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GLADSTONE COMMERCIAL CORP
0001234006
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-->
<div align="left" style="font-family: 'Times New Roman',Times,serif">
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<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left">
</div>
<div align="center" style="font-size: 10pt"><b></b></div>
<div align="center" style="font-size: 10pt"><b></b></div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. Organization and Significant Accounting Policies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Gladstone Commercial Corporation (the “Company”) was incorporated on February 14, 2003 under the
General Corporation Law of Maryland. The Company operates in a manner so as to qualify as a real
estate investment trust (“REIT”) for federal income tax purposes and exists primarily for the
purposes of engaging in the business of investing in real estate properties net leased to
creditworthy entities and making mortgage loans to creditworthy entities. Subject to certain
restrictions and limitations, the business of the Company is managed by Gladstone Management
Corporation, a Delaware corporation (the “Adviser”).
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Subsidiaries</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company conducts substantially all of its operations through a subsidiary, Gladstone Commercial
Limited Partnership, a Delaware limited partnership (the “Operating Partnership”). As the Company
currently owns all of the general and limited partnership interests of the Operating Partnership
through GCLP Business Trust I and II, as discussed in more detail below, the financial position and
results of operations of the Operating Partnership are consolidated with those of the Company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Gladstone Commercial Lending, LLC, a Delaware limited liability company (“Gladstone Commercial
Lending”) and a subsidiary of the Company, was created to conduct all operations related to real
estate mortgage loans of the Company. As the Operating Partnership currently owns all of the
membership interests of Gladstone Commercial Lending, the financial position and results of
operations of Gladstone Commercial Lending are consolidated with those of the Company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Gladstone Commercial Advisers, Inc., a Delaware corporation (“Commercial Advisers”) and a
subsidiary of the Company, is a taxable REIT subsidiary (“TRS”), which was created to collect all
non-qualifying income related to the Company’s real estate portfolio. There have been no such fees
earned to date. Since the Company owns 100% of the voting securities of Commercial Advisers, the
financial position and results of operations of Commercial Advisers are consolidated with those of
the Company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">GCLP Business Trust I and GCLP Business Trust II, each a subsidiary and business trust of the
Company, were formed under the laws of the Commonwealth of Massachusetts on December 28, 2005. The
Company transferred its 99% limited partnership interest in the Operating Partnership to GCLP
Business Trust I in exchange for 100 trust shares. Gladstone Commercial Partners, LLC transferred
its 1% general partnership interest in the Operating Partnership to GCLP Business Trust II in
exchange for 100 trust shares.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Interim Financial Information</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Interim financial statements of the Company are prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) for interim financial information and
pursuant to the requirements for reporting on Form 10-Q and in accordance with Article 10 of
Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared
in accordance with GAAP are omitted. In the opinion of the Company’s management, all adjustments,
consisting solely of normal recurring accruals, necessary for the fair statement of financial
statements for the interim period have been included. The interim financial statements and notes
thereto should be read in conjunction with the financial statements and notes thereto included in
the Company’s Form 10-K for the year ended December 31, 2010, as filed with the Securities and
Exchange Commission on March 8, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Out of Period Adjustment</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the three months ended March, 31 2011, the Company recorded adjustments to due diligence
expense, depreciation and amortization expense and to certain balance sheet accounts in connection
with the property the Company acquired in December 2010. As a result of these errors, the Company
understated net income by $250 for the year ended December 31, 2010, or $0.03 per share. The
Company
concluded that these adjustments were not material to the 2010 results of operations nor are they
expected to be material to the full year 2011 results. As such, these adjustments were recorded
during the three months ended March 31, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Use of Estimates</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of financial statements in conformity with GAAP requires management 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 materially
differ from those estimates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Reclassifications</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Certain amounts on the consolidated statements of operations from prior years’ financial statements
have been reclassified to conform to the current year presentation. These reclassifications had no
effect on previously reported net income or stockholders’ equity.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Investments in Real Estate</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company records investments in real estate at cost and capitalizes improvements and
replacements when they extend the useful life or improve the efficiency of the asset. The Company
expenses costs of repairs and maintenance as such costs are incurred. The Company computes
depreciation using the straight-line method over the estimated useful life or 39 years for
buildings and improvements, 5 to 7 years for equipment and fixtures, and the shorter of the useful
life or the remaining lease term for tenant improvements and leasehold interests.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company accounts for its acquisitions of real estate in accordance with Accounting Standards
Codification (“ASC”) 805, “Business Combinations,” which requires that the purchase price of real
estate be recorded at fair value and allocated to the acquired tangible assets and liabilities,
consisting of land, building, tenant improvements, long-term debt and identified intangible assets
and liabilities, consisting of the value of above-market and below-market leases, the value of
in-place leases, the value of unamortized lease origination costs, the value of tenant
relationships and the value of capital lease obligations, based in each case on their fair values.
ASC 805 also requires that all expenses related to the acquisition be expensed as incurred, rather
than capitalized into the cost of the acquisition as had been the previous accounting.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Management’s estimates of value are made using methods similar to those used by independent
appraisers (e.g., discounted cash flow analysis). Factors considered by management in its analysis
include an estimate of carrying costs during hypothetical expected lease-up periods considering
current market conditions and costs to execute similar leases. The Company also considers
information obtained about each property as a result of its pre-acquisition due diligence,
marketing and leasing activities in estimating the fair value of the tangible and intangible assets
and liabilities acquired. In estimating carrying costs, management also includes real estate taxes,
insurance and other operating expenses and estimates of lost rentals at market rates during the
hypothetical expected lease-up periods, which primarily range from nine to eighteen months,
depending on specific local market conditions. Management also estimates costs to execute similar
leases, including leasing commissions, legal and other related expenses to the extent that such
costs are not already incurred in connection with a new lease origination as part of the
transaction.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company allocates purchase price to the fair value of the tangible assets of an acquired
property by valuing the property as if it were vacant. The “as-if-vacant” value is allocated to
land, building and tenant improvements based on management’s determination of the relative fair
values of these assets. Real estate depreciation expense on these tangible assets, was $2,488 and
$4,878 for the three and six months ended June 30, 2011, respectively, and $2,384 and $4,775 for
the three and six months ended June 30, 2010, respectively.
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">Above-market and below-market in-place lease values for owned properties 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. The capitalized
above-market lease values, included in the accompanying balance sheet as part of deferred rent
receivable, are amortized as a reduction of rental income over the remaining non-cancelable terms
of the respective leases. Total amortization related to above-market lease values was $91 and $154
for the three and six months ended June 30, 2011, and $63 and $127 for the three and six months
ended June 30, 2010, respectively. The capitalized below-market lease values, included in the
accompanying consolidated balance sheet as deferred rent liability, are amortized as an increase to
rental income over the remaining non-cancelable terms of the respective leases. Total amortization
related to below-market lease values was $250 and $489 for the three and six months ended June 30,
2011, and $231 and $474 for the three and six months ended June 30, 2010, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The total amount of the remaining intangible assets acquired, which consist of in-place lease
values, unamortized lease origination costs, and customer relationship intangible values, are
allocated based on management’s evaluation of the specific characteristics of each tenant’s lease
and the Company’s overall relationship with that respective tenant. Characteristics to be
considered by management in allocating these values include the nature and extent of our existing
business relationships with the tenant, growth prospects for developing new business with the
tenant, the tenant’s credit quality and the Company’s expectations of lease renewals (including
those existing under the terms of the lease agreement), among other factors.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The value of in-place leases and unamortized lease origination costs are amortized to expense over
the remaining term of the respective leases, which generally range from 10 to 15 years. The value
of customer relationship intangibles, which is the benefit to the Company resulting from the
likelihood of an existing tenant renewing its lease, are amortized to expense over the remaining
term and any anticipated renewal periods in the respective leases, but in no event does the
amortization period for intangible assets exceed the remaining depreciable life of the building.
Should a tenant terminate its lease, the unamortized portion of the above-market and below-market
lease values, in-place lease values, unamortized lease origination costs and customer relationship
intangibles will be immediately charged to the related income or expense. Total amortization
expense related to these intangible assets, was $987 and $1,967 for the three and six months ended
June 30, 2011, respectively, and $1,006 and $1,938 for the three and six months ended June 30,
2010, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Impairment</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company accounts for the impairment of real estate, including intangible assets, in accordance
with ASC 360-10-35, “Property, Plant, and Equipment,” which requires the Company to periodically
review the carrying value of each property to determine if circumstances indicate impairment in the
carrying value of the investment exist or that depreciation periods should be modified. If
circumstances support the possibility of impairment, the Company prepares a projection of the
undiscounted future cash flows, without interest charges, of the specific property and determines
if the investment in such property is recoverable. If impairment is indicated, the Company will
write down the carrying value of the property to its estimated fair value.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In light of current economic conditions, the Company evaluates its entire portfolio each quarter
for any impairment indicators and performed an impairment analysis on those select properties that
had an indication of impairment. In performing the analysis, the Company considered such factors
as the tenants’ payment history and financial condition, the likelihood of lease renewal, business
conditions in the industry in which the tenants operate and whether the fair value of the real
estate has decreased. The Company concluded that none of its properties were impaired, and will
continue to monitor its portfolio for any indicators that may change this conclusion. There have
been no impairments recognized on real estate assets in the Company’s history.<i>Cash and Cash
Equivalents</i>
The Company considers cash equivalents to be all short-term, highly-liquid investments that are
both readily convertible to cash and have a maturity of three months or less at the time of
purchase, except that any such investments purchased with funds held in escrow or similar accounts
are classified as restricted cash. Items classified as cash equivalents include money-market
deposit accounts. All of the Company’s cash and cash equivalents at June 30, 2011 were held in the
custody of three financial institutions, and the Company’s balance at times may exceed federally
insurable limits.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Restricted Cash</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Restricted cash consists of security deposits and receipts from tenants for reserves. These funds
will be released to the tenants upon completion of agreed upon tasks, as specified in the lease
agreements, mainly consisting of maintenance and repairs on the buildings and upon receipt by the
Company of evidence of insurance and tax payments. For purposes of the statements of cash flows,
changes in restricted cash caused by changes in reserves held for tenants are shown as investing
activities. Changes in restricted cash caused by changes in security deposits are reflected in cash
from financing activities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Funds Held in Escrow</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Funds held in escrow consist of funds held by certain of the Company’s lenders for properties held
as collateral by these lenders. These funds will be released to the Company upon completion of
agreed upon tasks, as specified in the mortgage agreements, mainly consisting of maintenance and
repairs on the buildings, and when evidence of insurance and tax payments has been submitted to the
lenders.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Deferred Financing Costs</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Deferred financing costs consist of costs incurred to obtain financing, including legal fees,
origination fees and administrative fees. The costs are deferred and amortized using the
straight-line method, which approximates the effective interest method, over the term of the
secured financing. The Company made payments of $216 and $226 for deferred financing costs during
the three and six months ended June 30, 2011, respectively, and $11 and $61 for deferred financing
cost during the three and six months ended June 30, 2010, respectively. Total amortization expense
related to deferred financing costs is included in interest expense and was $225 and $456 for the
three and six months ended June 30, 2011, respectively, and $272 and $544 for the three and six
months ended June 30, 2010, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Obligation Under Capital Lease</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In conjunction with the Company’s acquisition of a building in Fridley, Minnesota in February 2008,
the Company acquired a ground lease on the parking lot of the building, which had a purchase
obligation to acquire the land under the ground lease at the end of the term in April 2014 for
$300. In accordance with ASC 840-10-25, “Leases,” the Company accounted for the ground lease as a
capital lease and recorded the corresponding present value of the obligation under the capital
lease. The Company recorded total interest expense related to the accretion of the capital lease
obligation of $3 and $6 for each of the three and six months ended June 30, 2011 and 2010,
respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Revenue Recognition</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Rental revenue includes rents that each tenant pays in accordance with the terms of its respective
lease reported evenly over the non-cancelable term of the lease. Most of the Company’s leases
contain rental increases at specified intervals. The Company recognizes such revenues on a
straight-line basis. Deferred rent receivable in the accompanying consolidated balance sheet
includes the cumulative difference between rental revenue, as recorded on a straight line basis,
and rents received from the tenants in accordance with the lease terms, along with the capitalized
above-market in-place lease values of certain acquired properties. Accordingly, the Company
determines, in its judgment, to what extent the deferred rent receivable applicable to each
specific tenant is collectable. The Company reviews deferred rent receivable, as it relates to
straight line rents, on a quarterly basis and takes into consideration the tenant’s payment
history, the financial condition of the tenant, business conditions in the industry in which the
tenant
operates and economic conditions in the geographic area in which the property is located. In the
event that the collectability of deferred rent with respect to any given tenant is in doubt, the
Company records an allowance for uncollectable accounts or records a direct write-off of the
specific rent receivable. No such reserves or direct write-offs have been recorded as of June 30,
2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Tenant recovery revenue includes payments from tenants as reimbursements for franchise taxes,
management fees, insurance, and ground lease payments. The Company recognizes tenant recovery
revenue in the same periods that it incurs the related expenses.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Income Taxes</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has operated and intends to continue to operate in a manner that will allow it to
qualify as a REIT under the Internal Revenue Code of 1986, as amended, and, accordingly, will not
be subject to federal income taxes on amounts distributed to stockholders (except income from
foreclosure property), provided that it distributes at least 90% of its REIT taxable income to its
stockholders and meets certain other conditions. To the extent that the Company satisfies the
distribution requirement but distributes less than 100% of its taxable income, the Company will be
subject to federal corporate income tax on its undistributed income.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Commercial Advisers is a wholly-owned TRS that is subject to federal and state income taxes. Though
Commercial Advisers has had no activity to date, the Company would account for any future income
taxes in accordance with the provisions of ASC 740, “Income Taxes.” Under ASC 740-10-25, the
Company accounts for income taxes using the asset and liability method under which deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Asset Retirement Obligations</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">ASC 410, “Asset Retirement and Environmental Obligation,” requires an entity to recognize a
liability for a conditional asset retirement obligation when incurred if the liability can be
reasonably estimated. ASC 410-20-20 clarifies that the term “Conditional Asset Retirement
Obligation” refers to a legal obligation (pursuant to existing laws or by contract) to perform an
asset retirement activity in which the timing and/or method of settlement are conditional on a
future event that may or may not be within the control of the entity. ASC 410-20-25-6 clarifies
when an entity would have sufficient information to reasonably estimate the fair value of an asset
retirement obligation. The Company has accrued a liability and corresponding increase to the cost
of the related properties for disposal related to all properties constructed prior to 1985 that
have, or may have, asbestos present in the building. The liabilities are accreted over the life of
the leases for the respective properties. There were no liabilities accrued during the six months
ended June 30, 2011 and 2010, as the properties acquired during these periods were constructed
after 1985. The Company also recorded expenses of $39 and $77 during the three and six months
ended June 30, 2011 respectively, and $38 and $75 during the three and six months ended June 30,
2010, respectively, related to the accretion of the obligation.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Stock Issuance Costs</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company accounts for stock issuance costs in accordance with SEC Staff Accounting Bulletin
(“SAB”) Topic 5.A, which states that incremental costs directly attributable to a proposed or
actual offering of securities should be deferred and charged against the gross proceeds of the
offering. Accordingly, the Company records costs incurred related to its ongoing equity offerings
to other assets on its consolidated balance sheet and ratably applies these amounts to the cost of
equity as stock is issued. If an equity offering is subsequently terminated and there are amounts
remaining in other assets that have not been allocated to the cost of the offering, the remaining
amounts are recorded as an expense on the consolidated statement of operations.
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. Related-Party Transactions</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is externally managed pursuant to contractual arrangements with its Adviser and
Gladstone Administration, LLC (the “Administrator”), which collectively employ all of the Company’s
personnel and pay their salaries, benefits, and general expenses directly. The Company has an
advisory agreement with its Adviser (the “Advisory Agreement”) and an administration agreement with
its Administrator (the “Administration Agreement”). The management services and administrative fees
under the Advisory and Administration Agreements are described below. As of June 30, 2011 and
December 31, 2010, respectively, $1,091 and $965 were due to the Adviser.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Advisory Agreement</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Advisory Agreement provides for an annual base management fee equal to 2% of the Company’s
total stockholders’ equity, less the recorded value of any preferred stock (“common stockholders’
equity”), and an incentive fee based on funds from operations (“FFO”). For the three and six months
ended June 30, 2011 the Company recorded a base management fee of $435 and $787, respectively, and
for the three and six months ended June 30, 2010, the Company recorded a base management fee of
$296 and $609, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For purposes of calculating the incentive fee, FFO includes any realized capital gains and capital
losses, less any distributions paid on preferred stock and senior common stock, but FFO does not
include any unrealized capital gains or losses. The incentive fee rewards the Adviser if the
Company’s quarterly FFO, before giving effect to any incentive fee (“pre-incentive fee FFO”),
exceeds 1.75%, or 7% annualized (the “hurdle rate”), of total common stockholders’ equity. The
Adviser receives 100% of the amount of the pre-incentive fee FFO that exceeds the hurdle rate, but
is less than 2.1875% of the Company’s common stockholders’ equity. The Adviser also receives an
incentive fee of 20% of the amount of the Company’s pre-incentive fee FFO that exceeds 2.1875% of
common stockholders’ equity.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For the three and six months ended June 30, 2011, the Company recorded an incentive fee of $840 and
$1,672, respectively, offset by a credit related to an unconditional and irrevocable voluntary
waiver issued by the Adviser of $445 and $931, respectively, resulting in a net incentive fee for
the three and six months ended June 30, 2011, of $395 and $741, respectively. For the three and six
months ended June 30, 2010, the Company recorded an incentive fee of $829 and $1,675, respectively,
offset by a credit related to an unconditional and irrevocable voluntary waiver issued by the
Adviser of $56 and $56, respectively, resulting in a net incentive fee for the three and six months
ended June 30, 2010, of $773 and $1,619, respectively. The Board of Directors of the Company
accepted the Adviser’s offer to waive on a quarterly basis a portion of the incentive fee for the
three and six months ended June 30, 2011 and 2010, respectively in order to support the current
level of distributions to the Company’s stockholders. This waiver may not be recouped by the
Adviser in the future.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Administration Agreement</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the Administration Agreement, the Company pays for its allocable portion of the
Administrator’s overhead expenses in performing its obligations to the Company, including, but not
limited to, rent and the salaries and benefits of its personnel, including its chief financial
officer, chief compliance officer, internal counsel, treasurer, investor relations and their
respective staffs. The Company’s allocable portion of expenses is derived by multiplying the
Administrator’s total allocable expenses by the percentage of the Company’s total assets at the
beginning of each quarter in comparison to the total assets of all companies managed by the Adviser
under similar agreements. For the three and six months ended June 30, 2011, the Company recorded an
administration fee of $260 and $516, respectively, and for the three and six months ended June 30,
2010, the Company recorded an administration fee of $219 and $451, respectively.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Dealer Manager Agreement</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the offering of the Company’s Senior Common Stock, see Note 6, “<i>Stockholders’
Equity</i>,” for further details, the Company entered into a Dealer Manager Agreement, dated March 25,
2011 (the “Dealer Manager Agreement”), with Gladstone Securities, LLC (the “Dealer Manager”),
pursuant to which the Dealer Manager agreed to act as the Company’s exclusive dealer manager in
connection with the offering. The Dealer Manager is an affiliate of the Company, as its parent
company is controlled by Mr. David Gladstone, the Company’s Chairman and Chief Executive Officer.
Pursuant to the terms of the Dealer Manager Agreement, the Dealer Manager is entitled to receive a
sales commission in the amount of 7.0% of the gross proceeds of the shares of Senior Common Stock
sold, plus a dealer manager fee in the amount of 3.0% of the gross proceeds of the shares of Senior
Common Stock sold. The Dealer Manager, in its sole and absolute discretion, may re-allow all of its
selling commissions attributable to a participating broker-dealer and may also re-allow a portion
of its Dealer Manager fee earned in respect of the proceeds generated by the participating
broker-dealer to any participating broker-dealer as a non-accountable marketing allowance. In
addition, the Company has agreed to indemnify the Dealer Manager against various liabilities,
including certain liabilities arising under the federal securities laws. The company has not made
any payments to date to the Dealer Manager pursuant to this agreement.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 3 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>3. Earnings per Share of Common Stock</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following tables set forth the computation of basic and diluted earnings per share of common
stock for the three and six months ended June 30, 2011 and 2010. The Company computed basic
earnings per share for the three and six months ended June 30, 2011 and 2010 using the weighted
average number of shares outstanding during the periods. Diluted earnings per share for the three
and six months ended June 30, 2011 and 2010, reflects additional shares of common stock, related to
our convertible senior common stock, that would have been outstanding if dilutive potential shares
of common stock had been issued, as well as an adjustment to net income available to common
stockholders as applicable to common stockholders that would result from their assumed issuance.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">For the three months ended June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">For the six months ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Calculation of basic earnings per share of common stock:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) available to common stockholders
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">331</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(17</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">772</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">46</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Denominator for basic weighted average shares of common stock
</div></td>
<td> </td>
<td> </td>
<td align="right">9,782</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,545</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,522</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,552</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Basic earnings per share of common stock
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.04</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.00</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.08</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.01</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Calculation of diluted earnings per share of comon stock:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) available to common stockholders
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">331</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(17</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">772</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">46</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Add: Income impact of assumed conversion of senior common stock
</div></td>
<td> </td>
<td> </td>
<td align="right">15</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">31</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) available to common stockholders plus assumed conversions
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">346</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(17</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">803</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">46</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Denominator for basic weighted average shares of common stock
</div></td>
<td> </td>
<td> </td>
<td align="right">9,782</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,545</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,522</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,552</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of convertible senior common stock
</div></td>
<td> </td>
<td> </td>
<td align="right">52</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">—</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td> </td>
<td align="right">52</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Denominator for diluted weighted average shares of common stock
</div></td>
<td> </td>
<td> </td>
<td align="right">9,834</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,545</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,574</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,553</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Diluted earnings per share of common stock
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.04</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.00</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.08</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.01</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96%"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>The convertible senior common stock was excluded from the calculation of diluted earnings per share for the three months ended June 30, 2010 because it was anti-dilutive.</td>
</tr>
</table>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 4 - us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>4. Real Estate and Intangible Assets</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Real Estate</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the components of the Company’s investments in real estate,
including capitalized leases, as of June 30, 2011 and December 31, 2010:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">June 30, 2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">December 31, 2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Real estate:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Land
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">58,146</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">55,158</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Building and improvements
</div></td>
<td> </td>
<td> </td>
<td align="right">349,399</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">335,576</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Tenant improvements
</div></td>
<td> </td>
<td> </td>
<td align="right">12,175</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,283</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Accumulated depreciation
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(48,537</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(43,659</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Real estate, net
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">371,183</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">357,358</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="100%"></td>
</tr>
<tr valign="top">
<td><sup style="font-size: 85%; vertical-align: text-top">(1)</sup> Includes land held under a capital lease carried at $1,100.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the six months ended June 30, 2011, the Company acquired two properties, which are
summarized below:
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On April 4, 2011, the Company acquired a 60,000 square foot office building located in Hickory,
North Carolina for $10,650, excluding related acquisition expenses of $59. The Company funded this
acquisition using borrowings from its line of credit. At closing, the Company was assigned the
triple net lease with Fiserv Solutions, Inc., which has a remaining term of approximately nine
years. The tenant has two options to extend the lease for additional periods of five years each.
The lease provides for prescribed rent escalations over the life of the lease, with annualized
straight line rents of $1,100.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On June 20, 2011, the Company acquired a 78,421 square foot office building located in Springfield,
Missouri for $15,850, excluding related acquisition expenses of $57. The Company funded this
acquisition through a combination of borrowings from its line of credit and the assumption of
$11,584 of mortgage debt on the property. At closing, the Company was assigned the existing triple
net lease with T-Mobile USA, Inc., which has a remaining term of approximately ten years. The
tenant has three options to extend the lease for additional periods of five years each. The lease
provides for prescribed rent escalations over the life of the lease, with annualized straight line
rents of $1,422.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with ASC 805 the Company allocated the purchase price of the properties acquired
during the six months ended June 30, 2011 as follows:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 6pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 6pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Carrying Value</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 6pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Tenant</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Customer</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Above Market</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">of Assumed</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Premium on</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Total Purchase</td>
<td> </td>
</tr>
<tr style="font-size: 6pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Land</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Building</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Improvements</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">In-place Leases</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Leasing Costs</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Relationships</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Leases</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Debt</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Assumed Debt</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Price</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Hickory, North Carolina
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,163</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5,567</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,038</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">736</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">559</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">616</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">971</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10,650</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Springfield, Missouri <sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">1,700</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,626</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">413</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,174</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">572</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">702</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,583</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(337</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">15,850</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,863</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17,193</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,451</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,910</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,131</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,318</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">971</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">11,583</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(337</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">26,500</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96%"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>The Company paid $4.3 million in cassh for this property, the remaining $11.6 million was funded with the assumed mortgaged debt.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The weighted average amortization period for the intangible assets acquired during the six months
ended June 30, 2011, were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="21%"> </td>
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Intangible assets</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Years</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">In-place leases
</div></td>
<td> </td>
<td> </td>
<td align="right">9.4</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Leasing costs
</div></td>
<td> </td>
<td> </td>
<td align="right">9.4</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer relationships
</div></td>
<td> </td>
<td> </td>
<td align="right">17.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Above market leases
</div></td>
<td> </td>
<td> </td>
<td align="right">8.8</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">All intangible assets
</div></td>
<td> </td>
<td> </td>
<td align="right">11.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Future operating lease payments from tenants under non-cancelable leases, excluding tenant
reimbursement of expenses, for the remainder of 2011 and each of the five succeeding fiscal years
and thereafter is as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="23%"> </td>
<td width="70%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Tenant</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Year</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Lease Payments</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Six months ending December 31, 2011
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">21,601</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-left:45px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">42,287</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-left:45px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">37,936</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-left:45px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">33,884</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-left:45px; text-indent:-15px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">29,865</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-left:45px; text-indent:-15px">2016
</div></td>
<td> </td>
<td> </td>
<td align="right">25,423</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-left:30px; text-indent:-15px">Thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">164,174</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with the lease terms, substantially all tenant expenses are required to be paid by
the tenant; however, the Company would be required to pay property taxes on the respective
properties, and ground lease payments on the property located in Tulsa, Oklahoma, in the event the
tenant fails to pay them. The total annualized property taxes for all properties held by the
Company at June 30, 2011 was $6,900, and the total annual ground lease payments on the property
located in Tulsa, Oklahoma was $153.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On January 31, 2011, the Company extended the lease with its tenant occupying its properties
located in Decatur, Georgia, Lawrenceville, Georgia, Snellville, Georgia, Covington, Georgia, and
Conyers, Georgia. The lease covering all of these properties was extended for an additional five
year period, thereby extending the lease until December 2031. The lease was originally set to
expire in December 2026. The lease provides for prescribed rent escalations over the life of the
lease, with annualized straight line rents of $1,616. Furthermore, the lease grants the tenant
four options to extend the lease for a period of five years each. In connection with the extension
of the lease and the modification of certain terms under the lease, the tenant paid $750 to the
Company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On May 15, 2011, the Company re-leased its previously vacant building located in South Hadley,
Massachusetts for a period of six months, and the tenant has a three-month extension option. The
lease provides for rent over the term of $101.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On June 23, 2011, the Company extended the lease with its tenant occupying its properties located
in Angola, Indiana and Rock Falls, Illinois. The lease covering these properties was extended for
an additional three year period, thereby extending the lease until August 2023. The lease was
originally set to expire in August 2020. The lease provides for prescribed rent escalations over
the life of the lease, with annualized straight line rents of $345. Furthermore, the lease grants
the tenant three options to extend the lease for a period of five years each.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Intangible Assets</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the value of intangible assets and the accumulated amortization for
each intangible asset class:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">June 30, 2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">December 31, 2010</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Accumulated</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Accumulated</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Lease Intangibles</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Lease Intangibles</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amortization</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">In-place leases
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">21,879</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(9,265</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">17,011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(8,362</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Leasing costs
</div></td>
<td> </td>
<td> </td>
<td align="right">12,126</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,155</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">10,764</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,685</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer relationships
</div></td>
<td> </td>
<td> </td>
<td align="right">19,430</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(6,211</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">17,636</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,617</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">53,435</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(20,631</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">45,411</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(18,664</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The estimated aggregate amortization expense for the remainder of 2011 and each of the five
succeeding fiscal years and thereafter is as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="65%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Estimated</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Year</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Amortization Expense</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td align="right" nowrap="nowrap">
<div style="margin-right:30px; text-indent:-0px">Six months ending December 31, 2011
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">3,246</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">5,706</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">3,331</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">3,072</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2015
</div></td>
<td> </td>
<td> </td>
<td align="right">2,687</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2016
</div></td>
<td> </td>
<td> </td>
<td align="right">2,127</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">Thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">12,635</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:DebtDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>5. Mortgage Notes Payable and Line of Credit</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company’s mortgage notes payable and line of credit as of June 30, 2011 and December 31, 2010
are summarized below:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="30%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="3%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Date of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Issuance/</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Principal</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Stated Interest Rate at</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Principal Balance Outstanding</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Assumption</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Maturity Date</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">June 30, 2011 <sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">June 30, 2011</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">December 31, 2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Fixed-Rate Mortgage Notes Payable:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">09/15/08</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">10/01/11</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">4.58</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="left">$</td>
<td align="right">45,233</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">48,015</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">02/21/06</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12/01/13</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.91</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">8,934</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,022</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">02/21/06</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">06/30/14</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.20</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">18,544</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,740</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">08/25/05</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">09/01/15</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.33</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">20,602</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20,771</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">09/12/05</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">09/01/15</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.21</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">12,115</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,209</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">12/21/05</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12/08/15</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.71</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">18,589</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,728</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">09/06/07</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12/11/15</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.81</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">4,255</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,292</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">03/29/06</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">04/01/16</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.92</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">16,968</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">04/27/06</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">05/05/16</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.58</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">13,566</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13,720</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">08/29/08</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">06/01/16</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.80</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">6,092</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,162</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">06/20/11</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">06/30/16</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.08</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">11,584</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">11/22/06</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12/01/16</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.76</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">13,858</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13,954</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">12/22/06</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">01/01/17</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.79</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">21,184</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">21,330</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">02/08/07</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">03/01/17</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.00</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">13,775</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13,775</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">06/05/07</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">06/08/17</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.11</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">14,240</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,240</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">10/15/07</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11/08/17</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.63</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">15,376</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">15,474</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">12/15/10</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12/10/26</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.63</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">10,602</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,795</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">03/16/05</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">04/01/30</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.33</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">2,483</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,642</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Contractual Fixed-Rate Mortgage Notes Payable:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">268,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">260,869</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Premiums and Discounts, net:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(876</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,274</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Fixed-Rate Mortgage Notes Payable:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">267,124</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">259,595</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Variable-Rate Line of Credit:
</div></td>
<td> </td>
<td> </td>
<td align="right">12/28/10</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12/27/13</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">LIBOR +3.00%</td>
<td> </td>
<td align="left">$</td>
<td align="right">8,200</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">27,000</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Mortgage Notes Payable and Line of Credit
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">275,324</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">286,595</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96%"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>The weighted average interest rate on all debt outstanding at June 30, 2011 was approximately 5.60%.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td>
<td> </td>
<td>This note has three annual extension options, which gives the Company the ability to extend the term of the note until October 1, 2013. The first of these options was exercised on September 30, 2010.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Mortgage Notes Payable</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2011, the Company had 18 fixed-rate mortgage notes payable, collateralized by a
total of 56 properties. The Company is not a co-borrower, but has limited recourse liabilities that
could result from any one or more of the following circumstances: a borrower voluntarily filing for
bankruptcy, improper conveyance of a property, fraud or material misrepresentation, misapplication
or misappropriation of rents, security deposits, insurance proceeds or condemnation proceeds, or
physical waste or damage to the property resulting from a borrower’s gross negligence or willful
misconduct. The Company will also indemnify lenders against claims resulting from the presence of
hazardous substances or activity involving hazardous substances in violation of environmental laws
on a property. The weighted-average interest rate on the mortgage notes payable as of June 30,
2011 was 5.68%.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has $45,233 of balloon principal payments maturing under one of its long-term mortgages
on September 30, 2011; however, the mortgage has two remaining annual extension options through
2013, and the Company intends to exercise one of these options in 2011. As long as the Company is
in compliance with certain covenants under the mortgage loan, it will be able to exercise the
renewal option. As of June 30, 2011 the Company was in compliance with these covenants.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair market value of all fixed-rate mortgage notes payable outstanding as of June 30, 2011 was
$261,089, as compared to the carrying value stated above of $267,124. The fair market value is
calculated based on a discounted cash flow analysis, using interest rates based on management’s
estimate of market interest rates on long-term debt with comparable terms.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Scheduled principal payments of mortgage notes payable for the remainder of 2011, each of the five
succeeding fiscal years and thereafter are as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="60%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Scheduled principal</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td colspan="1" nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Year</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">payments</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Six months ending December 31, 2011
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">47,081</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2012
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,956</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2013
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,793</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2014
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">21,439</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2015
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">55,282</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">2016
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">58,850</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="right">
<div style="margin-right:30px; text-indent:-0px">Thereafter
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">68,599</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">268,000</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96%"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>The $45.2 million mortgage note issued in September 2008 was
extended on September 30, 2010 for one year. The Company expects to exercise
additional options to extend the maturity date until October 2013.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Line of Credit</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2010, the Company procured a $50,000 line of credit (with Capital One, N.A. serving as
a revolving lender, a letter of credit issuer and as an administrative agent and Branch Banking and
Trust Company serving as a revolving lender and a letter of credit issuer), which matures on
December 28, 2013. The line of credit provides for a senior secured revolving credit facility of
up to $50,000 with a standby letter of credit sublimit of up to $20,000. The line of credit may,
upon satisfaction of certain conditions, be expanded up to $75,000. Currently, nine of the
Company’s properties are pledged as collateral under its line of credit. The interest rate per
annum applicable to the line of credit is equal to the London Interbank Offered Rate, or LIBOR,
plus an applicable margin of up to 3.00%, depending upon the Company’s leverage. The leverage ratio
used in determining the applicable margin for interest on the line of credit is recalculated
quarterly. The Company is subject to an annual maintenance fee of 0.25% per year. The Company’s
ability to access this source of financing is subject to its continued ability to meet customary
lending requirements, such as compliance with financial and operating covenants and its meeting
certain lending limits. One such covenant requires the Company to limit distributions to its
stockholders to 95% of our FFO, with acquisition-related costs required to be expensed under ASC
805 added back to FFO. In addition, the maximum amount the Company may draw under this agreement is
based on a percentage of the value of properties pledged as collateral to the banks, which must
meet agreed upon eligibility standards.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">If and when long-term mortgages are arranged for these pledged properties, the banks will release
the properties from the line of credit and reduce the availability under the line of credit by the
advanced amount of the released property. Conversely, as the Company purchases new properties
meeting the eligibility standards, it may pledge these new properties to obtain additional
availability under this agreement. The availability under the line of credit will also be reduced
by letters of credit used in the ordinary course of business. The Company may use the advances
under the line of credit for both general corporate purposes and the acquisition of new
investments.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">At June 30, 2011, there was $8,200 outstanding under the line of credit at an interest rate of 3.2%
and $5,050 outstanding under letters of credit at a weighted average interest rate of 3.0%. At
June 30, 2011, the remaining borrowing capacity available under the line of credit was $32,314.
The Company was in compliance with all covenants under the line of credit as of June 30, 2011. The
amount outstanding on the line of credit as of June 30, 2011 approximates fair value, because the
debt is short-term and variable rate.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:StockholdersEquityNoteDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>6. Stockholders’ Equity</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the changes in stockholders’ equity for the six months ended June
30, 2011:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="23%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Distributions in</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Capital in</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Notes</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Excess of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Total</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Preferred</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Senior Common</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Common</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Excess of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Receivable</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Accumulated</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Stockholders’</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Par Value</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">from Employees</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Equity</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at December 31, 2010
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">9</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">174,261</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(963</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(61,934</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">111,375</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Issuance of common stock, net
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">34,403</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">34,405</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Repayment of principal on employee notes receivable
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">532</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">532</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Distributions declared to common, senior common and preferred stockholders
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9,302</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9,302</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,850</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,850</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at June 30, 2011
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">11</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">208,664</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(431</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(68,386</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">139,860</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table is a summary of all outstanding notes issued to employees of the Adviser for
the exercise of stock options:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="10%"> </td>
<td width="17%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Strike Price</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Amount of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Outstanding Balance</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Outstanding Balance</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Options</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">of Options</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Promissory Note</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">of Employee Loans at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">of Employee Loans at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Maturity Date</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Interest Rate</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Date Issued</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Exercised</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Exercised</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Issued to Employees</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">June 30, 2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">December 31, 2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">of Note</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">on Note</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Sep 2004
</div></td>
<td> </td>
<td> </td>
<td align="right">25</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15.00</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">375</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">20</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">20</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Sep 2013</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.00</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Apr 2006
</div></td>
<td> </td>
<td> </td>
<td align="right">12</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16.10</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">193</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Apr 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">7.77</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">May 2006
</div></td>
<td> </td>
<td> </td>
<td align="right">50</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16.85</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">843</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">531</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">May 2016</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">7.87</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">May 2006
</div></td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16.10</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">32</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">32</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">32</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">May 2016</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">7.87</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Nov 2006
</div></td>
<td> </td>
<td> </td>
<td align="right">25</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">15.00</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">375</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">375</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">375</td>
<td> </td>
<td> </td>
<td colspan="3" align="center">Nov 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">8.15</td>
<td nowrap="nowrap">%</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">114</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,818</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">431</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">963</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with ASC 505-10-45-2, “Equity,” receivables from employees for the issuance of
capital stock to employees prior to the receipt of cash payment should be reflected in the balance
sheet as a reduction to stockholders’ equity. Therefore, these notes were recorded as full recourse
loans to employees and are included in the equity section of the accompanying consolidated balance
sheets. As of June 30, 2011, each loan maintained its full recourse status.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company’s Board of Directors declared the following distributions per share for the three and
six months ended June 30, 2011 and 2010:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000">For the three months ended June 30,</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000">For the six months ended June 30,</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Common Stock
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">0.375</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.375</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.750</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.750</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Senior Common Stock
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">0.2625</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.2625</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.5250</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.5250</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Series A Preferred Stock
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">0.4843749</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.4843749</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.9687498</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.9687498</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Series B Preferred Stock
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">0.4688</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.4688</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.9375</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">0.9375</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On February 2, 2011, the Company sold 725,000 shares of its common stock at $18.35 per share in an
underwritten public offering of its common stock. The Company also granted the underwriters a
30-day option to purchase up to 108,750 shares of common stock on the same terms and conditions to
cover over-allotments, if any. On February 11, 2011, the underwriters exercised their option to
purchase an additional 108,750 shares of common stock. The net proceeds, including the
over-allotment, after deducting the underwriting discount and offering expenses were $14,322. The
Company used the proceeds of the offering to repay a portion of the outstanding balance under its
line of credit and for general corporate purposes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On June 15, 2011, the Company sold 1,200,000 shares of its common stock at $17.55 per share in an
underwritten public offering of its common stock. The Company also granted the underwriters a
30-day option to purchase up to 180,000 shares of common stock on the same terms and conditions to
cover over- allotments, if any. On July 6, 2011, the underwriters exercised their option to
purchase an additional 174,000 shares of common stock. The net proceeds, including the
over-allotment, after deducting the underwriting discount and offering expenses were $22,705. The
Company used the proceeds of the offering to repay a portion of the outstanding balance under its
line of credit and for general corporate purposes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has an open market sale agreement, or the Open Market Sale Agreement, with Jefferies &
Company, Inc., or Jefferies, under which it may, from time to time, offer to sell shares of its
common stock with an aggregate sales price of up to $25,000 on the open market through Jefferies,
as agent, or to Jefferies, as principal. As of June 30, 2011, the Company had sold 192,365 shares
with net proceeds of $3,400, and has a remaining capacity to sell up to $21,600 of common stock
under the Open Market Sale Agreement with Jefferies. The program was not utilized during the three
months ending June 30, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On March 28, 2011, the Company commenced an offering of an aggregate of 3,500,000 shares of its
senior common stock, par value $0.001 per share, at a price to the public of $15.00 per share, of
which 3,000,000 shares are intended to be offered pursuant to the primary offering and 500,000
shares are intended to be offered pursuant to the Company’s distribution reinvestment plan (the
“DRIP”). The Company, however, reserves the right to reallocate the number of shares being offered
between the primary offering and the DRIP. To date the Company has not sold any shares of senior
common stock in this ongoing offering.
</div>
</div>
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<!-- Begin Block Tagged Note 7 - us-gaap:SubsequentEventsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7. Subsequent Events</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On July 6, 2011, in connection with the Company’s common stock offering completed on June 15, 2011,
the underwriters of the offering exercised and closed their option to purchase an additional
174,000 shares
of common stock from the Company. The Company received approximately $2,865 in additional net
proceeds from the sale of these shares after deducting the underwriting discount and offering
expenses.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">On July 12, 2011, the Company’s Board of Directors declared the following monthly distributions:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="36%"> </td>
<td width="5%"> </td>
<td width="37%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000">Common Stock Cash Distributions</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Distribution</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Record Date</td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Payment Date</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">per Share</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">July 22, 2011
</div></td>
<td> </td>
<td align="left" valign="top">July 29, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.125</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">August 19, 2011
</div></td>
<td> </td>
<td align="left" valign="top">August 31, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.125</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">September 22, 2011
</div></td>
<td> </td>
<td align="left" valign="top">September 30, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.125</td>
<td valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="36%"> </td>
<td width="5%"> </td>
<td width="37%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000">Senior Common Stock Cash Distributions </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="1">Payable to the Holders or</td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Distribution</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="1" style="border-bottom: 1px solid #000000">Record During the Month of:</td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Payment Date</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">per Share</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">July
</div></td>
<td> </td>
<td align="left" valign="top">August 5, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.0875</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">August
</div></td>
<td> </td>
<td align="left" valign="top">September 8, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.0875</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">September
</div></td>
<td> </td>
<td align="left" valign="top">October 7, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.0875</td>
<td valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="36%"> </td>
<td width="5%"> </td>
<td width="37%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000">Series A Preferred Stock Cash Distibutions</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Distribution</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Record Date</td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Payment Date</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">per Share</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">July 22, 2011
</div></td>
<td> </td>
<td align="left" valign="top">July 29, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.1614583</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">August 19, 2011
</div></td>
<td> </td>
<td align="left" valign="top">August 31, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.1614583</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">September 22, 2011
</div></td>
<td> </td>
<td align="left" valign="top">September 30, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.1614583</td>
<td valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="36%"> </td>
<td width="5%"> </td>
<td width="37%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000">Series B Preferred Stock Cash Distibutions</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Distribution</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Record Date</td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Payment Date</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">per Share</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">July 22, 2011
</div></td>
<td> </td>
<td align="left" valign="top">July 29, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.15625</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">August 19, 2011
</div></td>
<td> </td>
<td align="left" valign="top">August 31, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.15625</td>
<td valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">September 22, 2011
</div></td>
<td> </td>
<td align="left" valign="top">September 30, 2011</td>
<td> </td>
<td align="right" valign="top">$</td>
<td align="right" valign="top">0.15625</td>
<td valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
Refer to Note 2 Related-Party Transactions
Refer to Note 2 Related-Party Transactions