At quarter end, our portfolio exceeded a quarter billion dollars.

Over 2.8 million square feet

with 100 percent occupancy

Approximately 70% of net rental revenue is from investment grade tenants—the highest ranked and strongest end of the credit spectrum

As you can see in the pie chart on the right, we now have 11 separate tenants, well diversified by industry—in our REIT’s portfolio…exactly what we are looking for.

Our leases are long term, with an average remaining term of just under 10 years, and all are triple or absolute net—meaning the tenant, not us as landlord is responsible for paying operating expenses, taxes and insurance, and in absolute leases, most capital expenses such as roof and parking lot repair. This lease structure has fewer moving parts, and we believe fewer surprises.

Pricing of our properties has been attractive. Mike Escalante and his acquisitions team have been able to leverage their longstanding relationships and buy assets at an average purchase capitalization rate of 8.1%. That is the unlevered first year yield. Not only do those returns offer a nice cushion above our current shareholder distribution rate of 6.75%, they also exceed, by almost 4 full percentage points (380 basis points shown in the table) our current average debt rate of 4.3%.

Our REIT also benefits from contractual increases in rent, written into our leases with tenants, which average 2.31% portfolio-wide, a number which grows and compounds over the lease term, which we believe provides a measure of inflation protection. With so much recent fiscal stimulus, we are concerned about inflation over the next 4-7 years, and we take comfort in these built-in escalators in our leases.

Our leverage is just above 50%, (approx. 53% debt to total capitalization). At quarter end our REIT stood at $303 million in total capitalization and over $140 million in equity, including over $26 million of equity from myself and other senior officers of the REIT—a keen alignment of interest with shareholders that we believe really differentiates our REIT.

First, shown here, is an assembly and manufacturing building leased to GE Aviation Systems through March 2018, with the lease guaranteed by the parent company, GE, rated AA+ by Standard & Poors. Located in Whippany, NJ, approximately 30 miles west of midtown Manhattan, this is a dense area with attractive nearby amenities. We are not able to show you photographs from inside the building because it is highly secure—GE makes aviation parts for, among other things, the Patriot Missile System, but also the new Boeing 787 Dreamliner. I personally walked the plant and interviewed the business managers to supplement the work our acquisitions team did to ascertain that this location is truly ‘essential’ to the business of GE Aviation.

Our other property acquired in the second quarter of 2012 is the Regional Headquarters of Travelers Indemnity, the largest of 6 subsidiaries of the Travelers Companies—you may know them by the red umbrella logo—they are very big in financial services and insurance. This tenant is another investment grade company, rated AA. This property, located just south of Denver, CO, is leased through June 2024—12 years.

We reported MFFO of approximately $1.9 million, which represents a 262% increase, ALMOST THREE TIMES THE MFFO REPORTED in the same quarter of 2011.

Our cash distributions paid to investors during the same period totaled $1.4 million, which provides ample cash flow to meet our cash distribution requirements, when compared to MFFO.

In addition, we also issue shares pursuant to our Distribution Reinvestment Plan, which we consider to be the same as cash. In the second quarter, we issued $590,000 of DRP share to investors that opted to receive stock in lieu of cash. Adding the stock issuance to our cash payments, our total investor distributions totaled approximately $2 million.

We originally structured the facility in June 2010 as a $150 million facility to which KeyBank committed the first $35 million. The initial facility was priced at LIBOR plus 3.75% subject to a 2% LIBOR floor, or an interest rate of 5.75%.

Given our growth and property acquisitions through 2011, this past November BofA joined Key Bank with a $35 million commitment, along with amending certain terms, most notably was the reduction of the credit spread to 275 basis

points and the removal of the LIBOR floor, cutting our interest rate to effectively 3.0%, or nearly in half. A spread of over 500 bps when compared to our weighted average cap rate of 8.1%.

The facility matures in November 2013 and we have the ability to extend for one year to November 2014, which option we will inevitably execute.

Following the November renegotiation, we added North Shore Bank & Trust, Regions and Fifth Third to the line in 2012. We could not be more pleased with this group of leading financial institutions that have joined the line this year and the confidence these institutions have shown in us.

As of the second quarter we had drawn approximately $96 million from the line.

As we have acquired properties, we have financed these properties with a combination of the revolver and the bridge or mezzanine debt. Each bridge draw was repaid with net equity raised in our offering. This has been a very powerful vehicle in our capital structure as it has allowed us to close transactions and avoid idle cash balances to be deployed, which would have been dilutive to our investors. We intend to continue using this financing combination in future periods.

Our portfolio is currently 53% leveraged on total REIT capitalization as of June 30, 2012, compared to 58% for the same period in 2011. THIS REPRESENTS A 5% DROP IN OUR LEVERAGE RATIO, which heads us in the direction of at or below 50% when we prepare to implement our monetization strategy, be it a listing or a merger transaction.