Off-Balance Sheet Arrangements

As of June 30, 2010, we had five Investments in Unconsolidated Entities: (i) a 5.07% ownership interest in CBRE Strategic Partners Asia, (ii) an 80% ownership interest in the Duke joint venture (iii) a 90% ownership interest in Afton Ridge, (iv) an 80% ownership interest in the UK JV and (v) an 80% investment in the European JV. Our investments are discussed in Note 4, “Investments in Unconsolidated Entities” in the accompanying consolidated financial statements.

Contractual Obligations and Commitments

The following table provides information with respect to our consolidated property contractual obligations at June 30, 2010 (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	$	(14,149	)	$	(635	)	$	(13,514	)	$	—		$	—
Note Payable (and interest payments) Collateralized by 300 Constitution Drive		(13,065	)		(581	)		(12,484	)		—			—
Note Payable (and interest payments) Collateralized by Deerfield Commons I		(12,429	)		(576	)		(1,286	)		(1,286	)		(9,281	)
Note Payable (and interest payments) Collateralized by Bolingbrook Point III		(11,170	)		(473	)		(947	)		(9,750	)		—
Notes Payable (and interest payments) Collateralized by the Carolina Portfolio		(76,977	)		(6,980	)		(13,961	)		(13,350	)		(42,686	)
Note Payable (and interest payments) Collateralized by Lakeside Office Center		(11,749	)		(543	)		(1,281	)		(1,299	)		(8,626	)
Note Payable (and interest payments) Collateralized by Thames Valley Five(1)		(11,809	)		(185	)		(11,624	)		—			—
Note Payable (and interest payments) Collateralized by Enclave on the Lake		(18,092	)		(18,092	)		—			—			—
Note Payable (and interest payments) Collateralized by Albion Mills Retail Park(1)		(9,212	)		(169	)		(337	)		(8,706	)		—
Note Payable (and interest payments) Collateralized by Avion Midrise III & IV		(26,013	)		(1,618	)		(3,237	)		(21,158	)		—
Note Payable (and interest payments) Collateralized by 12650 Ingenuity Drive		(16,309	)		(1,118	)		(2,236	)		(12,955	)		—
Note Payable (and interest payments) Collateralized by Maskew Retail Park(1)		(23,612	)		(607	)		(1,215	)		(21,790	)		—
Loan Payable (and interest payments) Wells Fargo Credit Facility(1)(2)		(17,988	)		(765	)		(1,530	)		(15,693	)		—
Note Payable (and interest payments) Collateralized by One Wayside Road		(34,094	)		(1,950	)		(4,254	)		(4,254	)		(23,636	)
Total Consolidated Properties	$	(296,668	)	$	(34,292	)	$	(67,906	)	$	(110,241	)	$	(84,229	)

⁽¹⁾ These contractual obligations included the expected net payments due under interest rate swap agreements where in each case we have swapped our variable interest rate payments due under the debt agreements for fixed rates of interest payments.

⁽²⁾ Includes five properties that secure the Wells Fargo Credit Facility (see Note 6 “Debt”).

The following table provides information with respect to our unconsolidated property contractual obligations at June 30, 2010 (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 Duke joint venture	$	(142,329	)	$	(6,696	)	$	(13,392	)	$	(122,241	)	$	—
Note Payable (and interest payments) Collateralized by Afton Ridge joint venture		(27,310	)		(1,308	)		(2,616	)		(23,386	)		—
Total Unconsolidated Properties(1)	$	(169,639	)	$	(8,004	)	$	(16,008	)	$	(145,627	)	$	—

⁽¹⁾ Unconsolidated payment amounts are at our pro rata share of effective ownership and exclude our investment in CBRE Strategic Partners Asia.

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As of June 30, 2010, we were committed to pay $1,340,000 in accrued offering costs. The timing of future payments is uncertain.

As of June 30, 2010, we had an unfunded investment commitment in CBRE Strategic Partners Asia totaling $7,903,000. The timing of future payments is uncertain.

Income Taxes

We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended 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 generally 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. Included as a component of our tax provision, we have incurred income and other taxes (franchise, local and state government and international) related to our continuing operations in the amount of $70,000 and $58,000, $85,000 and $87,000 for California, Georgia, Minnesota, Texas and North Carolina impacting our operations during the three and six months ended June 30, 2010 and 2009, respectively.

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 foreign exchange rate changes from our investments in unconsolidated entities with operations in China, Japan, the United Kingdom and the European Union, as well as our consolidated operations in the United Kingdom.

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 are summarized as follows (in thousands):

	Interest Rate as of				Maturity Date	Notes Payable as of
Property	June 30, 2010		December 31, 2009			June 30, 2010			December 31, 2009
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)	—		1.25		—		—			8,886
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		10,101			10,330
Fairforest Bldg. 6(3)	5.42		5.42		June 1, 2019		3,124			3,257
HJ Park—Bldg. 1(3)	4.98		4.98		March 1, 2013		783			914
North Rhett I(3)	5.65		5.65		August 1, 2019		4,078			4,246
North Rhett II(3)	5.20		5.20		October 1, 2020		2,264			2,345
North Rhett III(3)	5.75		5.75		February 1, 2020		1,832			1,903
North Rhett IV(3)	5.80		5.80		February 1, 2025		10,113			10,328
Mt Holly Bldg.(3)	5.20		5.20		October 1, 2020		2,264			2,345
Orangeburg Park Bldg(3)	5.20		5.20		October 1, 2020		2,302			2,385
Kings Mountain I(3)	5.27		5.27		October 1, 2020		1,959			2,030
Kings Mountain II(3)	5.47		5.47		January 1, 2020		5,829			6,057
Union Cross Bldg. I(3)	5.50		5.50		July 1, 2021		2,843			2,935
Union Cross Bldg. II(3)	5.53		5.53		June 1, 2021		8,689			8,972
Thames Valley Five(4)(5)	6.42		6.42		May 30, 2013		11,205			12,117
Lakeside Office Center(6)	6.03		6.03		September 1, 2015		9,000			9,000
Enclave on the Lake(7)	5.45		5.45		May 1, 2011		18,092			18,274
Albion Mills Retail Park(4)(8)(9)	5.25		5.25		October 10, 2013		8,621			9,323
Avion Midrise III & IV(10)	5.52		5.52		April 1, 2014		21,561			21,765
12650 Ingenuity Drive(11)	5.62		5.62		October 1, 2014		13,244			13,424
Maskew Retail Park(4)(12)	5.68		5.68		August 10, 2014		20,879			22,578
One Wayside Road(13)	5.66		—		August 1, 2015		14,606			—
One Wayside Road(13)	5.92		—		August 1, 2015		12,111			—
Notes Payable							229,475			217,389
Plus Premium							602			—
Less Discount							(4,157	)		(4,615	)
Less Albion Mills Retail Park Fair Value Adjustment							(247	)		(349	)
Notes Payable Net of Premiums / Discounts and Fair Value Adjustment						$	225,673		$	212,425

⁽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⁾ This loan was fully paid off on March 11, 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⁾ These loans are subject to certain financial covenants (interest coverage and loan to value).

⁽⁵⁾ We entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 5.41% plus 1.01% or 6.42% per annum as of June 30, 2010 and expires on May 30, 2013. The stated rates on the mortgage note payable were 1.66% and 1.59% at June 30, 2010 and December 31, 2009, respectively, which were based on GBP-based LIBOR plus a spread of 1.01%.

⁽⁶⁾ 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.

⁽⁷⁾ The loan was assumed from the seller of Enclave on the Lake on July 1, 2008 and was recorded at estimated fair value which includes the discount.

⁽⁸⁾ The Albion Mills Retail Park notes payable balance is presented at cost basis. This loan is carried on our balance sheet at fair value (see Note 15).

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⁽⁹⁾ We entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.94% plus 1.31% or 5.25% per annum as of June 30, 2010 and expires on October 10, 2013. The stated rates on the mortgage note payable were 1.96% and 1.88% at June 30, 2010 and December 31, 2009, respectively, which were based on GBP-based LIBOR plus a spread of 1.31%.

⁽¹⁰⁾ The loan was assumed from the seller of Avion Midrise III & IV on November 18, 2008 and was recorded at estimated fair value which includes the discount.

⁽¹¹⁾ The loan was assumed from the seller of 12650 Ingenuity Drive on August 5, 2009 and was recorded at estimated fair value which includes the discount.

⁽¹²⁾ We entered into the interest rate swap agreement that fixed the GBP-based LIBOR rate at 3.42% plus 2.26 or 5.68% per annum as of June 30, 2010 and expires on August 10, 2014. The stated rates on the mortgage note payable was 2.91% and 2.83% at June 30, 2010 and December 31, 2009, respectively, which were based on GBP-based LIBOR plus a spread of 2.26%.

⁽¹³⁾ The two loans were assumed from the seller of One Wayside Road on June 24, 2010 and were recorded at estimated fair value which include the discount.

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 our fixed rate debt.

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 value at June 30, 2010 and December 31, 2009 (in thousands):

	As of June 30, 2010
	Carrying Value			Total Fair Value
Financial Liabilities:
Interest Rate Swaps	$	(3,318	)	$	(3,318	)
Notes Payable		(225,673	)		(229,921	)
Loan Payable		(15,000	)		(15,000	)

A 100 basis point increase or decrease in interest rates would increase or decrease the fair market value of our notes payable by $7,939,000 at June 30, 2010. In addition, a 100 basis point increase or decrease in interest rates would either increase or decrease annual variable interest expense as follows; approximately $112,000 on the Thames Valley Five property, approximately $86,000 on the Albion Mills Retail Park property and approximately $209,000 on the Maskew Retail Park property.

	As of December 31, 2009
	Carrying Value			Total Fair Value
Financial Assets (Liabilities):
Interest Rate Cap	$	1		$	1
Interest Rate Swaps		(1,703	)		(1,703	)
Notes Payable		(212,425	)		(210,087	)

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.

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Debt Maturities

The following table details our consolidated and unconsolidated debt maturities as of June 30, 2010 (in thousands):

	Consolidated Debt							Unconsolidated Debt(1)							Consolidated & Unconsolidated Debt(1)
	Scheduled Amortization		Term Maturities		Total			Scheduled Amortization		Term Maturities		Total			Scheduled Amortization		Term Maturities		Total
2010 (Six months ending December 31, 2010)	$	2,742	$	—	$	2,742		$		$		$			$	2,742	$	—	$	2,742
2011		5,738		31,028		36,766			—		—		—			5,738		31,028		36,766
2012		6,001		12,000		18,001			—		—		—			6,001		12,000		18,001
2013(2)		6,119		19,826		25,945			—		102,310		102,310			6,119		122,136		128,255
2014		5,932		67,191		73,123			—		40,640		40,640			5,932		107,831		113,763
2015		5,350		49,838		55,188			—		—		—			5,350		49,838		55,188
2016		4,930		—		4,930			—		—		—			4,930		—		4,930
2017		5,215		—		5,215			—		—		—			5,215		—		5,215
2018		5,516		—		5,516			—		—		—			5,516		—		5,516
2019		5,420		—		5,420			—		—		—			5,420		—		5,420
2020		3,959		—		3,959			—		—		—			3,959		—		3,959
Thereafter		7,670		—		7,670			—		—		—			7,670		—		7,670
Total	$	64,592	$	179,883	$	244,475		$	—	$	142,950	$	142,950		$	64,592	$	322,833	$	387,425
Weighted Average Maturity (years)						4.64							3.78							4.32
Weighted Average Interest Rate						5.53	%						5.60	%						5.55	%

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

⁽²⁾ The Thames Valley Five consolidated debt ($11,205,000 at June 30, 2010) maturity date may be extended for an additional two years from May, 2013 to May, 2015. In addition, Afton Ridge has the option to extend the maturity date of the unconsolidated debt ($22,950,000 at June 30, 2010—our share) for one additional year from October, 2013 to October, 2014.

Encumbered and Unencumbered Properties

The following table details our Encumbered and Unencumbered properties as of June 30, 2010 (Approximate Acquisition Cost and Debt Balance in thousands):

	Consolidated Properties					Unconsolidated Properties(1)					Consolidated & Unconsolidated  Properties(1)
	Properties	Approximate Acquisition Cost		Debt Balance		Properties	Approximate Acquisition Cost		Debt Balance		Properties	Approximate Acquisition Cost		Debt Balance
Encumbered Properties(2)	34	$	631,705	$	244,475	8	$	272,487	$	142,950	42	$	904,192	$	387,425
Unencumbered Properties	28		284,505		—	14		199,128		—	42		483,633		—
Total Properties	62	$	916,210	$	244,475	22	$	471,615	$	142,950	84	$	1,387,825	$	387,425

⁽¹⁾ Number of Properties at 100%. Approximate Acquisition Cost and Debt Balance for Unconsolidated Properties are at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia.

⁽²⁾ Includes five properties that secure the Wells Fargo Credit Facility (see Note 6 “Debt”).

Subsequent Events

From July 1, 2010 through August 6, 2010, we received gross proceeds from our current public offering of approximately $65,784,736 from the sale of 6,622,631 common shares.

On July 6, 2010, we entered into a purchase and sale agreement to acquire, subject to customary closing conditions, 100 Tice Blvd., located at 100 Tice Blvd. in Woodcliff Lake, New Jersey, a suburb of New York City. We will acquire 100 Tice Blvd. for approximately $67,600,000, of which approximately $42,600,000 will be paid by assuming an existing mortgage loan held by Hartford Life and Accident Insurance Company and Principal Life Insurance Company. We anticipate that the remainder of the purchase price will be funded using the net proceeds from our current public offering. 100 Tice Blvd. is a 208,911 square foot office building that is 100% leased to Eisai Inc. through December 2021 and is used as Eisai’s North American headquarters. Eisai Inc. is the U.S. operating subsidiary of the Japanese company Eisai Co., Ltd. Eisai Inc. is a producer of pharmaceuticals for the treatment of Alzheimer’s disease and cancers. While we anticipate this acquisition to close during the third quarter of 2010, the agreement to acquire the property is subject to a number of contingencies and therefore there can be no assurances that this acquisition will occur.

On July 27, 2010, we contributed an additional $507,000 of our CBRE Strategic Partners Asia capital commitment which was funded using net proceeds from our current public offering.

74

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, as amended, 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 and that disclosure controls and procedures were effective to ensure that the information required to be disclosed by us is accumulated and communicated to our management, including our chief executive officer and chief financial offer, 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 five 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 13(a)-15(e), 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 June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

75

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not party to any material legal proceedings as of June 30, 2010.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in Item 1.A. to Part I of our Annual Report on Form 10-K for the year ended December 31, 2009 and in Item 1.A. to Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.

76

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Securities and Repurchases of Securities

During the three months ended June 30, 2010, we did not sell any equity securities that are not registered under the Securities Act of 1933, as amended.

The following table provides information with respect to our Share Redemption Program for the three months ended June 30, 2010:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or approximate dollar value)  of Shares that May Yet Be Purchased Under the Plans or Programs
April	374,990.38	$	9.12	N/A	N/A
May	—		—	N/A	N/A
June	—		—	N/A	N/A
Total	374,990.38	$	9.12	N/A	N/A

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 covered up to $2,000,000,000 in common shares of beneficial interest, 90% of which were offered at a price of $10.00 per share, and 10% of which were 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. Our initial public offering was terminated effective as of the close of business on January 29, 2009. As of the close of business on January 29, 2009, we had sold a total of 60,808,967 common shares in the initial public offering, including 1,487,943 common shares which were issued pursuant to our dividend reinvestment plan. We withdrew from registration a total of 140,243,665 common shares that were registered but not sold in connection with the initial public offering. From October 24, 2006 (effective date) through January 29, 2009 (termination date), we had accepted subscriptions from 13,270 investors, issued 60,808,967 common shares and received $607,345,702 in gross offering proceeds pursuant to our initial public offering. After payment of approximately $8,290,000 in acquisition fees and related expenses, payment of approximately $26,335,000 in selling commission, $8,898,000 in dealer manager fees, $4,008,000 in marketing support fees and payment of approximately $12,147,000 in organization and offering expenses, as of January 29, 2009, we had raised aggregate net offering proceeds of approximately $548,000,000.

The registration statement relating to our follow-on public offering (No. 333-152653) was declared effective on January 30, 2009. CNL Securities Corp. is the Dealer Manager of our follow-on offering. The registration statement covers up to $3,000,000,000 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. We reserve the right to reallocate the shares between the primary offering and our dividend reinvestment plan. From January 30, 2009 (effective date) through June 30, 2010, we had accepted subscriptions from 19,546 investors, issued 72,998,556 common shares and received $728,540,691 in gross offering proceeds pursuant to our public offering after payment of $11,051,000 in acquisition fees and related expenses, payment of approximately $37,488,000 in selling commissions, $14,056,000 in dealer manager fees, $5,682,000 in marketing support fees and payment of approximately $10,348,000 in organization and offering expenses, as of June 30, 2010, we had raised aggregate net offering proceeds of approximately $649,916,000.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

None.

77

ITEM 6. EXHIBITS

10.1	Shareholders’ Agreement by and among Goodman Europe Development Trust, RT Princeton CE Holdings, LLC and Goodman Princeton Holdings (LUX) S.À R.L., dated June 10, 2010, filed herewith.
10.2	Shareholders’ Agreement by and among Goodman Jersey Holdings Trust, RT Princeton UK Holdings, LLC and Goodman Princeton Holdings (Jersey) Limited, dated June 10, 2010, 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.

78

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: August 13, 2010	/S/    JACK A. CUNEO
	Jack A. Cuneo
	President and Chief Executive Officer
Date: August 13, 2010	/S/    LAURIE E. ROMANAK
	Laurie E. Romanak
	Chief Financial Officer

79

EX-10.1

EXHIBIT 10.1

EXECUTION VERSION

DATED 10 June 2010

GOODMAN EUROPE DEVELOPMENT TRUST

and

RT PRINCETON CE HOLDINGS, LLC

and

GOODMAN PRINCETON HOLDINGS (LUX) S.À R.L.

SHAREHOLDERS’ AGREEMENT

in respect of GOODMAN PRINCETON HOLDINGS (LUX) S.À R.L.

Lacon House

84 Theobald’s Road

London WC1X 8RW

Tel: +44(0)20 7524 6000

CONTENTS

Clause	Subject matter	Page
1.	DEFINITIONS AND INTERPRETATION	1
2.	THE BUSINESS OF THE COMPANY	17
3.	COMPLETION	17
4.	DIRECTORS AND MANAGEMENT	18
5.	RESERVED MATTERS	23
6.	DEADLOCK	23
7.	BUY SELL OPTION	25
8.	BANKING ARRANGEMENTS	28
9.	ACCOUNTING RECORDS, BUDGETS AND FINANCIAL INFORMATION	29
10.	FINANCING THE COMPANY	31
11.	DISTRIBUTIONS AND DIVIDENDS	32
12.	SECRETARIAL AND ACCOUNTING FUNCTIONS	34
13.	INTELLECTUAL PROPERTY RIGHTS	34
14.	CONFIDENTIALITY	35
15.	ANNOUNCEMENTS	37
16.	FIRST RIGHT OF OFFER ON QUALIFYING ASSETS	37
17.	GOOD FAITH	41
18.	COMPLIANCE WITH THIS AGREEMENT AND THE ARTICLES	41
19.	TRANSFERS OF SHARES AND PECS	41
20.	DEFAULT EVENTS	42
21.	DETERMINATION OF NAV	44
22.	COMPLETION OF THE SALE AND PURCHASE OF SHARES AND PECS	44
23.	ASSIGNMENT	45
24.	SUCCESSORS	46
25.	DURATION	46
26.	TAX	47
27.	ENTIRE AGREEMENT	48
28.	SEVERANCE	48
29.	NO PARTNERSHIP	48
30.	STATUS OF AGREEMENT	49
31.	VARIATION	49
32.	WAIVER	49
33.	COSTS	49
34.	FURTHER ASSURANCE	49
35.	COUNTERPARTS	50
36.	NOTICES	50
37.	GOVERNING LAW AND JURISDICTION	52
	SCHEDULE 1 Initial Properties	53
	SCHEDULE 2	54
	Part 1 – Major Decisions	54
	Part 2 – Reserved Matters	54
	SCHEDULE 3 Completion	55
	SCHEDULE 4 Instrument of Adherence	57
	SCHEDULE 5 Articles	59
	SCHEDULE 6 Due Diligence Materials	60
	SCHEDULE 7 PECs Terms and Conditions	61
	SCHEDULE 8 Distribution Worked Example	62
	SCHEDULE 9 Certain US Federal Income Tax Provisions	63

i

SHAREHOLDERS’ AGREEMENT

DATE 10 June 2010

PARTIES

(1) GOODMAN EUROPE DEVELOPMENT TRUST acting by its trustee GOODMAN EUROPE DEVELOPMENT PTY LTD (incorporated and registered in New South Wales, Australia under company registration number ACN 119 827 726), the registered office of which is at c/o Level 10, 60 Castlereagh Street, Sydney NSW 2000, Australia (“Goodman”);

(2) RT PRINCETON CE HOLDINGS, LLC (a Delaware Limited Liability Company with its principal place of business at 47 Hulfish Street, Suite 210, Princeton, New Jersey 08542, USA (“RTPCE”); and

(3) GOODMAN PRINCETON HOLDINGS (LUX) S.À R.L. (a Luxembourg private limited liability company (société à responsabilité limitée) incorporated and in process of registration with the Luxembourg company registry (Registre de Commerce et des Sociétés), the registered office of which is at 8, rue Heine, L-1720 Luxembourg, Grand-Duchy of Luxembourg (the “Company”).

RECITALS

(A) The Company was incorporated on 20 May 2010 and was originally owned 100% by Goodman.

(B) On 9 June 2010 Goodman transferred 80% of its shares in the Company to RTPCE.

(C) Goodman and RTPCE intend to acquire and hold the Properties through the Company for investment purposes.

(D) This agreement sets out the terms and conditions on which Goodman and RTPCE agree to establish the Company and the rights and obligations of each of them as its shareholders.

IT IS AGREED AS FOLLOWS:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this agreement the following definitions apply:

“2006 Act”

means the United Kingdom Companies Act 2006;

“A Director”

means a Director appointed an A Director pursuant to this agreement or the Articles;

“A Share”

means an A ordinary share in the share capital of the Company having a par value of one Euro (€1.00);

“Administrator”

means Goodman Europe or such other person appointed as administrator to the Company and, where appropriate, the Indirect Investment Vehicles;

“Administration and Secretarial Agreement”

means the agreement dated on or about the date of this agreement to be entered into between (1) the Administrator and (2) the Company in relation to the provision of secretarial services to the Company and any Indirect Investment Vehicles (with such amendments as the Shareholders agree);

“Agreed Form”

means in a form agreed by and signed by or on behalf of each of the parties and initialled by them or on their behalf for identification;

“Alternative Representative”

has the meaning given to that term in clause 4.10.3;

“Appointor”

means, in relation to a Director or Representative, the Shareholder which nominated and appointed such Director or Representative in accordance with this agreement or the Articles;

“Articles”

means the articles of association of the Company in the form set out in Schedule 5 to be adopted pursuant to this agreement and as amended from time to time which are also to be adopted as the articles of association of the Indirect Investment Vehicles (with such amendments as the Shareholders agree);

“Asset Plan”

means an asset plan in respect of each Property from time to time as more fully described in clause 9.2.1;

“Associate”

means:

(a) in the case of a company, a subsidiary undertaking or parent undertaking of the company, and any other subsidiary undertaking of such parent undertaking;

(b) in any other case, any body corporate or unincorporated association (including but not limited to a partnership, limited partnership or trust) directly or indirectly controlled by the person concerned, and for this purpose “control” shall have the same meaning as in section 1124 of the United Kingdom Corporation Tax Act 2010.

provided that:

(i) neither of CB Richard Ellis Inc or any of its subsidiaries shall be deemed to be an Associate of RTPCE;

(ii) in the case of Goodman, each of Goodman Limited and its subsidiaries, the Investment Adviser, the Development Manager, the Property Manager and Goodman Operator (UK) Limited shall be deemed to be an Associate of Goodman; and

(iii) an Excluded Entity shall be deemed not to be an Associate of Goodman or the Investment Adviser;

“Auditors”

means the auditors of the Company from time to time;

“B Director”

means a Director appointed a B Director pursuant to this agreement or the Articles;

“B Share”

means a B ordinary share in the share capital of the Company having a par value of one Euro (€1.00);

“Bank Accounts”

means the Company’s bank accounts from time to time;

“Board”

means the board of directors (conseil de gérance) of the Company from time to time;

“Business”

means the business of the Company as described in clause 2.1;

“Business Day”

means a day other than a Saturday, Sunday or a day on which banks are authorised to close in the City of Luxembourg or the City of London;

“Business Plan”

means a business plan in respect of the Group from time to time as more fully described in clause 9.2.1;

“Capital Proceeds”

means all proceeds of a capital nature received by the Company following a disposal or liquidation of all or any part of the Properties or any of the Indirect Investment Vehicles (as appropriate) or following any refinancing of the Group’s borrowings or any equity release;

“Chairman”

means the chairman of the Board from time to time;

“Companies Law”

means the law of 10 August 1915 on commercial companies, as amended from time to time;

“Company Buy Offer”

has the meaning given to that term in clause 7.1.1(a);

“Company Buy-Sell Notice”

has the meaning given to that term in clause 7.1.1;

“Company Offeree”

has the meaning given to that term in clause 7.1.1;

“Company Offeror”

has the meaning given to that term in clause 7.1.1;

“Company Sell Offer”

has the meaning given to that term in clause 7.1.1(b);

“Completion”

means the completion of the subscription for PECs by Goodman and RTPCE and acquisition of the Düren SPV and the Schönberg SPV by the Company and entry into the Langenbach Agreement in accordance with clauses 3 and 10 and Schedule 3;

“Confidential Information”

means all information relating to the Business, the Group, any Property or to any Shareholder or any Associate of any Shareholder including, without limitation, trade secrets, any financial or trading information and the contents of this agreement and any other agreement referred to in this agreement;

“CSSF”

means the Commission de Surveillance du Secteur Financier;

“Deadlock”

has the meaning given to that term in clause 6.2;

“Deadlock Date”

has the meaning given to that term in clause 6.6;

“Deadlock Notice”

has the meaning given to that term in clause 6.3;

“Default Event”

has the meaning given to that term in clause 20.1;

“Defaulting Buy-Sell Shareholder”

has the meaning given to that term in clause 7.3.4(b);

“Defaulting Shareholder”

has the meaning given to that term in clause 20.1;

“Development Manager”

means Goodman Europe or any other person appointed as development manager to the Company or any Indirect Investment Vehicle from time to time;

“Development Management Agreement”

means any development management agreement to be entered into between (1) the Development Manager and (2) the Company in relation to the provision of development management services to the Company and any Indirect Investment Vehicle from time to time;

“Director”

means a director (gérant) designated as an A Director or a B Director, as the case may be, appointed in accordance with the Articles or this agreement and the expression “Directors” shall be construed accordingly;

“Disposal”

means the sale, transfer or other disposition of a Property or any Indirect Investment Vehicle that owns (either directly or indirectly) such Property;

“Drawdown Notice”

has the meaning given to that term in clause 10.7.1;

“Due Diligence Materials”

has the meaning given to that term in clause 16.3.1;

“Düren Property”

means the property known as “Düren” as described more fully in Schedule 1;

“Düren SPV”

means, Goodman Aventurine Logistics (Lux) Sarl a Luxembourg private limited liability company (société à responsabilité limitée) duly incorporated and registered with the Luxembourg company registry under number B 136616, the registered office of which is at 8, rue Heine, L-1720 Luxembourg, being the entity that owns the Düren Property;

“Emergency Funding”

means funding required for any valid business purpose of the Company or any Indirect Investment Vehicle as determined by the Property Manager or either Shareholder in each case in its reasonable discretion as being required on short notice, including for the prevention of danger or damage to any person or any Property, where the Shareholders do not agree on whether such funding should be provided;

“Emergency Shareholder Loan”

has the meaning given to that term in clause 10.7.1;

“Encumbrance”

includes any mortgage, charge (fixed or floating), pledge, lien, hypothecation, guarantee, trust, right of set-off or other third party right or interest (legal or equitable) including any assignment by way of security, reservation of title or other security interest of any kind, however created or arising, or any other agreement or arrangement (including a sale and repurchase agreement) having similar effect;

“Estimated Gross Asset Value”

has the meaning given to that term in clause 7.1.1;

“Excluded Entity”

means:

(a) any person in respect of which the Investment Adviser or any of its Associates has been appointed as an investment or asset adviser or manager (whether discretionary or not), other than Goodman Limited or any of its Associates; or

(b) any fund, joint venture, investment club, collective investment scheme, pooled investment vehicle or similar entity (whether incorporated or unincorporated) which is owned in part, managed or advised by the Investment Adviser or any of its Associates,

provided that none of the Investment Adviser, Property Manager or Development Manager (or any of their assignees under the Investment Advisory Agreement, Property Services Agreement or a Development Management Agreement which are Associates of Goodman Limited) shall be an Excluded Entity;

“Executive Committee”

shall have the meaning given to that term in clause 4.10.1;

“Finance Agreements”

means any loan, finance, security or other agreements or documents entered into by the Company and/or any Indirect Investment Vehicle with any third party lender or provider of finance;

“Financial Year”

in relation to the Company, means a financial accounting period of 12 months ending 31 December, but in the first year the Company is formed, means the period starting with the day the Company is formed and ending on 31 December 2010, and in the last year of the Company the period from 1 January in such year to the date of dissolution of the Company;

“First Notice”

has the meaning given to that term in clause 16.3.1;

“First Preferred Return”

means, in the case of each Shareholder, the sum of (a) an amount equal to eight and a half percent (8.5%) per annum, determined on a basis of 365 or 366 calendar days as the case may be, for the actual number of days in the Financial Year for which the first preferred return is being determined, of the average daily balance of such Shareholder’s Unreturned Capital for the given Financial Year plus (b) any amount of first preferred return in respect of paragraph (a) for any previous Financial Years to the extent not actually distributed pursuant to clause 11.1.1 or 11.1.2, cumulative and compounded at eight and a half percent (8.5%) on an annual basis;

“First Series PECs”

means the first series PECs in the Agreed Form and which are to be issued by the Company to Goodman on Completion;

“FSA”

means the United Kingdom Financial Services Authority;

“FSMA”

means the United Kingdom Financial Services and Markets Act 2000;

“General Partner”

means Goodman Princeton Participation GP GmbH, being the general partner of the Limited Partnership;

“Goodman Europe”

means Goodman Europe (Lux) S.A., a public limited liability company (société anonyme) duly incorporated and registered with the in Luxembourg company registry under number B 105319, the registered office which is at 8, rue Heine, L-1720 Luxembourg;

“Goodman Limited”

means Goodman Limited, a company incorporated in Australia under company number ACN 000 123 071;

“Goodman Representative”

has the meaning given to that term in clause 4.10.2;

“Goodman Senior Officer”

has the meaning given to that term in clause 6.5.1;

“Group”

means the Company and its subsidiaries (including each of the Indirect Investment Vehicles) from time to time and the expression “Group Member” means any one of them;

“Holdco”

means Goodman Princeton Investments (Lux) S.à r.l;

“Indemnified Person”

has the meaning given to that term in clause 9.3.2(a);

“Indirect Investment Vehicle”

means any limited partnership, limited liability partnership, general partnership, company, unit trust, offshore holding structure or collective investment scheme that is, or will be, either directly or indirectly wholly owned by the Company or in which another Indirect Investment Vehicle has a majority ownership interest, including Holdco, the General Partner and the Limited Partnership;

“Initial Plans”

means the Business Plan for the Group and the Asset Plan for each Initial Property in Agreed Form to be adopted at Completion;

“Initial Investment Term”

means the date falling three years after the date of this agreement;

“Initial Properties”

means:

(a) the Düren Property;

(b) the Schönberg Property; and

(c) the Langenbach Property;

“Initial Term”

has the meaning given to that term in clause 25.1;

“Instrument of Adherence”

means an instrument in the form set out in Schedule 4;

“Intellectual Property Rights”

means inventions, patents, technical information and know-how of all descriptions, utility models, trade marks, service marks, rights in design (registered and unregistered), semi-conductor topography rights, copyrights (including rights in computer software), database rights, business and trade names and associated

goodwill, domain names and all other industrial or intellectual property or other rights or forms of protection of a similar nature or having similar effect in any part of the world and all rights in and in relation to any of them, applications to register any of them, and the rights to apply for or claim priority in respect of any of them;

“Interested Director”

means in respect of a Related Party Contract:

(a) a Director (or director of an Indirect Investment Vehicle) who is a party to a Related Party Contract; or

(b) a Director (or director of an Indirect Investment Vehicle) whose Appointor (or an Associate of the Appointor) is a party to a Related Party Contract;

“Interested Party”

means an Interested Director, an Interested Representative, his or her Appointor (in each case) and any Associate of such Appointor;

“Interested Representative”

means in respect of a Related Party Contract:

(a) a Representative who is a party to a Related Party Contract; or

(b) a Representative whose Appointor (or an Associate of the Appointor) is a party to a Related Party Contract;

“Investment Adviser”

means Goodman Europe or any other person appointed as investment adviser to the Company from time to time;

“Investment Advisory Agreement”

means the investment advisory agreement dated on or about the date of this agreement to be in Agreed Form to be entered into between (1) the Company (2) the Investment Adviser and (3) Goodman Operator (UK) Limited in relation to the provision of investment advisory services to the Company and any Indirect Investment Vehicle;

“IRR”

means the annual internal rate of return (expressed as a percentage) which when applied as a discount to a particular set of cashflows gives the net present value of that set of cashflows as zero having adopted the convention of outflows as positive and inflows as negative on the basis that:

(a) each of those cashflows is regarded as arising at the date on which the cashflow in question occurs or is deemed to occur; and

(b) the rate of return is treated as compounding annually;

“Joint Venture Documents”

means:

(a) this agreement;

(b) the Service Agreements;

(c) the Administration and Secretarial Agreement;

(d) the Trade Mark Licence Agreement; and

(e) the Sale and Purchase Agreements;

“Langenbach Agreement”

means the conditional agreement for the acquisition of the shares in the Langenbach SPV by Holdco and the Limited Partnership represented by the General Partner;

“Langenbach Property”

means the property known as “Langenbach” as described more fully in Schedule 1;

“Langenbach SPV”

means, Goodman Langenbach Logistics (Lux) Sàrl (a Luxembourg private limited liability company (société à responsabilité limitée)) duly incorporated and in the process of being registered with the Luxembourg company registry, the registered office of which is at 8, rue Heine, L-1720 Luxembourg, being the entity that owns the Langenbach Property;

“Limited Partnership”

means Goodman Princeton Participation GP GmbH & Co KG being a limited partnership (Kommanditgesellschaft) established under the laws of Germany;

“Lux GAAP”

means the generally accepted accounting principles applicable under Luxembourg law;

“Luxembourg”

means the Grand Duchy of Luxembourg;

“Major Decisions”

means all matters set out in Part 1 of Schedule 2;

“Market Value”

means market value as determined in accordance with the latest valuation standards of the International Valuations Standard Council from time to time with such amendments for market practice in the relevant local jurisdictions as the Investment Adviser considers appropriate;

“NAV”

means, at the relevant time, the net asset value of the Company determined in accordance with Lux GAAP with such adjustments as the Auditors shall reasonably determine and calculated pursuant to clause 21 by:

(a) taking the aggregate of:

(i) the asset value of the Indirect Investment Vehicles (in relation to which the value of each Property shall be its Market Value at the relevant time, as determined by the Valuers) and, for the avoidance of doubt, any cash deposits (whether held as contingencies, other contingency or sinking fund amounts or otherwise) and receivables of any Indirect Investment Vehicle shall be included as assets; and

(ii) the current market value of any other assets of the Company including the PECs in issue and any cash deposits;

(b) deducting outstanding liabilities of the Company as at the relevant time excluding any PECs in issue; and

(c) applying the following additional principles:

(i) cash and short term deposits shall be taken at face value;

(ii) there shall be deducted the total amount of any actual or estimated liabilities properly payable by the Company or any Indirect Investment Vehicle (to the extent not already taken into account in determining values under paragraphs (a) and (b) above);

(iii) there shall be added the amount of any prepayments made by the Company or any Indirect Investment Vehicle (to the extent not already taken into account in determining values under paragraphs (a) and (b) above) in respect of any period after the date for calculation of the net asset value;

(iv) goodwill and other intangible assets shall be excluded;

(v) any Property which is the subject of an unconditional binding contract for sale shall be taken at the contract price less any associated costs of sale; and

(vi) the value or liability (as the case may be) under any interest rate or other hedging arrangements or any fixed interest rate debt instrument shall be marked to market as at the relevant date;

“NAV per Share”

means at the relevant time the amount determined by dividing the NAV by the total number of Shares then in issue;

“Net Income”

means all receipts of an income nature received by the Company (on an accruals basis) from any equity or debt instruments held by the Company in any Indirect Investment Vehicle in respect to the Group’s operations;

“Non-Defaulting Shareholder”

has the meaning given to that term in clause 20.1;

“Offer Period”

has the meaning given to that term in clause 16.1.2;

“Panel on Takeovers and Mergers”

means the United Kingdom Panel on Takeovers and Mergers;

“PECs”

means the preferred equity certificates issued or to be issued by the Company, each having a nominal value of one Euro cent (€0.01) each including the First Series PECs, the Second Series PECs and any further series of PECs issued by the Company pursuant to this agreement;

“PECs Terms and Conditions”

means the terms and conditions of PECs to be issued pursuant to this agreement as set out in Schedule 7;

“PEC Transfer Agreement”

means a transfer agreement relating to the PECs in a form to be approved by the Company at the relevant time;

“Performance Fee”

means the performance fee paid (or to be paid) to Goodman Europe as investment adviser pursuant to the Investment Advisory Agreement;

“Properties”

means, as the context requires:

(a) the Initial Properties;

(b) any other property acquired by the Company after the date of this agreement, either directly or by way of an Indirect Investment Vehicle; and

(c) any interest in such property;

“Property Buy Offer”

has the meaning given to that term in clause 7.2.1(a);

“Property Buy-Sell Notice”

has the meaning given to that term in clause 7.2.1;

“Property Manager”

means Goodman Europe or any other person appointed as property manager from time to time of each of the Properties;

“Property Offeree”

has the meaning given to that term in clause 7.2.1;

“Property Offeror”

has the meaning given to that term in clause 7.2.1;

“Property Sell Offer”

has the meaning given to that term in clause 7.2.1(b);

“Property Services Agreement”

means the property services agreement dated on or about the date of this agreement to be in Agreed Form to be entered into between (1) the Property Manager, (2) the Company and (3) Indirect Investment Vehicles in relation to the provision of property management services to the Company and any Indirect Investment Vehicle;

“Qualifying Asset”

has the meaning given to that term in clause 16.2.1;

“Quarter”

means a quarter of the Financial Year each such quarter ending on 31 March, 30 June, 30 September and 31 December;

“Quarter End”

means the last day of each Quarter;

“Related Party Contract”

means a contract, arrangement or understanding that is between:

(a) on the one hand, a Director, a Representative, his or her Appointor (in each case), any director, officer or Associate of such Appointor (other than the Company or any Indirect Investment Vehicle); and

(b) on the other hand, the Company, an Indirect Investment Vehicle or any other entity in which any of the Company or any Indirect Investment Vehicle is interested, in any matter and in any capacity (including, without limitation, on its own account, jointly with or on behalf of any other person, firm, company or other entity, or as an employee, manager, director, shareholder, member, partner, joint venture participant or consultant),

and shall be deemed to include the Joint Venture Documents and any agreement or transaction with, hiring for services rendered, or the payment of any fees or other remuneration to any Director, Representative or Shareholder or any Associate of a Shareholder or any of their respective members, shareholders, officers or directors;

“Relevant Date”

has the meaning given to that term in clause 21.1.1;

“Relevant Property”

has the meaning given to that term in clause 6.6;

“Representative”

has the meaning given to that term in clause 4.10.2;

“Reserved Matters”

means the matters listed in Part 2 of Schedule 2;

“RTPCE Notice”

has the meaning given to that term in clause 16.5.2;

“RTPCE Offer”

has the meaning given to that term in clause 16.5.1;

“RTPCE Representative”

has the meaning given to that term in clause 4.10.2;

“RTPCE Senior Officer”

has the meaning given to that term in clause 6.5.2;

“Sale and Purchase Agreements”

means:

(a) the Langenbach Agreement; and

(b) the sale and purchase agreement for the acquisition of the shares in the Düren SPV and the Schönberg SPV by the Company and the Limited Partnership represented by the General Partner;

“Schönberg Property”

means the property known as “Schönberg” as described more fully in Schedule 1;

“Schönberg SPV”

means, Goodman Marcasite Logistics (Lux) S.à.r.l (a Luxembourg private limited liability (société à responsabilité limitée) duly incorporated and in registered with the Luxembourg company registry under number B 137791, the registered office of which is at 8, rue Heine, L-1720 Luxembourg, being the entity that owns the Schönberg Property;

“Second Preferred Return”

means, in the case of each Shareholder, the sum of (a) an amount equal to one and a half percent (1.5%) per annum, determined on a basis of 365 or 366 calendar days as the case may be, for the actual number of days in the Financial Year for which the second preferred return is being determined, of the average daily balance of such Shareholder’s Unreturned Capital for the given Financial Year plus (b) any amount of second preferred return in respect of paragraph (a) for any previous Financial Years to the extent not actually distributed pursuant to clause 11.1.1 or 11.1.2, cumulative and compounded at ten percent (10%) on an annual basis;

“Second Series PECs”

means the second series PECs in the Agreed Form and which are to be issued by the Company to RTPCE on Completion;

“Service Agreements”

means:

(a) the Investment Advisory Agreement;

(b) any Development Management Agreement; and

(c) the Property Services Agreement;

“Share”

means any share (part sociale) in the subscribed share capital of the Company of whatever class, having a par value of one Euro (€1.00) each, and the expression “Shares” shall be construed accordingly;

“Shareholder”

means any person registered in the register of the Company, in application of Article 185 of the Companies Law, as the holder of a Share from time to time;

“Share Transfer Agreement”

means a transfer agreement relating to Shares in a form to be approved by the Company at the relevant time

“Target Region”

means France, Germany and Benelux;

“Trade Mark Licence Agreement”

means the trade mark licence agreement in the Agreed Form dated on or about the date of this agreement and to be entered into between Goodman Limited and the Company in relation to the use of the “Goodman” mark;

“Transaction Amount”

means the proposed purchase price of any Qualifying Asset that is subject to a Transaction in Progress;

“Transaction in Progress”

means any transaction in relation to a Qualifying Asset:

(a) which is actively being pursued by the Company (or any Indirect Investment Vehicle) following acceptance of a First Notice or a RTPCE Notice; or

(b) in respect of which heads of terms have been agreed or an offer, agreement in principle, memorandum of understanding or definitive agreement has been made or entered into in good faith between the Company (or any Indirect Investment Vehicle) and any other person;

“UKLA”

means the United Kingdom Listing Authority, being the FSA acting in its capacity as the competent authority for the purposes of Part VI FSMA;

“United Kingdom”

means Great Britain and Northern Ireland;

“Unreturned Capital”

means, for each Shareholder, an amount equal to the aggregate of sums subscribed for Shares by such Shareholder and any amounts funded to the Company under any PECs issued by the Company pursuant to this agreement and subscribed for by such Shareholder, less any amounts distributed to such Shareholder pursuant to clause 11.1.2(a), provided that if the resultant amount would result in a sum below zero it shall be deemed to be zero; and

“Valuers”

means such firm of valuers and surveyors being members of the Royal Institution of Chartered Surveyors as shall be determined by the Company for the purpose of valuing the Properties or failing determination by the Company, as determined by such valuer appointed by the then president of the Royal Institution of Chartered Surveyors (or the next most senior officer available) upon the application of either Shareholder.

1.2 Interpretation

Unless otherwise expressly stated, the rules of interpretation set out in this clause 1.2 apply in this agreement:

1.2.1 The contents page, headings and sub-headings in this agreement are for ease of reference only and do not affect the meaning of this agreement.

1.2.2 Words in the singular include the plural and vice versa.

1.2.3 The masculine includes the feminine and vice versa.

1.2.4 A reference to a party is to a party to this agreement and includes the respective successors or permitted assigns of the original parties.

1.2.5 Where examples are given by using words or phrases such as “include”, “including” or “in particular”, the examples do not restrict the meaning of the related general words and the use of the words “include”, “including” or “in particular” shall be deemed to include the words “without limitation”.

1.2.6 A reference to a person includes an individual, firm, partnership, company, corporation, association, organisation or trust (in each case whether or not having a separate legal personality).

1.2.7 A reference to a clause, paragraph or schedule is to a clause or paragraph of or schedule to this agreement and a reference to this agreement includes its schedules and appendices.

1.2.8 A reference to a company includes any company, corporation or any other body corporate (wherever incorporated).

1.2.9 A reference to legislation is a reference to all legislation having effect in Luxembourg at any time, including directives, decisions and regulations of the Council or Commission of the European Union, Acts of Parliament, orders, regulations, consents, licences, notices and bye-laws made or granted under any Act of Parliament or directive, decision or regulation of the Council or Commission of the European Union, or made or granted by a local authority or by a court of competent jurisdiction and any approved mandatory codes of practice issued by a statutory body.

1.2.10 A reference to a statute or statutory provision includes:

(a) that statute or statutory provision as amended, modified or replaced (before, on or after the date of this agreement);

(b) any statute or statutory provision which re-enacts (with or without modification) such statute or statutory provision; and

(c) any subordinate legislation or any mandatory code of practice made (before, on or after the date of this agreement) under that statute or statutory provision.

1.2.11 A reference to this agreement or to any other document shall include any variation, amendment or supplement made to this agreement or that other document.

1.2.12 The words “holding company”, “subsidiary”, “undertaking”, “parent undertaking” or “subsidiary undertaking” have the same meaning as their respective definitions in the 2006 Act.

1.2.13 A reference to a person being connected with another person is a reference to a connected person as defined in section 1122 and 1123 of the United Kingdom Corporation Tax Act 2010.

1.2.14 Where any act, matter or thing is due to happen under this agreement on any day that is not a Business Day then it shall be deemed to be due on the next Business Day.

2. THE BUSINESS OF THE COMPANY

2.1 The Company shall acquire and hold the Properties either directly or indirectly by way of an Indirect Investment Vehicle for investment purposes on the terms set out in this agreement.

2.2 The Business shall be carried on by the Company solely from Luxembourg.

2.3 Each of the Shareholders shall use reasonable endeavours (but without any obligation to incur any costs, expenses or liabilities, except where required in connection with fulfilling the duties and obligations set out elsewhere in this agreement or the documents referred to in this agreement):

2.3.1 to ensure that the Business is carried on in accordance with the then current Business Plan in respect of the Company and Asset Plan in respect of each Property; and

2.3.2 to promote and develop the Business to the best advantage of the Shareholders in accordance with good business practice.

3. COMPLETION

3.1 Completion shall take place on the date of this agreement at the offices of Oostvogels Pfister Feyten in Luxembourg City.

3.2 At Completion each of Goodman and RTPCE shall do those things respectively required of them and procure that the Company shall do those things required of it, in each case in accordance with Schedule 3.

3.3 Immediately following Completion:

3.3.1 the initial share capital of the Company shall be twelve thousand five hundred Euros (€12,500) divided into 2,500 A Shares and 10,000 B Shares, each of them fully subscribed and entirely paid up;

3.3.2 the First Series PECs and the Second Series PECs shall be issued in such amounts and to such persons as set out in clause 3.3.3 below; and

3.3.3 the Shares and PECs will be held by the Shareholders as follows:

Name	Number and Designation of Shares and PECs
Goodman	2,500 A Shares 557,500,000 First Series PECs
RTPCE	10,000 B Shares 2,230,000,000 Second Series PECs

4. DIRECTORS AND MANAGEMENT

4.1 Appointment of Directors

4.1.1 Subject to clause 4.2, the Board shall have responsibility for the supervision and management of the Company and its Business save in respect of the Reserved Matters, which require unanimous approval from the Shareholders as set out in clause 5.

4.1.2 Goodman shall (i) be entitled to appoint up to two Directors but not less than one Director from the list of persons nominated by Goodman and (ii) RTPCE shall be entitled to appoint up to three Directors but not less than one Director from the list of persons nominated by RTPCE. Goodman and RTPCE shall each be obliged to nominate at least one person for this purpose.

4.1.3 Any Directors appointed by the Shareholders being amongst the persons nominated by Goodman shall be designated as A Directors and any Directors appointed by the Shareholders being amongst the persons nominated by RTPCE shall be designated as B Directors.

4.1.4 At the date of this agreement the Directors shall be as follows:

A Directors:	Dominique Prince and Stephen Young.
B Directors:	Daniel Laurecin, Sansal Ozdemir and Philip L. Kianka.

4.1.5 A Shareholder may remove a Director appointed by it and appoint a new Director in his place by notice in writing to the Company and the other Shareholder; provided that:

(a) a Shareholder proposing to appoint or remove a Director shall consult with the other Shareholder (if it is reasonably practicable to do so) before giving such notice; and

(b) nothing in this clause 4.1 shall prevent the appointment or removal of a Director notwithstanding that such appointment or removal has not been agreed by the other Shareholder and each Shareholder undertakes that it will exercise its votes at any meeting of the Shareholders to give effect to such appointment or removal.

4.1.6 At all times at least one Director appointed by Goodman and two Directors appointed by RTPCE must be resident in Luxembourg. Each Shareholder undertakes that it will not appoint any Director or remove or procure the removal of any Director where to do so would result in less than one Director appointed by Goodman and two Directors appointed by RTPCE being resident in Luxembourg.

4.1.7 The position of Chairman shall be held for alternate periods of 6 months (or such other period as the Shareholders shall agree) by an A Director or by a B Director resident in Luxembourg. The Chairman shall not have a casting vote. The first Chairman shall be appointed by the A Directors. If the Chairman is unable to attend any meeting of the Board, the Shareholder who appointed him shall be entitled to appoint another of its Directors to act as Chairman at the meeting.

4.1.8 Whenever a Shareholder ceases, for whatever reason, to be a Shareholder, that Shareholder shall procure that the Director(s) appointed by it will resign immediately from the Board without payment of compensation for loss of office or otherwise.

4.1.9 Any Shareholder removing a Director shall be responsible for and agrees with the other Shareholder to indemnify the other Shareholder and the Company against all losses, liabilities and costs which the other Shareholder and/or the Company may incur arising out of, or in connection with, any claim by such Director for wrongful or unfair dismissal or redundancy or other compensation arising out of such Director’s removal from or loss of office.

4.1.10 Each Shareholder shall procure that no Director appointed by it shall bind or purport to bind the Company or authorise it to do or omit to do anything in its own corporate capacity other than in accordance with this agreement and the Articles.

4.2 Quorum

4.2.1 Save as set out in this agreement, no business shall be transacted at any meeting of the Board or Shareholders unless a quorum is present in accordance with the Articles or this agreement, as applicable, namely:

(a) at Board meetings, one A Director and two B Directors; and

(b) at general meetings and adjournments of any general meeting, both Shareholders present in person or by corporate representative,

provided that if a majority of the Directors present at the meeting are not in Luxembourg then the Directors present, irrespective of their number, shall not constitute a quorum and the Directors may not act.

4.2.2 If a quorum of Directors or Shareholders (as the case may be) is not present at all times during a meeting of the Board or the Shareholders, as applicable, such meeting shall be adjourned and reconvened at such time and place in Luxembourg as determined by the Directors or Shareholder representatives present (as the case may be) (provided that notice of the time, date and place of the reconvened meeting is given to each person entitled to attend the meeting not less than 48 hours before the meeting).

4.2.3 Each of the Shareholders shall take reasonable steps available to them to ensure that any meeting of the Board and every general meeting of the Company has the necessary quorum throughout.

4.3 Voting – Board meetings

4.3.1 Save as set out in this agreement, each of Directors shall have one vote provided that the A Directors’ votes shall be considered collectively as one vote and the B Directors’ votes shall collectively be considered as one vote and no matter shall be given effect to unless the A Directors present have exercised their collective vote in favour of the matter in question and the B Directors present have exercised their collective vote in favour of the matter in question.

4.3.2 Where the A Directors disagree as to which way to exercise their collective vote the A Directors shall be deemed to have exercised their collective vote against the proposed resolution.

4.3.3 Where the B Directors disagree as to which way to exercise their collective vote the B Directors shall be deemed to have exercised their collective vote against the proposed resolution.

4.4 Related Party Contracts

4.4.1 Subject to applicable law, an Interested Party may enter into, vary or terminate (in each case, insofar as it has the right to do so thereunder and in accordance with the terms thereof) a Related Party Contract and retain any benefits under a Related Party Contract provided that the entry into or variation of the Related Party Contract is on an arm’s length basis and either (a) the Related Party Contract is a Joint Venture Document or (b) the Board has passed a resolution approving the participation by the Interested Party in the Related Party Contract.

4.4.2 Subject to applicable law and clauses 4.4.4 and 20.3, an Interested Party:

(a) shall disclose all conflicts of interest relevant to it of which it is aware and which is applicable to the matter to be discussed at a meeting of the Shareholders or Board;

(b) may be present while a Related Party Contract is considered at a meeting of the Shareholders or Board;

(c) may vote on a resolution of the Shareholders or Board in relation to the Related Party Contract or any matters concerning a Related Party Contract; and

(d) may be counted in any quorum for a meeting of the Shareholders or Board in relation to a Related Party Contract when such contract is discussed.

4.4.3 Each of the Shareholders undertakes with the other of them that (unless otherwise agreed in writing by the other of them) it will join with the other of them in procuring that the Company and any Indirect Investment Vehicle:

(a) observes and performs in all respects the provisions of any contract, agreement or arrangement which the Company or any Indirect Investment Vehicle is a party; and

(b) enforces the observance and performance in all respects by the other party or parties thereto of the provisions of any contract, agreement or arrangement which the Company or any Indirect Investment Vehicle is a party.

4.4.4 The Shareholders agree to procure that in respect of any contract, agreement or arrangement between the Company or any Indirect Investment Vehicle on the one hand and any of the Shareholders or any of their respective Associates on the other hand all decisions relating to:

(a) the assertion, enforcement or defence of any claim relating to any such contract, agreement or arrangement (including the commencement, conduct, settlement or abandonment of proceedings in connection with the claim or the assertion of material breach under the contract, agreement or arrangement);

(b) the exercise of any rights of termination under such contract, agreement or arrangement other than the exercise of any rights under clause 9.2.2 of the Investment Advisory Agreement, clause 9.2.2 of the Property Services Agreement or any similar clause under a Development Management Agreement; or

(c) the acquisition by the Group of a Qualifying Asset owned by a Shareholder or its Associates,

shall be undertaken on behalf of the Company, or by the relevant Indirect Investment Vehicle, by a committee of the Board or by a committee of the board of directors of the relevant Indirect Investment Vehicle (as the case may be) comprising entirely of Directors appointed by the other Shareholder.

4.5 Timing and location of Board meetings

4.5.1 Meetings of the Board shall take place at the offices of the Company in Luxembourg, at such time or times as the Board may agree, but in any event not less frequently than two calendar months after each Quarter End by not less than 72 hours notice (or such other period of notice as the Board may agree from time to time) specifying the date, time and place of the meeting and the business to be transacted at that meeting, provided that all the Directors may, by notice in writing to the Company, waive such notice in respect of any particular meeting of the Board.

4.5.2 Any Director may participate in a Board meeting by means of a conference telephone or similar communicating equipment whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting provided that at least one Board meeting in a twelve month period should be held in person. Each Director may appoint another Director nominated by the same Shareholder to act as its proxy at any Board meeting.

4.6 Resolutions in writing

4.6.1 A resolution in writing of the Board signed, or approved in writing, by such of the Directors as are entitled pursuant to clause 4.3 to approve the resolution in question shall be as valid and effective as if it had been passed at a Board meeting duly convened and held and may consist of several documents in the like form each signed, or containing such approval, by one or more of the Directors, provided that resolutions in writing must be signed by all Directors to be valid.

4.6.2 In order for a resolution in writing of the Board to be effective the majority of the Directors signing the resolution must have signed it in Luxembourg.

4.7 Board papers

All papers for meetings of the Board shall be sent to all Directors as early as reasonably practicable prior to the relevant meeting and the chairman of such meeting shall procure that draft minutes of the Board meetings shall be sent to all Directors entitled to receive the same as soon as practicable after the holding of the relevant meeting.

4.8 Remuneration

The Directors shall not be entitled to any remuneration, fees or benefits but the Company will on such terms as the Board may from time to time resolve, reimburse the Directors for all reasonable travelling and other expenses properly incurred in attending Board meetings, in connection with the Business of the Company and in the performance of their duties as Directors.

4.9 Indirect Investment Vehicles

4.9.1 The shareholders of each Indirect Investment Vehicles shall

(a) in the case of Goodman, be entitled to appoint up to two directors from the list of persons nominated by Goodman; and

(b) in the case of RTPCE, be entitled to appoint up to three directors from the list of persons nominated by RTPCE but shall not be obliged to appoint any directors.

4.9.2 No other persons shall be appointed directors of any Indirect Investment Vehicle unless otherwise agreed in writing by the Shareholders.

4.9.3 The provisions of this clause 4 relating to Directors and the Board shall apply mutatis mutandis in relation to each Indirect Investment Vehicle as they apply to the Company, so that for this purpose references to the “Board”, the “Articles” and the “Directors” shall be deemed to include references to the board (or equivalent body), the articles of association (or other constitutional documents) and the directors, operators, managers (or equivalent persons) of the Indirect Investment Vehicle and the Shareholders shall procure that the articles of association (or other constitutional documents) of each Indirect Investment Vehicle are adopted to give effect thereto, provided that if RTPCE elects not to appoint any directors to any Indirect Investment Vehicle such that Goodman has appointed the only directors then this will be reflected accordingly.

4.10 Executive Committee

4.10.1 Unless otherwise agreed by the Shareholders from time to time, the Shareholders shall establish an executive committee (the “Executive Committee”) that will make recommendations on Major Decisions to the Board.

4.10.2 The Executive Committee shall consist of one representative of the A Shareholder (the “Goodman Representative”) and two representatives of the B Shareholder (the “RTPCE Representatives”) (together the “Representatives”) and the first Representatives shall be:

Goodman:	Greg Goodman; and
RTPCE:	Phil Kianka and Chuck Hessel,

or, in the case of each Shareholder, such other Representative(s) as that Shareholder shall have nominated and notified to the other Shareholder.

4.10.3 The Representatives shall have the right to appoint an alternate to attend Executive Committee meetings (an “Alternate Representative”) by giving written notice to and consulting with the other Representatives, provided that this shall not prevent the appointment of an Alternate Representative by any Representative. The parties agree and acknowledge that with effect from the date of this agreement James Inwood and Danny Peeters shall be appointed by Greg Goodman as his Alternate Representatives.

4.10.4 The quorum of Representatives required at an Executive Committee meeting before any business shall be transacted shall be one Goodman Representative and two RTPCE Representatives.

4.10.5 Voting – Executive Committee Meetings

(a) The Goodman Representative shall have one vote and the RTPCE Representatives shall collectively have one vote and no matter shall be given effect to unless the RTPCE Representatives present have exercised their collective vote in favour of the matter in question and the Goodman Representative has exercised his vote in favour of the matter in question.

(b) Where the RTPCE Representatives disagree as to which way to exercise their collective vote, then the RTPCE Representatives in question shall be deemed to have voted against the proposed resolution.

(c) All recommendations of the Executive Committee shall be referred to the Board for approval, regardless of whether a recommendation is for or against a Major Decision.

(d) If the Executive Committee fails to reach a decision on a Major Decision, then the decision shall be referred to the Board.

4.10.6 The provisions of clauses 4.2.2, 4.2.3, 4.4 and 4.6 to 4.8 inclusive shall apply mutatis mutandis in relation to the Executive Committee, the Representatives and the Alternative Representatives as they apply to the Board and the Directors, so that for this purpose references to the “Board” and the “Directors” shall be deemed to be references to the Executive Committee and the Representatives (or Alternative Representatives) respectively, provided that in respect of clause 4.2.2 meetings of the Executive Committee are not required to happen in Luxembourg.

5. RESERVED MATTERS

Notwithstanding clause 4, each of the Shareholders undertakes to exercise all voting rights and powers of control available to it in relation to the Company and each Indirect Investment Vehicle to procure that, save with the prior written consent of all the Shareholders, neither the Company nor any Indirect Investment Vehicle shall effect any of the Reserved Matters.

6. DEADLOCK

6.1 Subject to clauses 6.2 to 6.6, failure of the Board or the Shareholders to reach a decision in accordance with clauses 4 and 5 shall mean that the Company shall not have resolved to proceed with the act to which such decision relates.

6.2 In the case where the Board or the Shareholders or the board (or equivalent body) of any Indirect Investment Vehicle fail to reach a unanimous decision of the Directors or the Shareholders (or board (or equivalent body) of any Indirect Investment Vehicle) present and entitled to vote in relation to a Major Decision or a Reserved Matter or the Directors representing a Shareholder (or equivalent in relation to an Indirect Investment Vehicle) or a Shareholder wilfully absents itself from any meeting such that there is not a quorum at any meeting to discuss the same Major Decision or Reserved Matter on three consecutive occasions, then a deadlock shall be deemed to have arisen (a “Deadlock”) and any Shareholder shall be entitled, at its discretion, to exercise the rights conferred by this clause 6 in the manner, on the terms and subject to the conditions set out in this clause 6.

6.3 Within five (5) Business Days of the Deadlock arising, either Shareholder may give notice in writing (“Deadlock Notice”) to the other Shareholder that in its opinion there is a Deadlock and identifying the matter over which the Shareholders are deadlocked.

6.4 Following service of a Deadlock Notice each Shareholder shall use reasonable endeavours in good faith to resolve the Deadlock in the best interests of the Company and each Shareholder agrees that it shall not (and shall procure that any Director appointed by it shall not) invoke the provisions of this clause 6 otherwise than on the occurrence of a bona fide Deadlock (being a Deadlock which has not been artificially created or manufactured by such Shareholder or Director with a view to allowing it to instigate the procedures set out in this clause 6).

6.5 If the Shareholders are unable to resolve a Deadlock within twenty (20) Business Days of the service of the Deadlock Notice, then either Shareholder may refer the deadlocked matter to:

6.5.1 in the case of Goodman, Greg Goodman or such other person occupying the position of Chief Executive Officer of Goodman Limited (the “Goodman Senior Officer”); and

6.5.2 in the case of RTPCE, Jack A. Cuneo or such other person occupying the position of President of RTPCE (the “RTPCE Senior Officer”),

or if there ceases to be a Chief Executive Officer of Goodman or a President of RTPCE, the most senior officer of each such organisation, in each case with a view to such persons resolving the Deadlock as soon as possible in the best interests of the Company and each Shareholder shall use its reasonable endeavours to procure that such Deadlock is so resolved. If such persons agree upon a resolution of the matter, they shall execute a statement setting out the agreed terms. The Shareholders shall exercise their voting rights and other powers available to them in relation to the Company to procure that the agreed terms are fully and promptly put into effect.

6.6 If the persons referred to in clause 6.5 cannot resolve a Deadlock within twenty (20) Business Days of the Deadlock being referred to them (the “Deadlock Date”) and the Deadlock has arisen as a result of a Major Decision related to a specific Property (the “Relevant Property”, then either Shareholder shall be entitled to serve a Property Buy-Sell Notice on the other Shareholder in relation to the Relevant Property in accordance with clause 7.2.

6.7 The Shareholders shall procure that in the event of a Deadlock each of them and their Directors and Representatives, directors (or equivalent) of any Indirect Investment Vehicle and each of their Associates shall continue to perform their respective obligations in relation to this agreement, the Articles and any other agreement (including the Joint Venture Documents) entered into for and on behalf of the Company or any Indirect Investment Vehicle, or for the purposes of the Business.

6.8 Each party shall bear its own costs incurred in respect of a Deadlock and the resolution procedures contained in this clause 6 unless otherwise agreed.

7. BUY SELL OPTION

7.1 Company Buy-Sell Option

7.1.1 Subject to clause 20.2.2, at any time after the Initial Investment Term, any Shareholder wishing to exit the joint venture established by this agreement (the “Company Offeror”) may serve notice (the “Company Buy-Sell Notice”) on the Company and the other Shareholder (the “Company Offeree”) stating that the Company Offeror is exercising its rights pursuant to this clause 7.1 and specifying the Company Offeror’s estimate of the gross asset value of the Company (the “Estimated Gross Asset Value”) from which the corresponding price per A Share or B Share (as appropriate) and the value of the PECs held by the relevant Shareholder shall be calculated in accordance with the proviso to this clause 7.1.1 and at which the Company Offeree may elect either:

(a) to buy the Company Offeror’s interest in the Company (the “Company Buy Offer”); or

(b) to sell the Company Offeree’s interest in the Company to the Company Offeror (the “Company Sell Offer”),

provided that, the price per A Share or B Share (as appropriate) and the price of the relevant PECs offered by the Company Offeror shall be determined by reference to the value of the relevant Shares or PECs taking into account the amount that would be distributed to the relevant Shareholder if the Company’s assets were sold at the date of the Company Buy-Sell Notice for the Estimated Gross Asset Value and the Company and its subsidiaries were wound up and all debts and liabilities of the Group repaid or discharged and the proceeds following such winding up were distributed to the Shareholders pursuant to clause 11.1, provided further that the price per A Share or B Share (as appropriate) and the price of the relevant PECs shall be such amount as agreed between the Company Offeree and the Company Offeror or, where such amount cannot be agreed, to be determined by the Auditors in accordance with the principles contained in this clause 7.1.1 (or if they shall fail, or decline, to do so) a firm of chartered accountants agreed upon by the Shareholders or in the event of failure to so agree nominated by the president (or the next most senior officer available) of the Institute of Chartered Accountants upon the application of either Shareholder. The Auditor (or chartered accountant) shall act as an expert (and not an arbitrator) and the determination of the Auditor (or chartered accountant) shall be final and binding on the parties except for manifest error which shall be corrected forthwith.

7.1.2 Upon service 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 by serving written notice on the Company and the other Shareholder within sixty (60) days after the date of service of the Company Buy-Sell Notice or if later when the price per A Share or B Share (as appropriate) and price of the relevant PECs is agreed or determined, failing which the Company Offeree shall be deemed to have accepted the Company Sell Offer.

7.1.3 Upon acceptance (or deemed acceptance) of the Company Buy Offer or the Company Sell Offer, as the case may be, the Shareholders shall complete the transfer of the relevant interest in the Company at the relevant price per Share or price of each PEC in accordance with clause 22.

7.1.4 If the Company Offeree accepts the Company Buy Offer but the Company Offeree fails to pay the relevant price per Share or PEC or complete the transfer of the Company

Offeror’s interest in the Company within the prescribed time period specified in clause 22.1 other than due to the fault or delay of the Company Offeror, the Company Offeror may, within one hundred and eighty (180) days after the expiry of the relevant thirty (30) day period referred to in clause 22.1, sell its interest in the Company to a third party, provided that the purchase price of such interest is not less than eighty five per cent (85%) of the price per Share or PEC (as appropriate) of the Company Offeror’s Shares and PECs agreed or determined in accordance with clause 7.1.1.

7.1.5 The Shareholder acquiring the other Shareholder’s interest in the Company pursuant to this clause 7.1 may nominate another person (including a third party) to purchase the other Shareholder’s interest in the Company, provided that the selling Shareholder receives the price per Share and PEC pursuant to the relevant Company Buy Offer or Company Sell Offer.

7.2 Property Buy-Sell Option

7.2.1 If clause 6.6 applies, then either Shareholder (the “Property Offeror”) may serve notice (the “Property Buy-Sell Notice”) on the Company and the other Shareholder (the “Property Offeree”) within twenty (20) days of the Deadlock Date stating that the Property Offeror is exercising its rights pursuant to this clause 7.2 and specifying the price (which shall be the same) at which the Property Offeree may elect either:

(a) to buy the Relevant Property from the Company (or the Indirect Investment Vehicle holding the Relevant Property) (the “Property Buy Offer”); or

(b) to require the Company (or such relevant Indirect Investment Vehicle) to sell the Relevant Property to the Property Offeror (the “Property Sell Offer”).

7.2.2 Upon service 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 by serving written notice on the Company and the other Shareholder within sixty (60) days after the date of service of the Property Buy-Sell Notice, failing which the Property Offeree shall be deemed to have accepted the Property Sell Offer.

7.2.3 Upon acceptance (or deemed acceptance) of the Property Buy Offer or the Property Sell Offer, as the case may be, the purchasing Shareholder shall, and each of the Shareholders shall procure that the Company or the relevant Indirect Investment Vehicle shall, complete the transfer of the Relevant Property as appropriate and as required in form and substance to give the transfer of the Relevant Property effect in the jurisdiction in which it is located and at the price specified in the Property Buy-Sell Notice and upon substantially the same terms and conditions on which the Relevant Property was originally acquired by the Company (or the relevant Indirect Investment Vehicle), or, where such acquisition was a share acquisition then upon such terms to be agreed between them (acting reasonably) within thirty (30) days of service of the notice of acceptance or within thirty (30) days of the Property Offeree having been deemed to accept the Property Sell Offer.

7.2.4 If the Property Offeree accepts the Property Buy Offer but fails to pay the relevant price or complete the transfer of the Relevant Property within the thirty (30) day period specified in clause 7.2.3 other than due to any fault or delay on the part of the Property Offeror, the Property Offeror may within one hundred and eighty (180) days after the expiry of the relevant thirty (30) day period require the Company or the relevant Indirect Investment Vehicle to sell the Relevant Property to the Property Offeror or to a third party, provided that the purchase price of the Relevant Property is not less than eighty five per cent (85%) of the price specified in the Property Buy Sell Notice.

7.2.5 If the Property Offeree accepts (or is deemed to have accepted) the Property Sell Offer but the Property Offeror fails to pay the relevant price or complete the transfer of the Property within the thirty (30) day period specified in clause 7.2.3 other than due to any fault or delay on the part of the Property Offeree, the Property Offeree may within one hundred and eighty (180) days after the expiry of the relevant thirty (30) day period require the Company or the relevant Indirect Investment Vehicle to sell the Relevant Property to the Property Offeree or to a third party, provided that the purchase price of the Relevant Property is not less than eighty five per cent (85%) of the price specified in the Property Buy-Sell Notice.

7.2.6 The Shareholder having the right to acquire a Relevant Property pursuant to this clause 7.2 may nominate another entity (including a third party) to purchase the Relevant Property on the terms set out in clause 7.2.3, provided that the selling Company (or the relevant Indirect Investment Vehicle) receives the price specified in the Property Buy-Sell Notice.

7.2.7 If the Property Offeree elects (or is deemed to elect) to accept either the Property Buy Offer or the Property Sell Offer, the Shareholder (or any third party) purchasing the Relevant Property may elect to acquire the shares in any Indirect Investment Vehicle that owns the Relevant Property (provided that the Indirect Investment Vehicle owns no other Property) and the provisions of this clause 7.2 will apply mutatis mutandis provided that the price for each such share shall be equal to the net asset value for such Indirect Investment Vehicle (and such net asset value shall be calculated in accordance with clause 21 with such changes as shall be necessary to the NAV and NAV per Share to reflect the fact that the shares being acquired are the shares in the Indirect Investment Vehicle owning the Relevant Property and not the Shares) divided by the total issued share capital of any such Indirect Investment Vehicle.

7.3 General

7.3.1 For the avoidance of doubt, if either Shareholder serves a Property Buy-Sell Notice pursuant to clause 7.2.1 then the other Shareholder shall not be entitled to do so in respect of the same Deadlock matter giving rise thereto or in relation to a new Deadlock matter affecting the same Property until such time as the provisions of clause 7.2 have been exhausted in respect of the first Deadlock matter and if both Shareholders serve a Property Buy-Sell Notice on the same day, the first in time to be served shall prevail.

7.3.2 For the avoidance of doubt, if either Shareholder serves a Company Buy-Sell Notice pursuant to clause 7.1.1 then the other Shareholder shall not be entitled to do so until such time as the provisions of clause 7.1 have been exhausted in respect of the first Company Buy-Sell Notice and if both Shareholders serve a Company Buy-Sell Notice on the same day, the first in time to be served shall prevail provided that the Company Offeror shall be entitled to serve a further Company Buy-Sell Notice pursuant to clause 7.1.1 if clause 7.1.4 is applicable and the Company Offeree fails to buy the Company Offeror’s Shares pursuant thereto.

7.3.3 For the avoidance of doubt, if either Shareholder has served a Property Buy-Sell Notice, then either Shareholder may subsequently serve a Company Buy-Sell Notice, provided that:

(a) if the Property Buy-Sell Notice has not been accepted (or deemed accepted) by the Property Offeree prior to the date of service of the Company Buy-Sell Notice, then the Property Buy-Sell Notice shall lapse; or

(b) if the Property Buy-Sell Notice has been accepted (or deemed accepted) by the Property Offeree prior to the date of service of the Company Buy-Sell Notice then both the Property Buy-Sell Notice and the Company Buy-Sell Notice shall be given full effect to.

7.3.4 Where:

(a) either Shareholder has served a Company Buy-Sell Notice or a Property Buy-Sell Notice which has been accepted or deemed to be by the other Shareholder; and

(b) the relevant Company Buy Offer, Company Sell Offer, Property Buy Offer or Property Sell Offer cannot be completed in accordance with the terms of this agreement as a consequence of the default of a Shareholder (the “Defaulting Buy Sell Shareholder”) either in favour of the other Shareholder or in favour of any third party pursuant to the terms of this Agreement,

then the Defaulting Buy Sell Shareholder shall be required to pay compensation to the other Shareholder within ten (10) Business Days of service of a notice following such failure to complete in an amount equal to ten per cent (10%) of the Market Value of any Property subject to a Property Buy-Sell Notice or 10% of the aggregate price per Share (as specified in the relevant Company Buy-Sell Notice) for all Shares subject to the relevant Company Buy-Sell Notice.

8. BANKING ARRANGEMENTS

8.1 The bankers to the Company shall be ING or such other bankers as the Company may from time to time determine or as any Finance Agreement may require. The Company shall provide to a Shareholder on request such information as it may require in relation to the Bank Accounts.

8.2 All cheques, bills of exchange, promissory notes and other monies drawn on the Bank Accounts shall be drawn in the name of the Company (or an Indirect Investment Vehicle) and shall be drawn in such manner as shall be determined from time to time by the Board.

8.3 Subject to any Finance Agreement, no payments shall be made or money withdrawn from any of the Bank Accounts except by the Company (or an Indirect Investment Vehicle) for the purpose of the Business or for the purpose of making payments to the Shareholders in accordance with the terms of this agreement.

8.4 Subject to any Finance Agreement, all money received by the Company (or an Indirect Investment Vehicle) in respect of any Property or Indirect Investment Vehicle (including rents and sale proceeds) shall as soon as practicable following receipt be paid into one of the Bank Accounts.

8.5 The parties agree that, subject to the terms of any Finance Agreement and unless otherwise determined by the Board, no single amount in excess of €20,000 shall be disbursed from any bank account of the Company or of any Indirect Investment Vehicle, unless first authorised by:

8.5.1 one A Director and one B Director in writing, regardless of whether this is reflected on the bank mandate in respect of such account; or

8.5.2 the Business Plan or relevant Asset Plan.

8.6 The Shareholders agree that:

8.6.1 no Shareholder may grant any Encumbrance over its interest in the Company or in this Agreement;

8.6.2 neither the Company nor any Indirect Investment Vehicle shall enter into any Finance Agreement or otherwise permit the external gearing on a Property to exceed sixty five per cent (65%) of the Market Value of that Property, as valued at the completion of the acquisition of the Property by the Company or any Indirect Investment Vehicle;

8.6.3 neither the Company nor any Indirect Investment Vehicle shall grant any Encumbrance over any Property or over any other asset or interests of the Company or the relevant Indirect Investment Vehicle, unless otherwise first approved by the Board;

8.6.4 based on prevailing interest rates at the time of this agreement, the Shareholders intend to maintain an aggregate target gearing range (excluding intra-group debt) across the Group’s portfolio of Properties of forty per cent to fifty per cent (40%-50%) of the aggregate Market Value of all Properties, as valued at completion of the acquisition of each Property by the Company or any Indirect Investment Vehicle; and

8.6.5 any financing arrangements for each Property pursuant to a Finance Agreement will generally be non-recourse to the Company, the Indirect Investment Vehicles or the Shareholders and will otherwise be structured on market standard terms and at such pricing available from time to time as determined by the Board.

9. ACCOUNTING RECORDS, BUDGETS AND FINANCIAL INFORMATION

9.1 Reporting

9.1.1 The Shareholders shall procure that the Company and its subsidiaries shall at all times maintain accurate and complete accounting and other financial records in accordance with the requirements of all applicable laws and Lux GAAP

9.1.2 Each Shareholder shall procure that, through the exercise of votes it directly or indirectly controls at meetings of the Board and general meetings of the Company and meetings of the board of each Indirect Investment Vehicle, the Company provides to them quarterly unaudited financial reports and annual audited financial reports.

9.2 Business Plan and Asset Plan

9.2.1 The Shareholders shall procure that not later than thirty (30) days before the beginning of each Financial Year (or such other time as the Shareholders may agree), the Board shall procure that the Investment Adviser prepares and delivers to the Board for its approval a proposed Business Plan in respect of the Group and an Asset Plan in respect of each Property which shall include an annual budget and cash flow forecast for the next Financial Year and such other information relating to the financial position and affairs of the Group and each Property as each Shareholder may from time to time reasonably require, provided that the Investment Adviser has been given reasonable notice of such requirement and provided further that to the extent that the Investment Adviser incurs

materially increased expenditure in providing this additional information then such expenditure shall be reimbursed to the Company and/or the Investment Adviser by the Shareholder that requested such additional information.

9.2.2 Within the thirty (30) day period referred to in clause 9.2.1, the Board shall consider and, if it thinks fit, approve the relevant Business Plan and Asset Plan, subject to any amendments which it deems appropriate for the Financial Year.

9.2.3 Once any draft Business Plan or Asset Plan is in a form acceptable to, and approved by the Board, it shall become the Business Plan for the Group or (as appropriate) the Asset Plan in relation to the relevant Property for the year in question.

9.2.4 The Shareholders shall procure that the Board keeps the Business Plan and Asset Plans under review during the course of each Financial Year.

9.2.5 The business of the Group and each Property shall continue to be operated in accordance with each Business Plan or Asset Plan (as appropriate) for the prior year until the Board approves each new Business Plan or Asset Plan (as appropriate) save that adjustments shall be made thereto to reflect the deletions of non-recurring expense items and no capital expenditure shall be made until the approval of the new Business Plan or Asset Plan (as appropriate).

9.2.6 Each Shareholder undertakes to the other Shareholder that it shall, through the exercise of votes it directly or indirectly controls at meetings of the Executive Committee, Board and general meetings of the Company and meetings of the board of each Indirect Investment Vehicle ensure that the terms of the Business Plan and Asset Plans are complied with.

9.2.7 The Initial Plans shall be adopted by the parties at Completion.

9.3 US Filings

9.3.1 RTPCE shall be responsible at its sole cost, for dealing with any accounts, records, elections or other such documents which are required for United States federal, state or local tax purposes to be prepared, maintained or submitted by the Company, the Indirect Investment Vehicles or any other entity in which the Company holds a direct or indirect interest, and RTPCE shall indemnify and hold harmless Goodman, the Company, the Indirect Investment Vehicles, the Investment Adviser, the Property Manager and the Development Manager or any of their directors, officers and employees and any other entity in which the Company holds a direct or indirect interest from and against all costs, claims, liabilities, losses and damages suffered or incurred by any of Goodman, the Company, the Indirect Investment Vehicles, the Investment Adviser, the Property Manager and the Development Manager or any other entity in which the Company holds a direct or indirect interest, arising from RTPCE’s dealing with such accounts, records, elections or other such documents (including where the Company or any Indirect Investment Vehicle has an obligation under the Service Agreement to similarly indemnify the Investment Adviser, the Property Manager and the Development Manager) except where such costs, claims, liabilities, losses and damages have arisen as a result of information provided to RTPCE by any of the Investment Adviser, Property Manager or Development Manager which is incorrect in any material respect.

9.3.2 Each of the parties acknowledges and agrees that (without prejudice to any other rights available to them):

(a) each of the Indirect Investment Vehicles, the Investment Adviser, the Property Manager and the Development Manager or any of their directors, officers and employees and any other entity in which the Company holds a direct or indirect interest (the “Indemnified Persons”) shall be entitled to enforce the rights reserved to them in clause 9.3.1 and that the provisions of clause 9.3.1 may not be amended without the consent in writing of any party to whom the benefit of clause 9.3.1 applies; and

(b) none of them shall raise as a defence to any claim by an Indemnified Person under the indemnity in clause 9.3.1, that such person is not entitled to rely on such indemnity by virtue of the fact that such person is not a party to this agreement.

10. FINANCING THE COMPANY

10.1 The Business and the business of each Indirect Investment Vehicle shall be financed initially by the proceeds of the Share and PEC subscriptions referred to in Schedule 3, together with funding provided pursuant to any Finance Agreements provided that if the Company is required to make any additional payment under clause 6.1.1 of the Sale and Purchase Agreement relating to the Düren SPV and the Schönberg SPV or make any payment under the Sale and Purchase Agreement relating to the Langenbach SPV then the Shareholders shall fund such additional payment by way of a subscription for additional PECs in accordance with this clause 10.

10.2 Subject to clause 10.1, the Shareholders are not obliged to provide any further funding in addition to their Share and PEC subscriptions, but may do so if both Shareholders agree on a project by project basis. Any additional funding shall be provided by the Shareholders pro rata to their Shares and PEC subscriptions unless the Shareholders otherwise agree and shall be subject to the terms of this agreement.

10.3 In the event that the Shareholders agree (or are required) to provide additional funding, the Shareholders shall each execute and deliver to the Company a subscription for additional PECs for the agreed amount of the additional funding as agreed by them at the relevant time.

10.4 If the issue of further PECs would mean that the Shareholders did not hold Shares in the same ratio to each other as PECs then the Company shall issue such further Shares at par so as to ensure that each Shareholder continues to hold Shares and PECs in the same ratio to each other. All Shares to be issued to Goodman shall be A Shares and all Shares to be issued to RTPCE shall be B Shares.

10.5 All PECs to be issued pursuant to clauses 10.2 and 10.3 shall be issued in a new series of PECs and all PECs to be issued to Goodman shall be a series of PECs denominated with an odd number and all PECs to be issued to RTPCE shall be a series of PECs denominated with an even number.

10.6 The Shareholders shall procure that upon receipt of the subscription for Shares and PECs and subscription proceeds (in cleared funds) pursuant to clause 10.2 to 10.4 inclusive that the Company issue such Shares and PECs in accordance with the terms of this agreement and the Articles.

10.7 Emergency Funding

10.7.1 If either Shareholder or the Property Manager gives notice to the Company that Emergency Funding is required for an amount of up to one million two hundred thousand Euros (€1,200,000) for any one occurrence, the Company shall within one (1) Business Day of receipt of that notice serve notice (a “Drawdown Notice”) on each of the Shareholders. The Drawdown Notice will specify the reason for the Emergency Funding and the amount required for the Emergency Funding (an “Emergency Shareholder Loan”) and the date by which the Emergency Shareholder Loan must be advanced to the Company, provided that not less than four (4) Business Days’ prior written notice requesting payment shall be given. The Shareholders shall advance an Emergency Shareholder Loan pro rata to their Shares.

10.7.2 If a Shareholder fails to advance its Emergency Shareholder Loan, the other Shareholder may fund the resulting shortfall of the Emergency Funding by way of a further Emergency Shareholder Loan and the entire amount of Emergency Shareholder Loans funded by the other Shareholder shall accrue interest at a rate of eighteen per cent (18%) per annum, provided that if a Shareholder gives notice to the Company and the other Shareholder no later than two (2) Business Days after the due date of its Emergency Shareholder Loan disputing the fact that its Emergency Shareholder Loan is required for the purposes of Emergency Funding then, subject to clause 10.7.3, the interest rate will be 5 per cent (five%) per annum.

10.7.3 If a dispute notice is served pursuant to clause 10.7.2, any Shareholder may be entitled within ten (10) Business Days of service of the dispute notice to apply to the Valuers for a determination as to whether the Emergency Funding was bona fide. If the Valuers rule that the Emergency Funding was bona fide, then the Company shall be required to pay interest on any Emergency Shareholder Loans advanced pursuant to clause 10.7.2 at eighteen per cent (18%) per annum and the Shareholders shall procure that the Company pay any shortfall in interest to the Shareholder who funded the Emergency Funding.

10.7.4 Without prejudice to clause 10.7.6, as soon as practicable after the date the Company provides Emergency Funding to the Property Manager, the Executive Committee and the Board shall meet to agree the extent to which Emergency Shareholder Loans may be refinanced, repaid to the Shareholders or to take such other action as may be agreed by the Executive Committee and the Board.

10.7.5 All Emergency Shareholder Loans shall not be counted in relation to determining the First Preferred Return or the Second Preferred Return. A failure by a Shareholder to advance its Emergency Shareholder Loan shall not be a Default Event.

10.7.6 All distributions of available cash to the Shareholders pursuant to clause 11.1.1 or 11.1.2 shall be made in repayment of any outstanding Emergency Shareholder Loans (and all accrued but unpaid interest on them) in priority to any further distributions to the Shareholders.

11. DISTRIBUTIONS AND DIVIDENDS

11.1 Distributions

11.1.1 Subject to clause 10.7.6, any Finance Agreement and the requirements of the Companies Law, the Shareholders shall or shall procure that all distributions of available cash comprised of Net Income shall be made to the Shareholders in accordance with the rights attaching to their Shares in the following order of priority:

(a) first, to the Shareholders (pro rata to their Share and PEC subscriptions) until they have received back by way of yield on the PECs (pursuant to the PECs Terms and Conditions) an amount equal to their accrued but unpaid First Preferred Return;

(b) second, to RTPCE (as the B Shareholder and the holder of Second Series PECs) until RTPCE has received by way of yield on the PECs (pursuant to the PECs Terms and Conditions) an amount equal to the Second Preferred Return;

(c) third, to Goodman (as the A Shareholder and the holder of First Series PECS), until Goodman has received by way of yield on the PECs (pursuant to the PECs Terms and Conditions) an amount equal to the Second Preferred Return; and

(d) thereafter, to the Shareholders (pro rata to their Shares),

provided always that each of the above sub-clauses shall be reapplied in respect of each new such distribution and in respect of each new Financial Year, in all cases after payment of or making appropriate provision or reserve (if any) for amounts determined by the Board in respect of fees, costs, expenses, liabilities and debt service (including under the Service Agreements and in each case whether actual, anticipated or contingent) and working capital requirements in each case of the Company or any Indirect Investment Vehicle.

11.1.2 Subject to clause 10.6.6, any Finance Agreement and the requirements of the Companies Law, the Shareholders shall or shall procure that all distributions of available cash comprised of Capital Proceeds shall be made to the Shareholders in accordance with the rights attaching to their Shares in the following order of priority:

(a) first, to the extent that any part of the Capital Proceeds represents Unreturned Capital, then to the Shareholders (pro rata to their Share and PEC Subscriptions), in reduction of their Unreturned Capital (which may include redemption of their PECs);

(b) second, to the extent that any part of the Capital Proceeds represents capital profit (or where no Capital Proceeds representing Unreturned Capital are to be distributed), then to the Shareholders (pro rata to their Share and PEC Subscriptions) until they have received back by way of yield on the PECs (pursuant to the PECs Terms and Conditions) an amount equal to their accrued but unpaid First Preferred Return to the extent not already paid under clause 11.1.1(a) or this clause 11.1.2(b);

(c) third, to extent that any part of the Capital Proceeds represents capital profit, then to RTPCE (as the B Shareholder and the holder of Second Series PECs) until RTPCE has received by way of yield on the PECs (pursuant to the PECs Terms and Conditions) an amount equal to their accrued but unpaid Second Preferred Return to the extent not already paid under clause 11.1.1(b) or this clause 11.1.2(c);

(d) fourth, to extent that any part of the Capital Proceeds represents capital profit, then to Goodman (as the A Shareholder and the holder of First Series PECs), until Goodman has received by way of yield on the PECs (pursuant to the PECs Terms and Conditions) an amount equal to their accrued but unpaid Second Preferred Return to the extent not already paid under clause 11.1.1(c) or this clause 11.1.2(d); and

(e) thereafter, to the Shareholders (pro rata to their Shares),

provided always that each of the above sub-clauses shall be reapplied in respect of each new such distribution and in respect of each new Financial Year, in all cases after payment of or making appropriate provision or reserve (if any) for amounts determined by the Board in respect of fees, costs, expenses and liabilities (including under the Service Agreements and in each case whether actual, anticipated or contingent) and working capital requirements in each case of the Company or any Indirect Investment Vehicle.

11.1.3 There is set out in Schedule 8 a worked example of this clause 11 and the promote payment under the Investment Advisory Agreement.

11.2 Distributions of income and capital and dividends

11.2.1 Subject to the requirements of the Companies Law, all Net Operating Income available for distribution will be distributed quarterly in accordance with clause 11.1.1 within 30 days after the Quarter End in respect of the immediately preceding Quarter, provided that the Company may make such distributions at more frequent intervals.

11.2.2 In addition, the Board may make distributions of Capital Proceeds in accordance with clause 11.1.2 and the requirements of the Companies Law at such time as the Board shall determine as long as the Board is of the view that there is cash available for distribution.

11.2.3 Subject to the requirements of the Companies Law, each Shareholder shall procure that the amount of the Company’s cash available for distribution shall be distributed by the Company to the Shareholders pursuant to clause 11.1 and this clause 11.2 by way of yield on PECs.

11.2.4 Subject to any Finance Agreement and the requirements of the Companies Law, the Shareholders shall procure, through the exercise of all voting rights and powers of control available to them in relation to the Company and each Indirect Investment Vehicle, that all the reserves of each Indirect Investment Vehicle comprising Net Operating Income that are available for distribution from time to time shall be distributed to the Company after payment of or making appropriate provision or reserve (if any) for amounts determined by the board (or its equivalent) of any Indirect Investment Vehicle in respect of fees, costs, expenses and liabilities (including under the Service Agreements and in each case whether actual, anticipated or contingent) and working capital requirements in each case of the relevant Indirect Investment Vehicle.

12. SECRETARIAL AND ACCOUNTING FUNCTIONS

The Company shall appoint the Administrator pursuant to the Administration and Secretarial Agreement to carry out the services referred to therein.

13. INTELLECTUAL PROPERTY RIGHTS

Any Intellectual Property Rights which arise in the course of the Group’s activities shall belong to the Company, provided that this agreement shall not operate to transfer any Intellectual Property Rights of Goodman Limited (or any of its Associates) to the Company (including, for the avoidance of doubt, any Intellectual Property Rights owned by Goodman Limited (or any of its Associates) in its computer systems used in the delivery of its management services) other than as expressly provided in this agreement However the Shareholders acknowledge 1) that all

Intellectual Property Rights in the data output provided by Goodman Limited (or any of its Associates) to the Group (but no rights in the software system which provides such data output) shall vest in and be owned by the Company, and 2) Goodman Limited’s rights granted in the Trade Mark Licence Agreement.

14. CONFIDENTIALITY

14.1 During the term of this agreement and for a period of one year after its termination or expiration for any reason each Shareholder undertakes to the other Shareholder (other than in respect of the Confidential Information relating to itself or its Associates):

14.1.1 to keep the Confidential Information confidential;

14.1.2 not to disclose the Confidential Information to any other person other than with the prior written consent of the other Shareholder or in accordance with clauses 14.2, 14.3 and 14.4; and

14.1.3 not to use the Confidential Information for any purpose other than for the performance of its obligations under this agreement.

14.2 During the term of this agreement a Shareholder may disclose the Confidential Information to an Associate or to its employees to the extent reasonably necessary for the purposes of this agreement and then on terms under which the relevant Associate or employee is made aware that the Confidential Information should be treated in confidence as if that Associate or employee were himself a party to this agreement. The parties acknowledge that RTPCE does not itself have employees but is the beneficiary of services provided to it by employees of the CBRE Investors group of companies. It is therefore agreed that for the purpose of this clause 14.2 RTPCE may disclose the Confidential Information to employees of the CBRE Investors group of companies strictly for the purpose of delivering services to RTPCE and in doing so, RTPCE shall procure that any such recipient is aware of the terms of this confidentiality undertaking and maintains all such information in confidence as if that recipient were himself a party to this agreement.

14.3 If and to the extent that a Shareholder discloses any Confidential Information to any other person in accordance with clause 14.2 it shall procure that each recipient of Confidential Information is made aware of and complies with the obligations of confidentiality set out in this clause 14 as if such recipient was a party to this agreement.

14.4 Each Shareholder may disclose Confidential Information if and to the extent:

14.4.1 required by law;

14.4.2 required pursuant to a request or order by a court of competent jurisdiction;

14.4.3 required by any securities exchange or regulatory or governmental body or authority to which any Shareholder or its Associates is subject or submits, wherever situated, including (without limitation) the CSSF, the UKLA, London Stock Exchange plc, the Panel on Takeovers and Mergers, the Australian Securities Exchange and the United States Securities and Exchange Commission, the United States Financial Industry Regulatory Authority and the various securities regulatory authorities of the states and federal districts of the United States;

14.4.4 required to vest the full benefit of this agreement in that Shareholder or expressly contemplated by this agreement;

14.4.5 required by any tax authority for the purposes of the tax affairs of the Shareholder or Associate concerned;

14.4.6 required by its professional advisers, auditors, bankers, underwriters or dealers of securities in the ultimate parents of the Shareholders (and their representative);

14.4.7 in the case of RTPCE, the information generally conforms with such information as CB Richard Ellis Realty Trust historically discloses in its filings with the United States Securities and Exchange Commission; or

14.4.8 in the case of Goodman, the information generally conforms with such information as Goodman Limited or Goodman Industrial Trust historically disclose in their filings with the Australian Securities Exchange,

provided that prior to disclosing any Confidential Information pursuant to clauses 14.4.1, 14.4.2, 14.4.3 or 14.4.5, where possible under applicable law or regulation, the party who is to disclose such information shall first notify the other Shareholder in writing of such disclosure and where reasonably required by the other Shareholder shall act reasonably in co-operating with the other Shareholder in an attempt to prevent such disclosure in whole or in part in relation to any Confidential Information which is confidential to the other Shareholder including by participation in any submissions to the relevant body or regulatory or other authority.

14.5 For the purposes of this clause 14 information is not Confidential Information if:

14.5.1 it is or becomes public knowledge other than as a direct or indirect result of the information being disclosed in breach of this agreement;

14.5.2 either Shareholder can establish to the reasonable satisfaction of the other Shareholder that it found out the information from a source not connected with the other Shareholder or any of its Associates and that the source is not under any obligation of confidence in respect of the information;

14.5.3 either Shareholder can establish to the reasonable satisfaction of the other Shareholder that the information was known to the first Shareholder before the date of this agreement and that it was not under any obligation of confidence in respect of the information; or

14.5.4 the Shareholders agree in writing that it is not confidential.

14.6 Notwithstanding any term or condition of this agreement to the contrary, the foregoing confidentiality obligations shall not extend to the tax structure or tax treatment of the Company, the Indirect Investment Vehicles and its or their investments, any transactions undertaken by the Company or the Indirect Investment Vehicles or to materials of any kind (including any opinions or other analysis) relating to such tax structure or tax treatment; provided, however, that such exception shall not include (1) the name (or other identifying information not relevant to such tax structure or tax treatment) of any person; (2) any performance information relating to the Company, the Indirect Investment Vehicles or its or their investments; or (3) any information for which nondisclosure is reasonably required to comply with applicable securities laws.

15. ANNOUNCEMENTS

15.1 Subject to clause 15.2, no announcement concerning the Company, the Business, any Indirect Investment Vehicle, any Property or the existence or subject matter of this agreement or any of the Joint Venture Documents shall be made by any Shareholder without it being approved in writing by the other Shareholder as to its content, form and manner of publication (such approval not to be unreasonably withheld or delayed).

15.2 Any announcement or circular to be made or issued by either Shareholder (as required by law or by the UKLA and/or the London Stock Exchange plc and/or the Australian Stock Exchange or by any other regulatory body in relation to the trading of the securities of that party or by the Panel on Takeovers and Mergers or by any other regulatory body including the United States Securities and Exchange Commission) may be made or issued by such Shareholder without the prior approval of the other Shareholder.

15.3 Subject to clause 15.2 and save as may otherwise be provided by law, the Shareholders shall consult together upon the form of any such announcement or circular in relation to the subject matter of this agreement and the other Shareholder shall promptly provide such information and comment as the Shareholder making the announcement or sending out the circular may from time to time reasonably request.

16. FIRST RIGHT OF OFFER ON QUALIFYING ASSETS

16.1 Right of Offer

16.1.1 Subject to clauses 16.1.2 and 16.1.3, Goodman shall procure that the Investment Adviser offers to the Company in priority to any other person the right to acquire any Qualifying Asset that has come to the attention of the Investment Adviser, Goodman or any of their Associates and that is:

(a) owned by the Investment Adviser, Goodman or any of their Associates which the Investment Adviser, Goodman or any of their Associates has decided to sell or that is otherwise being pursued by or offered to the Investment Adviser, Goodman or any of their Associates; and

(b) not precluded by the vendor of the Qualifying Asset (not being the Investment Adviser, Goodman or any of their Associates but including any of their joint venture partners) from being offered to or acquired by the Company (or any Indirect Investment Vehicle),

(the “Right of Offer”).

16.1.2 The Right of Offer shall commence on the date of this agreement and shall terminate on the earlier of:

(a) the expiration of the Initial Investment Term;

(b) (for the purposes of clauses 16.1 to 16.4) the date that the Board has rejected any three (3) Qualifying Assets offered by Goodman pursuant to clause 16.1.1 and (for the purposes of clauses 16.5 and 16.6) the date that the Board has rejected any three (3) Qualifying Assets offered by RTPCE pursuant to clause 16.5.1;

(c) the date on which the aggregate value of Share and PEC subscriptions made by the Shareholders exceeds €400 million;

(d) the termination of any of the Service Agreements in accordance with its terms;

(e) the date that a Shareholder transfers its entire interest in the Company to the other Shareholder pursuant to clauses 7.1 or 20; and

(f) the date that Goodman or RTPCE or any of their respective Associates are no longer a Shareholder,

(the “Offer Period”).

16.1.3 Notwithstanding anything to the contrary:

(a) the parties acknowledge and agree that the Goodman European Logistics Fund shall be entitled to be offered any Qualifying Asset in priority to the Company and the Investment Adviser shall not be required to offer any such asset to the Company unless and until the Goodman European Logistics Fund has determined not to proceed with the acquisition of such asset;

(b) the Investment Adviser shall be entitled to exclude up to three (3) Qualifying Assets from the Right of Offer during the term of this agreement for any reason;

(c) the Investment Adviser shall be entitled to offer any Qualifying Asset to an Excluded Entity in existence as at the date of this agreement where the Investment Adviser or its Associates are subject to an obligation existing at the date of this agreement to offer assets similar to Qualifying Assets to an Excluded Entity; and

(d) the Investment Adviser may, but is not obliged to, offer to the Company any asset that is not a Qualifying Asset and in such case clauses 16.3 and 16.4 shall apply to that asset as if it was a Qualifying Asset.

16.2 Qualifying Asset

16.2.1 For the purposes of this clause 16, a “Qualifying Asset” is any real property that is a logistics development or logistics investment asset that:

(a) has a target yield (calculated as Net Operating Income divided by Market Value) of greater than seven per cent (7 %), unless otherwise agreed by the Board;

(b) has a Market Value of greater than €10,000,000;

(c) has a target IRR of greater than eight per cent (8%);

(d) has in place leases or agreements for lease over the whole or substantially the whole of the lettable area of the asset for a term (or terms) (without including renewal terms) of greater than five (5) years and constitutes a stabilised asset;

(e) would generally be acceptable to an institutional investor seeking a logistics property with a size greater than ten thousand square metres (10,000 m ²); and

(f) is located in a major industrial property location in the Target Region.

16.2.2 The Shareholders acknowledge that whilst it will not preclude any asset from being a Qualifying Asset it will be preferable for a Qualifying Asset to be subject to leases or agreements for lease where the rental income is subject to regular increases.

16.3 First Notice of Qualifying Asset

16.3.1 Where a Qualifying Asset is subject to the Right of Offer, Goodman shall procure that the Investment Adviser provides written notice (the “First Notice”) to the Company of any potential Qualifying Asset together with such information as the Investment Adviser considers is reasonably necessary for the Company to make an evaluation of the Qualifying Asset which may include:

(a) an estimate of the Market Value of the Qualifying Asset prepared by the Investment Adviser (including upon completion of any development where the asset is a development asset);

(b) an estimate of the net operating income for the applicable Qualifying Asset for the first full year of the term of a lease to a tenant of the Qualifying Asset in which the tenant is required to pay full rent;

(c) a capitalisation rate for such Qualifying Asset based on the estimated Market Value and the net operating income;

(d) an investment proposal or development proposal (as appropriate);

(e) in the case of a development logistics asset a site plan of the proposed improvements of the Qualifying Asset and a copy of the agreed heads of terms for a lease or agreement for lease; and

(f) such of the due diligence materials listed in Schedule 6 as the Investment Adviser determines are relevant and to the extent that such materials are in the Investment Adviser’s possession or control,

(the “Due Diligence Materials”).

16.3.2 The Company shall have until the date that is ten (10) Business Days after the receipt of all necessary Due Diligence Materials as reasonably determined by the Investment Adviser, to either accept or reject the Qualifying Asset subject to the First Notice by serving written notice on the Investment Adviser. If the Company rejects a Qualifying Asset or if the Company fails to serve on the Investment Adviser notice of acceptance within such ten (10) Business Day period, then the Company shall have waived its right to acquire that Qualifying Asset and the Investment Adviser or any of its Associates or any third party may acquire or sell the Qualifying Asset.

16.4 Completion of acquisition of Qualifying Asset

16.4.1 If the Company accepts a Qualifying Asset pursuant to clause 16.3.2, the Company shall negotiate in good faith with the seller of the asset to either:

(a) where the Qualifying Asset is an investment asset, complete the acquisition of the Qualifying Asset or any Indirect Investment Vehicle that owns the Qualifying Asset as soon as reasonably practicable; or

(b) where the Qualifying Asset is a development asset, enter into an agreement with the seller for the acquisition of the asset upon practical completion of the asset subject to, amongst others, acceptance of the premises by the tenant and commencement of the lease term,

provided that if a Qualifying Asset is to be acquired from Goodman or any of its Associates by way of an Indirect Investment Vehicle then the terms of any such acquisition shall be mutatis mutandis on substantially similar terms as the contract for the acquisition of the shares in the Schönberg SPV (for an investment asset) or the Langenbach SPV (for a development asset) by the Company with such amendments as may be necessary to address requirements in the local jurisdiction where the Indirect Investment Vehicle is domiciled or otherwise as the Shareholders shall agree provided further that if the Company has not completed the acquisition or entered into an agreement with the relevant seller within one (1) month of the date of service of the notice of acceptance of the Qualifying Asset due to the fault or delay of RTPCE, then the Company shall be deemed to have rejected and waived its right to acquire the Qualifying Asset and the Investment Adviser or any of its Associates or any third party may acquire the Qualifying Asset.

16.4.2 Where the Company has entered into an agreement pursuant to clause 16.4.1(b), then Goodman shall procure that the Investment Adviser provides periodic updates, no less frequently than quarterly, relating to the construction, development and leasing aspects (as appropriate) of the Qualifying Asset, including any update to the Due Diligence Materials.

16.4.3 There shall be no requirement to complete the acquisition of any Qualifying Asset if the execution ready final lease or agreement for lease is materially different from the agreed heads of terms (as provided for in clause 16.3.1(e)), unless RTPCE and Goodman agree otherwise. Where any execution ready final lease or agreement for lease is materially different from the agreed heads of terms then upon presenting the Qualifying Asset to the Company it shall be deemed to be a new Qualifying Asset and the provisions of this clause 16 shall apply mutatis mutandis.

16.5 RTPCE Right of Offer

During the Offer Period, RTPCE (in each case, in so far as it is able) shall (and shall procure that any of its Associates shall) procure that any Qualifying Asset that is owned by a third party and is being pursued by RTPCE (or its Associates) is offered to the Company in priority to any other person where the Company is not precluded by the vendor of the Qualifying Asset (not being RTPCE or its Associates) from being offered to or acquired by the Company (or any Indirect Investment Vehicle) (the “RTPCE Offer”).

16.5.1 If a Qualifying Asset is subject to a RTPCE Offer, RTPCE shall provide written notice (the “RTPCE Notice”) to the Company of any potential Qualifying Asset together with such information as RTPCE considers is reasonably necessary for the Company to make an evaluation of the Qualifying Asset which may include the Due Diligence Materials to the extent that such materials are in RTPCE’s or its Associates’ possession or control.

16.5.2 The Company shall either accept or reject the Qualifying Asset the subject of the RTPCE Notice by indicating its acceptance or rejection on such notice and returning it to RTPCE within ten (10) Business Days after receipt of all necessary Due Diligence Materials as determined by the Investment Adviser. If the Company rejects such Qualifying Asset or if the Company fails to deliver notice of acceptance to RTPCE within such ten (10) Business Day period, then the Company shall have waived its right to acquire that Qualifying Asset and RTPCE or any of its Associates or any third party may acquire the Qualifying Asset.

16.5.3 If the Company accepts a Qualifying Asset pursuant to clause 16.5.3, the Company shall negotiate in good faith with the seller of the asset to either:

(a) where the Qualifying Asset is an investment asset, complete the acquisition of the Qualifying Asset or any Indirect Investment Vehicle that owns the Qualifying Asset as soon as reasonably practicable; or

(b) where the Qualifying Asset is a development asset, enter into an agreement with the seller for the acquisition of the asset upon practical completion of the asset subject to, amongst others, acceptance of the premises by the tenant and commencement of the lease term,

provided that if the Company has not completed the acquisition or entered into an agreement with the relevant seller within one (1) month of the date of service of the notice of acceptance of the Qualifying Asset due to the fault or delay of Goodman or the

Investment Adviser, then the Company shall be deemed to have rejected and waived its right to acquire the Qualifying Asset and RTPCE or any of its Associates or any third party may acquire the Qualifying Asset.

16.6 Waiver of Right of Offer or RTPCE Offer

The Company may waive the Right of Offer or the RTPCE Offer in relation to any Qualifying Asset at any time by written notice to the Shareholders and the Investment Adviser in which case the Qualifying Asset may be acquired by any other person.

16.7 The Shareholders agree and acknowledge that, save for the Right of Offer obligations contained in this clause 16, either of the Shareholders and any of the respective Associates may acquire, own, develop or otherwise exploit any interest in real estate, either directly or indirectly, and whether alone or for or with other persons and nothing in this agreement shall prevent them from doing so.

16.8 If either of the Shareholders or any Directors appointed by such Shareholder shall have voted against the acquisition by the Group of a Qualifying Asset from a third party, such Shareholder or its Associates shall not pursue the acquisition of such Qualifying Asset for its own benefit or the benefit of its Associates. For the avoidance of doubt, if the other Shareholder voted in favour of the acquisition of such Qualifying Asset by the Group, it may pursue the acquisition of such Qualifying Asset for its own benefit or the benefit of its Associates.

17. GOOD FAITH

17.1 All transactions entered into between a Shareholder (or any Associate of it) and the Group shall be conducted in good faith and on the basis set out or referred to in this agreement or, if not provided for in this agreement, as may be agreed by the Shareholders.

17.2 Each Shareholder shall at all times act in good faith towards the other.

18. COMPLIANCE WITH THIS AGREEMENT AND THE ARTICLES

18.1 Each Shareholder undertakes to the other that it shall take all practicable steps, including without limitation the exercise of votes it directly or indirectly controls at meetings of the Executive Committee, the Board and general meetings of the Company, to ensure that the terms of this agreement are complied with and that it does all such other acts and things as may be necessary or desirable to implement this agreement.

18.2 Each Shareholder undertakes to the other to comply fully and promptly with the provisions of the Articles so that each and every provision of the Articles (subject to clause 30.1) shall be enforceable by the Shareholders as between themselves in whatever capacity.

19. TRANSFERS OF SHARES AND PECS

19.1 Subject to any Finance Agreement and the relevant provisions of the Companies Law, no Shareholder shall sell, transfer, grant any Encumbrance over or otherwise dispose of any Share or PEC or grant any interest in any Share or PEC other than as permitted by the Articles or this agreement.

19.2 Subject to any Finance Agreement, a Shareholder may at any time transfer all (but not some) of its Shares to any of its Associates in accordance with the Articles, provided that:

19.2.1 the transferor provides such evidence as the other Shareholder may reasonably require that the transferee is an Associate of the transferor and can comply with the obligations on its part in this agreement;

19.2.2 the Company or the other Shareholder is not adversely affected by such transfer;

19.2.3 all costs and expenses in relation to such transfer are borne by the transferor, and the other Shareholder and the Company are indemnified accordingly;

19.2.4 if the transferee ceases to be an Associate of the transferor, the transferee shall, and the transferor shall procure that the transferee shall, immediately transfer all its Shares which it holds back to the transferor or to another Associate of Goodman/or RTPCE (as the case may be); and

19.2.5 all (but not some) entitlement of the Shareholder to any PECs are transferred at the same time as the transfer of the Shares.

19.3 Any person (who is not already a party to this agreement whether as an original party or by executing an Instrument of Adherence) acquiring any Shares (whether by allotment or transfer or transmission) shall not be allotted such Shares or registered as their holder or be transferred the benefit of any PECs unless or until he has entered into and delivered to the Company an Instrument of Adherence in a legally binding manner. Neither the Company nor any Shareholder shall be held liable for any distributions that may be made to the incorrect person following any such transfer prior to receipt of such an Instrument of Adherence

20. DEFAULT EVENTS

20.1 A Shareholder shall be a defaulting Shareholder (“Defaulting Shareholder”) upon the occurrence of any of the following events in respect of it (each a “Default Event”) and the other Shareholder shall be a non-defaulting Shareholder (“Non-Defaulting Shareholder”):

20.1.1 the Shareholder commits a material breach of its obligations under this agreement or an Associate of the Shareholder commits a material breach of its obligations under any Service Agreement and, where capable of remedy, the Shareholder or Associate (as the case may be) fails after service of notice requiring the breach to be remedied to:

(a) commence remedy of the breach within 10 Business Days (or such longer period as is reasonable in the circumstances and agreed between the parties) of the date of service of the notice;

(b) complete remedy of the breach within 30 Business Days (or such longer period as is reasonably required in the circumstances or as agreed between the parties) of the date of service of the notice; and/or

(c) diligently proceed to remedy the breach;

20.1.2 the Shareholder fails to fund any amount required pursuant to this agreement (other than clause 10.6) within ten (10) Business Days of the due date;

20.1.3 the liquidation (voluntary or otherwise) of the Shareholder other than a genuine solvent reconstruction or amalgamation in which the new company resulting from such reconstruction or amalgamation assumes (and is capable of assuming) all the obligations of the Shareholder;

20.1.4 an order is made by a court of competent jurisdiction or a resolution is passed for the administration of a Shareholder;

20.1.5 any step is taken by any person (and is not withdrawn or discharged within ninety (90) days) to appoint a liquidator, receiver, administrative receiver or manager in respect of the whole or a substantial part of the assets or undertaking of the Shareholder;

20.1.6 the Shareholder becomes unable to pay its debts as they fall due in accordance with Article 437 of the Luxembourg Commercial Code;

20.1.7 the Shareholder enters into a composition or arrangement with its creditors;

20.1.8 any event analogous to any of the events set out in clauses 20.1.3 to 21.1.7 (inclusive) occurs in any jurisdiction other than Luxembourg; and/or

20.1.9 in the case of:

(a) RTPCE CB Richard Ellis Realty Trust ceases to hold a direct or indirect majority of the beneficial interests in RTPCE; and

(b) Goodman, Goodman Industrial Trust ceases to hold a majority of the beneficial interests in Goodman,

and each Shareholder shall forthwith notify the Company and the other Shareholder if it becomes a Defaulting Shareholder or it becomes aware of the occurrence of a Default Event in relation to the other Shareholder.

20.2 Without prejudice to any other rights of action or remedies it may have, upon becoming aware of a Default Event the Non-Defaulting Shareholder may, within 45 Business Days of becoming aware of the Default Event and provided such Default Event still continues:

20.2.1 serve notice on the Defaulting Shareholder and the Company (the “Default Notice”):

(a) where the Default Event relates to a Transaction in Progress that cannot be furthered or completed due to the occurrence of the Default Event, requiring that the Defaulting Shareholder pay within ten (10) Business Days of service of the Default Notice compensation to the Non-Defaulting Shareholder in an amount equal to ten per cent (10%) of the Transaction Amount; and/or

(b) where the Defaulting Shareholder is Goodman or an Associate of Goodman, requiring notice to be served on each of the Investment Adviser, the Property Manager and the Development Manager (on behalf of the Company) terminating the Investment Advisory Agreement, the Property Services Agreement and/or any Development Management Agreement; and/or

20.2.2 during the Initial Investment Term serve a Company Buy-Sell Notice on the Defaulting Shareholder,

provided that the Non-Defaulting Shareholder may exercise its rights in respect of any one or more of clauses 20.2.1(a), 20.2.1(b) and 20.2.2 or any combination of them.

20.3 At any time after the service of a Default Notice (and provided such Default Event continues), no Directors or Representatives appointed by the Defaulting Shareholder shall be entitled to vote at any meeting of the Executive Committee or the Board of the Company or any Indirect Investment Vehicle and the Defaulting Shareholder shall not be entitled to vote at a general meeting of the Company and the quorum for any such meeting during this time shall be one Director or one Representative appointed by the Non-Defaulting Shareholder (as appropriate) or in the case of a general meeting, the Non-Defaulting Shareholder (although the Directors and Representatives appointed by the Defaulting Shareholder may attend meetings of the Executive Committee and the Board and the Defaulting Shareholder may attend general meetings of the Company in each case if they so wish). During such period, the Non-Defaulting Shareholder will (and will use all powers reasonably available to it to procure that the Directors and Representatives appointed by it will) act in good faith and take account of the interests of the Company and its Shareholders generally in considering how to exercise the powers of control and management available to it.

21. DETERMINATION OF NAV

21.1 Where the NAV or NAV per Share is required to be determined for the purposes of this agreement the following provisions shall apply:

21.1.1 Within five (5) Business Days of the date on which the NAV is required to be determined (the “Relevant Date”) the Company shall instruct the Valuers to determine (within ten (10) Business Days of such instruction) the Market Value of the Properties as at the Relevant Date. The Valuers shall act as an expert and not as arbitrators (but notwithstanding this each of the Shareholders shall be entitled to make written submissions and counter submissions to the Valuers although the Valuers shall not be in any way fettered by any such submissions and counter submissions) and the determination of the Valuers shall be final and binding on the Shareholders (save in the case of manifest or proven error which shall be rectified without delay). The costs of the Valuers shall be borne by the Company.

21.1.2 Following determination of the Market Value of the Properties in accordance with clause 21.1.1, the Company shall instruct the Auditors to determine the NAV. The Auditors shall act as an expert in determining the NAV and not as an arbitrator and their determination of the NAV shall be final and binding on the Shareholders (save in the case of manifest or proven error which shall be rectified without delay). The costs of the Auditors shall be borne by the Company.

22. COMPLETION OF THE SALE AND PURCHASE OF SHARES AND PECS

22.1 Completion of the sale and purchase of Shares and PECs under clause 7.1 shall take place at the registered office of the Company on the date which is thirty (30) Business Days after the date of acceptance or deemed acceptance pursuant to clause 7.1.2.

22.2 At completion:

22.2.1 the transferring Shareholder shall transfer its Shares by way of a duly completed Share Transfer Agreement to the purchaser together with the relevant share certificate and such other documents as the purchaser may reasonably require to show good title to the Shares and enable it to be registered as the holder of the Shares;

22.2.2 the transferring Shareholder shall transfer its PECs by way of a duly completed PEC Transfer Agreement to the purchaser together with such other documents as the purchaser may reasonably require to show good title to the PECs and enable it to be registered as the holder of the PECs;

22.2.3 the purchaser shall pay the purchase price by telegraphic transfer/cheque to the transferring Shareholder or its solicitors (who have been irrevocably authorised by the transferring Shareholder to receive it) or to such other bank account as the transferring Shareholder may nominate; and

22.2.4 the transferring Shareholder shall deliver or procure that there are delivered to the Company resignations from all of the Directors appointed by the transferring Shareholder, to take effect at completion of the sale of the Shares and PECs under this clause 22 and acknowledging that such Directors have no claims against the Company.

22.3 The transferring Shareholder’s Shares and PECs will be sold by the transferring Shareholder with full title guarantee free from any Encumbrances (en pleine proprieté, libre de tout droit) and the transfer shall be notified to and acknowledged by the Company.

22.4 The Shareholders shall procure that the Company registers the transfers of the transferring Shareholder’s Shares and PECs under this clause 22 and each of them consents to such transfers and registrations pursuant to this agreement and the Articles.

22.5 If the transferring Shareholder fails to deliver duly completed Share Transfer Agreements or PEC Transfer Agreements for the relevant Shares and PECs to the purchaser by the completion date as required by clauses 22.2 and 22.3:

22.5.1 the Directors may (and shall if requested by the purchaser) authorise any Director to transfer the Shares and PECs on the transferring Shareholder’s behalf to the purchaser to the extent that the purchaser has, by the completion date, put the Company in funds to pay the price due for the relevant Shares and PECs. Each Shareholder irrevocably and by way of security appoints the other Shareholder as its respective attorney to execute any transfer of Shares and PECs pursuant to this clause 22.5.1. The Shareholders agree to hold each other harmless in relation to, and ratify any action taken by the other in accordance with this clause 22.5.1;

22.5.2 the Directors shall then authorise registration of the transfer of Shares and PECs; and

22.5.3 the transferring Shareholder shall surrender the certificates for its Shares and PECs to the Company and on surrender the transferring Shareholder shall be entitled to the purchase price for its Shares and PECs.

23. ASSIGNMENT

No Shareholder shall create any Encumbrance over or assign or transfer or create any trust in respect of purport to create any Encumbrance over or assign or transfer or create any trust in respect of any of its rights or obligations under this agreement without the prior written consent of the other Shareholder.

24. SUCCESSORS

This agreement shall be binding on and enure for the benefit of the lawful successors and permitted assigns of each Shareholder.

25. DURATION

25.1 This agreement shall continue in force for an initial term (“Initial Term”) of five years from the date of this agreement and shall continue in force after the Initial Term unless terminated earlier pursuant to the terms of this agreement or if terminated:

25.1.1 at any time by the written agreement of the Shareholders; or

25.1.2 automatically without notice:

(a) on the date that all of the Shares and PECs become owned by one Shareholder; or

(b) on the date of the winding up of the Company,

provided that following a resolution being passed for the winding up of the Company, the Right of Offer and RTPCE Offer shall no longer apply.

25.2 The Shareholders shall meet at least every five (5) years after the commencement of this agreement to consider the termination of this agreement and possible exit strategies.

25.3 Upon termination of this agreement the Shareholders shall procure that the Company is wound up and the Shareholders shall endeavour to agree a suitable basis for dealing with the interests and assets of the Company and any Indirect Investment Vehicle and shall endeavour to ensure that:

25.3.1 all existing contracts of the Company and any Indirect Investment Vehicle are performed so far as there are sufficient resources within the Company and any Indirect Investment Vehicle;

25.3.2 no new contractual obligations shall be entered into by the Company or any Indirect Investment Vehicle;

25.3.3 the Investment Adviser determines the appropriate strategy for the Disposal of any Properties or Indirect Investment Vehicle, as the case may be, in which the Company still has an interest and shall procure the marketing of the relevant Properties or Indirect Investment Vehicles, as the case may be, as soon as reasonably practicable for the best price reasonably obtainable on the open market;

25.3.4 following the sale of all of the Properties, the Company and each remaining Indirect Investment Vehicle shall be wound up as soon as possible; and

25.3.5 each Shareholder shall return to the other and the Company shall return to each of the Shareholders all proprietary information belonging to or originating from either of the Shareholders, as the case may be.

25.4 Termination of this agreement shall not affect any rights or liabilities that the parties have accrued under it.

25.5 This clause 25.5 and the following provisions of this agreement remain in full force after termination:

25.5.1 clause 1 (Definitions and Interpretation);

25.5.2 clause 14 (Confidentiality);

25.5.3 clause 15 (Announcements);

25.5.4 clause 17 (Good Faith);

25.5.5 clause 25.3 (Duration);

25.5.6 clause 26 (Tax);

25.5.7 clause 27 (Entire Agreement);

25.5.8 clause 28 (Severance);

25.5.9 clause 31 (Variation);

25.5.10 clause 32 (Waiver

25.5.11 clause 33 (Costs);

25.5.12 clause 34 (Further Assurance);

25.5.13 clause 36 (Notices); and

25.5.14 clause 37 (Governing Law and Jurisdiction).

26. TAX

26.1 The Company shall be organised in such a manner that the Directors may elect for the Company to be classified as a “partnership” or a “disregarded entity” for US federal income tax purposes, it being understood that the Directors shall cause the Company to elect to be treated as a partnership or disregarded entity for US federal income tax purposes effective not later than the day before the Company issues any Shares to RTPCE.

26.2 RTPCE shall (at its sole discretion) be entitled to determine the US tax classifications of the Company, its Indirect Investment Vehicles and any other entity in which the Company holds a direct or indirect interest, in each case, prior to their acquisition or formation, and Goodman shall consent to any US tax elections necessary or appropriate to secure such classifications.

26.3 Goodman acknowledges that the indirect parent of RTPCE has elected to be treated as a real estate investment trust (a “REIT”) for US federal income tax purposes. Prior to the direct or indirect acquisition or formation of any interest in any Property, Indirect Investment Vehicle, or other entity, RTPCE will be required to confirm to the Company that the proposed acquisition or formation is suitable for RTPCE’s indirect parent in relation to the US federal income tax rules applicable to REITs.

26.4 The Board shall cause the Company, any Indirect Investment Vehicle and any other entity in which the Company owns a direct or indirect interest to file an election with the US Internal Revenue Service (“IRS”) to be treated as a partnership for US federal income tax purposes (and prior to the Company or such other entity having two or more Shareholders, as a disregarded entity for US federal income tax purposes it being understood that in the event that the Company or such other entity only has one Shareholder at the effective time of such

election, it will be treated as a disregarded entity for US federal income tax purposes until such entity has two Shareholders) effective not later than the date of formation of the Company or such other entity or in the case of an entity that was in existence more than seventy-five (75) days prior to the date the Company directly or indirectly acquires an interest in such entity, effect not later than two (2) days before such acquisition date. Each Shareholder consents to such treatment and such elections, and authorises the Board to file any and all consents, statements and schedules on behalf of the Company or such other entities and such Shareholder that may be necessary or appropriate in furtherance of such treatment and such elections.

26.5 Solely for US federal income tax purposes, the Company and any Indirect Investment Vehicle or other entity in which the company owns a direct or indirect interest and that is treated as a partnership for US federal income tax purposes shall maintain capital accounts and comply with the other provisions set forth in Schedule 9.

27. ENTIRE AGREEMENT

27.1 This agreement together with any documents referred to in it contains the entire agreement between the parties in relation to the matters contemplated by this agreement and any such documents and supersedes any previous agreements between the parties in relation to such matters.

27.2 Each of the parties confirms that in entering into this agreement it has not relied on any statement, representation, warranty, agreement or undertaking of any person (whether a party to this agreement or not) other than those expressly set out in this agreement, and that it will not have any claim, right or remedy arising out of any such statement, representation, warranty, agreement or undertaking.

27.3 Nothing in this agreement shall operate to limit or exclude any liability of one of the parties in respect of a fraudulent misrepresentation made by that party to any of the others.

28. SEVERANCE

28.1 Each of the provisions of this agreement is distinct and severable from the others. If at any time one or more of those provisions is or becomes invalid or unenforceable (whether wholly or partly), the validity and enforceability of the remaining provisions (or the same provision to any other extent) shall not be affected or impaired in any way.

28.2 If any provision of this agreement is or becomes invalid or unenforceable (whether wholly or partly) but it would be valid or enforceable if deleted in part or reduced in application, then the provision shall apply with the minimum deletion or modification necessary to make it valid or enforceable.

29. NO PARTNERSHIP

Nothing in this agreement (including clause 26) shall be deemed to constitute a partnership or agency relationship between the parties or any other person.

30. STATUS OF AGREEMENT

30.1 If there is any conflict or inconsistency between the provisions of this agreement and the Articles or the articles of any Indirect Investment Vehicle, this agreement shall prevail.

30.2 The Shareholders shall whenever necessary exercise all voting and other rights and powers available to them to procure the amendment, waiver or suspension of the relevant provision of the Articles or the articles of any Indirect Investment Vehicle, to the extent necessary, to permit the Company and each Indirect Investment Vehicle and its affairs to be administered as provided in this agreement.

30.3 Nothing in this agreement shall be deemed to constitute an amendment of the Articles or the articles of any Indirect Investment Vehicle or any previous articles of association of the Company or the articles of any Indirect Investment Vehicle.

30.4 The Company is not bound by any provision of this agreement to the extent that it constitutes an unlawful fetter on any statutory power of the Company. This shall not affect the validity of the relevant provision as between the other parties to this agreement or the respective obligations of the other parties as between themselves under clause 30.2.

31. VARIATION

No variation of this agreement shall be effective unless it is in writing and signed by or on behalf of each of the parties.

32. WAIVER

32.1 A party can only waive a right or remedy provided in this agreement or by law by express written notice.

32.2 No failure or delay to exercise, or other relaxation or indulgence granted in relation to, any power, right or remedy under this agreement shall operate as a waiver of it, impair, or prejudice it.

32.3 Any single or partial exercise or waiver of any power, right or remedy shall not preclude its further exercise or the exercise of any other power, right or remedy.

33. COSTS

Unless otherwise provided in this agreement all costs in connection with the negotiation, preparation, execution and performance of this agreement shall be borne by the party that incurred the costs.

34. FURTHER ASSURANCE

Each of the parties shall promptly execute and deliver all such documents and do all such things as the other parties may from time to time reasonably require for the purpose of giving full effect to the provisions of this agreement.

35. COUNTERPARTS

The parties may execute this agreement in any number of counterparts, each of which when executed and delivered will be an original but all of which when taken together will constitute one agreement.

36. NOTICES

36.1 Form of notice

Any notice, consent, request, demand, approval or other communication to be given or made under or in connection with this agreement (each a “Notice” for the purposes of this clause 36) must be in English, legible and subject to clause 36.2.1(d) in writing and signed by or on behalf of the person giving it.

36.2 Method of service

36.2.1 A Notice must be served by one of the following methods:

(a) by hand to the relevant address set out in clause 36.3 and shall be deemed to have been served upon delivery if delivered during a Business Day, or at the start of the next Business Day if delivered at any other time;

(b) by special delivery post or international courier, in either case with proof of receipt to the relevant address set out in clause 36.3 and shall be deemed to have been served upon delivery if delivered during a Business Day, or at the start of the next Business Day if delivered at any other time;

(c) by fax to the relevant fax number set out in clause 36.3 and shall be deemed served on despatch, if sent during a Business Day or at the start of the next Business Day if sent at any other time, provided that in each case a receipt indicating complete transmission of the Notice is obtained by the sender and that a copy of the Notice is also despatched to the recipient using one of the methods described in clauses 36.2.1(a) or 36.2.1(b) no later than the end of the next Business Day; or

(d) in the case of clauses 14 and 15, by electronic mail to the relevant email address set out in clause 36.3 and shall be deemed to have been served upon transmission by the sender if delivered during a Business Day, or at the start of the next Business Day if delivered at any other time, provided that a notice shall be deemed not to have been received where the sender has received an error, out of office or similar reply message.

36.2.2 In this clause 36, all references to “Business Day” mean during business hours (i.e. 9.00 am to 5.00 pm) based on the local time where the recipient of the Notice is located.

36.2.3 Subject to clause 36.2.1(d),a Notice must not be sent by electronic mail.

36.3 Addresses for service

Notices must be addressed as follows:

36.3.1 Notices for Goodman must be marked for the attention of:

Name: General Counsel, Europe

Address: 8 Rue Heine, Luxembourg-Gare, L-1720 Grand Duchy of Luxembourg

Fax number: +352 26 36 32 26

Email: dominiek.vanoost@goodman.com

36.3.2 Notices for RTPCE must be marked for the attention of:

Name:

Address:

Fax number:

Email:

36.3.3 Notices for the Company must be marked for the attention of:

Name: Company Secretary

Address: 8 Rue Heine, Luxembourg-Gare, L-1720 Grand Duchy of Luxembourg

Fax number: +352 26 36 32 26

Email: lorna.ros@goodman.com

36.4 Copies of Notices

36.4.1 Copies of all Notices sent to Goodman must also be sent or given to:

Name: General Counsel

Address: Goodman Limited, 60 Castlereagh Street, Sydney NSW 2000 Australia

Fax number: +61 2 9230 7444

Email: carolyn.scobie@goodman.com

36.4.2 Copies of all Notices sent to RTPCE must also be sent or given to:

Name: Jack Cuneo

Address:

Fax number: 001 609 806 2666

Email:

36.4.3 Notices for the Company must also be sent or given to:

Name: General Counsel, Europe

Address: Arlington House, Arlington Business Park, Theale, Berkshire RG7 4SA

Fax number: +44 118 930 4383

Email: dominiek.vanoost@goodman.com

AND

Name:

Address:

Fax number:

Email:

36.4.4 Copies of Notices must be sent by one of the methods described in clause 36.2. Failure to deliver copies other than in respect of clause 36.2.1(d) will invalidate the Notice.

36.5 Change of details

A party may change its address for service so long as it gives the other party at least ten (10) Business Days’ prior notice. Until the end of those ten (10) Business Days, service on either the old or new address will be effective.

37. GOVERNING LAW AND JURISDICTION

37.1 This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by the laws of Luxembourg.

37.2 The parties irrevocably agree that the courts of Luxembourg shall have exclusive jurisdiction to determine any dispute or claim that arises out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims).

The parties have executed this agreement on the date stated at the top of page 1.

SCHEDULE 1

Initial Properties

Initial Property	Description	Relevant Owner
Düren	The property known as Düren, Henry Ford Strasse 3, 52351 Düren, Germany; registered in the land register of Düren, folio 21485, cadastral area 44, parcel no. 66, Henry-Ford-Strasse, with a registered size of 63,245 sqm.	Goodman Aventurine (Lux) Sarl
Schönberg	The property known as Schönberg/Lübeck, Sabower Höhe 14, 23923 Schönberg, Germany; registered in the land register of Schönberg, folio 5007, cadastral area 1, parcel nos. 497/16, 356/10 and 357/3, An der B 104, with a total registered size of 70,179 sqm, and folio 4993, cadastral area 1, parcel no. 497/20, An der B 104, with a registered size of 212 sqm (the latter parcel yet to be acquired by the Schönberg SPV).	Goodman Marcasite Logistics (Lux) Sarl
Langenbach	The property known as Munich Airport Logistics Centre, Isartalstrasse – 85416 Langenbach, Germany; a piece of land of approx. 34,673 sqm still to be measured and mapped out of two existing parcels, registered in the land register of Oberhummel, folio 1156, parcel nos. 162 and 163, Resserwegfeld, as described in the notarial deed dated 29 October 2009, UR-Nr A 1820/2009 Notary Dr. Paul Rombach (the entire piece of land yet to be acquired by the Langenbach SPV).	Goodman Langenbach (Lux) Sarl

SCHEDULE 2

Part 1 – Major Decisions

1. The entering into or any change to any Finance Agreement or the refinancing of such facilities (including granting any Encumbrance over any Property or over any other asset or interests of the Company or the relevant Indirect Investment Vehicle).

2. Any proposal for the acquisition of any Property either directly or indirectly, including a Qualifying Asset pursuant to clause 16.

3. Any proposal for the Disposal of any Property or part of any Property held by an Indirect Investment Vehicle, otherwise than in the case of a sale as provided for in the then current Business Plan or relevant Asset Plan.

4. Material capital expenditures, being any capital expenditure which is at least five per cent (5%) in excess of the operating and capital budget for the relevant item (if applicable) in relation to the relevant Property or as set out in the Business Plan or relevant Asset Plan.

5. Annual operating and capital budget in relation to each Property and the Group as a whole.

6. Save where already approved by virtue of approval of the Business Plan or an Asset Plan, amending and renegotiating leases and entering into any agreements for lease and any lease with any tenant of the whole or any part of a Property (in each case including, but not limited to, the identity of any such tenant) or any material modification to any such lease.

7. Termination and/or engagement of any Service Agreement or any other Related Party Contract, other than as set out under clause 4.4.4(b) (and for the avoidance of doubt termination under clause 9.2.2 of the Investment Advisory Agreement, clause 9.2.2 of the Property Services Agreement or any similar clause under any Development Management Agreement shall be a Major Decision).

8. Material development, redevelopment or refurbishment of any Property.

Part 2 - Reserved Matters

1. The winding up the Company and any Indirect Investment Vehicles, including:

1.1 the method of divestment of all assets of the Company as a portfolio or as individual properties; or

1.2 the roll over of the Company’s assets into a follow-on fund or the Goodman European Logistics Fund with liquidity provided to the Shareholders to allow them to exit the joint venture established by this agreement in whole or in part.

2. The admittance of a third party Shareholder into the Company.

3. Any alteration to the Articles, constitutional documents of any Indirect Investment Vehicle and this agreement.

SCHEDULE 3

Completion

At Completion:

1. The Shareholders shall procure that such meetings of the Company and the Board are held as may be necessary to:

1.1 re-designate the 2,500 ordinary shares held in the Company held by Goodman as 2,500 A Shares and re-designate the 10,000 ordinary shares held in the Company held by RTPCE as 10,000 B Shares;

1.2 adopt new Articles;

1.3 issue and allot 557,500,000 First Series PECs to Goodman and 2,230,000,000 Second Series PECs to RTPCE and issue PEC certificates for them;

1.4 appoint and designate Dominique Prince and Stephen Young as A Directors;

1.5 appoint and designate Daniel Laurecin, Sansal Ozdemir and Philip L. Kianka as B Directors;

1.6 authorise the Company to execute:

(a) this agreement;

(b) the Investment Advisory Agreement and the Property Service Agreement;

(c) the Administration and Secretarial Agreement;

(d) the Trade Mark Licence Agreement; and

(e) the Sale and Purchase Agreements;

1.7 adopt the Initial Plans;

1.8 appoint Goodman Europe as secretary of the Company;

1.9 appoint ING as the bankers of the Company and pass the resolutions comprised in, and complete, the bank’s mandate form; and

1.10 appoint Deloitte as Auditors.

2. The Shareholders shall procure that the Company completes the acquisition of the Düren SPV and the Schönberg SPV and enter into the Langenbach Agreement.

3. Goodman shall:

3.1 subscribe in cash for 557,500,000 First Series PECs and shall pay five million, five hundred and seventy-five thousand Euros (€5,575,000) to the Company;

3.2 procure the execution of and deliver to the Company the Service Agreements; and

3.3 provide a legal opinion in the Agreed Form.

4. RTPCE shall:

4.1 subscribe in cash for 2,230,000,000 Second Series PECs and shall pay twenty-two million, three hundred thousand Euros (€22,300,000) to the Company; and

4.2 provide a legal opinion in the Agreed Form.

SCHEDULE 4

Instrument of Adherence

DATE 200[    ]

PARTIES

(1) [                    ] (a trust established in [                    ], acting by its [manager/trustees] [                    ] (incorporated and registered in [                    ] under company registration number [                    ]), the registered office of which is at [                    ] (the “Transferor”); and

(2) [                    ] (incorporated and registered in [                    ] under company registration number [                    ]), the registered office of which is at [                    ] (the “New Shareholder”)

RECITALS

(A) This instrument is supplemental to an agreement (“Shareholders’ Agreement”) dated [                    ] 2010, made between (1) Goodman Europe Development Trust (acting by its trustee Goodman Europe Development Pty Limited (2) RT Princeton CE Holdings, LLC and (3) Goodman Princeton Holdings (Lux) Sarl (“Existing Parties”) setting out the terms for operating the joint venture company, Goodman Princeton Holdings (Lux) Sarl (incorporated and registered in Luxembourg with company number [—]) (“Company”).

(B) By a transfer of Shares and PECs in the capital of the Company dated [                    ], the Transferor transferred to the New Shareholder [            ] Shares and [            ] PECs in the capital of the Company having an aggregate value of [            ] Euros (€[—]).

IT IS AGREED AS FOLLOWS

1. Words and expressions used in this instrument shall, unless the context expressly requires otherwise, have the meaning given to them in the Shareholders’ Agreement.

2. The “Effective Date” means the date of this instrument.

3. The New Shareholder confirms that it has been supplied with a copy of the Shareholders’ Agreement and undertakes with each of the Existing Parties that, from the Effective Date, the New Shareholder shall observe, perform and be bound by the provisions of the Shareholders’ Agreement that contain obligations on the Transferor as though the New Shareholder was an original party to the Shareholders’ Agreement.

4. Nothing in this instrument shall release the Transferor from any liability in respect of any obligations under the Shareholders’ Agreement due to be performed prior to the Effective Date. The Transferor shall not be liable for any matter arising on or after the Effective Date.

5. This instrument shall be governed by, and construed in accordance with, Luxembourg law.

6. The courts of Luxembourg are to have exclusive jurisdiction to determine any dispute arising out of or in connection with this instrument. Each party irrevocably submits and agrees to submit to the jurisdiction of the Luxembourg courts.

This document has been executed and is delivered and takes effect on the date stated at the beginning of it.

Signed by [                    ]	)
acting by [                    ], a director,	)
in the presence of:	)

Signature of witness

Name (in BLOCK CAPITALS)

Address

Signed by [                    ]	)
acting by [                    ], a director,	)
in the presence of:	)

Signature of witness

Name (in BLOCK CAPITALS)

Address

SCHEDULE 5

Articles

In the Agreed Form

SCHEDULE 6

Due Diligence Materials

1. Most recent surveys.

2. Updated copy of registered title (with an effective date no earlier than two months prior to the date of acquisition of the Qualifying Asset) or most recent title insurance policy, together with copies of all listed exceptions.

3. Leases, lease amendments, assignments, subleases, lease guarantees and other occupancy agreements.

4. Building plans and specifications, “as-built” (if available), including actual floor area measurements and floor diagrams, together with detailed gross, rentable and usable floor area calculations for the building, each floor and each tenant (if available in each case).

5. Environmental and physical inspection reports generated by third parties regarding the Qualifying Asset, including soil reports (if available).

6. Complete rent roll for most recent month and budgeted operating statement.

7. Tenant financials.

8. Statement of or certificate showing insurance coverage.

9. Such tax returns, registrations and information as are necessary to undertake a suitable review of the tax history of the Qualifying Asset.

10. A detailed summary of all unresolved litigation, including actions taken on behalf of or against the ownership of the Qualifying Asset.

11. Service charge budget for the current year and first fiscal year (if available).

12. All approvals, permits and licenses from each governmental authority having jurisdiction over the Qualifying Asset as are necessary to permit the full use and occupancy of the Qualifying Asset, including without limitation, environmental permits and approvals, certificate of completion, certificates of occupancy and evidence of compliance with applicable zoning and land use regulations.

13. Searches which a prudent buyer’s lawyer would make in the relevant jurisdiction where the Qualifying Asset is located, being note more than 3 months old (or such other period as is customary in the relevant jurisdiction).

SCHEDULE 7

PECs Terms and Conditions

In the Agreed Form

SCHEDULE 8

Distribution Worked Example

In the Agreed Form

SCHEDULE 9

Certain US Federal Income Tax Provisions

1. Certain Definitions. Any capitalised terms used in this Schedule and not defined shall have the meanings ascribed to them in the Articles. The following terms have the definitions hereinafter indicated whenever used in this Schedule with initial capital letters:

1.1 Adjusted Capital Account Deficit: With respect to any Shareholder, the deficit balance, if any, in such Shareholder’s Capital Account (as defined below) as of the end of the relevant Fiscal Year or other period, after giving effect to the following adjustments:

(i) Credit to such Capital Account any amounts which such Shareholder is obligated to restore to the Company pursuant to Regulations § 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to Regulations § 1.704-2(g)(1) or Regulations § 1.704-2(i)(5); and

(ii) Debit to such Capital Account the items described in Regulations §§ 1.704-1(b)(2)(ii)(d)(4), (d)(5), and (d)(6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations § 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

1.2 Intentionally Deleted.

1.3 Partnership Minimum Gain: The aggregate gain, if any, that would be realised by the Company for purposes of computing Profits and Losses with respect to each Company asset if each Company asset subject to a Nonrecourse Liability were disposed of for the amount outstanding on the Nonrecourse Liability by the Company in a taxable transaction. Partnership Minimum Gain with respect to each Company asset shall be further determined in accordance with Regulations § 1.704-2(d) and any subsequent rule or regulation governing the determination of minimum gain. A Shareholder’s share of Partnership Minimum Gain at the end of any Fiscal Year shall equal the aggregate Nonrecourse Deductions allocated to such Shareholder (or its predecessors in interest) up to that time, less such Shareholder’s (and predecessors’) aggregate share of decreases in Partnership Minimum Gain determined in accordance with Regulations § 1.704-2(g).

1.4 Depreciation: For each Fiscal Year, an amount equal to the US federal income tax depreciation, amortisation or other cost recovery deduction allowable with respect to an asset for such year, except that if the Gross Asset Value of an asset differs from its adjusted basis for US federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the US federal income tax depreciation, amortisation or other cost recovery deduction for such year bears to such beginning adjusted tax basis; provided, however, that if the US federal income tax depreciation, amortisation or other cost recovery deductions for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Board.

1.5 Fiscal Year: The taxable year of the Company which, except in the case of a short taxable year, shall be the calendar year.

1.6 Gross Asset Value: With respect to any asset of the Company, such asset’s adjusted basis for US federal income tax purposes, except as follows:

(A) the initial Gross Asset Value of any asset contributed by a Shareholder to the Company shall be the gross fair market value of such asset at the time of contribution determined by the Board using such reasonable method of valuation as it may adopt;

(B) in the discretion of the Board, the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Board, immediately prior to the following events:

(i) a Capital Contribution (other than a de minimis Capital Contribution) to the Company by a new or existing Shareholder as consideration for Shares;

(ii) the distribution by the Company to a Shareholder of more than a de minimis amount of Company property as consideration for the redemption of Shares; and

(iii) the liquidation of the Company within the meaning of Regulations § 1.704-1(b)(2)(ii)(g); and

(C) the Gross Asset Values of Company assets distributed to any Shareholder shall be the gross fair market values of such assets as reasonably determined by the General Partner as of the date of distribution.

At all times, Gross Asset Values shall be adjusted by any Depreciation taken into account with respect to the Company’s assets for purposes of computing Profits and Losses. Gross Asset Values shall be further adjusted to reflect adjustments to Capital Accounts pursuant to Regulations § 1.704-1(b)(2)(iv)(m) to the extent not otherwise reflected in adjustments to Gross Asset Values. Any adjustment to the Gross Asset Values of Company property shall require an adjustment to the Shareholders’ Capital Accounts as provided in Section 2 of this Schedule.

1.7 Nonrecourse Deductions: Nonrecourse Deductions are as defined in Regulations § 1.704-2(b)(1). The amount of Nonrecourse Deductions for a Fiscal Year equals the net increase, if any, in the amount of Partnership Minimum Gain during such Fiscal Year reduced by any distributions during such Fiscal Year of proceeds of a Nonrecourse Liability that are allocable to an increase in Partnership Minimum Gain, determined according to the provisions of Regulations § 1.704-2(c) and 1.704-2(h).

1.8 Nonrecourse Liability: A liability as defined in Regulations § 1.704-2(b)(3).

1.9 Profits and Losses: Respectively, for each Fiscal Year or other period, the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Code § 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code § 703(a)(1) shall be included in taxable income or loss), adjusted as follows:

(1) any income of the Company that is exempt from US federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or loss;

(2) in lieu of the depreciation, amortisation and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period;

(3) any items that are specially allocated pursuant to Section 3.2 shall not be taken into account in computing Profits or Losses;

(4) any expenditures of the Company described in Code § 705(a)(2)(B) (or treated as such under Regulations § 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses shall be deducted from such US taxable income or loss;

(5) in the event the Gross Asset Value of any Company asset is adjusted in accordance with paragraph (B) or (C) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Company asset for purposes of computing Profits or Losses;

(6) gain or loss resulting from any disposition of any Company asset with respect to which gain or loss is recognised for US federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding the fact that the adjusted tax basis of such Company asset differs from its Gross Asset Value; and

(7) an allocation of Company Profits or Losses to a Shareholder shall be treated as an allocation to such Shareholder of the same share of each item of income, gain, loss and deduction that has been taken into account in computing such Profits or Losses.

Profits and Losses shall be further determined and adjusted in accordance with the Regulations issued under Section 704 of the Code.

1.10 Regulations: The regulations of the US Treasury Department promulgated under the Code.

1.11 Intentionally Deleted.

1.12 Partner Minimum Gain: An amount, with respect to each Partner Nonrecourse Debt, equal to Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations § 1.704-2(i)(3).

1.13 Partner Nonrecourse Debt: A liability as defined in Regulations § 1.704-2(b)(4).

1.14 Partner Nonrecourse Deductions: The partner nonrecourse deductions as defined in Regulations § 1.704-2(i)(2). The amount of Partner Nonrecourse Deductions with respect to a Shareholder’s Nonrecourse Debt for a Fiscal Year equals the net increase, if any, in the amount of Partner Minimum Gain during such Fiscal Year attributable to such Partner Nonrecourse Debt, reduced by any distributions during that Fiscal Year to the Shareholder that bears the economic risk of loss for such Partner Nonrecourse Debt to the extent that such distributions are from the proceeds of such Partner Nonrecourse Debt and are allocable to an increase in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined according to the provisions of Regulations § 1.704-2(h) and 1.704-2(i).

2. Capital Account. The Company shall maintain a book account (a “Capital Account”) in accordance with the following provisions for each Shareholder (and any other person who acquires Shares):

(a) To each Shareholder’s Capital Account there shall be credited the amount of cash contributed by such Shareholder, the initial Gross Asset Value of any other asset contributed by such Shareholder to the capital of the Company (net of liabilities secured by such contributed property that the Company assumes or takes subject to), such Shareholder’s distributive share of Profits, the amount of any Company liabilities assumed by the Shareholder or secured by distributed assets that such Shareholder takes subject to and any other items in the nature of income or gain that are allocated to such Shareholder pursuant to this Schedule; and

(b) To each Shareholder’s Capital Account there shall be debited the amount of cash distributed to the Shareholder, the Gross Asset Value of any Company asset distributed to such Shareholder pursuant to any provision of the Articles (net of liabilities secured by such distributed property that such Shareholder assumes or takes subject to), such Shareholder’s distributive share of Losses and any other items in the nature of expenses or losses that are allocated to such Shareholder pursuant to this Schedule.

In the event that a Shareholder’s Shares or portion thereof is transferred within the meaning of Regulations § 1.704-1(b)(2)(iv)(f), the transferee shall succeed to the Capital Account of the transferor to the extent that it relates to the Shares or portion thereof so transferred.

In the event that the Gross Asset Values of Company assets are adjusted, as contemplated in paragraph (B) or (C) of the definition of “Gross Asset Value”, the Capital Accounts of the Shareholders shall be adjusted to reflect the aggregate net adjustments as if the Company sold the relevant assets for their fair market values and recognised gain or loss for US federal income tax purposes equal to the amount of such aggregate net adjustment.

The foregoing provisions and the other provisions of the Articles relating to the maintenance of Capital Accounts are intended to comply with Regulations § 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. No Shareholder shall be obligated to restore any deficit balance in its Capital Account and no Shareholder shall have any entitlement to receive any distribution or other payment from the Company in respect of any positive balance in its Capital Account.

3. Allocations.

3.1 Allocation of Profits and Losses. All items of income, gain, loss and deduction for any Fiscal Year shall be allocated among the Shareholders in such a manner that the Capital Accounts of the Shareholders immediately after making such allocations bear, as nearly as possible the same proportions to one another as would the amounts of the distributions that would be made to the Shareholders pursuant to the organisational documents of the Company were the Company to be dissolved, its affairs wound up and the Company Assets sold for an amount equal to their aggregate book values at the end of that Fiscal Year, provided that, for the purpose of making allocations pursuant to this Schedule, any amount which is or would be required to be contributed to the Company on its dissolution shall be deemed to have been so contributed.

3.2 Mandatory Allocations.

(A) No Excess Deficit. To the extent that any Shareholder has or would have, as a result of an allocation of Loss (or item thereof), an Adjusted Capital Account Deficit, such amount of Loss (or item thereof) shall be allocated to the other Shareholders in accordance with Section 3.1, but in a manner which will not produce an Adjusted Capital Account Deficit as to such Shareholders.

(B) Minimum Gain Chargeback. Notwithstanding any other provision of this Schedule, if there is a net decrease in Partnership Minimum Gain during any Fiscal Year, then, subject to the exceptions set forth in Regulations § 1.704-2(f)(2), (3), (4) and (5), each Shareholder shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Shareholder’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations § 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Shareholder pursuant thereto. The items to be so allocated shall be determined in such section of the Regulations in accordance with Regulations § 1.704-2(f). This Section 3.2(B) is intended to comply with the minimum gain chargeback requirements in Regulations § 1.704-2(f) and shall be interpreted consistently therewith.

(C) Partner Minimum Gain Chargeback. Notwithstanding any other provision of this Schedule 1 except Section 3.2(B), if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year, then, subject to the exceptions set forth in Regulations § 1.704-2(i)(4), each Shareholder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations § 1.704-2(i)(5), shall be specially allocated items of

Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Shareholder’s share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations § 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Shareholder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations § 1.704-2(i)(4). This Section 3.2(C) is intended to comply with the minimum gain chargeback requirement in the Regulations and shall be interpreted consistently therewith.

(D) Qualified Income Offset. Notwithstanding any other provision of this Schedule, except Sections 3.2(B) and 3.2(C), in the event any Shareholder receives any adjustments, allocations or distributions described in Regulations § 1.704-1(b)(2)(ii)(d)(4), (5), or (6), that cause or increase an Adjusted Capital Account Deficit of such Shareholder, items of Company income and gain shall be specially allocated to such Shareholder in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Shareholder as quickly as possible.

(E) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be allocated to the Shareholders in proportion to their respective shares of Profits and Losses.

(F) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Shareholder who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Regulations § 1.704-2(i)(1).

(G) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code § 734(b) or 743(b) is required, pursuant to Regulations § 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such 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 such basis), and such item of gain or loss shall be specially allocated to the Shareholders in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such section of the Regulations.

Each Shareholder hereby agrees to provide the Company with all information necessary to give effect to an election made under Code § 754 if the Board determines to make such an election; provided, however, that the cost associated with such an election shall be borne by the Company as a whole. With respect to such election:

(i) Any change in the amount of the depreciation deducted by the Company and any change in the gain or loss of the Company, for US federal income tax purposes, resulting from an adjustment pursuant to Code § 743(b) shall be allocated entirely to the transferee of the Shares or portion thereof so transferred. Neither the capital contribution obligations of, nor the Shares of, nor the amount of any cash distributions to, the Shareholders shall be affected as a result of such election, and except as provided in Regulations § 1.704-1(b)(2)(iv)(m), the making of such election shall have no effect except for US federal and (if applicable) state and local income tax purpose,

(ii) Solely for US federal and, if applicable, state and local income tax purposes and not for the purpose of maintaining the Shareholders’ Capital Accounts (except as provided in Regulations § 1.704-1(b)(2)(iv)(m)), the Company shall keep a written record for those assets, the bases of which are adjusted as a result of such election, and the amount at which such assets are carried on such record shall be debited (in the case of an increase in basis) or credited (in the case of a decrease in basis) by the amount of such basis adjustment. Any change in the amount of the depreciation deducted by the Company and any change in the gain or loss of the Company, for US federal and (if applicable) state and local income tax purposes, attributable to the basis adjustment made as a result of such election shall be debited or credited, as the case may be, on such record.

(H) Curative Allocations. The allocations set forth in Sections 3.2(A), (B), (C) and (D) above (the “Regulatory Allocations”) are intended to comply with certain requirements of Regulations § 1.704-1(b). The Regulatory Allocations shall be taken into account for the purpose of equitably adjusting subsequent allocations of Profits and Losses, and items of income, gain, loss, and deduction among the Shareholders so that, to the extent possible, the net amount of such allocations of Profits and Losses and other items to each Shareholder shall be equal to the net amount that would have been allocated to each such Shareholder if the Regulatory Allocations had not occurred.

(I) Nonrecourse Debt Distribution. To the extent permitted by Regulations § 1.704-2(h)(3) and 1.704-2(i)(6), the Board shall endeavor to treat distributions as having been made from the proceeds of Nonrecourse Liabilities or Partner Nonrecourse Debt only to the extent that such distributions would cause or increase a deficit balance in any Shareholder’s Capital Account that exceeds the amount such Shareholder is otherwise obligated to restore (within the meaning of Regulations § 1.704-1(b)(ii)(c)) as of the end of the Company’s taxable year in which the distribution occurs.

3.3 Allocations for Tax Purposes.

(A) Except as otherwise provided in this Section 3.3, for US federal income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Shareholders in the same manner as its correlative item of Profits or Losses is allocated pursuant to Sections 3.1 and 3.2.

(B) In accordance with Code § 704(b) and 704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall, solely for US federal income tax purposes, be allocated among the Shareholders so as to take into account any variation between the adjusted basis of such property to the Company for US federal income tax purposes and the initial Gross Asset Value of such property. If the Gross Asset Value of any Company property is adjusted as described in the definition of Gross Asset Value, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for US federal income tax purposes and the Gross Asset Value of such asset in the manner prescribed under Code § 704(b) and 704(c) and the Regulations thereunder. In furtherance of the foregoing, the Company shall employ any reasonable method selected by the Board.

3.4 Allocations to Transferred Shares. Profits and Losses allocable to Shares assigned or reissued during a Fiscal Year shall be allocated to each person who was the holder of such Shares during such Fiscal Year, in proportion to the number of days that each such holder was recognised as the owner of such shares during such Fiscal Year or by an interim closing of the books or in any other proportion permitted by the Code and selected by the Board in accordance with the Articles, without regard to the results of Company operations or the date, amount or recipient of any distributions which may have been made with respect to such Shares.

3.5 US Tax Treatment; Subsidiaries. Following the Company’s treatment as a partnership for US federal income tax purposes, the Company shall take any and all actions necessary or appropriate to be treated at all times as a partnership for US federal income tax purposes. In addition, the Board shall elect to treat all subsidiaries or other investments of the Company as partnerships or disregarded entities for US federal income tax purposes, as applicable unless otherwise directed by a Shareholder that is directly or indirectly owned by CB Richard Ellis Realty Trust. Each Shareholder hereby consent to the filing of any tax elections or other consents or statements necessary or appropriate to treat the Company and any subsidiary or investment of the Company as a partnership or disregarded entity (as the case may be) for US federal income tax purposes.

3.6 Tax Matters Partner. The Board shall designate RT Princeton CE Holdings, LLC as the “tax matters partner” (in this Section called the “TMP”) as defined in Code § 6231(a)(7) of the Company. Without limitation of the foregoing, the TMP shall be authorised to extend the statute of limitations, file a request for administrative adjustment, file suit concerning any tax refund or deficiency relating to any Company administrative adjustment or enter into any settlement agreement relating to any Company item of income, gain, loss, deduction or credit for any Fiscal Year of the Company, in each case, with respect to US federal, state and local tax matters. The TMP shall indemnify and reimburse the Company for all expenses, including legal and accounting fees, claims, liabilities, losses and damages incurred in connection with any administrative or judicial proceeding with respect to the tax liability of the Shareholders or in connection with any audit of the Company’s income tax returns, or in respect of any other obligation on the Company to prepare, maintain or file any accounts, records, returns, elections or other such documents required for US federal, state or local tax purposes.

3.7 Each Indirect Investment Vehicle or other entity in which the Company directly or indirectly owns an interest and that is treated as a partnership for US federal income tax purposes shall comply with each provision of this Schedule 9. For the purpose of any such entity’s compliance with this Schedule 9, any reference to the “Company” shall be deemed to refer to such entity, any reference to a “Shareholder” shall be deemed to refer to the partners of such entity for US federal income tax purpose, and each other term in this Schedule 9 shall be understood to be defined such that the provisions of this Schedule 9 shall apply to such entity in a manner analogous to the application of such provisions to the Company. Notwithstanding the foregoing, the first sentence of section 3.6 shall not apply to any entity in which RT Princeton CE Holdings, LLC is not a partner for US federal income tax purposes, and the Board shall designate as TMP of each such entity a person that is a partner of such entity for US federal income tax purposes and that is either (i) the Company or (ii) an entity in which the Company holds a direct or indirect equity interest. Any person who is designated a TMP pursuant to the foregoing sentence shall delegate its duties as TMP to RT Princeton Holdings, LLC, and/or follow all instructions of RT Princeton Holdings, LLC with respect to such duties, to the extent consistent with applicable law.

Signed, sealed and delivered for and on behalf of	)
GOODMAN EUROPE DEVELOPMENT PTY	)
LIMITED in its capacity as trustee for THE	)
GOODMAN EUROPE DEVELOPMENT TRUST	)
by its attorney in the presence of:	)

Signature of attorney	/s/ Carl Bicego
Signature of witness	/s/ Angela Lin
Name (in BLOCK CAPITALS) ANGELA LIN
Address	77A Livingstone Avenue
	Pymble NSW, 2073
	Australia

Signed by RT PRINCETON CE HOLDINGS, LLC	)
a Delaware limited liability company	)
acting by	)
Name:  Charles W. Hessel
Title:  Vice President
in the presence of:  Gregory L. Vinson	)

Signature of witness	/s/ Gregory L. Vinson
Name (in BLOCK CAPITALS) GREGORY L. VINSON
Address	c/o CB Richard Ellis Realty Trust
	47 Hulfish Street, Suite 210
	Princeton, NJ 08542

Signed by GOODMAN PRINCETON HOLDINGS	)
(LUX) S.À R.L.	)
acting by Dominique Prince
a director,	)
in the presence of:	)

Signature of witness	/s/ Lorna Ros
Name (in BLOCK CAPITALS) LORNA ROS
Address	8 Rue Hiene
	L1720 Luxembourg

EX-10.2

EXHIBIT 10.2

EXECUTION VERSION

DATED 10 June 2010

GOODMAN JERSEY HOLDINGS TRUST

and

RT PRINCETON UK HOLDINGS, LLC

and

GOODMAN PRINCETON HOLDINGS (JERSEY) LIMITED

SHAREHOLDERS’ AGREEMENT

in respect of Goodman Princeton Holdings (Jersey) Limited

Lacon House

84 Theobald’s Road

London WC1X 8RW

Tel: +44(0)20 7524 6000

CONTENTS

Clause	Subject matter	Page
1.	DEFINITIONS AND INTERPRETATION	1
2.	THE BUSINESS OF THE COMPANY	15
3.	COMPLETION	16
4.	DIRECTORS AND MANAGEMENT	16
5.	RESERVED MATTERS	21
6.	DEADLOCK	21
7.	BUY SELL OPTION	23
8.	BANKING ARRANGEMENTS	26
9.	ACCOUNTING RECORDS, BUDGETS AND FINANCIAL INFORMATION	27
10.	FINANCING THE COMPANY	29
11.	DISTRIBUTIONS AND DIVIDENDS	30
12.	SECRETARIAL AND ACCOUNTING FUNCTIONS	32
13.	INTELLECTUAL PROPERTY RIGHTS	32
14.	CONFIDENTIALITY	32
15.	ANNOUNCEMENTS	34
16.	FIRST RIGHT OF OFFER ON QUALIFYING ASSETS	35
17.	GOOD FAITH	39
18.	COMPLIANCE WITH THIS AGREEMENT AND THE ARTICLES	39
19.	TRANSFERS OF SHARES	39
20.	DEFAULT EVENTS	40
21.	DETERMINATION OF NAV	41
22.	COMPLETION OF THE SALE AND PURCHASE OF SHARES	42
23.	ASSIGNMENT	43
24.	SUCCESSORS	43
25.	DURATION	43
26.	TAX	44
27.	ENTIRE AGREEMENT	45
28.	SEVERANCE	45
29.	NO PARTNERSHIP	45
30.	STATUS OF AGREEMENT	45
31.	VARIATION	46
32.	WAIVER	46
33.	COSTS	46
34.	FURTHER ASSURANCE	46
35.	COUNTERPARTS	46
36.	NOTICES	46
37.	GOVERNING LAW AND JURISDICTION	49
	SCHEDULE 1 Initial Properties	50
	SCHEDULE 2	51
	Part 1 – Major Decisions	51
	Part 2 - Reserved Matters	51
	SCHEDULE 3 Completion	52
	SCHEDULE 4 Instrument of Adherence	54
	SCHEDULE 5 Articles	56
	SCHEDULE 7 Distribution Worked Example	58

SHAREHOLDERS’ AGREEMENT

DATE 10 June 2010

PARTIES

(1) GOODMAN JERSEY HOLDINGS TRUST acting by its trustee Goodman Jersey Property Holdings (Aust) Pty Ltd, (incorporated and registered in New South Wales, Australia under company registration number ACN 121444746), the registered office of which is at c/o Level 10, 60 Castlereagh Street, Sydney NSW 2000, Australia) (“Goodman”);

(2) RT PRINCETON UK HOLDINGS, LLC, a Delaware Limited Liability Corporation with its principal place of business at 47 Hulfish Street, Suite 210, Princeton, New Jersey 08542, USA (“RTPUK”); and

(3) GOODMAN PRINCETON HOLDINGS (JERSEY) LIMITED (a company incorporated and registered in Jersey under company number 105771), the registered office of which is at 13 Castle Street, St Helier, Jersey, JE4 5UT (the “Company”).

RECITALS

(A) Goodman and RTPUK wish to establish the Company for the purpose of acquiring and holding the Properties for investment purposes.

(B) This agreement sets out the terms and conditions on which Goodman and RTPUK agree to become shareholders in the Company and the rights and obligations of each of them as its shareholders.

IT IS AGREED AS FOLLOWS:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this agreement the following definitions apply:

“2006 Act”

means the United Kingdom Companies Act 2006;

“A Director”

means a Director appointed an A Director pursuant to this agreement or the Articles;

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“A Share”

means an A ordinary share of no par value in the capital of the Company;

“Administrator”

means Sanne Trust Company Limited or such other person appointed as administrator to the Company and, where appropriate, the Indirect Investment Vehicles;

“Administration and Secretarial Agreement”

means the agreement dated on or about the date of this agreement to be entered into between (1) the Company and South Normanton SPV and Brackmills SPV and (2) the Administrator in relation to the provision of secretarial services from the Administrator to each of them;

“Agreed Form”

means in a form agreed by and signed by or on behalf of each of the parties and initialled by them or on their behalf for identification;

“Alternative Representative”

has the meaning given to that term in clause 4.10.3;

“Appointor”

means, in relation to a Director or Representative, the Shareholder which nominated and appointed such Director or Representative in accordance with this agreement or the Articles;

“Articles”

means the articles of association of the Company in the form set out in Schedule 5 to be adopted pursuant to this agreement and as amended from time to time which are also to be adopted as the articles of association of the Indirect Investment Vehicles (with such amendments as the Shareholders agree);

“Asset Plan”

means an asset plan in respect of each Property from time to time as more fully described in clause 9.2.1;

“Associate”

means:

(a) in the case of a company, a subsidiary undertaking or parent undertaking of the company, and any other subsidiary undertaking of such parent undertaking; and

(b) in any other case, any body corporate or unincorporated association (including but not limited to a partnership, limited partnership or trust) directly or indirectly controlled by the person concerned, and for this purpose “control” shall have the same meaning as in section 1124 of the United Kingdom Corporation Tax Act 2010,

2

provided that:

(i) neither of CB Richard Ellis, Inc or any of its subsidiaries shall be deemed to be an Associate of RTPUK;

(ii) in the case of Goodman, each of Goodman Limited and its subsidiaries, the Investment Adviser, the Development Manager, the Property Manager and Goodman Operator (UK) Limited shall be deemed to be an Associate of Goodman; and

(iii) an Excluded Entity shall be deemed not to be an Associate of Goodman or the Investment Adviser;

“Auditors”

means the auditors of the Company from time to time;

“B Director”

means a Director appointed a B Director pursuant to this agreement or the Articles;

“B Share”

means a B ordinary share of no par value in the capital of the Company;

“Bank Accounts”

means the Company’s bank accounts from time to time;

“Board”

means the board of directors of the Company from time to time;

“Brackmills Property”

means the property known as “Brackmills” as described more fully in Schedule 1;

“Brackmills SPV”

means, Goodman Brackmills (Jersey) Limited (a company incorporated in Jersey under company number 94382), the registered office of which is at 13 Castle Street St Helier, Jersey JE4 5UT, being the entity that owns the Brackmills Property;

“Business”

means the business of the Company as described in clause 2.1;

“Business Day”

means a day other than a Saturday, Sunday or a day on which banks are authorised to close in Jersey or the City of London;

“Business Plan”

means a business plan in respect of the Group from time to time as more fully described in clause 9.2.1;

3

“Capital Proceeds”

means all proceeds of a capital nature received by the Company following a disposal or liquidation of all or any part of the Properties or any of the Indirect Investment Vehicles (as appropriate) or following any refinancing of the Group’s borrowings or any equity release;

“Chairman”

means the chairman of the Board from time to time;

“Companies Law”

means the Companies (Jersey) Law 1991, as amended;

“Company Buy Offer”

has the meaning given to that term in clause 7.1.1(a);

“Company Buy-Sell Notice”

has the meaning given to that term in clause 7.1.1;

“Company Offeree”

has the meaning given to that term in clause 7.1.1;

“Company Offeror”

has the meaning given to that term in clause 7.1.1;

“Company Sell Offer”

has the meaning given to that term in clause 7.1.1(b);

“Completion”

means the completion of the subscription for Shares by Goodman and RTPUK and acquisition of the Brackmills SPV and South Normanton SPV by the Company in accordance with clauses 3 and 10.1 and Schedule 3;

“Confidential Information”

means all information relating to the Business, the Group, any Property or to any Shareholder or any Associate of any Shareholder including, without limitation, trade secrets, any financial or trading information and the contents of this agreement and any other agreement referred to in this agreement;

“Deadlock”

has the meaning given to that term in clause 6.2;

“Deadlock Date”

has the meaning given to that term in clause 6.6;

“Deadlock Notice”

has the meaning given to that term in clause 6.3;

4

“Default Event”

has the meaning given to that term in clause 20.1;

“Defaulting Buy Sell Shareholder”

has the meaning given to that term in clause 7.3.4(b);

“Defaulting Shareholder”

has the meaning given to that term in clause 20.1;

“Development Manager”

means Goodman Logistics or any other person appointed as development manager to the Company or any Indirect Investment Vehicle from time to time;

“Development Management Agreement”

means the development management agreement dated on or about the date of this agreement to be in Agreed Form to be entered into between (1) the Development Manager and (2) the Company in relation to the provision of development management services to the Company and any Indirect Investment Vehicle;

“Director”

means an A Director or a B Director, as the case may require including where applicable an alternate director in each case appointed in accordance with the Articles or this agreement and the expression “Directors” shall be construed accordingly;

“Disposal”

means the sale, transfer or other disposition of a Property or any Indirect Investment Vehicle that owns (either directly or indirectly) such Property;

“Drawdown Notice”

has the meaning given to that term in clause 10.6.1;

“Due Diligence Materials”

has the meaning given to that term in clause 16.3.1;

“Emergency Funding”

means funding required for any valid business purpose of the Company or any Indirect Investment Vehicle as determined by the Property Manager or any Shareholder in each case in its reasonable discretion as being required on short notice, including for the prevention of danger or damage to any person or any Property, where the Shareholders do not agree on whether such funding should be provided;

“Emergency Shareholder Loan”

has the meaning given to that term in clause 10.6.1;

5

“Encumbrance”

includes any mortgage, charge (fixed or floating), pledge, lien, hypothecation, guarantee, trust, right of set-off or other third party right or interest (legal or equitable) including any assignment by way of security, reservation of title or other security interest of any kind, however created or arising, or any other agreement or arrangement (including a sale and repurchase agreement) having similar effect;

“Estimated Gross Asset Value”

has the meaning given to that term in clause 7.1.1;

“Excluded Entity”

means:

(a) any person in respect of which the Investment Adviser or any of its Associates has been appointed as an investment or asset adviser or manager (whether discretionary or not), other than Goodman Limited or any of its Associates; or

(b) any fund, joint venture, investment club, collective investment scheme, pooled investment vehicle or similar entity (whether incorporated or unincorporated) which is owned in part, managed or advised by the Investment Adviser or any of its Associates,

provided that none of the Investment Adviser, Property Manager or Development Manager (or any of their assignees under the Investment Advisory Agreement, Property Services Agreement or the Development Management Agreement which are Associates of Goodman Limited) shall be an Excluded Entity;

“Executive Committee”

shall have the meaning given to that term in clause 4.10.1;

“Finance Agreements”

means any loan, finance, security or other agreements or documents entered into by the Company and/or any Indirect Investment Vehicle with any third party lender or provider of finance;

“Financial Year”

in relation to the Company, means a financial accounting period of 12 months ending 31 December, but in the first year the Company is formed, means the period starting with the day the Company is formed and ending on 31 December 2010, and in the last year of the Company the period from 1 January in such year to the date of dissolution of the Company;

“First Notice”

has the meaning given to that term in clause 16.3.1;

“First Preferred Return”

means, in the case of each Shareholder, the sum of (a) an amount equal to eight and a half percent (8.5%) per annum, determined on a basis of 365 or 366 calendar

6

days as the case may be, for the actual number of days in the Financial Year for which the first preferred return is being determined, of the average daily balance of such Shareholder’s Unreturned Capital for the given Financial Year plus (b) any amount of first preferred return in respect of paragraph (a) for any previous Financial Years to the extent not actually distributed pursuant to clause 11.1.1 or 11.1.2, cumulative and compounded at eight and a half percent (8.5%) on an annual basis;

“Goodman Limited”

means Goodman Limited, a company incorporated in Australia under company number ACN 000 123 071;

“Goodman Logistics”

means Goodman Logistics Developments (UK) Limited, a company incorporated and registered in England and Wales under company number 03921188;

“Goodman Representative”

has the meaning given to that term in clause 4.10.2;

“Goodman Senior Officer”

has the meaning given to that term in clause 6.5.1;

“Group”

means the Company and its subsidiaries (including each of the Indirect Investment Vehicles) from time to time and the expression “Group Member” means any one of them;

“Indemnified Person”

has the meaning given to that term in clause 9.3.2(a);

“Indirect Investment Vehicle”

means any limited partnership, limited liability partnership, general partnership, company, unit trust, offshore holding structure or collective investment scheme that is, or will be, either directly or indirectly wholly owned by the Company or in which another Indirect Investment Vehicle has a majority ownership interest;

“Initial Plans”

means the Business Plan for the Group and the Asset Plan for each Initial Property in Agreed Form to be adopted at Completion;

“Initial Investment Term”

means the date falling three years after the date of this agreement;

“Initial Properties”

means each of the properties in the United Kingdom listed in Schedule 1 to be acquired indirectly on or about the date of this agreement through the purchase of the total share capital of the Brackmills SPV and the South Normanton SPV;

7

“Initial Term”

has the meaning given to that term in clause 25.1;

“Instrument of Adherence”

means an instrument in the form set out in Schedule 4;

“Intellectual Property Rights”

means inventions, patents, technical information and know-how of all descriptions, utility models, trade marks, service marks, rights in design (registered and unregistered), semi-conductor topography rights, copyrights (including rights in computer software), database rights, business and trade names and associated goodwill, domain names and all other industrial or intellectual property or other rights or forms of protection of a similar nature or having similar effect in any part of the world and all rights in and in relation to any of them, applications to register any of them, and the rights to apply for or claim priority in respect of any of them;

“Interested Director”

means in respect of a Related Party Contract:

(a) a Director (or director of an Indirect Investment Vehicle) who is a party to a Related Party Contract; or

(b) a Director (or director of an Indirect Investment Vehicle) whose Appointor (or an Associate of the Appointor) is a party to a Related Party Contract;

“Interested Party”

means an Interested Director, an Interested Representative, his or her Appointor (in each case) and any Associate of such Appointor;

“Interested Representative”

means in respect of a Related Party Contract:

(a) a Representative who is a party to a Related Party Contract; or

(b) a Representative whose Appointor (or an Associate of the Appointor) is a party to a Related Party Contract;

“Investment Adviser”

means Goodman Logistics or any other person appointed as investment adviser to the Company from time to time;

“Investment Advisory Agreement”

means the investment advisory agreement dated on or about the date of this agreement to be in Agreed Form to be entered into between (1) the Company (2) the Investment Adviser and (3) Goodman Operator (UK) Limited in relation to the provision of investment advisory services to the Company and any Indirect Investment Vehicle;

8

“IRR”

means the annual internal rate of return (expressed as a percentage) which when applied as a discount to a particular set of cashflows gives the net present value of that set of cashflows as zero having adopted the convention of outflows as positive and inflows as negative on the basis that:

(a) each of those cashflows is regarded as arising at the date on which the cashflow in question occurs or is deemed to occur; and

(b) the rate of return is treated as compounding annually;

“Jersey”

means the Island of Jersey, Channel Islands;

“Joint Venture Documents”

means:

(a) this agreement;

(b) the Service Agreements;

(c) the Administration and Secretarial Agreement;

(d) the Trade Mark Licence Agreement; and

(e) the Sale and Purchase Agreements;

“Major Decisions”

means all matters set out in Part 1 of Schedule 2;

“Market Value”

means market value as determined in accordance with the latest appraisal and valuation manual of the Royal Institution of Chartered Surveyors from time to time;

“Memorandum”

means the memorandum of association of the Company, as may be amended from time to time;

“NAV”

means, at the relevant time, the net asset value of the Company determined in accordance with United Kingdom generally accepted accounting standards with such adjustments as the Auditors shall reasonably determine and calculated pursuant to clause 21 by:

(a) taking the aggregate of:

(i) the asset value of the Indirect Investment Vehicles (in relation to which the value of each Property shall be its Market Value at the relevant time, as determined by the Valuers) and, for the avoidance of doubt, any cash deposits (whether held as contingencies, other contingency or sinking fund amounts or otherwise) and receivables of any Indirect Investment Vehicle shall be included as assets; and

(ii) the current market value of any other assets of the Company including any cash deposits;

9

(b) deducting outstanding liabilities of the Company as at the relevant time; and

(c) applying the following additional principles:

(i) cash and short term deposits shall be taken at face value;

(ii) there shall be deducted the total amount of any actual or estimated liabilities properly payable by the Company or any Indirect Investment Vehicle (to the extent not already taken into account in determining values under paragraphs (a) and (b) above);

(iii) there shall be added the amount of any prepayments made by the Company or any Indirect Investment Vehicle (to the extent not already taken into account in determining values under paragraphs (a) and (b) above) in respect of any period after the date for calculation of the net asset value;

(iv) goodwill and other intangible assets shall be excluded;

(v) any Property which is the subject of an unconditional binding contract for sale shall be taken at the contract price less any associated costs of sale; and

(vi) the value or liability (as the case may be) under any interest rate or other hedging arrangements or any fixed interest rate debt instrument shall be marked to market as at the relevant date;

“NAV per Share”

means at the relevant time the amount determined by dividing the NAV by the total number of Shares then in issue;

“Net Operating Income”

means all tenant cash payments and recoverable outgoing charges to tenants, less Property costs and expenses and costs and expenses of the Group, including but not limited to, base fees, administration fees, performance fees and other ancillary costs associated with the Group’s operations

“Non-Defaulting Shareholder”

has the meaning given to that term in clause 20.1;

“Offer Period”

has the meaning given to that term in clause 16.1.2;

“Performance Fee”

means the performance fee paid (or to be paid) to Goodman Logistics as investment adviser pursuant to the Investment Advisory Agreement;

“Properties”

means, as the context requires:

(a) the Initial Properties;

(b) any other property acquired by the Company after the date of this agreement, either directly or by way of an Indirect Investment Vehicle; and

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(c) any interest in such property;

“Property Buy Offer”

has the meaning given to that term in clause 7.2.1(a);

“Property Buy-Sell Notice”

has the meaning given to that term in clause 7.2.1;

“Property Manager”

means Goodman Logistics or any other person appointed as property manager from time to time of each of the Properties;

“Property Offeree”

has the meaning given to that term in clause 7.2.1;

“Property Offeror”

has the meaning given to that term in clause 7.2.1;

“Property Sell Offer”

has the meaning given to that term in clause 7.2.1(b);

“Property Services Agreement”

means the property services agreement dated on or about the date of this agreement to be in Agreed Form to be entered into between (1) the Property Manager (2) the Company and (3) Indirect Investment Vehicles in relation to the provision of property management services to the Company and any Indirect Investment Vehicle;

“Qualifying Asset”

has the meaning given to that term in clause 16.2.1;

“Quarter”

means a quarter of the Financial Year each such quarter ending on 31 March, 30 June, 30 September and 31 December;

“Quarter End”

means the last day of each Quarter;

“Related Party Contract”

means a contract, arrangement or understanding that is between:

(a) on the one hand, a Director, a Representative, his or her Appointor (in each case), any director, officer or Associate of such Appointor (other than the Company or any Indirect Investment Vehicle); and

(b) on the other hand, the Company, an Indirect Investment Vehicle or any other entity in which any of the Company or any Indirect Investment Vehicle is interested, in any matter and in any capacity (including, without limitation, on

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its own account, jointly with or on behalf of any other person, firm, company or other entity, or as an employee, manager, director, shareholder, member, partner, joint venture participant or consultant),

and shall be deemed to include the Joint Venture Documents and any agreement or transaction with, hiring for services rendered, or the payment of any fees or other remuneration to, any Director, Representative or Shareholder or any Associate of a Shareholder or any of their respective members, shareholders, officers or directors;

“Relevant Date”

has the meaning given to that term in clause 21.1.1;

“Relevant Property”

has the meaning given to that term in clause 6.6;

“Representative”

has the meaning given to that term in clause 4.10.2;

“Reserved Matters”

means the matters listed in Part 2 of Schedule 2;

“RTPUK Notice”

has the meaning given to that term in clause 16.5.2;

“RTPUK Offer”

has the meaning given to that term in clause 16.5.1;

“RTPUK Representative”

has the meaning given to that term in clause 4.10.2;

“RTPUK Senior Officer”

has the meaning given to that term in clause 6.5.2;

“Sale and Purchase Agreements”

means the sale and purchase agreements relating to shares in the Brackmills SPV and in the South Normanton SPV;

“SDLT”

means United Kingdom stamp duty land tax or any similar tax replacing the same from time to time;

“Second Preferred Return”

means, in the case of each Shareholder, the sum of (a) an amount equal to one and a half percent (1.5%) per annum, determined on a basis of 365 or 366 calendar days as the case may be, for the actual number of days in the Financial Year for which the second preferred return is being determined, of the average daily balance of such Shareholder’s Unreturned Capital for the given Financial Year plus (b) any

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amount of second preferred return in respect of paragraph (a) for any previous Financial Years to the extent not actually distributed pursuant to clause 11.1.1 or 11.1.2, cumulative and compounded at ten percent (10%) on an annual basis;

“Service Agreements;

means:

(a) the Investment Advisory Agreement;

(b) the Development Management Agreement; and

(c) the Property Services Agreement;

“Share”

means any share in the capital of the Company of whatever class and the expression “Shares” shall be construed accordingly;

“Shareholder”

means any person registered in the books of the Company as the holder of a Share from time to time;

“SNL”

means Sanne Nominees Limited;

“South Normanton Property”

means the property known as “South Normanton” as described more fully in Schedule 1;

“South Normanton SPV”

means, Goodman South Normanton (Jersey) Limited (a company incorporated in Jersey under company number 94370 the registered office of which is at 13 Castle Street St Helier, Jersey JE4 5UT), being the entity that owns the South Normanton Property;

“Target Region”

means the United Kingdom;

“Trade Mark Licence Agreement”

means the trade mark licence agreement in the Agreed Form dated on or about the date of this agreement and to be entered into between Goodman Limited and the Company in relation to the use of the “Goodman” mark;

“Transaction Amount”

means the proposed purchase price of any Qualifying Asset that is subject to a Transaction in Progress;

“Transaction in Progress”

means any transaction in relation to a Qualifying Asset:

(a) which is actively being pursued by the Company (or any Indirect Investment Vehicle) following acceptance of a First Notice or a RTPUK Notice; or

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(b) in respect of which heads of terms have been agreed or an offer, agreement in principle, memorandum of understanding or definitive agreement has been made or entered into in good faith between the Company (or any Indirect Investment Vehicle) and any other person;

“United Kingdom”

means Great Britain and Northern Ireland;

“Unreturned Capital”

means, for each Shareholder, an amount equal to the aggregate of sums subscribed for Shares by such Shareholder less any amounts distributed to such Shareholder pursuant to clause 11.1.2(a), provided that if the resultant amount would result in a sum below zero it shall be deemed to be zero; and

“Valuers”

means such firm of valuers and surveyors being members of the Royal Institution of Chartered Surveyors as shall be determined by the Company for the purpose of valuing the Properties or failing determination by the Company, as determined by such valuer appointed by the then president of the Royal Institution of Chartered Surveyors (or the next most senior officer available) upon the application of either Shareholder.

1.2 Interpretation

Unless otherwise expressly stated, the rules of interpretation set out in this clause 1.2 apply in this agreement:

1.2.1 The contents page, headings and sub-headings in this agreement are for ease of reference only and do not affect the meaning of this agreement.

1.2.2 Words in the singular include the plural and vice versa.

1.2.3 The masculine includes the feminine and vice versa.

1.2.4 A reference to a party is to a party to this agreement and includes the respective successors or permitted assigns of the original parties.

1.2.5 Where examples are given by using words or phrases such as “include”, “including” or “in particular”, the examples do not restrict the meaning of the related general words and the use of the words “include”, “including” or “in particular” shall be deemed to include the words “without limitation”.

1.2.6 A reference to a person includes an individual, firm, partnership, company, corporation, association, organisation or trust (in each case whether or not having a separate legal personality).

1.2.7 A reference to a clause, paragraph or schedule is to a clause or paragraph of or schedule to this agreement and a reference to this agreement includes its schedules and appendices.

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1.2.8 A reference to a company includes any company, corporation or any other body corporate (wherever incorporated).

1.2.9 A reference to legislation is a reference to all legislation having effect in the United Kingdom at any time, including directives, decisions and regulations of the Council or Commission of the European Union, Acts of Parliament, orders, regulations, consents, licences, notices and bye-laws made or granted under any Act of Parliament or directive, decision or regulation of the Council or Commission of the European Union, or made or granted by a local authority or by a court of competent jurisdiction and any approved mandatory codes of practice issued by a statutory body.

1.2.10 A reference to a statute or statutory provision includes:

(a) that statute or statutory provision as amended, modified or replaced (before, on or after the date of this agreement);

(b) any statute or statutory provision which re-enacts (with or without modification) such statute or statutory provision; and

(c) any subordinate legislation or any mandatory code of practice made (before, on or after the date of this agreement) under that statute or statutory provision.

1.2.11 A reference to this agreement or to any other document shall include any variation, amendment or supplement made to this agreement or that other document.

1.2.12 The words “holding company”, “subsidiary”, “undertaking”, “parent undertaking” or “subsidiary undertaking” have the same meaning as their respective definitions in the 2006 Act.

1.2.13 A reference to a person being connected with another person is a reference to a connected person as defined in section 1122 and 1123 of the United Kingdom Corporation Tax Act 2010.

1.2.14 Where any act, matter or thing is due to happen under this agreement on any day that is not a Business Day then it shall be deemed to be due on the next Business Day.

2. THE BUSINESS OF THE COMPANY

2.1 The Company shall acquire and hold the Properties either directly or indirectly by way of an Indirect Investment Vehicle for investment purposes on the terms set out in this agreement.

2.2 The Business shall be carried on by the Company solely in Jersey.

2.3 Each of the Shareholders shall use reasonable endeavours (but without any obligation to incur any costs, expenses or liabilities, except where required in connection with fulfilling the duties and obligations set out elsewhere in this agreement or the documents referred to in this agreement):

2.3.1 to ensure that the Business is carried on in accordance with the then current Business Plan in respect of the Company and Asset Plan in respect of each Property; and

2.3.2 to promote and develop the Business to the best advantage of the Shareholders in accordance with good business practice.

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3. COMPLETION

3.1 Completion shall take place on the date of this agreement at the offices of Sanne Group, 13 Castle Street, St Helier, Jersey JE4 5UT.

3.2 At Completion each of Goodman and RTPUK shall do those things respectively required of them and procure that the Company shall do those things required of it, in each case in accordance with Schedule 3.

3.3 Immediately following Completion:

3.3.1 the initial authorised share capital of the Company shall be an unlimited number of no par value Shares and the initial issued share capital of the Company shall be 10 Shares divided into 2 A Shares, 8 B Shares; and

3.3.2 the Shares will be held by the Shareholders as follows:

Name	Number and Designation of Shares
Goodman	2 A Shares
RTPUK	8 B Shares

4. DIRECTORS AND MANAGEMENT

4.1 Appointment of Directors

4.1.1 Subject to clause 4.2, the Board shall have responsibility for the supervision and management of the Company and its Business save in respect of the Reserved Matters, which require unanimous approval from the Shareholders as set out in clause 5.

4.1.2 Goodman shall be entitled to appoint up to two Directors and RTPUK shall be entitled to appoint up to three Directors but each shall be obliged to appoint at least one Director.

4.1.3 Any Directors appointed by Goodman shall be designated as A Directors and any Directors appointed by RTPUK shall be designated as B Directors.

4.1.4 At the date of this agreement the Directors shall be as follows:

A Directors:	Stephen Young and Zena Yates.
B Directors:	Chuck Hessel, Colin Borman and Peter Machon.

4.1.5 A Shareholder may remove a Director appointed by it and appoint a new Director in his place by notice in writing to the Company and the other Shareholder; provided that:

(a) a Shareholder proposing to appoint or remove a Director shall consult with the other Shareholder (if it is reasonably practicable to do so) before giving such notice; and

(b) nothing in this clause 4.1 shall prevent the appointment or removal of a Director notwithstanding that such appointment or removal has not been agreed by the other Shareholder.

4.1.6 At all times at least one Director appointed by Goodman and two Directors appointed by RTPUK must be resident in Jersey. Each Shareholder undertakes that it will not appoint any Director or remove or procure the removal of any Director where to do so would result in less than one Director appointed by Goodman and two Directors appointed by RTPUK being resident in Jersey.

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4.1.7 The position of Chairman shall be held for alternate periods of 6 months (or such other period as the Shareholders shall agree) by an A Director or by a B Director resident in Jersey. The Chairman shall not have a casting vote. The first Chairman shall be appointed by the A Directors. If the Chairman is unable to attend any meeting of the Board, the Shareholder who appointed him shall be entitled to appoint another of its Directors to act as Chairman at the meeting.

4.1.8 Whenever a Shareholder ceases, for whatever reason, to be a Shareholder, that Shareholder shall procure that the Director(s) appointed by it will resign immediately from the Board without payment of compensation for loss of office or otherwise.

4.1.9 Any Shareholder removing a Director shall be responsible for and agrees with the other Shareholder to indemnify the other Shareholder and the Company against all losses, liabilities and costs which the other Shareholder and/or the Company may incur arising out of, or in connection with, any claim by such Director for wrongful or unfair dismissal or redundancy or other compensation arising out of such Director’s removal from or loss of office.

4.1.10 Each Shareholder shall procure that no Director appointed by it (nor any alternate Director appointed by such Director) shall bind or purport to bind the Company or authorise it to do or omit to do anything in its own corporate capacity other than in accordance with this agreement and the Articles.

4.2 Quorum

4.2.1 Save as set out in this agreement, no business shall be transacted at any meeting of the Board or Shareholders unless a quorum is present in accordance with the Articles or this agreement, as applicable, namely:

(a) at Board meetings, one A Director and two B Directors; and

(b) at general meetings and adjournments of any general meeting, both Shareholders present in person or by corporate representative,

provided that:

(c) if a majority of the Directors present at the meeting are not in Jersey; or

(d) if any Director is participating from the United Kingdom,

then the Directors present, irrespective of their number, shall not constitute a quorum and the Directors may not act.

4.2.2 If a quorum of Directors or Shareholders (as the case may be) is not present at all times during a meeting of the Board or the Shareholders, as applicable, such meeting shall be adjourned and reconvened at such time and place in Jersey as determined by the Directors or Shareholder representatives present (as the case may be) (provided that notice of the time, date and place of the reconvened meeting is given to each person entitled to attend the meeting not less than 48 hours before the meeting).

4.2.3 Each of the Shareholders shall take reasonable steps available to them to ensure that any meeting of the Board and every general meeting of the Company has the necessary quorum throughout.

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4.3 Voting – Board meetings

4.3.1 Save as set out in this agreement, the A Directors shall collectively have one vote and the B Directors shall collectively have one vote and no matter shall be given effect to unless the A Directors present have exercised their collective vote in favour of the matter in question and the B Directors present have exercised their collective vote in favour of the matter in question.

4.3.2 Where the A Directors disagree as to which way to exercise their collective vote the A Directors shall be deemed to have exercised their collective vote against the proposed resolution.

4.3.3 Where the B Directors disagree as to which way to exercise their collective vote the B Directors shall be deemed to have exercised their collective vote against the proposed resolution.

4.4 Related Party Contracts

4.4.1 Subject to applicable law, an Interested Party may enter into, vary or terminate (in each case, insofar as it has the right to do so thereunder and in accordance with the terms thereof) a Related Party Contract and retain any benefits under a Related Party Contract provided that the entry into or variation of the Related Party Contract is on an arm’s length basis and either (a) the Related Party Contract is a Joint Venture Document or (b) the Board has passed a resolution approving the participation by the Interested Party in the Related Party Contract.

4.4.2 Subject to applicable law and clauses 4.4.4 and 20.3, an Interested Party:

(a) shall disclose all conflicts of interest relevant to it of which it is aware and which is applicable to the matter to be discussed at a meeting of the Shareholders or Board;

(b) may be present while a Related Party Contract is considered at a meeting of the Shareholders or Board;

(c) may vote on a resolution of the Shareholders or Board in relation to the Related Party Contract or any matters concerning a Related Party Contract; and

(d) may be counted in any quorum for a meeting of the Shareholders or Board in relation to a Related Party Contract when such contract is discussed.

4.4.3 Each of the Shareholders undertakes with the other of them that (unless otherwise agreed in writing by the other of them) it will join with the other of them in procuring that the Company and any Indirect Investment Vehicle:

(a) observes and performs in all respects the provisions of any contract, agreement or arrangement which the Company or any Indirect Investment Vehicle is a party; and

(b) enforces the observance and performance in all respects by the other party or parties thereto of the provisions of any contract, agreement or arrangement which the Company or any Indirect Investment Vehicle is a party.

4.4.4 The Shareholders agree to procure that in respect of any contract, agreement or arrangement between the Company or any Indirect Investment Vehicle on the one hand and any of the Shareholders or any of their respective Associates on the other hand all decisions relating to:

(a) the assertion, enforcement or defence of any claim relating to any such contract, agreement or arrangement (including the commencement, conduct, settlement or abandonment of proceedings in connection with the claim or the assertion of material breach under the contract, agreement or arrangement);

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(b) the exercise of any rights of termination under such contract, agreement or arrangement other than the exercise of any rights under clause 9.2.2 of the Investment Advisory Agreement, clause 9.2.2 of the Property Services Agreement or clause 12.2.3 of the Development Management Agreement; or

(c) the acquisition by the Group of a Qualifying Asset owned by a Shareholder or its Associates,

shall be undertaken on behalf of the Company, or by the relevant Indirect Investment Vehicle, by a committee of the Board or by a committee of the board of directors of the relevant Indirect Investment Vehicle (as the case may be) comprising entirely of Directors appointed by the other Shareholder.

4.5 Timing and location of Board meetings

4.5.1 Meetings of the Board shall take place at the offices of the Company in Jersey, at such time or times as the Board may agree, but in any event not less frequently than two calendar months after each Quarter End by not less than 72 hours notice (or such other period of notice as the Board may agree from time to time) specifying the date, time and place of the meeting and the business to be transacted at that meeting, provided that all the Directors may, by notice in writing to the Company, waive such notice in respect of any particular meeting of the Board.

4.5.2 Any Director may participate in a Board meeting by means of a conference telephone or similar communicating equipment whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting provided that at least one Board meeting in a twelve month period should be held in person and provided always that no Director participating in the meeting by telephone shall be present in the United Kingdom at the time of the meeting.

4.6 Resolutions in writing

4.6.1 A resolution in writing of the Board signed, or approved in writing, by such of the Directors as are entitled pursuant to clause 4.3 to approve the resolution in question shall be as valid and effective as if it had been passed at a Board meeting duly convened and held and may consist of several documents in the like form each signed, or containing such approval, by one or more of the Directors. A resolution signed by an alternate Director need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity.

4.6.2 In order for a resolution in writing of the Board to be effective the majority of the Directors signing the resolution must have signed it in Jersey and no director shall have signed it in the United Kingdom.

4.7 Board papers

All papers for meetings of the Board shall be sent to all Directors as early as reasonably practicable prior to the relevant meeting and the chairman of such meeting shall procure that draft minutes of the Board meetings shall be sent to all Directors entitled to receive the same as soon as practicable after the holding of the relevant meeting.

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4.8 Remuneration

The Directors shall not be entitled to any remuneration, fees or benefits but the Company will, on such terms as the Board may from time to time resolve, reimburse the Directors for all reasonable travelling and other expenses properly incurred in attending Board meetings, in connection with the Business of the Company and in the performance of their duties as Directors.

4.9 Indirect Investment Vehicles

4.9.1 Goodman shall be entitled to appoint up to two directors and RTPUK shall be entitled to appoint up to three directors to each Indirect Investment Vehicle but RTPUK shall not be obliged to appoint any directors.

4.9.2 No other persons shall be appointed directors of any Indirect Investment Vehicle unless otherwise agreed in writing by the Shareholders.

4.9.3 The provisions of this clause 4 relating to Directors and the Board shall apply mutatis mutandis in relation to each Indirect Investment Vehicle as they apply to the Company, so that for this purpose references to the “Board”, the “Articles” and the “Directors” shall be deemed to include references to the board (or equivalent body), the articles of association (or other constitutional documents) and the directors, operators, managers (or equivalent persons) of the Indirect Investment Vehicle and the Shareholders shall procure that the articles of association (or other constitutional documents) of each Indirect Investment Vehicle are adopted to give effect thereto, provided that if RTPUK elects not to appoint any directors to any Indirect Investment Vehicle such that Goodman has appointed the only directors then this will be reflected accordingly.

4.10 Executive Committee

4.10.1 Unless otherwise agreed by the Shareholders from time to time, the Shareholders shall establish an executive committee (the “Executive Committee”) that will make recommendations on Major Decisions to the Board.

4.10.2 The Executive Committee shall consist of one representative of the A Shareholder (the “Goodman Representative”) and two representatives of the B Shareholder (the “RTPUK Representatives”) (together the “Representatives”) and the first Representatives shall be:

Goodman:	Greg Goodman; and
RTPUK:	Phil Kianka and Chuck Hessel,

or, in the case of each Shareholder, such other Representative(s) as that Shareholder shall have nominated and notified to the other Shareholder.

4.10.3 The Representatives shall have the right to appoint an alternate to attend Executive Committee meetings (an “Alternate Representative”) by giving written notice to and consulting with the other Representatives, provided that this shall not prevent the appointment of an Alternate Representative by any Representative. The parties agree and acknowledge that with effect from the date of this agreement James Inwood and Jason Dalby shall be appointed by Greg Goodman as his Alternate Representatives.

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4.10.4 No Representative may be resident in the United Kingdom.

4.10.5 The quorum of Representatives required at an Executive Committee meeting before any business shall be transacted shall be one Goodman Representative and two RTPUK Representatives, provided that if any Representative is participating from the United Kingdom, then the Representatives present, irrespective of their number, shall not constitute a quorum and the Representatives may not act.

4.10.6 Voting – Executive Committee Meetings

(a) The Goodman Representative shall have one vote and the RTPUK Representatives shall collectively have one vote and no matter shall be given effect to unless the RTPUK Representatives present have exercised their collective vote in favour of the matter in question and the Goodman Representative has exercised his vote in favour of the matter in question.

(b) Where the RTPUK Representatives disagree as to which way to exercise their collective vote, then the RTPUK Representatives in question shall be deemed to have voted against the proposed resolution.

(c) All recommendations of the Executive Committee shall be referred to the Board for approval, regardless of whether a recommendation is for or against a Major Decision.

(d) If the Executive Committee fails to reach a decision on a Major Decision, then the decision shall be referred to the Board.

4.10.7 The provisions of clauses 4.2.2, 4.2.3, 4.4 and 4.6 to 4.8 inclusive shall apply mutatis mutandis in relation to the Executive Committee, the Representatives and the Alternative Representatives as they apply to the Board and the Directors, so that for this purpose references to the “Board” and the “Directors” shall be deemed to be references to the Executive Committee and the Representatives (or Alternative Representatives) respectively, provided that in respect of clause 4.2.2 meetings of the Executive Committee are not required to happen in Jersey.

5. RESERVED MATTERS

Notwithstanding clause 4, each of the Shareholders undertakes to exercise all voting rights and powers of control available to it in relation to the Company and each Indirect Investment Vehicle to procure that, save with the prior written consent of all the Shareholders, neither the Company nor any Indirect Investment Vehicle shall effect any of the Reserved Matters.

6. DEADLOCK

6.1 Subject to clauses 6.2 to 6.6, failure of the Board or the Shareholders to reach a decision in accordance with clauses 4 and 5 shall mean that the Company shall not have resolved to proceed with the act to which such decision relates.

6.2 In the case where the Board or the Shareholders or the board (or equivalent body) of any Indirect Investment Vehicle fail to reach a unanimous decision of the Directors or the

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Shareholders (or board (or equivalent body) of any Indirect Investment Vehicle) present and entitled to vote in relation to a Major Decision or a Reserved Matter or the Directors representing a Shareholder (or equivalent in relation to an Indirect Investment Vehicle) or a Shareholder wilfully absents itself from any meeting such that there is not a quorum at any meeting to discuss the same Major Decision or Reserved Matter on three consecutive occasions, then a deadlock shall be deemed to have arisen (a “Deadlock”) and any Shareholder shall be entitled, at its discretion, to exercise the rights conferred by this clause 6 in the manner, on the terms and subject to the conditions set out in this clause 6.

6.3 Within five (5) Business Days of the Deadlock arising, either Shareholder may give notice in writing (“Deadlock Notice”) to the other Shareholder that in its opinion there is a Deadlock and identifying the matter over which the Shareholders are deadlocked.

6.4 Following service of a Deadlock Notice each Shareholder shall use reasonable endeavours in good faith to resolve the Deadlock in the best interests of the Company and each Shareholder agrees that it shall not (and shall procure that any Director appointed by it shall not) invoke the provisions of this clause 6 otherwise than on the occurrence of a bona fide Deadlock (being a Deadlock which has not been artificially created or manufactured by such Shareholder or Director with a view to allowing it to instigate the procedures set out in this clause 6).

6.5 If the Shareholders are unable to resolve a Deadlock within twenty (20) Business Days of the service of the Deadlock Notice, then either Shareholder may refer the deadlocked matter to:

6.5.1 in the case of Goodman, Greg Goodman or such other person occupying the position of Chief Executive Officer of Goodman Limited (the “Goodman Senior Officer”); and

6.5.2 in the case of RTPUK, Jack A. Cuneo or such other person occupying the position of President of RTPUK (the “RTPUK Senior Officer”),

or if there ceases to be a Chief Executive Officer of Goodman or a President of RTPUK, the most senior officer of each such organisation, in each case with a view to such persons resolving the Deadlock as soon as possible in the best interests of the Company and each Shareholder shall use its reasonable endeavours to procure that such Deadlock is so resolved. If such persons agree upon a resolution of the matter, they shall execute a statement setting out the agreed terms. The Shareholders shall exercise their voting rights and other powers available to them in relation to the Company to procure that the agreed terms are fully and promptly put into effect.

6.6 If the persons referred to in clause 6.5 cannot resolve a Deadlock within twenty (20) Business Days of the Deadlock being referred to them (the “Deadlock Date”) and the Deadlock has arisen as a result of a Major Decision related to a specific Property, (the “Relevant Property”) then either Shareholder shall be entitled to serve a Property Buy-Sell Notice on the other Shareholder in relation to the Relevant Property in accordance with clause 7.2.

6.7 The Shareholders shall procure that in the event of a Deadlock each of them and their Directors and Representatives, directors (or equivalent) of any Indirect Investment Vehicle and each of their Associates shall continue to perform their respective obligations in relation to this agreement, the Articles and any other agreement (including the Joint Venture Documents) entered into for and on behalf of the Company or any Indirect Investment Vehicle, or for the purposes of the Business.

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6.8 Each party shall bear its own costs incurred in respect of a Deadlock and the resolution procedures contained in this clause 6 unless otherwise agreed.

7. BUY SELL OPTION

7.1 Company Buy-Sell Option

7.1.1 Subject to clause 20.2.2, at any time after the Initial Investment Term, any Shareholder wishing to exit the joint venture established by this agreement (the “Company Offeror”) may serve notice (the “Company Buy-Sell Notice”) on the Company and the other Shareholder (the “Company Offeree”) stating that the Company Offeror is exercising its rights pursuant to this clause 7.1 and specifying the Company Offeror’s estimate of the gross asset value of the Company (the “Estimated Gross Asset Value”) from which the corresponding price per A Share or B Share (as appropriate) shall be calculated in accordance with the proviso to this clause 7.1.1 and at which the Company Offeree may elect either:

(a) to buy the Company Offeror’s interest in the Company (the “Company Buy Offer”); or

(b) to sell the Company Offeree’s interest in the Company to the Company Offeror (the “Company Sell Offer”),

provided that, the price per A Share or B Share (as appropriate) offered by the Company Offeror shall be determined by reference to the value of the relevant Shares taking into account the amount that would be distributed to the relevant Shareholder if the Company’s assets were sold at the date of the Company Buy-Sell Notice for the Estimated Gross Asset Value and the Company and its subsidiaries were wound up and all debts and liabilities of the Group repaid or discharged and the proceeds following such winding up were distributed to the Shareholders pursuant to clause 11.1, provided further that the price per A Share or B Share (as appropriate) shall be such amount as agreed between the Company Offeree and the Company Offeror or, where such amount cannot be agreed, to be determined by the Auditors in accordance with the principles contained in this clause 7.1.1 (or if they shall fail, or decline, to do so) a firm of chartered accountants agreed upon by the Shareholders or in the event of failure to so agree nominated by the president (or the next most senior officer available) of the Institute of Chartered Accountants upon the application of either Shareholder. The Auditor (or chartered accountant) shall act as an expert (and not an arbitrator) and the determination of the Auditor (or chartered accountant) shall be final and binding on the parties except for manifest error which shall be corrected forthwith.

7.1.2 Upon service 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 by serving written notice on the Company and the other Shareholder within sixty (60) days after the date of service of the Company Buy-Sell Notice or if later when the price per A Share or B Share (as appropriate) is agreed or determined, failing which the Company Offeree shall be deemed to have accepted the Company Sell Offer.

7.1.3 Upon acceptance (or deemed acceptance) of the Company Buy Offer or the Company Sell Offer, as the case may be, the Shareholders shall complete the transfer of the relevant interest in the Company at the relevant price per Share in accordance with clause 22.

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7.1.4 If the Company Offeree accepts the Company Buy Offer but the Company Offeree fails to pay the relevant price per Share or complete the transfer of the Company Offeror’s interest in the Company within the prescribed time period specified in clause 22.1, other than due to the fault or delay of the Company Offeror, the Company Offeror may, within one hundred and eighty (180) days after the expiry of the relevant thirty (30) day period referred to in clause 22.1, sell its interest in the Company to a third party, provided that the purchase price of such interest is not less than eighty five per cent (85%) of the price per Share of the Company Offeror’s Shares agreed or determined in accordance with clause 7.1.1.

7.1.5 The Shareholder acquiring the other Shareholder’s interest in the Company pursuant to this clause 7.1 may nominate another person (including a third party) to purchase the other Shareholder’s interest in the Company, provided that the selling Shareholder receives the price per Share pursuant to the relevant Company Buy Offer or Company Sell Offer.

7.2 Property Buy-Sell Option

7.2.1 If clause 6.6 applies, then either Shareholder (the “Property Offeror”) may serve notice (the “Property Buy-Sell Notice”) on the Company and the other Shareholder (the “Property Offeree”) within twenty (20) days of the Deadlock Date stating that the Property Offeror is exercising its rights pursuant to this clause 7.2 and specifying the price (which shall be the same) at which the Property Offeree may elect either:

(a) to buy the Relevant Property from the Company (or the Indirect Investment Vehicle holding the Relevant Property) (the “Property Buy Offer”); or

(b) to require the Company (or such relevant Indirect Investment Vehicle) to sell the Relevant Property to the Property Offeror (the “Property Sell Offer”).

7.2.2 Upon service 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 by serving written notice on the Company and the other Shareholder within sixty (60) days after the date of service of the Property Buy-Sell Notice, failing which the Property Offeree shall be deemed to have accepted the Property Sell Offer.

7.2.3 Upon acceptance (or deemed acceptance) of the Property Buy Offer or the Property Sell Offer, as the case may be, the purchasing Shareholder shall, and each of the Shareholders shall procure that the Company or the relevant Indirect Investment Vehicle shall, complete the transfer of the Relevant Property as appropriate at the price specified in the Property Buy-Sell Notice and upon substantially the same terms and conditions on which the Relevant Property was originally acquired by the Company (or the relevant Indirect Investment Vehicle), or, where such acquisition was a share acquisition then the Relevant Property shall be acquired upon the Standard Commercial Property Conditions (Second Edition or the edition current at the relevant time) and upon such other terms to be agreed between them (acting reasonably) within thirty (30) days of service of the notice of acceptance or within thirty (30) days of the Property Offeree having been deemed to accept the Property Sell Offer.

7.2.4 If the Property Offeree accepts the Property Buy Offer but fails to pay the relevant price or complete the transfer of the Relevant Property within the thirty (30) day period specified in clause 7.2.3 other than due to any fault or delay on the part of the Property Offeror, the Property Offeror may within one hundred and eighty (180) days after the expiry of the relevant thirty (30) day period require the Company or the relevant Indirect Investment

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Vehicle to sell the Relevant Property to the Property Offeror or to a third party, provided that the purchase price of the Relevant Property is not less than eighty five per cent (85%) of the price specified in the Property Buy-Sell Notice.

7.2.5 If the Property Offeree accepts (or is deemed to have accepted) the Property Sell Offer but the Property Offeror fails to pay the relevant price or complete the transfer of the Property within the thirty (30) day period specified in clause 7.2.3 other than due to any fault or delay on the part of the Property Offeree, the Property Offeree may within one hundred and eighty (180) days after the expiry of the relevant thirty (30) day period require the Company or the relevant Indirect Investment Vehicle to sell the Relevant Property to the Property Offeree or to a third party, provided that the purchase price of the Relevant Property is not less than eighty five per cent (85%) of the price specified in the Property Buy-Sell Notice.

7.2.6 The Shareholder having the right to acquire a Relevant Property pursuant to this clause 7.2 may nominate another entity (including a third party) to purchase the Relevant Property on the terms set out in clause 7.2.3 provided that the selling Company (or the relevant Indirect Investment Vehicle) receives the price specified in the Property Buy-Sell Notice.

7.2.7 If the Property Offeree elects (or is deemed to elect) to accept either the Property Buy Offer or the Property Sell Offer, the Shareholder (or any third party) purchasing the Relevant Property may elect to acquire the shares in any Indirect Investment Vehicle that owns the Relevant Property (provided that the Indirect Investment Vehicle owns no other Property) and the provisions of this clause 7.2 will apply mutatis mutandis provided that the price for each such share shall be equal to the net asset value for such Indirect Investment Vehicle (and such net asset value shall be calculated in accordance with clause 21 with such changes as shall be necessary to the NAV and NAV per Share to reflect the fact that the shares being acquired are the shares in the Indirect Investment Vehicle owning the Relevant Property and not the Shares) divided by the total issued share capital of any such Indirect Investment Vehicle.

7.3 General

7.3.1 For the avoidance of doubt, if either Shareholder serves a Property Buy-Sell Notice pursuant to clause 7.2.1 then the other Shareholder shall not be entitled to do so in respect of the same Deadlock matter giving rise thereto or in relation to a new Deadlock matter affecting the same Property until such time as the provisions of clause 7.2 have been exhausted in respect of the first Deadlock matter and if both Shareholders serve a Property Buy-Sell Notice on the same day, the first in time to be served shall prevail.

7.3.2 For the avoidance of doubt, if either Shareholder serves a Company Buy-Sell Notice pursuant to clause 7.1.1 then the other Shareholder shall not be entitled to do so until such time as the provisions of clause 7.1 have been exhausted in respect of the first Company Buy-Sell Notice and if both Shareholders serve a Company Buy-Sell Notice on the same day, the first in time to be served shall prevail provided that the Company Offeror shall be entitled to serve a further Company Buy-Sell Notice pursuant to clause 7.1.1 if clause 7.1.4 is applicable and the Company Offeree fails to buy the Company Offeror’s Shares pursuant thereto.

7.3.3 For the avoidance of doubt, if either Shareholder has served a Property Buy-Sell Notice, then either Shareholder may subsequently serve a Company Buy-Sell Notice, provided that:

(a) if the Property Buy-Sell Notice has not been accepted (or deemed accepted) by the Property Offeree prior to the date of service of the Company Buy-Sell Notice, then the Property Buy-Sell Notice shall lapse; or

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(b) if the Property Buy-Sell Notice has been accepted (or deemed accepted) by the Property Offeree prior to the date of service of the Company Buy-Sell Notice then both the Property Buy-Sell Notice and the Company Buy-Sell Notice shall be given full effect to.

7.3.4 Where:

(a) either Shareholder has served a Company Buy-Sell Notice or a Property Buy-Sell Notice which has been accepted or deemed to be by the other Shareholder; and

(b) the relevant Company Buy Offer, Company Sell Offer, Property Buy Offer or Property Sell Offer cannot be completed in accordance with the terms of this agreement as a consequence of the default of a Shareholder (the “Defaulting Buy Sell Shareholder”) either in favour of the other Shareholder or in favour of any third party pursuant to the terms of this Agreement,

then the Defaulting Buy Sell Shareholder shall be required to pay compensation to the other Shareholder within ten (10) Business Days of service of a notice following such failure to complete in an amount equal to ten per cent (10%) of the Market Value of any Property subject to a Property Buy-Sell Notice or 10% of the aggregate price per Share (as specified in the relevant Company Buy-Sell Notice) for all Shares subject to the relevant Company Buy-Sell Notice.

8. BANKING ARRANGEMENTS

8.1 The bankers to the Company shall be HSBC or such other bankers as the Company may from time to time determine or as any Finance Agreement may require. The Company shall provide to a Shareholder on request such information as it may require in relation to the Bank Accounts.

8.2 All cheques, bills of exchange, promissory notes and other monies drawn on the Bank Accounts shall be drawn in the name of the Company (or an Indirect Investment Vehicle) and shall be drawn in such manner as shall be determined from time to time by the Board.

8.3 Subject to any Finance Agreement, no payments shall be made or money withdrawn from any of the Bank Accounts except by the Company (or an Indirect Investment Vehicle) for the purpose of the Business or for the purpose of making payments to the Shareholders in accordance with the terms of this agreement.

8.4 Subject to any Finance Agreement, all money received by the Company (or an Indirect Investment Vehicle) in respect of any Property or Indirect Investment Vehicle (including rents and sale proceeds) shall as soon as practicable following receipt be paid into one of the Bank Accounts.

8.5 The parties agree that, subject to the terms of any Finance Agreement and unless otherwise determined by the Board, no single amount in excess of £20,000 shall be disbursed from any bank account of the Company or of any Indirect Investment Vehicle, unless first authorised by:

8.5.1 one A Director and one B Director in writing, regardless of whether this is reflected on the bank mandate in respect of such account; or

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8.5.2 the Business Plan or relevant Asset Plan.

8.6 The Shareholders agree that:

8.6.1 no Shareholder may grant any Encumbrance over its interest in the Company or in this Agreement;

8.6.2 neither the Company nor any Indirect Investment Vehicle shall enter into any Finance Agreement or otherwise permit the external gearing on a Property to exceed sixty five per cent (65%) of the Market Value of that Property, as valued at the completion of the acquisition of the Property by the Company or any Indirect Investment Vehicle;

8.6.3 neither the Company nor any Indirect Investment Vehicle shall grant any Encumbrance over any Property or over any other asset or interests of the Company or the relevant Indirect Investment Vehicle, unless otherwise first approved by the Board;

8.6.4 based on prevailing interest rates at the time of this agreement, the Shareholders intend to maintain an aggregate target gearing range (excluding intra-group debt) across the Group’s portfolio of Properties of forty per cent to fifty per cent (40%-50%) of the aggregate Market Value of all Properties, as valued at completion of the acquisition of each Property by the Company or any Indirect Investment Vehicle; and

8.6.5 any financing arrangements for each Property pursuant to a Finance Agreement will generally be non-recourse to the Company, the Indirect Investment Vehicles or the Shareholders and will otherwise be structured on market standard terms and at such pricing available from time to time as determined by the Board.

9. ACCOUNTING RECORDS, BUDGETS AND FINANCIAL INFORMATION

9.1 Reporting

9.1.1 The Shareholders shall procure that the Company and its subsidiaries shall at all times maintain accurate and complete accounting and other financial records in accordance with the requirements of all applicable laws and generally accepted accounting principles applicable in the United Kingdom.

9.1.2 Each Shareholder shall procure that, through the exercise of votes it directly or indirectly controls at meetings of the Board and general meetings of the Company and meetings of the board of each Indirect Investment Vehicle, the Company provides to them quarterly unaudited financial reports and annual audited financial reports.

9.2 Business Plan and Asset Plan

9.2.1 The Shareholders shall procure that not later than thirty (30) days before the beginning of each Financial Year (or such other time as the Shareholders may agree), the Board shall procure that the Investment Adviser prepares and delivers to the Board for its approval a proposed Business Plan in respect of the Group and an Asset Plan in respect of each Property which shall include an annual budget and cash flow forecast for the next Financial Year and such other information relating to the financial position and affairs of the Group and each Property as each Shareholder may from time to time reasonably require, provided that the Investment Adviser has been given reasonable notice of such

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requirement and provided further that to the extent that the Investment Adviser incurs materially increased expenditure in providing this additional information then such expenditure shall be reimbursed to the Company and/or the Investment Adviser by the Shareholder that requested such additional information.

9.2.2 Within the thirty (30) day period referred to in clause 9.2.1, the Board shall consider and, if it thinks fit, approve the relevant Business Plan and Asset Plan, subject to any amendments which it deems appropriate for the Financial Year.

9.2.3 Once any draft Business Plan or Asset Plan is in a form acceptable to, and approved by the Board, it shall become the Business Plan for the Group or (as appropriate) the Asset Plan in relation to the relevant Property for the year in question.

9.2.4 The Shareholders shall procure that the Board keeps the Business Plan and Asset Plans under review during the course of each Financial Year.

9.2.5 The business of the Group and each Property shall continue to be operated in accordance with each Business Plan or Asset Plan (as appropriate) for the prior year until the Board approves each new Business Plan or Asset Plan (as appropriate) save that adjustments shall be made thereto to reflect the deletions of non-recurring expense items and no capital expenditure shall be made until the approval of the new Business Plan or Asset Plan (as appropriate).

9.2.6 Each Shareholder undertakes to the other Shareholder that it shall, through the exercise of votes it directly or indirectly controls at meetings of the Executive Committee, Board and general meetings of the Company and meetings of the board of each Indirect Investment Vehicle ensure that the terms of the Business Plan and Asset Plans are complied with.

9.2.7 The Initial Plans shall be adopted by the parties at Completion.

9.3 US Filings

9.3.1 RTPUK shall be responsible at its sole cost, for dealing with any accounts, records, elections or other such documents which are required for United States federal, state or local tax purposes to be prepared, maintained or submitted by the Company, the Indirect Investment Vehicles or any other entity in which the Company holds a direct or indirect interest, and RTPUK shall indemnify and hold harmless Goodman, the Company, the Indirect Investment Vehicles, the Investment Adviser, the Property Manager and the Development Manager or any of their directors, officers and employees and any other entity in which the Company holds a direct or indirect interest from and against all costs, claims, liabilities, losses and damages suffered or incurred by any of Goodman, the Company, the Indirect Investment Vehicles, the Investment Adviser, the Property Manager and the Development Manager or any other entity in which the Company holds a direct or indirect interest, arising from RTPUK’s dealing with such accounts, records, elections or other such documents (including where the Company or any Indirect Investment Vehicle has an obligation under the Service Agreement to similarly indemnify the Investment Adviser, the Property Manager and the Development Manager) except where such costs, claims, liabilities, losses and damages have arisen as a result of information provided to RTPUK by any of the Investment Adviser, Property Manager or Development Manager which is incorrect in any material respect.

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9.3.2 Each of the parties acknowledges and agrees that (without prejudice to any other rights available to them):

(a) each of the Indirect Investment Vehicles, the Investment Adviser, the Property Manager and the Development Manager or any of their directors, officers and employees and any other entity in which the Company holds a direct or indirect interest (the “Indemnified Persons”) shall be entitled to enforce the rights reserved to them in clause 9.3.1 and that the provisions of clause 9.3.1 may not be amended without the consent in writing of any party to whom the benefit of clause 9.3.1 applies; and

(b) none of them shall raise as a defence to any claim by an Indemnified Person under the indemnity in clause 9.3.1, that such person is not entitled to rely on such indemnity by virtue of the fact that such person is not a party to this agreement.

10. FINANCING THE COMPANY

10.1 The Business and the business of each Indirect Investment Vehicle shall be financed initially by the proceeds of the Share subscriptions referred to in Schedule 3, together with funding provided pursuant to any Finance Agreements, provided that if the Company is required to make any additional payment under clause 3.3(a)(ii), 3.3(b)(ii), 3.6(a) or 3.6(c) or paragraph 7 of Schedule 6 of the Sale and Purchase Agreement, then the Shareholders shall fund such additional payment by way of a subscription for additional Shares in accordance with this clause 10.

10.2 Subject to clause 10.1, the Shareholders are not obliged to provide any further funding in addition to their Share subscriptions, but may do so if both Shareholders agree on a project by project basis. Any additional funding shall be provided by the Shareholders pro rata to their Shares unless the Shareholders otherwise agree and shall be subject to the terms of this agreement.

10.3 In the event that the Shareholders agree (or are required) to provide additional funding, the Shareholders shall each either execute and deliver to the Company a subscription for additional Shares for the agreed amount of the additional funding or execute and deliver to the Company loan agreements for the amount of any loans to be made available by them to the Company. The Shareholders agree to make such amendments to this agreement as may be necessary to give effect to the fact that they have agreed to provide additional funding by way of loans.

10.4 All Shares to be issued pursuant to clauses 10.2 and 10.3 shall be a nominal amount of Shares in the agreed proportions (as set out in clause 10.2) issued at a premium and all Shares to be issued to Goodman shall be A Shares and all Shares to be issued to RTPUK shall be B Shares.

10.5 The Shareholders shall procure that upon receipt of the subscription for Shares and subscription proceeds (in cleared funds) pursuant to clause 10.2 to 10.4 inclusive that the Company issue such Shares in accordance with the terms of this agreement and the Articles.

10.6 Emergency Funding

10.6.1 If either Shareholder or the Property Manager gives notice to the Company that Emergency Funding is required for an amount of up to one million pounds (£1,000,000) for any one occurrence, the Company shall within one (1) Business Day of receipt of that notice serve a notice (a “Drawdown Notice”) on each of the Shareholders. The Drawdown Notice will specify the reason for the Emergency Funding and the amount

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required for the Emergency Funding (an “Emergency Shareholder Loan”) and the date by which the Emergency Shareholder Loan must be advanced to the Company, provided that not less than four (4) Business Days’ prior written notice requesting payment shall be given. The Shareholders shall advance an Emergency Shareholder Loan pro rata to their Shares.

10.6.2 If a Shareholder fails to advance its Emergency Shareholder Loan, the other Shareholder may fund the resulting shortfall of the Emergency Funding by way of a further Emergency Shareholder Loan and the entire amount of Emergency Shareholder Loans funded by such other Shareholder shall accrue interest at a rate of eighteen per cent (18%) per annum, provided that if a Shareholder gives notice to the Company and the other Shareholder no later than two (2) Business Days after the due date of its Emergency Shareholder Loan disputing the fact that its Emergency Shareholder Loan is required for the purposes of Emergency Funding then, subject to clause 10.6.3, the interest rate will be 5 (five%) per annum.

10.6.3 If a dispute notice is served pursuant to clause 10.6.2, any Shareholder may be entitled within ten (10) Business Days of service of the dispute notice to apply to the Valuers for a determination as to whether the Emergency Funding was bona fide. If the Valuers rule that the Emergency Funding was bona fide, then the Company shall be required to pay interest on any Emergency Shareholder Loans advanced pursuant to clause 10.6.2 at eighteen per cent (18%) per annum and the Shareholders shall procure that the Company pay any shortfall in interest to the Shareholder who funded the Emergency Funding.

10.6.4 Without prejudice to clause 10.6.6, as soon as practicable after the date the Company provides Emergency Funding to the Property Manager, the Executive Committee and the Board shall meet to agree the extent to which Emergency Shareholder Loans may be refinanced, repaid to the Shareholders or to take such other action as may be agreed by the Executive Committee and the Board.

10.6.5 All Emergency Shareholder Loans shall not be counted in relation to determining the First Preferred Return or the Second Preferred Return. A failure by a Shareholder to advance its Emergency Shareholder Loan shall not be a Default Event.

10.6.6 All distributions of available cash to the Shareholders pursuant to clause 11.1.1 or 11.1.2 shall be made in repayment of any outstanding Emergency Shareholder Loans (and all accrued but unpaid interest on them) in priority to any further distributions to the Shareholders.

11. DISTRIBUTIONS AND DIVIDENDS

11.1 Distributions

11.1.1 Subject to clause 10.6.6, any Finance Agreement and the requirements of the Companies Law, the Shareholders shall or shall procure that all distributions of available cash comprised of Net Operating Income shall be made to the Shareholders in accordance with the rights attaching to their Shares in the following order of priority:

(a) first, to the Shareholders (pro rata to their Shares) until they have received back an amount equal to their accrued but unpaid First Preferred Return;

(b) second, to RTPUK (as the B Shareholder) until RTPUK has received back an amount equal to the Second Preferred Return;

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(c) third, to Goodman (as the A Shareholder), until Goodman has received back an amount equal to the Second Preferred Return; and

(d) thereafter, to the Shareholders (pro rata to their Shares),

provided always that each of the above sub-clauses shall be reapplied in respect of each new such distribution and in respect of each new Financial Year, in all cases after payment of or making appropriate provision or reserve (if any) for amounts determined by the Board in respect of fees, costs, expenses, liabilities and debt service (including under the Service Agreements and in each case whether actual, anticipated or contingent) and working capital requirements in each case of the Company or any Indirect Investment Vehicle.

11.1.2 Subject to clause 10.6.6, any Finance Agreement and the requirements of the Companies Law, the Shareholders shall or shall procure that all distributions of available cash comprised of Capital Proceeds shall be made to the Shareholders in accordance with the rights attaching to their Shares in the following order of priority:

(a) first, to the Shareholders (pro rata to their Shares), in reduction of their Unreturned Capital;

(b) second, to the Shareholders (pro rata to their Shares) until they have received back an amount equal to their accrued but unpaid First Preferred Return to the extent not already paid under clause 11.1.1(a) and/or this clause 11.1.2(b);

(c) third, to RTPUK (as the B Shareholder) until RTPUK has received back an amount equal to their accrued but unpaid Second Preferred Return to the extent not already paid under clause 11.1.1 (b) and/or this clause 11.1.2(c);

(d) fourth, to Goodman (as the A Shareholder), until Goodman has received back an amount equal to their accrued but unpaid Second Preferred Return to the extent not already paid under clause 11.1.1(c) and/or this clause 11.1.2(d); and

(e) thereafter, to the Shareholders (pro rata to their Shares),

provided always that each of the above sub-clauses shall be reapplied in respect of each new such distribution and in respect of each new Financial Year, in all cases after payment of or making appropriate provision or reserve (if any) for amounts determined by the Board in respect of fees, costs, expenses and liabilities (including under the Service Agreements and in each case whether actual, anticipated or contingent) and working capital requirements in each case of the Company or any Indirect Investment Vehicle.

11.1.3 There is set out in Schedule 7 a worked example of this clause 11 and the promote payment under the Investment Advisory Agreement.

11.2 Distributions of income and capital and dividends

11.2.1 Subject to the requirements of the Companies Law, all Net Operating Income available for distribution will be distributed quarterly in accordance with clause 11.1.1 within 30 days after the Quarter End in respect of the immediately preceding Quarter, provided that the Company may make such distributions at more frequent intervals.

11.2.2 In addition, the Board may make distributions of Capital Proceeds in accordance with clause 11.1.2 and the requirements of the Companies Law at such time as the Board shall determine as long as the Board is of the view that there is cash available for distribution.

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11.2.3 Subject to the requirements of the Companies Law, each Shareholder shall procure that the amount of the Company’s cash available for distribution shall be distributed by the Company to the Shareholders pursuant to clause 11.1.1 and this clause 11.1.2 by way of cash dividends.

11.2.4 Subject to any Finance Agreement and the requirements of the Companies Law, the Shareholders shall procure, through the exercise of all voting rights and powers of control available to them in relation to the Company and each Indirect Investment Vehicle, that all the reserves of each Indirect Investment Vehicle comprising Net Operating Income that are available for distribution from time to time shall be distributed to the Company after payment of or making appropriate provision or reserve (if any) for amounts determined by the board (or its equivalent) of any Indirect Investment Vehicle in respect of fees, costs, expenses and liabilities (including under the Service Agreements and in each case whether actual, anticipated or contingent) and working capital requirements in each case of the relevant Indirect Investment Vehicle.

12. SECRETARIAL AND ACCOUNTING FUNCTIONS

The Company shall appoint the Administrator pursuant to the Administration and Secretarial Agreement to carry out the services referred to therein.

13. INTELLECTUAL PROPERTY RIGHTS

Any Intellectual Property Rights which arise in the course of the Group’s activities shall belong to the Company, provided that this agreement shall not operate to transfer any Intellectual Property Rights of Goodman Limited (or any of its Associates) to the Company (including, for the avoidance of doubt, any Intellectual Property Rights owned by Goodman Limited (or any of its Associates) in its computer systems used in the delivery of its management services) other than as expressly provided in this agreement. However the Shareholders acknowledge 1) that all Intellectual Property Rights in the data output provided by Goodman Limited (or any of its Associates) to the Group (but no rights in the software system which provides such data output) shall vest in and be owned by the Company, and 2) Goodman Limited’s rights granted in the Trade Mark Licence Agreement.

14. CONFIDENTIALITY

14.1 During the term of this agreement and for a period of one year after its termination or expiration for any reason each Shareholder undertakes to the other Shareholder (other than in respect of the Confidential Information relating to itself or its Associates):

14.1.1 to keep the Confidential Information confidential;

14.1.2 not to disclose the Confidential Information to any other person other than with the prior written consent of the other Shareholder or in accordance with clauses 14.2, 14.3 and 14.4; and

14.1.3 not to use the Confidential Information for any purpose other than for the performance of its obligations under this agreement.

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14.2 During the term of this agreement a Shareholder may disclose the Confidential Information to an Associate or to its employees to the extent reasonably necessary for the purposes of this agreement and then on terms under which the relevant Associate or employee is made aware that the Confidential Information should be treated in confidence as if that Associate or employee were himself a party to this agreement. The parties acknowledge that RTPUK does not itself have employees but is the beneficiary of services provided to it by employees of the CBRE Investors group of companies. It is therefore agreed that for the purpose of this clause 14.2 RTPUK may disclose the Confidential Information to employees of the CBRE Investors group of companies strictly for the purpose of delivering services to RTPUK and in doing so, RTPUK shall procure that any such recipient is aware of the terms of this confidentiality undertaking and maintains all such information in confidence as if that recipient were himself a party to this agreement.

14.3 If and to the extent that a Shareholder discloses any Confidential Information to any other person in accordance with clause 14.2 it shall procure that each recipient of Confidential Information is made aware of and complies with the obligations of confidentiality set out in this clause 14 as if such recipient was a party to this agreement.

14.4 Each Shareholder may disclose Confidential Information if and to the extent:

14.4.1 required by law;

14.4.2 required pursuant to a request or order by a court of competent jurisdiction;

14.4.3 required by any securities exchange or regulatory or governmental body or authority to which any Shareholder or its Associates is subject or submits, wherever situated, including (without limitation) the Jersey Financial Services Commission, the UKLA, London Stock Exchange plc, the Panel on Takeovers and Mergers, the Australian Securities Exchange and the United States Securities and Exchange Commission, the United States Financial Industry Regulatory Authority and the various securities regulatory authorities of the states and federal districts of the United States;

14.4.4 required to vest the full benefit of this agreement in that Shareholder or expressly contemplated by this agreement;

14.4.5 required by any tax authority for the purposes of the tax affairs of the Shareholder or Associate concerned;

14.4.6 required by its professional advisers, auditors, bankers, underwriters or dealers of securities in the ultimate parents of the Shareholders (and their representative);

14.4.7 in the case of RTPUK, the information generally conforms with such information as CB Richard Ellis Realty Trust historically discloses in its filings with the United States Securities and Exchange Commission; or

14.4.8 in the case of Goodman, the information generally conforms with such information as Goodman Limited or Goodman Industrial Trust historically disclose in their filings with the Australian Securities Exchange,

provided that prior to disclosing any Confidential Information pursuant to clauses 14.4.1, 14.4.2, 14.4.3 or 14.4.5, where possible under applicable law or regulation, the party who is to disclose such information shall first notify the other Shareholder in writing of such disclosure and where reasonably required by the other Shareholder shall act reasonably in co-operating with the other Shareholder in an attempt to prevent such disclosure in whole or

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in part in relation to any Confidential Information which is confidential to the other Shareholder including by participation in any submissions to the relevant body or regulatory or other authority.

14.5 For the purposes of this clause 14, information is not Confidential Information if:

14.5.1 it is or becomes public knowledge other than as a direct or indirect result of the information being disclosed in breach of this agreement;

14.5.2 either Shareholder can establish to the reasonable satisfaction of the other Shareholder that it found out the information from a source not connected with the other Shareholder or any of its Associates and that the source is not under any obligation of confidence in respect of the information;

14.5.3 either Shareholder can establish to the reasonable satisfaction of the other Shareholder that the information was known to the first Shareholder before the date of this agreement and that it was not under any obligation of confidence in respect of the information; or

14.5.4 the Shareholders agree in writing that it is not confidential.

14.6 Notwithstanding any term or condition of this agreement to the contrary, the foregoing confidentiality obligations shall not extend to the tax structure or tax treatment of the Company, the Indirect Investment Vehicles and its or their investments, any transactions undertaken by the Company or the Indirect Investment Vehicles or to materials of any kind (including any opinions or other analysis) relating to such tax structure or tax treatment; provided, however, that such exception shall not include (1) the name (or other identifying information not relevant to such tax structure or tax treatment) of any person; (2) any performance information relating to the Company, the Indirect Investment Vehicles or its or their investments; or (3) any information for which nondisclosure is reasonably required to comply with applicable securities laws.

15. ANNOUNCEMENTS

15.1 Subject to clause 15.2, no announcement concerning the Company, the Business, any Indirect Investment Vehicle, any Property or the existence or subject matter of this agreement or any of the Joint Venture Documents shall be made by any Shareholder without it being approved in writing by the other Shareholder as to its content, form and manner of publication (such approval not to be unreasonably withheld or delayed).

15.2 Any announcement or circular to be made or issued by either Shareholder (as required by law or by the UKLA and/or the London Stock Exchange plc and/or the Australian Stock Exchange or by any other regulatory body in relation to the trading of the securities of that party or by the Panel on Takeovers and Mergers or by any other regulatory body including the United States Securities and Exchange Commission) may be made or issued by such Shareholder without the prior approval of the other Shareholder.

15.3 Subject to clause 15.2 and save as may otherwise be provided by law, the Shareholders shall consult together upon the form of any such announcement or circular in relation to the subject matter of this agreement and the other Shareholder shall promptly provide such information and comment as the Shareholder making the announcement or sending out the circular may from time to time reasonably request.

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16. FIRST RIGHT OF OFFER ON QUALIFYING ASSETS

16.1 Right of Offer

16.1.1 Subject to clauses 16.1.2 and 16.1.3, Goodman shall procure that the Investment Adviser offers to the Company in priority to any other person the right to acquire any Qualifying Asset that has come to the attention of the Investment Adviser, Goodman or any of their Associates and that is:

(a) owned by the Investment Adviser, Goodman or any of their Associates which the Investment Adviser, Goodman or any of their Associates has decided to sell or that is otherwise being pursued by or offered to the Investment Adviser, Goodman or any of their Associates; and

(b) not precluded by the vendor of the Qualifying Asset (not being the Investment Adviser. Goodman or any of their Associates but including any of their joint venture partners) from being offered to or acquired by the Company (or any Indirect Investment Vehicle),

(the “Right of Offer”).

16.1.2 The Right of Offer shall commence on the date of this agreement and shall terminate on the earlier of:

(a) the expiration of the Initial Investment Term;

(b) (for the purposes of clauses 16.1 to 16.4) the date that the Board has rejected any three (3) Qualifying Assets offered by Goodman pursuant to clause 16.1.1 and (for the purposes of clauses 16.5 and 16.6) the date that the Board has rejected any three (3) Qualifying Assets offered by RTPUK pursuant to clause 16.5.1;

(c) the date on which the aggregate value of Share subscriptions made by the Shareholders exceeds £400 million;

(d) the termination of any of the Service Agreements in accordance with its terms;

(e) the date that a Shareholder transfers its entire interest in the Company to the other Shareholder pursuant to clauses 7.1 or 20; and

(f) the date that Goodman or RTPUK or any of their respective Associates are no longer a Shareholder,

(the “Offer Period”).

16.1.3 Notwithstanding anything to the contrary:

(a) the Investment Adviser shall be entitled to exclude up to three (3) Qualifying Assets from the Right of Offer during the term of this agreement for any reason;

(b) the Investment Adviser shall be entitled to offer any Qualifying Asset to an Excluded Entity in existence as at the date of this agreement where the Investment Adviser or its Associates are subject to an obligation existing at the date of this agreement to offer assets similar to Qualifying Assets to an Excluded Entity; and

(c) the Investment Adviser may, but is not obliged to, offer to the Company any asset that is not a Qualifying Asset and in such case clauses 16.3 and 16.4 shall apply to that asset as if it was a Qualifying Asset.

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16.2 Qualifying Asset

16.2.1 For the purposes of this clause 16, a “Qualifying Asset” is any real property that is a logistics development or logistics investment asset that:

(a) has a target yield (calculated as Net Operating Income divided by Market Value) of greater than seven per cent (7%), unless otherwise agreed by the Board;

(b) has a Market Value of greater than £10,000,000;

(c) has a target IRR of greater than eight per cent (8%);

(d) has in place leases or agreements for lease over the whole or substantially the whole of the lettable area of the asset for a term (or terms) (without including renewal terms) of greater than five (5) years and constitutes a stabilised asset;

(e) would generally be acceptable to an institutional investor seeking a logistics property with a size greater than ten thousand square metres (10,000 m ²); and

(f) is located in a major industrial property location in the Target Region.

16.2.2 The Shareholders acknowledge that whilst it will not preclude any asset from being a Qualifying Asset it will be preferable for a Qualifying Asset to be subject to leases or agreements for lease where the rental income is subject to regular increases.

16.3 First Notice of Qualifying Asset

16.3.1 Where a Qualifying Asset is subject to the Right of Offer, Goodman shall procure that the Investment Adviser provides written notice (the “First Notice”) to the Company of any potential Qualifying Asset together with such information as the Investment Adviser considers is reasonably necessary for the Company to make an evaluation of the Qualifying Asset which may include:

(a) an estimate of the Market Value of the Qualifying Asset prepared by the Investment Adviser (including upon completion of any development where the asset is a development asset);

(b) an estimate of the net operating income for the applicable Qualifying Asset for the first full year of the term of a lease to a tenant of the Qualifying Asset in which the tenant is required to pay full rent;

(c) a capitalisation rate for such Qualifying Asset based on the estimated Market Value and the net operating income;

(d) an investment proposal or development proposal (as appropriate);

(e) in the case of a development logistics asset a site plan of the proposed improvements of the Qualifying Asset and a copy of the agreed heads of terms for a lease or agreement for lease; and

(f) such of the due diligence materials listed in Schedule 6 as the Investment Adviser determines are relevant and to the extent that such materials are in the Investment Adviser’s possession or control,

(the “Due Diligence Materials”).

16.3.2 The Company shall have until the date that is ten (10) Business Days after the receipt of all necessary Due Diligence Materials as reasonably determined by the Investment Adviser, to either accept or reject the Qualifying Asset subject to the First Notice by serving written notice on the Investment Adviser. If the Company rejects a Qualifying Asset or if the Company fails to serve on the Investment Adviser notice of acceptance

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within such ten (10) Business Day period, then the Company shall have waived its right to acquire that Qualifying Asset and the Investment Adviser or any of its Associates or any third party may acquire or sell the Qualifying Asset.

16.4 Completion of acquisition of Qualifying Asset

16.4.1 If the Company accepts a Qualifying Asset pursuant to clause 16.3.2, the Company shall negotiate in good faith with the seller of the asset to either:

(a) where the Qualifying Asset is an investment asset, complete the acquisition of the Qualifying Asset or any Indirect Investment Vehicle that owns the Qualifying Asset as soon as reasonably practicable; or

(b) where the Qualifying Asset is a development asset, enter into an agreement with the seller for the acquisition of the asset upon practical completion of the asset subject to, amongst others, acceptance of the premises by the tenant and commencement of the lease term,

provided that if a Qualifying Asset is to be acquired from Goodman or any of its Associates by way of an Indirect Investment Vehicle then the terms of any such acquisition shall be mutatis mutandis on substantially similar terms as the contract for the acquisition of the shares in the Brackmills SPV by the Company with such amendments as the Shareholders shall agree provided further that if the Company has not completed the acquisition or entered into an agreement with the relevant seller within one (1) month of the date of service of the notice of acceptance of the Qualifying Asset due to the fault or delay of RTPUK, then the Company shall be deemed to have rejected and waived its right to acquire the Qualifying Asset and the Investment Adviser or any of its Associates or any third party may acquire the Qualifying Asset.

16.4.2 Where the Company has entered into an agreement pursuant to clause 16.4.1(b), then Goodman shall procure that the Investment Adviser provides periodic updates, no less frequently than quarterly, relating to the construction, development and leasing aspects (as appropriate) of the Qualifying Asset, including any update to the Due Diligence Materials.

16.4.3 There shall be no requirement to complete the acquisition of any Qualifying Asset if the execution ready final lease or agreement for lease is materially different from the agreed heads of terms (as provided for in clause 16.3.1(e)), unless RTPUK and Goodman agree otherwise. Where any execution ready final lease or agreement for lease is materially different from the agreed heads of terms then upon presenting the Qualifying Asset to the Company it shall be deemed to be a new Qualifying Asset and the provisions of this clause 16 shall apply mutatis mutandis.

16.5 RTPUK Right of Offer

16.5.1 During the Offer Period, RTPUK (in each case, in so far as it is able) shall (and shall procure that any of its Associates shall) procure that any Qualifying Asset that is owned by a third party and is being pursued by RTPUK (or its Associates) is offered to the Company in priority to any other person where the Company is not precluded by the vendor of the Qualifying Asset (not being RTPUK or its Associates) from being offered to or acquired by the Company (or any Indirect Investment Vehicle) (the “RTPUK Offer”).

16.5.2 If a Qualifying Asset is subject to a RTPUK Offer, RTPUK shall provide written notice (the “RTPUK Notice”) to the Company of any potential Qualifying Asset together with such

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information as RTPUK considers is reasonably necessary for the Company to make an evaluation of the Qualifying Asset which may include the Due Diligence Materials to the extent that such materials are in RTPUK’s or its Associates’ possession or control.

16.5.3 The Company shall either accept or reject the Qualifying Asset the subject of the RTPUK Notice by indicating its acceptance or rejection on such notice and returning it to RTPUK within ten (10) Business Days after receipt of all necessary Due Diligence Materials as determined by the Investment Adviser. If the Company rejects such Qualifying Asset or if the Company fails to deliver notice of acceptance to RTPUK within such ten (10) Business Day period, then the Company shall have waived its right to acquire that Qualifying Asset and RTPUK or any of its Associates or any third party may acquire the Qualifying Asset.

16.5.4 If the Company accepts a Qualifying Asset pursuant to clause 16.5.3, the Company shall negotiate in good faith with the seller of the asset to either:

(a) where the Qualifying Asset is an investment asset, complete the acquisition of the Qualifying Asset or any Indirect Investment Vehicle that owns the Qualifying Asset as soon as reasonably practicable; or

(b) where the Qualifying Asset is a development asset, enter into an agreement with the seller for the acquisition of the asset upon practical completion of the asset subject to, amongst others, acceptance of the premises by the tenant and commencement of the lease term,

provided that if the Company has not completed the acquisition or entered into an agreement with the relevant seller within one (1) month of the date of service of the notice of acceptance of the Qualifying Asset due to the fault or delay of Goodman or the Investment Adviser, then the Company shall be deemed to have rejected and waived its right to acquire the Qualifying Asset and RTPUK or any of its Associates or any third party may acquire the Qualifying Asset.

16.6 Waiver of Right of Offer or RTPUK Offer

The Company may waive the Right of Offer or the RTPUK Offer in relation to any Qualifying Asset at any time by written notice to the Shareholders and the Investment Adviser in which case the Qualifying Asset may be acquired by any other person.

16.7 The Shareholders agree and acknowledge that, save for the Right of Offer obligations contained in this clause 16, either of the Shareholders and any of the respective Associates may acquire, own, develop or otherwise exploit any interest in real estate, either directly or indirectly, and whether alone or for or with other persons and nothing in this agreement shall prevent them from doing so.

16.8 If either of the Shareholders or any Directors appointed by such Shareholder shall have voted against the acquisition by the Group of a Qualifying Asset from a third party, such Shareholder or its Associates shall not pursue the acquisition of such Qualifying Asset for its own benefit or the benefit of its Associates. For the avoidance of doubt, if the other Shareholder voted in favour of the acquisition of such Qualifying Asset by the Group, it may pursue the acquisition of such Qualifying Asset for its own benefit or the benefit of its Associates.

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17. GOOD FAITH

17.1 All transactions entered into between a Shareholder (or any Associate of it) and the Group shall be conducted in good faith and on the basis set out or referred to in this agreement or, if not provided for in this agreement, as may be agreed by the Shareholders.

17.2 Each Shareholder shall at all times act in good faith towards the other.

18. COMPLIANCE WITH THIS AGREEMENT AND THE ARTICLES

18.1 Each Shareholder undertakes to the other that it shall take all practicable steps, including without limitation the exercise of votes it directly or indirectly controls at meetings of the Executive Committee, the Board and general meetings of the Company, to ensure that the terms of this agreement are complied with and that it does all such other acts and things as may be necessary or desirable to implement this agreement.

18.2 Each Shareholder undertakes to the other to comply fully and promptly with the provisions of the Articles so that each and every provision of the Articles (subject to clause 30.1) shall be enforceable by the Shareholders as between themselves in whatever capacity.

19. TRANSFERS OF SHARES

19.1 Subject to any Finance Agreement and the relevant provisions of the Companies Law, no Shareholder shall sell, transfer, grant any Encumbrance over or otherwise dispose of any Share or grant any interest in any Share other than as permitted by the Articles or this agreement.

19.2 Subject to any Finance Agreement, a Shareholder may at any time transfer all (but not some) of its Shares to any of its Associates in accordance with the Articles, provided that:

19.2.1 the transferor provides such evidence as the other Shareholder may reasonably require that the transferee is an Associate of the transferor and can comply with the obligations on its part in this agreement;

19.2.2 the Company or the other Shareholder is not adversely affected by such transfer;

19.2.3 all costs and expenses in relation to such transfer are borne by the transferor, and the other Shareholder and the Company are indemnified accordingly; and

19.2.4 if the transferee ceases to be an Associate of the transferor, the transferee shall, and the transferor shall procure that the transferee shall, immediately transfer all its Shares which it holds back to the transferor or to another Associate of Goodman/or RTPUK (as the case may be).

19.3 Any person (who is not already a party to this agreement whether as an original party or by executing an Instrument of Adherence) acquiring any Shares (whether by allotment or transfer or transmission) shall not be allotted such Shares or registered as their holder unless or until he has entered into and delivered to the Company an Instrument of Adherence in a legally binding manner. Neither the Company nor any Shareholder shall be held liable for any distributions that may be made to the incorrect person following any such transfer prior to receipt of such an Instrument of Adherence.

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20. DEFAULT EVENTS

20.1 A Shareholder shall be a defaulting Shareholder (“Defaulting Shareholder”) upon the occurrence of any of the following events in respect of it (each a “Default Event”) and the other Shareholder shall be a non-defaulting Shareholder (“Non-Defaulting Shareholder”):

20.1.1 the Shareholder commits a material breach of its obligations under this agreement or an Associate of the Shareholder commits a material breach of its obligations under any Service Agreement and, where capable of remedy, the Shareholder or Associate (as the case may be) fails after service of notice requiring the breach to be remedied to:

(a) commence remedy of the breach within 10 Business Days (or such longer period as is reasonable in the circumstances and agreed between the parties) of the date of service of the notice;

(b) complete remedy of the breach within 30 Business Days (or such longer period as is reasonably required in the circumstances or as agreed between the parties) of the date of service of the notice; and/or

(c) diligently proceed to remedy the breach;

20.1.2 the Shareholder fails to fund any amount required pursuant to this agreement (other than clause 10.6) within ten (10) Business Days of the due date;

20.1.3 the liquidation (voluntary or otherwise) of the Shareholder other than a genuine solvent reconstruction or amalgamation in which the new company resulting from such reconstruction or amalgamation assumes (and is capable of assuming) all the obligations of the Shareholder;

20.1.4 an order is made by a court of competent jurisdiction or a resolution is passed for the administration of a Shareholder;

20.1.5 any step is taken by any person (and is not withdrawn or discharged within ninety (90) days) to appoint a liquidator, receiver, administrative receiver or manager in respect of the whole or a substantial part of the assets or undertaking of the Shareholder;

20.1.6 the Shareholder becomes unable to pay its debts as they fall due for the purposes of section 123(1)(e) of the United Kingdom Insolvency Act 1986;

20.1.7 the Shareholder enters into a composition or arrangement with its creditors;

20.1.8 any event analogous to any of the events set out in clauses 20.1.3 to 21.1.7 (inclusive) occurs in any jurisdiction other than England and Wales; and/or

20.1.9 in the case of:

(a) RTPUK, CB Richard Ellis Realty Trust ceases to hold a direct or indirect majority of the beneficial interests in RTPUK; and

(b) Goodman, Goodman Industrial Trust ceases to hold a majority of the beneficial interests in Goodman,

and each Shareholder shall forthwith notify the Company and the other Shareholder if it becomes a Defaulting Shareholder or it becomes aware of the occurrence of a Default Event in relation to the other Shareholder.

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20.2 Without prejudice to any other rights of action or remedies it may have, upon becoming aware of a Default Event the Non-Defaulting Shareholder may, within 45 Business Days of becoming aware of the Default Event and provided such Default Event still continues:

20.2.1 serve notice on the Defaulting Shareholder and the Company (the “Default Notice”):

(a) where the Default Event relates to a Transaction in Progress that cannot be furthered or completed due to the occurrence of the Default Event, requiring that the Defaulting Shareholder pay within ten (10) Business Days of service of the Default Notice compensation to the Non-Defaulting Shareholder in an amount equal to ten per cent (10%) of the Transaction Amount; and/or

(b) where the Defaulting Shareholder is Goodman or an Associate of Goodman, requiring notice to be served on each of the Investment Adviser, the Property Manager and the Development Manager (on behalf of the Company) terminating the Investment Advisory Agreement, the Property Services Agreement and/or the Development Management Agreement; and/or

20.2.2 during the Initial Investment Term serve a Company Buy-Sell Notice on the Defaulting Shareholder,

provided that the Non-Defaulting Shareholder may exercise its rights in respect of any one or more of clauses 20.2.1(a), 20.2.1(b) and 20.2.2 or any combination of them.

20.3 At any time after the service of a Default Notice (and provided such Default Event continues), no Directors or Representatives appointed by the Defaulting Shareholder shall be entitled to vote at any meeting of the Executive Committee or the Board of the Company or any Indirect Investment Vehicle and the Defaulting Shareholder shall not be entitled to vote at a general meeting of the Company and the quorum for any such meeting during this time shall be one Director or one Representative appointed by the Non-Defaulting Shareholder (as appropriate) or in the case of a general meeting, the Non-Defaulting Shareholder (although the Directors and Representatives appointed by the Defaulting Shareholder may attend meetings of the Executive Committee and the Board and the Defaulting Shareholder may attend general meetings of the Company in each case if they so wish). During such period, the Non-Defaulting Shareholder will (and will use all powers reasonably available to it to procure that the Directors and Representatives appointed by it will) act in good faith and take account of the interests of the Company and its Shareholders generally in considering how to exercise the powers of control and management available to it.

21. DETERMINATION OF NAV

21.1 Where the NAV or NAV per Share is required to be determined for the purposes of this agreement the following provisions shall apply:

21.1.1 Within five (5) Business Days of the date on which the NAV is required to be determined (the “Relevant Date”) the Company shall instruct the Valuers to determine (within ten (10) Business Days of such instruction) the Market Value of the Properties as at the Relevant Date. The Valuers shall act as an expert and not as arbitrators (but notwithstanding this each of the Shareholders shall be entitled to make written submissions and counter submissions to the Valuers although the Valuers shall not be in any way fettered by any such submissions and counter submissions) and the determination of the Valuers shall be final and binding on the Shareholders (save in the case of manifest or proven error which shall be rectified without delay). The costs of the Valuers shall be borne by the Company.

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21.1.2 Following determination of the Market Value of the Properties in accordance with clause 21.1.1, the Company shall instruct the Auditors to determine the NAV. The Auditors shall act as an expert in determining the NAV and not as an arbitrator and their determination of the NAV shall be final and binding on the Shareholders (save in the case of manifest or proven error which shall be rectified without delay). The costs of the Auditors shall be borne by the Company.

22. COMPLETION OF THE SALE AND PURCHASE OF SHARES

22.1 Completion of the sale and purchase of Shares under clause 7.1 shall take place at the registered office of the Company on the date which is thirty (30) Business Days after the date of acceptance or deemed acceptance pursuant to clause 7.1.2.

22.2 At completion:

22.2.1 the transferring Shareholder shall transfer its Shares by way of a duly completed share transfer form to the purchaser together with the relevant share certificate and such other documents as the purchaser may reasonably require to show good title to the Shares and enable it to be registered as the holder of the Shares;

22.2.2 the purchaser shall pay the purchase price by telegraphic transfer/cheque to the transferring Shareholder or its solicitors (who have been irrevocably authorised by the transferring Shareholder to receive it) or to such other bank account as the transferring Shareholder may nominate; and

22.2.3 the transferring Shareholder shall deliver or procure that there are delivered to the Company resignations from all of the Directors appointed by the transferring Shareholder, to take effect at completion of the sale of the Shares under this clause 22 and acknowledging that such Directors have no claims against the Company.

22.3 The transferring Shareholder’s Sale Shares will be sold by the transferring Shareholder with full title guarantee and free from all Encumbrances.

22.4 The Shareholders shall procure the registration of the transfers of the transferring Shareholder’s Shares under this clause 22 and each of them consents to such transfers and registrations pursuant to this agreement and the Articles.

22.5 If the transferring Shareholder fails to deliver duly completed share transfer forms for the relevant Shares to the purchaser by the completion date as required by clause 22.2:

22.5.1 the Directors may (and shall if requested by the purchaser) authorise any Director to transfer the Shares on the transferring Shareholder’s behalf to the purchaser to the extent that the purchaser has, by the completion date, put the Company in funds to pay the price due for the relevant Shares. Each Shareholder irrevocably and by way of security appoints the other Shareholder as its respective attorney to execute any transfer of Shares pursuant to this clause 22.5.1. The Shareholders agree to hold each other harmless in relation to, and ratify any action taken by the other in accordance with this clause 22.5.1;

22.5.2 the Directors shall then authorise registration of the share transfer; and

22.5.3 the transferring Shareholder shall surrender the share certificate for its Shares to the Company and on surrender the transferring Shareholder shall be entitled to the purchase price for its Shares.

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23. ASSIGNMENT

No Shareholder shall create any Encumbrance over or assign or transfer or create any trust in respect of purport to create any Encumbrance over or assign or transfer or create any trust in respect of any of its rights or obligations under this agreement without the prior written consent of the other Shareholder.

24. SUCCESSORS

This agreement shall be binding on and enure for the benefit of the lawful successors and permitted assigns of each Shareholder.

25. DURATION

25.1 This agreement shall continue in force for an initial term (“Initial Term”) of five years from the date of this agreement and shall continue in force after the Initial Term unless terminated earlier pursuant to the terms of this agreement or if terminated:

25.1.1 at any time by the written agreement of the Shareholders; or

25.1.2 automatically without notice:

(a) on the date that all of the Shares become owned by one Shareholder; or

(b) on the date of the winding up of the Company,

provided that following a resolution being passed for the winding up of the Company, the Right of Offer and RTPUK Offer shall no longer apply.

25.2 The Shareholders shall meet at least every five (5) years after the commencement of this agreement to consider the termination of this agreement and possible exit strategies.

25.3 Upon termination of this agreement the Shareholders shall procure that the Company is wound up and the Shareholders shall endeavour to agree a suitable basis for dealing with the interests and assets of the Company and any Indirect Investment Vehicle and shall endeavour to ensure that:

25.3.1 all existing contracts of the Company and any Indirect Investment Vehicle are performed so far as there are sufficient resources within the Company and any Indirect Investment Vehicle;

25.3.2 no new contractual obligations shall be entered into by the Company or any Indirect Investment Vehicle;

25.3.3 the Investment Adviser determines the appropriate strategy for the Disposal of any Properties or Indirect Investment Vehicle, as the case may be, in which the Company still has an interest and shall procure the marketing of the relevant Properties or Indirect Investment Vehicles, as the case may be, as soon as reasonably practicable for the best price reasonably obtainable on the open market;

25.3.4 following the sale of all of the Properties, the Company and each remaining Indirect Investment Vehicle shall be wound up as soon as possible; and

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25.3.5 each Shareholder shall return to the other and the Company shall return to each of the Shareholders all proprietary information belonging to or originating from either of the Shareholders, as the case may be.

25.4 Termination of this agreement shall not affect any rights or liabilities that the parties have accrued under it.

25.5 This clause 25.5 and the following provisions of this agreement remain in full force after termination:

25.5.1 clause 1 (Definitions and Interpretation);

25.5.2 clause 14 (Confidentiality);

25.5.3 clause 15 (Announcements);

25.5.4 clause 17 (Good Faith);

25.5.5 clause 25.3 (Duration);

25.5.6 clause 26 (Tax);

25.5.7 clause 27 (Entire Agreement);

25.5.8 clause 28 (Severance);

25.5.9 clause 31 (Variation);

25.5.10 clause 32 (Waiver

25.5.11 clause 33 (Costs);

25.5.12 clause 34 (Further Assurance);

25.5.13 clause 36 (Notices); and

25.5.14 clause 37 (Governing Law and Jurisdiction).

26. TAX

26.1 The Company shall be organised in such a manner that the Directors may elect for the Company to be classified as a “partnership” or a “disregarded entity” for US federal income tax purposes, it being understood that the Directors shall cause the Company to elect to be treated as a partnership or disregarded entity for US federal income tax purposes effective not later than the day before the Company issues any Shares to RTPUK.

26.2 RTPUK shall (at its sole discretion) be entitled to determine the US tax classifications of the Company, its Indirect Investment Vehicles and any other entity in which the Company holds a direct or indirect interest, in each case, prior to their acquisition or formation, and Goodman shall consent to any US tax elections necessary or appropriate to secure such classifications.

26.3 Goodman acknowledges that the indirect parent of RTPUK has elected to be treated as a real estate investment trust (a “REIT”) for US federal income tax purposes. Prior to the direct or indirect acquisition or formation of any interest in any Property, Indirect Investment Vehicle, or other entity, RTPUK will be required to confirm to the Company that the proposed acquisition or formation is suitable for RTPUK’s indirect parent in relation to the US federal income tax rules applicable to REITs.

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27. ENTIRE AGREEMENT

27.1 This agreement together with any documents referred to in it contains the entire agreement between the parties in relation to the matters contemplated by this agreement and any such documents and supersedes any previous agreements between the parties in relation to such matters.

27.2 Each of the parties confirms that in entering into this agreement it has not relied on any statement, representation, warranty, agreement or undertaking of any person (whether a party to this agreement or not) other than those expressly set out in this agreement, and that it will not have any claim, right or remedy arising out of any such statement, representation, warranty, agreement or undertaking.

27.3 Nothing in this agreement shall operate to limit or exclude any liability of one of the parties in respect of a fraudulent misrepresentation made by that party to any of the others.

28. SEVERANCE

28.1 Each of the provisions of this agreement is distinct and severable from the others. If at any time one or more of those provisions is or becomes invalid or unenforceable (whether wholly or partly), the validity and enforceability of the remaining provisions (or the same provision to any other extent) shall not be affected or impaired in any way.

28.2 If any provision of this agreement is or becomes invalid or unenforceable (whether wholly or partly) but it would be valid or enforceable if deleted in part or reduced in application, then the provision shall apply with the minimum deletion or modification necessary to make it valid or enforceable.

29. NO PARTNERSHIP

Nothing in this agreement (including clause 26) shall be deemed to constitute a partnership or agency relationship between the parties or any other person.

30. STATUS OF AGREEMENT

30.1 If there is any conflict or inconsistency between the provisions of this agreement and the Articles or the articles of any Indirect Investment Vehicle, this agreement shall prevail.

30.2 The Shareholders shall whenever necessary exercise all voting and other rights and powers available to them to procure the amendment, waiver or suspension of the relevant provision of the Articles or the articles of any Indirect Investment Vehicle, to the extent necessary, to permit the Company and each Indirect Investment Vehicle and its affairs to be administered as provided in this agreement.

30.3 Nothing in this agreement shall be deemed to constitute an amendment of the Articles or the articles of any Indirect Investment Vehicle or any previous articles of association of the Company or the articles of any Indirect Investment Vehicle.

30.4 The Company is not bound by any provision of this agreement to the extent that it constitutes an unlawful fetter on any statutory power of the Company. This shall not affect the validity of the relevant provision as between the other parties to this agreement or the respective obligations of the other parties as between themselves under clause 30.2.

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31. VARIATION

No variation of this agreement shall be effective unless it is in writing and signed by or on behalf of each of the parties.

32. WAIVER

32.1 A party can only waive a right or remedy provided in this agreement or by law by express written notice.

32.2 No failure or delay to exercise, or other relaxation or indulgence granted in relation to, any power, right or remedy under this agreement shall operate as a waiver of it, impair, or prejudice it.

32.3 Any single or partial exercise or waiver of any power, right or remedy shall not preclude its further exercise or the exercise of any other power, right or remedy.

33. COSTS

Unless otherwise provided in this agreement all costs in connection with the negotiation, preparation, execution and performance of this agreement shall be borne by the party that incurred the costs.

34. FURTHER ASSURANCE

Each of the parties shall promptly execute and deliver all such documents and do all such things as the other parties may from time to time reasonably require for the purpose of giving full effect to the provisions of this agreement.

35. COUNTERPARTS

The parties may execute this agreement in any number of counterparts, each of which when executed and delivered will be an original but all of which when taken together will constitute one agreement.

36. NOTICES

36.1 Form of notice

Any notice, consent, request, demand, approval or other communication to be given or made under or in connection with this agreement (each a “Notice” for the purposes of this clause 36) must be in English, legible and subject to clause 36.2.1(d) in writing and signed by or on behalf of the person giving it.

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36.2 Method of service

36.2.1 A Notice must be served by one of the following methods:

(a) by hand to the relevant address set out in clause 36.3 and shall be deemed to have been served upon delivery if delivered during a Business Day, or at the start of the next Business Day if delivered at any other time;

(b) by special delivery post or international courier, in either case with proof of receipt to the relevant address set out in clause 36.3 and shall be deemed to have been served upon delivery if delivered during a Business Day, or at the start of the next Business Day if delivered at any other time;

(c) by fax to the relevant fax number set out in clause 36.3 and shall be deemed served on despatch, if sent during a Business Day or at the start of the next Business Day if sent at any other time, provided that in each case a receipt indicating complete transmission of the Notice is obtained by the sender and that a copy of the Notice is also despatched to the recipient using one of the methods described in clauses 36.2.1(a) or 36.2.1(b) no later than the end of the next Business Day; or

(d) in the case of clauses 14 and 15, by electronic mail to the relevant email address set out in clause 36.3 and shall be deemed to have been served upon transmission by the sender if delivered during a Business Day, or at the start of the next Business Day if delivered at any other time, provided that a notice shall be deemed not to have been received where the sender has received an error, out of office or similar reply message.

36.2.2 In this clause 36, all references to “Business Day” mean during business hours (i.e. 9.00 am to 5.00 pm) based on the local time where the recipient of the Notice is located.

36.2.3 Subject to clause 36.2.1(d), a Notice must not be sent by electronic mail.

36.3 Addresses for service

Notices must be addressed as follows:

36.3.1 Notices for Goodman must be marked for the attention of:

Name: General Counsel, Europe

Address: Arlington House, Arlington Business Park, Theale, Berkshire RG7 4SA

Fax number: +44 118 930 4383

Email: dominiek.vanoost@goodman.com

36.3.2 Notices for RTPUK must be marked for the attention of:

Name: Russell Taylor

Address: c/o CB Richard Ellis Investors, 21 Bryanston Street, London W1H 7PR

Fax number: +44 20 7268 7307

Email: rtaylor@cbreinvestors.com

36.3.3 Notices for the Company must be marked for the attention of:

Name: Company Secretary

47

Address: 13 Castle Street, St Helier, Jersey JE4 5UT

Fax number: +44 1534 769 770

Email: goodman@sannegroup.com

36.4 Copies of Notices

36.4.1 Copies of all Notices sent to Goodman must also be sent or given to:

Name: General Counsel

Address: Goodman Limited, 60 Castlereagh Street, Sydney NSW 2000 Australia

Fax number: +61 2 9230 7444

Email: carolyn.scobie@goodman.com

36.4.2 Copies of all Notices sent to RTPUK must also be sent or given to:

Name: Jack Cuneo

Address: 47 Hulfish Street, Suite 210, Princeton, New Jersey 08542, USA

Fax number: 001 609 806 2666

Email: jcuneo@cbreinvestors.com

36.4.3 Notices for the Company must also be sent or given to:

Name: General Counsel, Europe

Address: Arlington House, Arlington Business Park, Theale, Berkshire RG7 4SA

Fax number: +44 118 930 4383

Email: dominiek.vanoost@goodman.com

And

Name: Russell Taylor

Address: c/o CB Richard Ellis Investors, 21 Bryanston Street, London W1H 7PR

Fax number: +44 20 7268 7307

Email: rtaylor@cbreinvestors.com

36.4.4 Copies of Notices must be sent by one of the methods described in clause 36.2. Failure to deliver copies other than in respect of clause 36.2.1(d) will invalidate the Notice.

36.5 Change of details

A party may change its address for service so long as it gives the other party at least ten (10) Business Days’ prior notice. Until the end of those ten (10) Business Days, service on either the old or new address will be effective.

48

37. GOVERNING LAW AND JURISDICTION

37.1 This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by Jersey law.

37.2 The parties irrevocably agree that the courts of Jersey shall have exclusive jurisdiction to determine any dispute or claim that arises out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims).

The parties have executed this agreement on the date stated at the top of page 1.

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SCHEDULE 1

Initial Properties

Property	Description	Title Numbers	Relevant Owner
Brackmills	The leasehold property known as The Houghton Centre, Salthouse Road, Brackmills Industrial Estate, Northampton	NN204508	Goodman Brackmills (Jersey) Limited
South Normanton	The freehold property known as Amber Park, Berristow Lane, South Normanton, Alfreton	DY286621	Goodman South Normanton (Jersey) Limited

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SCHEDULE 2

Part 1 – Major Decisions

1. The entering into or any change to any Finance Agreement or the refinancing of such facilities (including granting any Encumbrance over any Property or over any other asset or interests of the Company or the relevant Indirect Investment Vehicle).

2. Any proposal for the acquisition of any Property either directly or indirectly, including a Qualifying Asset pursuant to clause 16.

3. Any proposal for the Disposal of any Property or part of any Property held by an Indirect Investment Vehicle, otherwise than in the case of a sale as provided for in the then current Business Plan or relevant Asset Plan.

4. Material capital expenditures, being any capital expenditure which is at least five per cent (5%) in excess of the operating and capital budget for the relevant item (if applicable) in relation to the relevant Property or as set out in the Business Plan or relevant Asset Plan.

5. Annual operating and capital budget in relation to each Property and the Group as a whole.

6. Save where already approved by virtue of approval of the Business Plan or an Asset Plan, amending and renegotiating leases and entering into any agreements for lease and any lease with any tenant of the whole or any part of a Property (in each case including, but not limited to, the identity of any such tenant) or any material modification to any such lease.

7. Termination and/or engagement of any Service Agreement or any other Related Party Contract, other than as set out under clause 4.4.4(b) (and for the avoidance of doubt termination under clause 9.2.2 of the Investment Advisory Agreement, clause 9.2.2 of the Property Services Agreement or clause 12.2.3 of the Development Management Agreement shall be a Major Decision).

8. Material development, redevelopment or refurbishment of any Property.

Part 2 – Reserved Matters

1. The winding up the Company and any Indirect Investment Vehicles, including:

1.1 the method of divestment of all assets of the Company as a portfolio or as individual properties;

1.2 the roll over of the Company’s assets into a follow-on fund or the Goodman European Logistics Fund with liquidity provided to the Shareholders to allow them to exit the joint venture established by this agreement in whole or in part; or

1.3 an initial public offering.

2. The admittance of a third party Shareholder into the Company.

3. Any alteration to the Memorandum, Articles, constitutional documents of any Indirect Investment Vehicle and this agreement.

51

SCHEDULE 3

Completion

At Completion:

1. The Shareholders shall procure that such meetings of the Company and the Board are held as may be necessary to:

1.1 transfer the share held by the Administrator to the Goodman Shareholder;

1.2 transfer the share held by SNL to the CBRE Shareholder;

1.3 issue and allot 1 Share to Goodman and 7 Shares to RTPUK;

1.4 redesignate the 2 Shares held by Goodman as A Shares and the 8 Shares held by RTPUK as B Shares and issue share certificates to them;

1.5 adopt new Articles and new constitutional documents for each Indirect Investment Vehicle;

1.6 appoint and designate Stephen Young and Zena Yates as A Directors;

1.7 appoint and designate Chuck Hessel, Colin Borman and Peter Machon as B Directors;

1.8 authorise the Company to execute:

(a) this agreement;

(b) the Service Agreements;

(c) the Administration and Secretarial Agreement;

(d) the Trade Mark Licence Agreement; and

(e) the Sale and Purchase Agreements;

1.9 adopt the Initial Plans;

1.10 appoint Sanne Secretaries Limited as secretary of the Company;

1.11 appoint HSBC as the bankers of the Company and pass the resolutions comprised in, and complete, the bank’s mandate form; and

1.12 appoint Deloitte as Auditors.

2. The Shareholders shall procure that the Company complete the acquisition of the Brackmills SPV and the South Normanton SPV.

3. Goodman shall:

3.1 execute a stock transfer form transferring 1 Share (to be redesignated an A Share) from the Administrator to Goodman and shall pay £1 to the Administrator; and

3.2 subscribe in cash for 1 Share (to be redesignated an A Share) and shall pay four million, five hundred and fourteen thousand pounds, six hundred and ninety-nine pounds (£4,514,699) to the Company;

52

3.3 procure the execution of and deliver to the Company the Service Agreements and the Trade Mark Licence Agreement; and

3.4 provide a legal opinion in the Agreed Form.

4. RTPUK shall:

4.1 execute a stock transfer form transferring 1 Share (to be redesignated a B Share) from SNL to RTPUK and shall pay £1 to SNL;

4.2 subscribe in cash for 7 Shares (to be redesignated as B Shares) and shall pay eighteen million, fifty-eight thousand, seven hundred and ninety-nine pounds (£18,058,799) to the Company; and

4.3 provide a legal opinion in the Agreed Form.

53

SCHEDULE 4

Instrument of Adherence

DATE 200[    ]

PARTIES

(1) [                                         ] (a trust established in [            ], acting by its [manager/trustees] [            ] (incorporated and registered in [            ] under company registration number [            ]), the registered office of which is at [                                             ] (the “Transferor”); and

(2) [                                         ] (incorporated and registered in [            ] under company registration number [            ]), the registered office of which is at [                                        ] (the “New Shareholder”)

RECITALS

(A) This instrument is supplemental to an agreement (“Shareholders’ Agreement”) dated [                    ] 2010, made between (1) Goodman Jersey Holdings Trust (acting by its trustee Goodman Jersey Property Holdings (Aust) Pty Ltd) (2) RT Princeton UK Holdings, LLC and (3) Goodman Princeton Holdings (Jersey) Limited (“Existing Parties”) setting out the terms for operating the joint venture company, Goodman Princeton Holdings (Jersey) Limited (incorporated and registered in Jersey with company number 105771) (“Company”).

(B) By a transfer of Shares in the capital of the Company dated [            ], the Transferor transferred to the New Shareholder [            ] Shares in the capital of the Company for [            ] pounds (£[—]).

IT IS AGREED AS FOLLOWS

1. Words and expressions used in this instrument shall, unless the context expressly requires otherwise, have the meaning given to them in the Shareholders’ Agreement.

2. The “Effective Date” means the date of this instrument.

3. The New Shareholder confirms that it has been supplied with a copy of the Shareholders’ Agreement and undertakes with each of the Existing Parties that, from the Effective Date, the New Shareholder shall observe, perform and be bound by the provisions of the Shareholders’ Agreement that contain obligations on the Transferor as though the New Shareholder was an original party to the Shareholders’ Agreement.

4. Nothing in this instrument shall release the Transferor from any liability in respect of any obligations under the Shareholders’ Agreement due to be performed prior to or after the Effective Date. The Transferor shall not be liable for any matter arising on or after the Effective Date.

54

5. This instrument shall be governed by, and construed in accordance with, Jersey law.

6. The courts of Jersey are to have exclusive jurisdiction to determine any dispute arising out of or in connection with this instrument. Each party irrevocably submits and agrees to submit to the jurisdiction of the Jersey courts.

This document has been executed and is delivered and takes effect on the date stated at the beginning of it.

Signed by [                    ]	)
acting by [                    ], a director,	)
in the presence of:	)

Signature of witness

Name (in BLOCK CAPITALS)

Address

Signed by [                    ]	)
acting by [                    ], a director,	)
in the presence of:	)

Signature of witness

Name (in BLOCK CAPITALS)

Address

55

SCHEDULE 5

Articles

In the Agreed Form.

56

SCHEDULE 6

Due Diligence Materials

1. Most recent surveys.

2. Updated copy of registered title (with an effective date no earlier than two months prior to the date of acquisition of the Qualifying Asset) or most recent title insurance policy, together with copies of all listed exceptions.

3. Leases, lease amendments, assignments, subleases, lease guarantees and other occupancy agreements.

4. Building plans and specifications, “as-built” (if available), including actual floor area measurements and floor diagrams, together with detailed gross, rentable and usable floor area calculations for the building, each floor and each tenant (if available in each case).

5. Environmental and physical inspection reports generated by third parties regarding the Qualifying Asset, including soil reports (if available).

6. Complete rent roll for most recent month and budgeted operating statement.

7. Tenant financials.

8. Statement of or certificate showing insurance coverage.

9. Such tax returns, registrations and information as are necessary to undertake a suitable review of the tax history of the Qualifying Asset.

10. A detailed summary of all unresolved litigation, including actions taken on behalf of or against the ownership of the Qualifying Asset.

11. Service charge budget for the current year and first fiscal year (if available).

12. All approvals, permits and licenses from each governmental authority having jurisdiction over the Qualifying Asset as are necessary to permit the full use and occupancy of the Qualifying Asset, including without limitation, environmental permits and approvals, certificate of completion, certificates of occupancy and evidence of compliance with applicable zoning and land use regulations.

13. A local search not more than 3 months old and any other searches which a prudent buyer’s lawyer would make.

57

SCHEDULE 7

Distribution Worked Example

In the Agreed Form

58

Signed for and on behalf of	)
GOODMAN JERSEY PROPERTY HOLDINGS	)
(AUST) PTY LTD in its capacity as trustee for GOODMAN JERSEY HOLDINGS TRUST	) )
by its attorney in the presence of:	)

Signature of attorney	/s/ Carl Bicego
Signature of witness	/s/ Angela Lin
Name (in BLOCK CAPITALS)   ANGELA LIN
Address	77A Livingstone Avenue
	Pymble NSW, 2073
	Australia

Signed by RT PRINCETON UK HOLDINGS, LLC	)
a Delaware limited liability company	)
acting by	)
Name: Charles W. Hessel
Title: Vice President
in the presence of: Gregory L. Vinson	)

Signature of witness	/s/ Gregory L. Vinson
Name (in BLOCK CAPITALS)   GREGORY L. VINSON
Address	c/o CB Richard Ellis Realty Trust
	47 Hulfish Street, Suite 210
	Princeton, NJ 08542

Signed by GOODMAN PRINCETON HOLDINGS	)
(JERSEY) LIMITED	)
acting by    Colin Burman                        a director	)
in the presence of:	)

Signature of witness	/s/ Peter Machon
Name (in BLOCK CAPITALS)
Address	Ivy Farm, La Rue du Grand Mourier
	St. John, Jersey
	JE3 4AB, Channel Islands

59

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: August 13, 2010

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 E. 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 E. ROMANAK        

Laurie E. Romanak

Chief Financial Officer

Date: August 13, 2010

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 June 30, 2010 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 results of operations of the Company.

/S/    JACK A. CUNEO

Jack A. Cuneo

President and Chief Executive Officer

Date: August 13, 2010

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 June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Laurie E. 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 results of operations of the Company.

/S/    LAURIE E. ROMANAK      

Laurie E. Romanak

Chief Financial Officer

Date: August 13, 2010