-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 HHfUnoL4xai+Pyo9VT2dOIDov/RRM+HuHoM+3uZ/Ix/bBKPP4cT1M/3JKPvfYQC/
 X55Tfk21ok2rd9C3sYfJTg==

<SEC-DOCUMENT>0001171520-06-000174.txt : 20060504
<SEC-HEADER>0001171520-06-000174.hdr.sgml : 20060504
<ACCEPTANCE-DATETIME>20060504141738
ACCESSION NUMBER:		0001171520-06-000174
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20060430
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060504
DATE AS OF CHANGE:		20060504

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FRANKLIN STREET PROPERTIES CORP /MA/
		CENTRAL INDEX KEY:			0001031316
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				042724223
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32470
		FILM NUMBER:		06807531

	BUSINESS ADDRESS:	
		STREET 1:		401 EDGEWATER PL
		STREET 2:		STE 200
		CITY:			WAKEFIELD
		STATE:			MA
		ZIP:			01880
		BUSINESS PHONE:		7815571300

	MAIL ADDRESS:	
		STREET 1:		401 EDGEWATER PLACE
		STREET 2:		STE 200
		CITY:			WAKEFIELD
		STATE:			MA
		ZIP:			01880

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FRANKLIN STREET PARTNERS LP
		DATE OF NAME CHANGE:	20010301
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>eps2108.txt
<DESCRIPTION>FRANKLIN STREET PROPERTIES CORP.
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                      ------------------------------------

                                    FORM 8-K

                                 CURRENT REPORT
     Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): April 30, 2006

                        FRANKLIN STREET PROPERTIES CORP.
- --------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

            Maryland                    001-32470             04-3578653
- --------------------------------------------------------------------------------
     (State or Other Juris-            (Commission           (IRS Employer
    diction of Incorporation          File Number)        Identification No.)

       401 Edgewater Place, Suite 200, Wakefield MA          01880-6210
- --------------------------------------------------------------------------------
         (Address of Principal Executive Offices)            (Zip Code)

       Registrant's telephone number, including area code: (781) 557-1300


- --------------------------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)


      Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)

|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)

|_|   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))

|_|   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

Item 2.01. Completion of Acquisition or Disposition of Assets.

      On April 30, 2006, Franklin Street Properties Corp. ("FSP Corp."), five of
its wholly-owned subsidiaries (the "Acquisition Subsidiaries") and five real
estate investment trusts (the "Target REITs"), consummated the acquisition of
the Target REITs by FSP Corp. by means of the merger of each Target REIT with
and into an Acquisition Subsidiary ("the Mergers"), pursuant to the Agreement
and Plan of Merger dated as of March 15, 2006 (the "Merger Agreement"). The
Target REITs are FSP Willow Bend Office Center Corp., FSP Innsbrook Corp., FSP
380 Interlocken Corp., FSP Blue Lagoon Drive Corp., and FSP Eldridge Green Corp.
The Acquisition Subsidiaries are Willow Bend Acquisition Corp., Innsbrook
Acquisition Corp., 380 Interlocken Acquisition Corp., Blue Lagoon Acquisition
Corp., and Eldridge Green Acquisition Corp. FSP Willow Bend Office Center Corp.
owned an office building in Plano, Texas; FSP Innsbrook Corp. owned three office
buildings in Glen Allen, Virginia; FSP 380 Interlocken Corp. owned an office
building in Broomfield, Colorado; FSP Blue Lagoon Drive Corp. owned an office
building in Miami, Florida; and FSP Eldridge Green Corp. owned an office
building in Houston, Texas.

      Pursuant to the Merger Agreement, the preferred stock in each Target REIT
(the "Target Stock") was converted into a number of shares of FSP Corp. common
stock equal to an exchange ratio, which exchange ratio was calculated for each
Target REIT by dividing the price per share of the Target REIT by the market
value of the FSP Corp. common stock. The market value of FSP Corp. common stock
was $20.94 per share calculated by taking the volume weighted average of the
selling price of the FSP Corp. common stock on the American Stock Exchange over
twenty (20) consecutive trading days commencing on March 29, 2006 and ending on
April 26, 2006. Under generally accepted accounting principles in the United
States, FSP Corp. is reporting the market value of FSP Corp. common stock at
$21.01 per share, as further described in the Notes to Condensed Consolidated
Pro Forma Financial Statements included with this Current Report on Form 8-K.
The price per share of each Target REIT is set forth in the table below:

      Target REIT                        Price Per Target Share
      -----------                        ----------------------
      Willow Bend                        $100,000.00
      Innsbrook                          $105,263.16
      380 Interlocken                    $105,000.00
      Blue Lagoon                        $100,000.00
      Eldridge Green                     $121,546.96

<PAGE>

Based on the above-described exchange ratio, the Target Stock was converted into
the number of shares of common stock of FSP Corp. set forth in the table below
and FSP Corp. has reserved for issuance an aggregate of 10,972,279 shares. In
addition, the one share of common stock issued and outstanding for each Target
REIT, and held by FSP Corp., was cancelled. FSP Corp. did not receive any
consideration for the one share of common stock it held in each Target REIT or
for the 49.25 shares of preferred stock it held in FSP Blue Lagoon Drive Corp.

<TABLE>
<CAPTION>
                                  Shares of common stock of       Shares of common stock of
                                    FSP Corp. issuable in         FSP Corp. issuable in the
                                   exchange for each share      aggregate to stockholders of
      Target REIT                      of Target Stock             each Target REIT (1)(2)
      -----------                      ---------------             -----------------------

<S>                                       <C>                            <C>
      Willow Bend                         4,775.55                          938,763
      Innsbrook                           5,026.89                        2,387,775
      380 Interlocken                     5,014.33                        2,406,877
      Blue Lagoon                         4,775.55                        2,625,358
      Eldridge Green                      5,804.53                        2,568,506
                                                                         ----------
      Total                                                              10,972,279
                                                                         ==========
</TABLE>

- ----------
(1)   Rounded to the nearest whole share.
(2)   This number of shares of common stock of FSP Corp. is slightly higher than
      the actual number of shares of common stock of FSP Corp. issued in
      connection with the Mergers due to the fact that FSP Corp. will pay cash
      in lieu of issuing fractional shares of common stock of FSP Corp.

      The Merger Agreement was approved by the board of directors of FSP Corp.
and the board of directors and a majority of the stockholders of each Target
REIT. A number of conflicts of interest are inherent in the relationships among
the Target REITs, the boards of directors of the Target REITs, FSP Corp., FSP
Corp.'s board of directors and their respective affiliates. These conflicts of
interest include, among others:

o     George J. Carter, the President and a director of each Target REIT, is
      President and Chief Executive Officer and a director of FSP Corp. and owns
      an aggregate of 810,531 shares of common stock of FSP Corp.;

o     R. Scott MacPhee, an Executive Vice President, a director of each Target
      REIT and a member of the special committee of each Target REIT's board of
      directors, is also an Executive Vice President of FSP Corp. and owns an
      aggregate of 386,451 shares of common stock of FSP Corp.;

o     William W. Gribbell, an Executive Vice President, a director of each
      Target REIT and a member of the special committee of each Target REIT's
      board of directors, is also an Executive Vice President of FSP Corp. and
      owns an aggregate of 131,212 shares of common stock of FSP Corp.;

o     Barbara J. Fournier, Vice President, Chief Operating Officer, Treasurer,
      Secretary and a director of each Target REIT, is also Vice President,
      Chief Operating Officer, Treasurer, Secretary and a director of FSP Corp.
      and owns an aggregate of 28,934 shares of common stock of FSP Corp.;

o     Janet P. Notopoulos, Vice President of each target REIT and a director of
      FSP Blue Lagoon Drive Corp. and FSP Eldridge Green Corp., is also a Vice
      President and director of FSP Corp. and owns an aggregate of 14,985 shares
      of common stock of FSP Corp.; and
<PAGE>

o     Barry Silverstein, Dennis J. McGillicuddy, John N. Burke and Georgia
      Murray, are the only directors of FSP Corp. who are not also officers or
      directors of any Target REIT.

      Mr. Silverstein and Mr. McGillicuddy, each a director of FSP Corp.,
beneficially owned an aggregate of 102.5 and 33 shares of Target Stock,
respectively. Messrs. Silverstein and McGillicuddy each purchased their shares
in the original offerings of Target Stock and on the same terms as other
stockholders of such Target REITs. These shares of Target Stock held by Messrs.
Silverstein and McGillicuddy converted into approximately 535,346 and
approximately 157,593 shares of common stock of FSP Corp., respectively.

      The spouse of William Gribbell, an executive officer of FSP Corp. and an
executive officer and a director of each Target REIT, owned 0.25 shares of
Target Stock. Mr. Gribbell's spouse purchased her partial share of Target Stock
in the original offering of Target Stock and, except for not paying a sales
commission, on the same terms as other stockholders of such Target REITs. This
partial share of Target Stock held by Mr. Gribbell's spouse converted into
approximately 1,451 shares of common stock of FSP Corp.

      The properties formerly owned by the Target REITs continue to be managed
by FSP Property Management LLC, a wholly-owned subsidiary of FSP Corp. pursuant
to management services agreements under which FSP Corp. previously received
certain fees from each Target REIT for its management services.

Item 9.01. Financial Statements and Exhibits

      (a)   Financial Statements of Business Acquired

            The financial statements required by this item are contained in
            Exhibit 99.1 to this Form 8-K and are incorporated herein by
            reference.

      (b)   Pro Forma Financial Information.

            The pro forma financial information required by this item is
            contained in Exhibit 99.2 to this Form 8-K and is incorporated
            herein by reference.

      (c)   Exhibits.

            See Exhibit Index attached hereto.

<PAGE>

                                    SIGNATURE

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


                                    FRANKLIN STREET PROPERTIES CORP.

Date:  May 4, 2006                  By: /s/ George J. Carter
                                        --------------------------------------
                                        President and Chief Executive Officer

<PAGE>


                                  EXHIBIT INDEX

Exhibit No.                             Description
- -----------                             -----------

2.1*           Agreement and Plan of Merger, dated as of March 15, 2006, by
               and among Franklin Street Properties Corp., the Acquisition
               Subsidiaries and the Target REITs

23.1**         Consent of Braver PC

99.1**         Financial Statements of FSP Willow Bend Office Center Corp.,
               FSP Innsbrook Corp., FSP 380 Interlocken Corp., FSP Blue Lagoon
               Drive Corp., and FSP Eldridge Green Corp.

99.2**         Pro Forma Financial Information of Franklin Street Properties
               Corp.

*     Incorporated herein by reference to Exhibit 2.1 to FSP Corp.'s Current
      Report on Form 8-K, dated and filed on March 16, 2006.

**    Filed herewith.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>2
<FILENAME>ex23-1.txt
<TEXT>

                                                                    Exhibit 23.1


                         CONSENT OF INDEPENDENT AUDITORS


We hereby consent to the inclusion in the Current Report on Form 8-K of Franklin
Street Properties Corp. of our reports dated March 1, 2006 relating to the
financial statements and financial statement schedules for the year ended
December 31, 2005 of FSP Willow Bend Office Center Corp., FSP Innsbrook Corp.,
FSP 380 Interlocken Corp., FSP Blue Lagoon Drive Corp., and FSP Eldridge Green
Corp. that appear in this Form 8-K.


/s/ Braver PC
Newton Massachusetts
May 4, 2006


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>ex99-1.txt
<DESCRIPTION>FINANCIAL STATEMENTS
<TEXT>

                          Index to Financial Statements


                                                                            Page
                                                                            ----

FSP Willow Bend Office Center Corp.

Index to financial statements as of December 31, 2005, 2004 and 2003......   F-2


FSP Innsbrook Corp.

Index to financial statements as of December 31, 2005, 2004 and 2003......  F-16

Index to statements of revenue over certain operating expenses for the
      period January 1, 2003 to July 16, 2003 and for the year ended
      December 31, 2002...................................................  F-30


FSP 380 Interlocken Corp.

Index to financial statements as of December 31, 2005, 2004 and 2003......  F-35

Index to statements of revenue over certain operating expenses for the
      period January 1, 2003 to August 14, 2003 and for the year ended
      December 31, 2002...................................................  F-50


FSP Blue Lagoon Corp.

Index to financial statements as of December 31, 2005 and 2004............  F-55

Index to statements of revenue over certain operating expenses for the
      period January 1, 2003 to November 5, 2003 and for the year ended
      December 31, 2002...................................................  F-69


FSP Eldridge Green Corp.

Index to financial statements as of December 31, 2005 and 2004............  F-74

Index to statements of revenue over certain operating expenses for the
      period January 1, 2004 to January 15, 2004 and for the years ended
      December 31, 2003 and 2002..........................................  F-88


                                      F-1
<PAGE>

                       FSP Willow Bend Office Center Corp.
                              Financial Statements
                        December 31, 2005, 2004 and 2003

                                Table of Contents

                                                                            Page
                                                                            ----

Financial Statements

Independent Auditor's Report.............................................    F-3

Balance Sheets as of December 31, 2005 and 2004..........................    F-4

Statements of Operations for the years ended December 31, 2005,
      2004 and 2003......................................................    F-5

Statements of Changes in Stockholders' Equity for the years ended
      December 31, 2005, 2004 and 2003...................................    F-6

Statements of Cash Flows for the years ended December 31, 2005,
      2004 and 2003......................................................    F-7

Notes to Financial Statements............................................    F-8


                                      F-2
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Willow Bend Office Center Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP Willow Bend Office Center
Corp. as of December 31, 2005 and 2004 and the related statements of operations,
changes in stockholders' equity and cash flows for the years ended December 31,
2005 2004 and 2003.These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Willow Bend Office Center
Corp. as of December 31, 2005, and 2004, and the results of its operations and
its cash flows for the years ended December 31, 2005, 2004 and 2003 in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Braver and Company, P.C.
Newton, Massachusetts
March 1, 2006


                                      F-3
<PAGE>

                       FSP Willow Bend Office Center Corp.
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                    ------------------------------
(in thousands,except shares and par value amounts)                                    2005                 2004
==================================================================================================================

<S>                                                                                  <C>                  <C>
Assets:

Real estate investments, at cost:
     Land                                                                            $ 2,737              $ 2,737
     Buildings and improvements                                                       15,497               15,497
- ------------------------------------------------------------------------------------------------------------------
                                                                                      18,234               18,234

     Less accumulated depreciation                                                     2,095                1,545
- ------------------------------------------------------------------------------------------------------------------

Real estate investments, net                                                          16,139               16,689

Cash and cash equivalents                                                                677                  621
Cash-funded reserves                                                                   1,041                1,062
Restricted cash                                                                          129                  254
Tenant rent receivable                                                                    47                   43
Step rent receivable                                                                     509                  480
Deferred leasing costs, net of accumulated amortization
      of $228 and $101, respectively                                                     356                  482
Prepaid expenses and other assets                                                         23                   14
- ------------------------------------------------------------------------------------------------------------------

      Total assets                                                                   $18,921              $19,645
==================================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                                $   433              $   371
Distributions payable                                                                     --                  273
Tenant security deposits                                                                 129                  254
- ------------------------------------------------------------------------------------------------------------------

     Total liabilities                                                                   562                  898
- ------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies:                                                            --                   --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 206 shares
       authorized, issued and outstanding                                                 --                   --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                                --                   --
     Additional paid-in capital                                                       18,900               18,900
     Retained deficit and distributions in excess of earnings                           (541)                (153)
- ------------------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                                       18,359               18,747
- ------------------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                                      $18,921              $19,645
==================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-4
<PAGE>

                       FSP Willow Bend Office Center Corp.
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                                  For the Year Ended December 31,
                                                                            --------------------------------------------
(in thousands, except shares and per share amounts)                           2005              2004             2003
========================================================================================================================

<S>                                                                           <C>             <C>                <C>
Revenues:
     Rental                                                                   $2,129          $ 3,900            $1,526
- ------------------------------------------------------------------------------------------------------------------------

        Total revenue                                                          2,129            3,900             1,526
- ------------------------------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                                   860              647               647
     Real estate taxes and insurance                                             334              348               322
     Depreciation and amortization                                               677              490               404
- ------------------------------------------------------------------------------------------------------------------------

       Total expenses                                                          1,871            1,485             1,373
- ------------------------------------------------------------------------------------------------------------------------

Income before interest income                                                    258            2,415               153

Interest income                                                                   48               12                16
- ------------------------------------------------------------------------------------------------------------------------

Net income attributable to preferred stockholders                               $306           $2,427              $169
========================================================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                           206              206               206
========================================================================================================================

Net income per preferred share, basic and diluted                             $1,485          $11,782            $  820
========================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-5
<PAGE>

                       FSP Willow Bend Office Center Corp.
                  Statements of Changes in Stockholders' Equity
              For the Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                                            Retained Deficit
                                                            Additional      and Distributions        Total
                                   Preferred    Common        Paid-in         in Excess of       Stockholders'
(in thousands)                       Stock       Stock        Capital           Earnings            Equity
================================================================================================================

<S>                                  <C>         <C>          <C>                <C>               <C>
Balance, December 31, 2002           $ --        $ --         $18,900            $(1,471)          $17,429

Distributions                          --          --             --                (607)             (607)

Net income                             --          --             --                 169               169
- ----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003             --          --          18,900             (1,909)           16,991

Distributions                          --          --             --                (671)             (671)

Net income                             --          --             --               2,427             2,427
- ----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004             --          --          18,900               (153)           18,747

Distributions                          --          --             --                (694)             (694)

Net income                             --          --             --                 306               306
- ----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2005             $ --        $ --        $18,900           $  (541)          $18,359
================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-6
<PAGE>

                       FSP Willow Bend Office Center Corp.
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                          For the Years Ended December 31,
(in thousands)                                                        2005              2004             2003
=================================================================================================================

<S>                                                                   <C>              <C>                <C>
Cash flows from operating activities:
     Net Income                                                       $  306           $2,427             $ 169
     Adjustments to reconcile net income to net cash
         provided by operating activities:
             Depreciation and amortization                               677              490               404
          Changes in operating assets and liabilities:
             Cash-funded reserves                                         21             (587)              540
             Restricted cash                                             125             (186)              (53)
             Tenant rent receivable                                       (4)             (43)              137
             Step rent receivable                                        (29)            (400)              (80)
             Prepaid expenses and other assets                            (9)              (5)               21
             Accounts payable and accrued expenses                        62               47              (128)
             Tenant security deposits                                   (125)             186                53
             Payment of deferred leasing costs                            (1)            (413)             (170)
- -----------------------------------------------------------------------------------------------------------------

                  Net cash provided by operating activities            1,023            1,516               893
- -----------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                       --             (863)             (230)
- -----------------------------------------------------------------------------------------------------------------

                  Net cash used for investing activities                  --             (863)             (230)
- -----------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Distributions to stockholders                                      (967)            (535)             (618)
- -----------------------------------------------------------------------------------------------------------------

                  Net cash used for financing activities                (967)            (535)             (618)
- -----------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                 56              118                45

Cash and cash equivalents, beginning of year                             621              503               458
- -----------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year                                $  677           $  621             $ 503
=================================================================================================================

Supplemental disclosure of cash flow information:

Disclosure of non-cash financing activities:
     Distributions declared but not paid                              $   --           $  273             $ 137
</TABLE>

                See accompanying notes to financial statements.


                                      F-7
<PAGE>

                       FSP Willow Bend Office Center Corp.
                          Notes to Financial Statements

1.    Organization

FSP Willow Bend Office Center Corp. (the "Company") was organized on December
13, 2000 as a Corporation under the laws of the State of Delaware to purchase,
own and operate a commercial building located in Plano, Texas (the "Property").
The Property consists of a two-story office building containing 116,600 total
square feet of space situated on approximately 7 acres of land. The Company
acquired the Property on December 15, 2000 and will operate in a manner intended
to qualify as a real estate investment trust ("REIT") for federal income tax
purposes.

2.    Summary of Significant Accounting Policies

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.

RECLASSIFICATIONS

Certain information in the 2004 and 2003 financial statements has been
reclassified to conform to the 2005 presentation.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the assets are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight line method over the assets'
estimated useful lives as follows:

         Category                               Years
         --------                               -----
         Building - Commercial                    39
         Building Improvements                  15-39
         Furniture and equipment                 5-7

Depreciation expense amounted to $550,000, $417,000, and $376,000 for the years
ended December 31, 2005, 2004 and 2003, respectively.

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2005 and
2004, no such indicators of impairment were identified.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments with an initial
maturity of three months or less to be cash equivalents.


                                      F-8
<PAGE>

                       FSP Willow Bend Office Center Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. Although these funds typically are used for the payment of real estate
assets and deferred leasing commissions, there is no legal restriction on their
use and they may be used for any Company purpose.

RESTRICTED CASH

Restricted cash consists of tenant security deposits.

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the years ended December 31, 2005, 2004 and 2003 rental income was derived
from various tenants. Future receipts are dependent upon the financial strength
of the lessees and their ability to perform under the lease agreements.

The following tenants represent greater than 10% of total revenue:

                                              2005         2004        2003
      Quadrem US, Inc.                         19%         14%          31%
      Bluegreen Vacations                      15%         15%          --
      Coastal Capital Corp.                    10%         10%          13%
      Prelude Systems, Inc                     19%         19%          16%

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents,
cash-funded reserves and restricted cash approximate their fair values based on
their short-term maturity and prevailing interest rates.

TENANT RENT RECEIVABLE

Tenant rent receivable is reported at the amount the Company expects to collect
on balances outstanding at year-end. The Company provides an allowance for
doubtful accounts based on its estimate of a tenant's ability to make future
rent payments. The computation of this allowance is based in part on the
tenant's payment history and current credit status. In 2003, an amount of
$27,000 was written off as a bad debt.


                                      F-9
<PAGE>

                       FSP Willow Bend Office Center Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

STEP RENT RECEIVABLE

Certain leases provide for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreements. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company is
$509,000 and $480,000 at December 31, 2005 and 2004, respectively.

DEFERRED LEASING COSTS

Deferred leasing commissions represent direct and incremental external leasing
costs incurred in the leasing of commercial space. These costs are capitalized
and are amortized on a straight-line basis over the terms of the related lease
agreements. Amortization expense was $128,000, $73,000 and $28,000 for the years
ended December 31, 2005, 2004 and 2003, respectively. Detail of the deferred
leasing costs as of December 31,2005:

      (in thousands)                        2005          2004
      --------------                      ---------------------

      Costs                                $ 584         $ 583
      Accumulated Amortization              (228)         (101)
                                          ---------------------
      Book Value                           $ 356         $ 482
                                          =====================

The estimated annual amortization expense for the five years succeeding December
31, 2005 are as follows:

      (in thousands)
      --------------

           2006                                    $   121
           2007                                    $   111
           2008                                    $    80
           2009                                    $    42
           2010                                    $     2

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$1,700,167 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial property and accounts for its leases as
operating leases. Rental income from leases, which may include rent concessions
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenants. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

                                                          Years Ended
                                                          December, 31
(in thousands)                                   2005         2004        2003
================================================================================

Income from leases                              $1,872       $1,337      $1,327
Bankruptcy settlement [1]                           --        2,032          --
Step rent adjustment                                29          400          80
Reimbursable expenses                              228          131         119
- --------------------------------------------------------------------------------
     Total                                      $2,129       $3,900      $1,526
================================================================================

(1)   Bankruptcy settlement received relative to former tenant, Pacific USA
      Holdings Corporation.


                                      F-10
<PAGE>

                       FSP Willow Bend Office Center Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per share is computed by dividing net income
by the weighted average number of shares outstanding during the period. Diluted
net income per share reflects the potential dilution that could occur if
securities or other contracts to issue shares were exercised or converted into
shares. There were no potential dilutive shares outstanding at December 31,
2005, 2004 and 2003. Subsequent to the completion of the offering of preferred
shares, the holders of common stock are not entitled to share in any income nor
any related distributions.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

For the period ended December 31, 2000, the Company incurred a net operating
loss for income tax purposes of approximately $236,000 that can be carried
forward until it expires in the year 2020.

At December 31, 2005, the Company's net tax basis of its real estate assets was
$16,254,000.

The following schedule reconciles GAAP net income to taxable income subject to
dividend requirements:

(in thousands)                                         2005       2004     2003
================================================================================

GAAP net income                                       $ 306    $ 2,427    $ 169

Add: Book depreciation and amortization                 677        490      404
Deferred Rent                                            39         --       --
Less:  Tax depreciation and amortization               (611)    (2,404)    (409)
Bad debts                                                --       (480)      --
Step rents                                              (29)      (400)     (80)
- --------------------------------------------------------------------------------
Taxable income subject to dividend requirement        $ 382    $  (367)   $  84
================================================================================


                                      F-11
<PAGE>

                       FSP Willow Bend Office Center Corp.
                          Notes to Financial Statements

3.    Income Taxes (continued)

The following schedule summarizes the tax components of the distributions paid
for the years ended December 31:

<TABLE>
<CAPTION>
(in thousands)                      2005                  2004                 2003
                            --------------------  -------------------  -------------------
                            Preferred      %      Preferred      %     Preferred      %
                            ---------  ---------  ---------  --------  ---------  --------
<S>                            <C>       <C>        <C>         <C>       <C>        <C>
Ordinary income                $338       35%       $386         73%      $100        16%
Return of Capital               629       65%        149         27%       518        84%

                            ---------  ---------  ---------  --------  ---------  --------
Total                          $967      100%       $535        100%      $618       100%
                            =========  =========  =========  ========  =========  ========
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of shares of Preferred Stock ("Shares") is entitled to
receive ratably all dividends, if any, declared by the Board of Directors out of
funds legally available. The right to receive dividends shall be non-cumulative,
and no right to dividends shall accrue by reason of the fact that no dividend
has been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to share in any earnings nor any related
dividend.

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the years
ended December 31, 2005, 2004 and 2003 fees incurred under the agreement were
$22,000, $14,000, and $15,000, respectively.


                                      F-12
<PAGE>

                       FSP Willow Bend Office Center Corp.
                          Notes to Financial Statements

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:

                                           Year Ending
      (in thousands)                       December 31,        Amount
                                           ------------        -------

                                              2006              2,098
                                              2007              2,035
                                              2008              1,393
                                              2009                773
                                              2010                 91
                                                               -------
                                                               $6,390
                                                               =======

In addition, the lessees are liable for real estate taxes and certain operating
expenses of the Property.

Upon acquiring the commercial rental property in December 2000, the Company was
assigned the lease agreements between the seller of the Property and the
existing tenants. The original lease periods ranged from five to eleven years
with renewal options.

7.    Subsequent Events

On January 20, 2006, the Board of Directors of the Company declared a cash
distribution of $303,000 payable on February 21, 2006 to stockholders of record
on January 31, 2006.


                                      F-13
<PAGE>

                                  SCHEDULE III

                       FSP Willow Bend Office Center Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2005

<TABLE>
<CAPTION>
                                                                        Initial Cost
                                                             -----------------------------------
                                                                                       Costs
                                                                       Buildings    Capitalized
                                                                     Improvements   (Disposals)
                                                                          and      Subsequent to
Description                                Encumbrances (1)   Land     Equipment    Acquisition
- -----------                                ----------------   ----     ---------    -----------

<S>                                        <C>                <C>        <C>          <C>
   Willow Bend Office Center, Plano, TX                       2,737      14,401       1,096

<CAPTION>
                                                              Historical Costs
                                          ------------------------------------------------------------

                                                   Buildings                              Total Costs,
                                                  Improvements                               Net of     Depreciable
                                                      and                   Accumulated   Accumulated       Life      Date of
Description                                Land    Equipment    Total (2)   Depreciation  Depreciation     Years     Acquisition
- -----------                                ----    ---------    ---------  -------------  ------------     -----     -----------
                                            (in thousands)
<S>                                        <C>        <C>         <C>         <C>          <C>             <C>           <C>
   Willow Bend Office Center, Plano, TX    2,737      15,497      18,234      2,095        16,139          39            2000
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $17,621.


                                      F-14
<PAGE>

                       FSP Willow Bend Office Center Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                         December 31,
                                                --------------------------------
(in thousands)                                   2005        2004        2003
================================================================================

Real estate investments, at cost:
    Balance, beginning of period                $18,234     $17,371     $17,141
        Acquisitions                                 --          --          --
        Improvements                                 --         863         230
        Dispositions                                 --          --          --
- --------------------------------------------------------------------------------

   Balance, end of period                       $18,234     $18,234     $17,371
================================================================================

Accumulated depreciation:
    Balance, beginning of period                $ 1,545     $ 1,128     $   752
        Depreciation                                550         417         376
        Dispositions                                 --          --          --
- --------------------------------------------------------------------------------

    Balance, end of period                      $ 2,095     $ 1,545     $ 1,128
================================================================================


                                      F-15
<PAGE>

                               FSP Innsbrook Corp.
                              Financial Statements
                        December 31, 2005, 2004 and 2003

                                Table of Contents

                                                                            Page
                                                                            ----
Financial Statements

Independent Auditor's Report.............................................   F-17

Balance Sheets as of December 31, 2005 and 2004..........................   F-18

Statements of Operations for the years ended December 31, 2005 and
      2004 and the period May 14, 2003 (date of inception) to
      December 31, 2003..................................................   F-19

Statements of Changes in Stockholders' Equity for the years ended
      December 31, 2005 and 2004 and the period May 14, 2003
      (date of inception) to December 31, 2003...........................   F-20

Statements of Cash Flows for the years ended December 31, 2005 and 2004 and
      the period May 14, 2003 (date of inception) to December 31, 2003...   F-21

Notes to Financial Statements............................................   F-22


                                      F-16
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Innsbrook Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP Innsbrook Corp. as of
December 31, 2005 and 2004, and the related statements of operations, changes in
stockholders' equity and cash flows for the years then ended and the period from
May 14, 2003 (date of inception) to December 31, 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Innsbrook Corp. as of
December 31, 2005 and 2004, and the results of its operations and its cash flows
for the years then ended and for the initial period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Braver and Company, P.C.
Newton, Massachusetts
March 1, 2006


                                      F-17
<PAGE>

                               FSP Innsbrook Corp.
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                   ---------------------------
(in thousands, except shares and par value amounts)                                   2005              2004
==============================================================================================================

<S>                                                                                 <C>               <C>
Assets:

Real estate investments, at cost:
     Land                                                                           $ 3,643           $ 3,643
     Buildings and improvements                                                      33,737            33,737
- --------------------------------------------------------------------------------------------------------------
                                                                                     37,380            37,380

     Less accumulated depreciation                                                    2,126             1,261
- --------------------------------------------------------------------------------------------------------------

Real estate investments, net                                                         35,254            36,119

Acquired real estate leases, net of accumulated amortization
      of $494 and $293, respectively                                                    781               982
Cash and cash equivalents                                                             1,469             1,392
Cash-funded reserves                                                                  2,191             2,191
Tenant rent receivable                                                                    -                24
Step rent receivable                                                                    310               226
Prepaid expenses and other assets                                                       109               118
- --------------------------------------------------------------------------------------------------------------

      Total assets                                                                  $40,114           $41,052
==============================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                               $   646           $   589
Distributions payable                                                                    --               903
- --------------------------------------------------------------------------------------------------------------

     Total liabilities                                                                  646             1,492
- --------------------------------------------------------------------------------------------------------------

Commitments and Contingencies:                                                           --                --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 475 shares
        authorized, issued and outstanding                                               --                --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                               --                --
     Additional paid-in capital                                                      43,607            43,607
     Retained deficit and distributions in excess of earnings                        (4,139)           (4,047)
- --------------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                                      39,468            39,560
- --------------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                                     $40,114           $41,052
==============================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-18
<PAGE>

                               FSP Innsbrook Corp.
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                                                         For the Period
                                                                                                          May 14, 2003
                                                                                                            (date of
                                                                    For the Year Ended December 31,      inception) to
                                                                   ---------------------------------      December 31,
(in thousands, except shares and per share amounts)                   2005                2004                2003
=======================================================================================================================

<S>                                                                    <C>              <C>                  <C>
Revenues:
     Rental                                                            $5,591           $5,581               $ 2,711
- -----------------------------------------------------------------------------------------------------------------------

       Total revenue                                                    5,591            5,581                 2,711
- -----------------------------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                          1,528            1,584                   746
     Real estate taxes and insurance                                      416              404                   179
     Depreciation and amortization                                      1,066            1,066                   488
     Interest                                                              --               --                 2,818
- -----------------------------------------------------------------------------------------------------------------------

       Total expenses                                                   3,010            3,054                 4,231
- -----------------------------------------------------------------------------------------------------------------------

Income (loss) before interest income                                    2,581            2,527                (1,520)

Interest income                                                            63               44                    15
- -----------------------------------------------------------------------------------------------------------------------

Net income (loss) before distributions to common stockholder            2,644            2,571                (1,505)

Distributions paid to common stockholder                                   --               --                    14
- -----------------------------------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders               $2,644           $2,571               $(1,519)
=======================================================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                    475              475                   465
=======================================================================================================================

Net income (loss) per preferred share, basic and diluted               $5,566           $5,413               $(3,267)
=======================================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-19
<PAGE>

                               FSP Innsbrook Corp.
                  Statements of Changes in Stockholders' Equity
 For the Years Ended December 31, 2005 and 2004 and for the Period May 14, 2003
                    (date of inception) to December 31, 2003

<TABLE>
<CAPTION>
                                                                                       Retained Deficit
                                                                     Additional       and Distributions          Total
                                            Preferred     Common       Paid-in           in Excess of        Stockholders'
      (in thousands, except shares)           Stock        Stock       Capital             Earnings              Equity
===========================================================================================================================

<S>                                           <C>          <C>         <C>                  <C>                 <C>
Private offering of 475 shares, net           $ --         $ --        $43,607              $    --             $43,607

Distributions                                   --           --             --               (1,521)             (1,521)

Net loss                                        --           --             --               (1,505)             (1,505)
- ---------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                      --           --         43,607               (3,026)             40,581

Distributions                                   --           --             --               (3,592)             (3,592)

Net income                                      --           --             --                2,571               2,571
- ---------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                      --           --         43,607               (4,047)             39,560

Distributions                                   --           --             --               (2,736)             (2,736)

Net income                                      --           --             --                2,644               2,644
- ---------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2005                    $ --         $ --        $43,607              $(4,139)            $39,468
===========================================================================================================================
</TABLE>

See accompanying notes to financial statements.


                                      F-20
<PAGE>

                               FSP Innsbrook Corp.
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                                    For the Period
                                                                                                                     May 14, 2003
                                                                               For the Year Ended December 31,   (date of inception)
                                                                             -----------------------------------   to December 31,
(in thousands)                                                                    2005                 2004              2003
===================================================================================================================================

<S>                                                                             <C>                  <C>             <C>
Cash flows from operating activities:
     Net Income (loss)                                                          $ 2,644              $ 2,571         $ (1,505)
     Adjustments to reconcile net income (loss) to net cash
          provided by (used for) operating activities:
                 Depreciation and amortization                                    1,066                1,066              488
          Changes in operating assets and liabilities:
                 Cash-funded reserves                                                --                   --           (2,191)
                 Tenant rent receivable                                              24                    2              (26)
                 Step rent receivable                                               (84)                   3             (229)
                 Prepaid expenses and other assets                                    9                   20             (138)
                 Accounts payable and accrued expenses                               57                   (1)             590
- -----------------------------------------------------------------------------------------------------------------------------------

                        Net cash provided by (used for) operating activities      3,716                3,661           (3,011)
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                                  --                   --          (37,380)
     Purchase of acquired real estate leases                                         --                   --           (1,275)
- -----------------------------------------------------------------------------------------------------------------------------------

                        Net cash used for investing activities                       --                   --          (38,655)
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Proceeds from sale of company stock                                             --                   --           47,510
     Syndication costs                                                               --                   --           (3,903)
     Distributions to stockholders                                               (3,639)              (3,565)            (645)
     Proceeds from long-term debt                                                    --                   --           38,122
     Principal payments on long-term debt                                            --                   --          (38,122)
- -----------------------------------------------------------------------------------------------------------------------------------

                        Net cash (used for) provided by financing activities     (3,639)              (3,565)          42,962
- -----------------------------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                            77                   96            1,296

Cash and cash equivalents, beginning of period                                    1,392                1,296               --
- -----------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                        $ 1,469              $ 1,392          $ 1,296
===================================================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
     Interest                                                                   $    --              $    --          $ 2,818

Disclosure of non-cash financing activities:
     Distributions declared but not paid                                        $    --              $   903          $   876
</TABLE>

                 See accompanying notes to financial statements.


                                      F-21
<PAGE>

                               FSP Innsbrook Corp.
                          Notes to Financial Statements

1.    Organization

FSP Innsbrook Corp. (the "Company") was organized on May 14, 2003 as a
Corporation under the laws of the State of Delaware to purchase, own and operate
three recently constructed Class "A" suburban office buildings containing
approximately 297,789 square feet of rentable space located on approximately 17
acres of land in Glen Allen, Henrico County, VA. (the "Property"). The Company
acquired the Property on July 16, 2003.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from inception to December 31, 2003 are not
necessarily indicative of the results to be obtained for other interim periods
or for the full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.

RECLASSIFICATIONS

Certain information in the 2004 and 2003 financial statement has been
reclassified to conform to the 2005 presentation.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the asset are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows:

         Category                               Years
         --------                               -----
         Building - Commercial                    39
         Building Improvements                  15-39
         Furniture & Equipment                   5-7

The following schedule reconciles the cost of the Property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheet:

      (in thousands)

      Price per Offering Memorandum                  $  38,122
      Plus: Acquisition fees                               238
            Other acquisition costs                        295
      -----------------------------------------------------------
        Total Acquisition Costs                      $  38,655
      ===========================================================


                                      F-22
<PAGE>

                               FSP Innsbrook Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

These costs were recorded in the Company's Balance Sheets as follows:

      (in thousands)

      Land                                           $  3,643
      Building                                         33,737
      Acquired real estate leases                       1,275
      ----------------------------------------------------------
        Total recorded on Balance Sheets             $ 38,655
      ==========================================================

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2005 and
2004, no such indicators of impairment were identified.

Depreciation expense of $865,000, $865,000 and $396,000 is included in
Depreciation and Amortization in the Company's Statements of Operations for the
periods ended December 31, 2005, 2004 and 2003, respectively.

ACQUIRED REAL ESTATE LEASES

Acquired real estate leases represent the estimated value of legal and leasing
costs related to acquired leases that were included in the purchase price when
the Company acquired the Property. Under Statement of Financial Accounting
Standard ("SFAS") No. 141 "Business Combinations", which was approved by the
Financial Accounting Standards Board ("FASB") in June 2001, the Company is
required to segregate these costs from its investment in real estate. The
Company subsequently amortizes these costs on a straight-line basis over the
weighted-average remaining life of the related leases. Amortization expense of
$201,000, $201,000 and $92,000 is included in Depreciation and Amortization in
the Company's Statements of Operations for the periods ended December 31, 2005,
2004 and 2003, respectively.

Acquired real estate leases included in the purchase price of the property were
$1,275,000 and are being amortized over a period of six years in respect of the
lease assumed. Detail of the acquired real estate leases as of December 31,:

      (in thousands)                                    2005             2004
      --------------                                  --------         --------

      Cost                                            $  1,275         $  1,275
      Accumulated amortization                            (494)            (293)
                                                      --------         --------
      Book value                                      $    781         $    982
                                                      ========         ========

The estimated annual amortization expense for the four years succeeding December
31, 2005 are as follows:

      (in thousands)
      --------------
      2006                                    $    201
      2007                                    $    201
      2008                                    $    201
      2009                                    $    178

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an initial maturity of
three months or less to be cash equivalents.


                                      F-23
<PAGE>

                               FSP Innsbrook Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. These funds typically are used for the payment of real estate assets
and deferred leasing commissions; however, there is no legal restriction on
their use and they may be used for any Company purpose.

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

The Property is currently leased through November 14, 2009 to Capital One
Services, Inc., a wholly owned subsidiary of Capital One Financial Corporation.

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents and
cash-funded reserves approximate their fair values based on their short-term
maturity and prevailing interest rates.

STEP RENT RECEIVABLE

The lease provides for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreement. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, is
$310,000 and $226,000 at December 31, 2005 and 2004, respectively.

TENANT RENT RECEIVABLE

Tenant rent receivable is reported at the amount the Company expects to collect
on balances outstanding at year-end. Management monitors outstanding balances
and tenant relationships and concluded that any realization losses would be
immaterial.

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$3,903,000 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.


                                      F-24
<PAGE>

                               FSP Innsbrook Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial property and accounts for its leases as
operating lease. Rental income from leases, which may include rent concession
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenant. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

                                      Year Ended     Year Ended    Period Ended
                                     December 31,   December 31,   December, 31
(in thousands)                           2005           2004           2003
================================================================================
Income from leases                      $3,450         $3,640        $1,652
Straight-line rent adjustment               84            (3)           229
Reimbursable expenses                    2,057          1,944           830
- --------------------------------------------------------------------------------

     Total                              $5,591         $5,581        $2,711
================================================================================

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per preferred share is computed by dividing
net income by the weighted average number of preferred shares outstanding during
the period. Diluted net income per preferred share reflects the potential
dilution that could occur if securities or other contracts to issue shares were
exercised or converted into shares. There were no potential dilutive shares
outstanding at December 31, 2005, 2004 and 2003. Subsequent to the completion of
the offering of preferred shares, the holders of common stock are not entitled
to share in any income nor any related dividend.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

For the period ended December 31, 2003, the Company incurred a net operating
loss for income tax purposes of approximately $1,194,000 that can be carried
forward until it expires in the year 2023.

At December 31, 2005, the Company's net tax basis of its real estate assets is
$36,449,000.


                                      F-25
<PAGE>

                               FSP Innsbrook Corp.
                          Notes to Financial Statements

3.    Income Taxes (continued)

The following schedule reconciles net income (loss) to taxable income subject to
dividend requirements:

<TABLE>
<CAPTION>
                                                      Year Ended      Year Ended     Period Ended
                                                     December 31,    December 31,    December 31,
(in thousands)                                           2005            2004            2003
==================================================================================================

<S>                                                     <C>             <C>            <C>
GAAP net income (loss)                                  $2,644          $2,571         $(1,505)

Add: Book depreciation and amortization                  1,066           1,066             488
Deferred rent                                               --            (446)            446
Less: Tax depreciation and amortization                   (902)           (900)           (394)
Straight-line rents                                        (84)              3            (229)
- --------------------------------------------------------------------------------------------------

Taxable income (loss)[1]                                $2,724          $2,294         $(1,194)
==================================================================================================
</TABLE>

(1)   A tax loss is not subject to a dividend requirement.

The following schedule summarizes the tax components of the distributions paid
for the period ended December 31:

<TABLE>
<CAPTION>
(in thousands)                           2005                            2004                           2003
                            ------------------------------  -----------------------------  -----------------------------
                            Preferred   Common       %      Preferred   Common      %      Preferred   Common      %
                            ---------  --------  ---------  ---------  --------  --------  ---------  --------  --------
<S>                           <C>        <C>       <C>        <C>        <C>        <C>       <C>        <C>       <C>
Ordinary income               $2,750     $ --       76%       $2,320     $ --        65%      $ --       $ --        0%
Return of Capital                889       --       24%        1,245       --        35%       631         14      100%
                            ---------  --------  ---------  ---------  --------  --------  ---------  --------  --------
Total                         $3,639     $ --      100%       $3,565     $ --       100%      $631       $ 14      100%
                            =========  ========  =========  =========  ========  ========  =========  ========  ========
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of shares of Preferred Stock ("Shares") is entitled to
receive ratably all dividends, if any, declared by the Board of Directors out of
funds legally available. The right to receive dividends shall be non-cumulative,
and no right to dividends shall accrue by reason of the fact that no dividend
has been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to share in any earnings nor any related
dividend.


                                      F-26
<PAGE>

                               FSP Innsbrook Corp.
                          Notes to Financial Statements

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the periods
ended December 31, 2005, 2004 and 2003, fees incurred under the agreement were
$56,000, $56,000 and $24,500 respectively.

An acquisition fee of $237,500 and other costs of $295,000 were paid in 2003 to
an affiliate of the Common Shareholder. Such fees were included in the cost of
the real estate.

Syndication fees of $3,800,000 were paid in 2003 to an affiliate of the Common
Shareholder for services related to syndication of the Company's preferred
stock.

During 2003, the Company borrowed and repaid in full a note payable to FSP,
principal of $38,122,000 with interest equal to the Citizens Bank base rate.
Interest paid to FSP was $87,000. The average interest rate during the time the
loan was outstanding was 4.50%.

A commitment fee of $2,731,000 was paid in 2003 to FSP for obtaining the first
mortgage loan. Such amount is included in interest expense on the Statements of
Operations.

The Company paid a distribution in 2003 of $14,000 to the common stockholder
relating to the operations of the Company prior to the completion of the
offering of preferred shares.

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rentals due under a non-cancelable
operating lease as follows:

                                Year Ending
      (in thousands)            December 31,         Amount
                                ------------        --------

                                    2006            $ 3,518
                                    2007              3,589
                                    2008              3,661
                                    2009              3,090
                                                    --------
                                                    $13,858
                                                    ========

In addition, the lessee is liable for real estate taxes and certain operating
expenses of the property.

Upon acquiring the commercial rental property in July 2003, the Company was
assigned the lease agreement between the seller of the Property and the existing
tenant. The original lease period expires in six years with renewal options.

7.    Subsequent Events

On January 13, 2006, LandAmerica Financial Group, Inc. ("Subtenant") signed a
sublease agreement with Capital One Services, Inc. ("Sublandlord") through the
duration of the Sublandlord's lease expiring October 31, 2009. On the same date,
the Company entered into a direct lease with LandAmerica Financial Group, as
tenant, with rental operation commencing November 1, 2009. The Company is
obligated to pay an allowance of approximately $5,430,000 (the "Reimbursement
Allowance") to reimburse the tenant for the costs of alterations made upon the
tenant's continued occupancy of the premises (including alterations made prior
to the commencement date). Landlord shall not be required to pay the
Reimbursement Allowance before the commencement date of the term. An amount of
$1,264,000 will be paid in 2006 and the remaining balance of $4,166,000 is to be
paid November 1, 2009.

On January 13, 2006, related to the sublease and lease agreements mentioned
above, the Company agreed to pay a commission to CB Richard Ellis of Virginia,
Inc. ("Broker") in the amount of $911,000. An amount of $418,000 was paid to the
Broker in February 2006.

On January 20, 2006, the Board of Directors of the Company declared a cash
distribution of $934,000 payable on February 21, 2006 to stockholders of record
on January 31, 2006.


                                      F-27
<PAGE>

                                  SCHEDULE III

                               FSP Innsbrook Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2005

<TABLE>
<CAPTION>
                                                                        Initial Cost
                                                             -----------------------------------
                                                                                       Costs
                                                                       Buildings    Capitalized
                                                                     Improvements   (Disposals)
                                                                          and      Subsequent to
Description                                Encumbrances (1)   Land     Equipment    Acquisition
- -----------                                ----------------   ----     ---------    -----------

<S>                                        <C>                <C>        <C>          <C>
   Innsbrook, Glen Allen, VA                                  3,643      33,737       --

<CAPTION>
                                                               Historical Costs
                                           ------------------------------------------------------------

                                                    Buildings                              Total Costs,
                                                   Improvements                               Net of     Depreciable
                                                       and                   Accumulated   Accumulated       Life      Date of
Description                                 Land    Equipment    Total (2)   Depreciation  Depreciation     Years     Acquisition
- -----------                                 ----    ---------    ---------  -------------  ------------     -----     -----------
                                             (in thousands)
<S>                                         <C>       <C>        <C>           <C>          <C>             <C>           <C>
   Innsbrook, Glen Allen, VA                3,643     33,737     37,380        2,126        35,254          39            2003
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $38,655.


                                      F-28
<PAGE>

                               FSP Innsbrook Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                           December 31,
                                                  ------------------------------
(in thousands)                                      2005       2004       2003
================================================================================

Real estate investments, at cost:
   Balance, beginning of period                   $37,380    $37,380    $    --
       Acquisitions                                    --         --     37,380
       Improvements                                    --         --         --
       Dispositions                                    --         --         --
- --------------------------------------------------------------------------------

   Balance, end of period                         $37,380    $37,380    $37,380
================================================================================

Accumulated depreciation:
    Balance, beginning of period                   $1,261       $396    $    --
        Depreciation                                  865        865        396
        Dispositions                                   --         --         --
- --------------------------------------------------------------------------------

    Balance, end of period                         $2,126     $1,261    $   396
================================================================================


                                      F-29
<PAGE>

                                    INNSBROOK
                              FINANCIAL STATEMENTS
                                 FOR THE PERIOD
                      JANUARY 1, 2003 TO JULY 16, 2003 AND
                               FOR THE YEAR ENDED
                                DECEMBER 31, 2002


                                    CONTENTS

                                                                            PAGE

Independent auditors' report                                                F-31

Statements of revenue over certain operating expenses                       F-32

Notes accompanying the statements of revenue over certain
      operating expenses                                                    F-33


                                      F-30
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders

FSP Innsbrook Corp.
Wakefield, Massachusetts


We have audited the accompanying statements of revenue over certain operating
expenses (the "Statements") of Innsbrook for the period January 1, 2003 to July
16, 2003 and for the year ended December 31, 2002. These Statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these Statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the Statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the Statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall Statements'
presentation. We believe that our audits provide a reasonable basis for our
opinion.

The accompanying Statements were prepared to comply with the requirements of
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission, and
exclude certain expenses described in Note 2 and, therefore, are not intended to
be a complete presentation of the Property's revenue and expenses.

In our opinion, these Statements referred to above present fairly, in all
material respects, the revenue over certain operating expenses (as described in
Note 2) of Innsbrook for the period January 1, 2003 to July 16, 2003 and for the
year ended December 31, 2002, in conformity with the basis of accounting
described in Note 2.


/s/ Braver and Company, P.C.
Newton, Massachusetts
June 27, 2005


                                      F-31
<PAGE>

                                    INNSBROOK
              STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
               FOR THE PERIOD JANUARY 1, 2003 TO JULY 16, 2003 AND
                        FOR YEAR ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                    January 1, 2003 to    For the Year Ended
                                                       July 16, 2003       December 31, 2002
                                                       -------------       -----------------
Revenue

<S>                                                     <C>                    <C>
  Rental income                                         $2,840,645             $5,504,128
                                                        ----------             ----------

Certain operating expenses (Note 2):

  Taxes and insurance                                      192,380                348,588
  Management fees                                           92,396                156,091
  Administrative                                            48,848                 78,062
  Operating and maintenance                                595,990              1,190,268
                                                        ----------             ----------

                                                           929,614              1,773,009
                                                        ----------             ----------

Excess of revenue over certain operating expenses       $1,911,031             $3,731,119
                                                        ==========             ==========
</TABLE>

               The accompanying notes are an integral part of the
             statements of revenue over certain operating expenses.


                                      F-32
<PAGE>

                                    INNSBROOK
    NOTES ACCOMPANYING STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
               FOR THE PERIOD JANUARY 1, 2003 TO JULY 16, 2003 AND
                        FOR YEAR ENDED DECEMBER 31, 2002


1.    DESCRIPTION OF THE PROPERTY:

The accompanying statements of revenue over certain operating expenses (the
"Statements") include the operations of a commercial building located in Glen
Allen, Virginia (the "Property"). The Property consists of three Class "A"
suburban office buildings containing in the aggregate approximately 297,789
square feet of rentable space located on 17 acres of land. The Property was
owned by Highwoods Realty Limited Partnership and sold to FSP Innsbrook Corp.
(the "Company") on July 17, 2003.

2.    BASIS OF ACCOUNTING:

The accompanying Statements have been prepared on the accrual basis of
accounting. The Statements have been prepared in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, these Statements exclude
certain historical expenses not comparable to the operations of the Property
after acquisition such as amortization, depreciation, interest, corporate
expenses and certain other costs not directly related to future operations of
the Property.

3.    REVENUE RECOGNITION:

Rental revenue includes income from the lease, certain reimbursable expenses,
and straight-line rent adjustments associated with renting the property. A
summary of rental revenue is shown in the following table:

                                          January 1, 2003         Year Ended
                                                 to              December 31,
                                           July 16, 2003             2002
                                           -------------         ------------

      Income from lease                      $ 1,921,969          $3,508,398
      Straight-line rent adjustment              (29,529)            230,938
      Reimbursable expenses                      948,205           1,764,792
                                             -----------          ----------

                       Total                 $ 2,840,645          $5,504,128
                                             ===========          ==========

Innsbrook has retained substantially all of the risks and benefits of the
Property and accounts for its lease as an operating lease. Rental income from
the lease, which includes rent concessions (including free rent and tenant
improvement allowances) and scheduled increases in rental rates during the lease
term, is recognized on a straight-line basis. Innsbrook does not have any
percentage rent arrangements with its tenant. Reimbursable costs are included in
rental income in the period earned.

4.    USE OF ESTIMATES:

The preparation of the Statements in conformity with the basis of accounting
described in Note 2 requires management to make estimates and assumptions that
affect the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

5.    CONCENTRATIONS OF RISKS:

For the period January 1, 2003 to July 16, 2003 and for the year ended December
31, 2002, rental income was received from one lessee. As such, future receipts
are dependent upon the financial strength of the lessee and its ability to
perform under the lease agreement.


                                      F-33
<PAGE>

                                    INNSBROOK
    NOTES ACCOMPANYING STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
               FOR THE PERIOD JANUARY 1, 2003 TO JULY 16, 2003 AND
                        FOR YEAR ENDED DECEMBER 31, 2002


6.    LEASES:

Innsbrook, as lessor, has minimum future rentals due under a non-cancelable
operating lease as follows:

                              Year Ending
                              December 31,            Amount
                              ------------           --------
      (In thousands)
                                2003                  $ 1,651
                                2004                    3,640
                                2005                    3,450
                                2006                    3,518
                                2007                    3,589
                             Thereafter                 6,751
                                                      -------
                                                      $22,599
                                                      =======

In addition, the lessee is liable for real estate taxes and operating expenses
as direct expenses to the lessee.


                                      F-34
<PAGE>

                            FSP 380 Interlocken Corp.
                              Financial Statements
                        December 31, 2005, 2004 and 2003

                                Table of Contents

                                                                            Page
                                                                            ----

Financial Statements

Independent Auditor's Report.............................................   F-36

Balance Sheets as of December 31, 2005 and 2004 .........................   F-37

Statements of Operations for the years ended December 31, 2005 and 2004
      and the period June 24, 2003 (date of inception) to
      December 31, 2003..................................................   F-38

Statements of Changes in Stockholders' Equity for the years ended
      December 31, 2005 and 2004 and the period June 24, 2003
      (date of inception) to December 31, 2003...........................   F-39

Statements of Cash Flows for the years ended December 31, 2005 and 2004
      and the period June 24, 2003 (date of inception) to
      December 31, 2003..................................................   F-40

Notes to Financial Statements............................................   F-41


                                      F-35
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP 380 Interlocken Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP 380 Interlocken Corp. as
of December 31, 2005 and 2004, and the related statements of operations, changes
in stockholders' equity and cash flows for the years ended December 31, 2005 and
2004 and the period from June 24, 2003 (date of inception) to December 31, 2003.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP 380 Interlocken Corp. as of
December 31, 2005 and 2004, and the results of its operations and its cash flows
for the years ended December 31, 2005 and 2004 and for the initial period ended
December 31, 2003 in conformity with accounting principles generally accepted in
the United States of America.


/s/ Braver and Company, P.C.
Newton, Massachusetts
March 1, 2006


                                      F-36
<PAGE>

                            FSP 380 Interlocken Corp.
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                      -------------------------------
(in thousands,except shares and par value amounts)                                       2005                2004
=====================================================================================================================

<S>                                                                                     <C>                 <C>
Assets:

Real estate investments, at cost:
     Land                                                                               $ 5,287             $ 5,287
     Buildings and improvements                                                          27,223              27,207
- ---------------------------------------------------------------------------------------------------------------------
                                                                                         32,510              32,494

     Less accumulated depreciation                                                        1,686                 988
- ---------------------------------------------------------------------------------------------------------------------

Real estate investments, net                                                             30,824              31,506

Acquired real estate leases, net of accumulated amortization
      of $601 and $352, respectively                                                        352                 601
Acquired favorable real estate leases, net of accumulated amortization
      of $3,152 and $1,848, respectively                                                  1,848               3,152
Deferred leasing costs, net of accumulated amortization
      of $1 and $0, respectively                                                              8                  --
Cash and cash equivalents                                                                 2,204               2,275
Cash-funded reserves                                                                      2,830               2,855
Restricted cash                                                                              39                  32
Tenant rent receivable                                                                      242                  30
Step rent receivable                                                                        247                 208
Prepaid expenses and other assets                                                           104                 103
- ---------------------------------------------------------------------------------------------------------------------

      Total assets                                                                      $38,698             $40,762
=====================================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                                   $ 1,309             $ 1,218
Distributions payable                                                                        --               1,161
Tenant security deposits                                                                     39                  32
- ---------------------------------------------------------------------------------------------------------------------

     Total liabilities                                                                    1,348               2,411
- ---------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies:                                                               --                  --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 480 shares
       authorized, issued and outstanding                                                    --                  --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                                   --                  --
     Additional paid-in capital                                                          44,092              44,092
     Retained deficit and distributions in excess of earnings                            (6,742)             (5,741)
- ---------------------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                                          37,350              38,351
- ---------------------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                                         $38,698             $40,762
=====================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-37
<PAGE>

                            FSP 380 Interlocken Corp.
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                                                                 For the Period
                                                                                                                  June 24, 2003
                                                                                                                     (date of
(in thousands, except shares and per share amounts)                       For the Year Ended December 31,           inception)
                                                                         --------------------------------        to December 31,
                                                                             2005                 2004                2003
===================================================================================================================================

<S>                                                                         <C>                  <C>                <C>
Revenues:
     Rental                                                                 $6,100               $5,558             $ 2,393
- -----------------------------------------------------------------------------------------------------------------------------------

       Total revenue                                                         6,100                5,558               2,393
- -----------------------------------------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                               1,442                1,343                 522
     Real estate taxes and insurance                                         1,283                1,231                 391
     Depreciation and amortization                                             948                  946                 394
     Interest                                                                   --                   --               2,854
- -----------------------------------------------------------------------------------------------------------------------------------

       Total expenses                                                        3,673                3,520               4,161
- -----------------------------------------------------------------------------------------------------------------------------------

Income (loss) before interest income                                         2,427                2,038              (1,768)

Interest income                                                                111                   95                  17
- -----------------------------------------------------------------------------------------------------------------------------------

Net income (loss) before distributions to common stockholder                 2,538                2,133              (1,751)

Distributions paid to common stockholder                                        --                   --                 318
- -----------------------------------------------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders                    $2,538               $2,133             $(2,069)
===================================================================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                         480                  480                 392
===================================================================================================================================

Net income (loss) per preferred share, basic and diluted                    $5,288               $4,444             $(5,278)
===================================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-38
<PAGE>

                            FSP 380 Interlocken Corp.
                  Statements of Changes in Stockholders' Equity
 For the Years Ended December 31, 2005 and 2004 and for the Period June 24, 2003
                    (date of inception) to December 31, 2003

<TABLE>
<CAPTION>
                                                                                     Retained Decifit
                                                                    Additional      and Distributions        Total
                                            Preferred    Common       Paid in          in Excess of      Stockholders'
       (in thousands, except shares)          Stock       Stock       Capital            Earnings           Equity
=======================================================================================================================

<S>                                           <C>         <C>         <C>                 <C>               <C>
Private offering of 480 shares, net           $ --        $ --        $44,092             $    --           $44,092

Distributions                                   --          --             --              (1,540)           (1,540)

Net loss                                        --          --             --              (1,751)           (1,751)
- -----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                      --          --         44,092              (3,291)           40,801

Distributions                                   --          --             --              (4,583)           (4,583)

Net income                                      --          --             --               2,133             2,133
- -----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                      --          --         44,092              (5,741)           38,351

Distributions                                   --          --             --              (3,539)           (3,539)

Net income                                      --          --             --               2,538             2,538
- -----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2005                    $ --        $ --        $44,092             $(6,742)          $37,350
=======================================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-39
<PAGE>

                            FSP 380 Interlocken Corp.
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                                    For the Period
                                                                                                                    June 24, 2003
                                                                              For the Year Ended December 31,    (date of inception)
                                                                           -----------------------------------     to December 31,
(in thousands)                                                                  2005                  2004               2003
====================================================================================================================================

<S>                                                                            <C>                   <C>                <C>
Cash flows from operating activities:
     Net income (loss)                                                         $ 2,538               $ 2,133            $ (1,751)
     Adjustments to reconcile net income (loss) to net cash
        provided by (used for) operating activities:
             Depreciation and amortization                                         948                   946                 394
             Amortization of favorable lease                                     1,304                 1,305                 543
         Changes in operating assets and liabilities:
             Cash-funded reserves                                                   25                    17              (2,872)
             Restricted cash                                                        (7)                   --                 (32)
             Tenant rent receivable                                               (212)                  194                (224)
             Step rent receivable                                                  (39)                   86                (294)
             Prepaid expenses and other assets                                      (1)                   (6)                (97)
             Accounts payable and accrued expenses                                  91                    28               1,190
             Tenant security deposits                                                7                    --                  32
             Payment of deferred leasing costs                                      (9)                   --                  --
- ------------------------------------------------------------------------------------------------------------------------------------

                       Net cash provided by (used for) operating activities      4,645                 4,703              (3,111)
- ------------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                                (16)                  (17)            (32,477)
     Purchase of acquired real estate leases                                        --                    --                (953)
     Purchase of acquired favorable real estate leases                              --                    --              (5,000)
- ------------------------------------------------------------------------------------------------------------------------------------

                       Net cash used for investing activities                      (16)                  (17)            (38,430)
- ------------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Proceeds from sale of company stock                                            --                    --              48,010
     Syndication costs                                                              --                    --              (3,918)
     Distributions to stockholders                                              (4,700)               (4,491)               (471)
     Proceeds from long-term debt                                                   --                    --              38,000
     Principal payments on long-term debt                                           --                    --             (38,000)
- ------------------------------------------------------------------------------------------------------------------------------------

                       Net cash (used for) provided by financing activities     (4,700)               (4,491)             43,621
- ------------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                               (71)                  195               2,080

Cash and cash equivalents, beginning of period                                   2,275                 2,080                  --
- ------------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                       $ 2,204               $ 2,275             $ 2,080
====================================================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
     Interest                                                                  $    --               $    --             $ 2,854

Disclosure of non-cash financing activities:
     Distributions declared but not paid                                       $    --               $ 1,161             $ 1,069
</TABLE>

                See accompanying notes to financial statements.


                                      F-40
<PAGE>

                            FSP 380 Interlocken Corp.
                          Notes to Financial Statements

1.    Organization

FSP 380 Interlocken Corp. (the "Company") was organized on June 24, 2003 as a
Corporation under the laws of the State of Delaware to purchase, own and operate
a ten-story, multi-tenant Class "A" suburban office tower containing
approximately 240,184 square feet of rentable space located on approximately 13
acres of land in Broomfield, CO (the "Property"). The company acquired the
Property on August 15, 2003.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from inception to December 31, 2003 are not
necessarily indicative of the results to be obtained for other interim periods
or for the full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.

RECLASSIFICATIONS

Certain information in the 2004 and 2003 financial statements has been
reclassified to conform to the 2005 presentation.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the assets are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows:

      Category                               Years
      --------                               -----
      Building - Commercial                    39
      Building Improvements                  15-39
      Furniture & Equipment                   5-7

The following schedule reconciles the cost of the Property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheet:

      (in thousands)

      Price per Offering Memorandum                        $38,000
      Plus:  Acquisition fees                                  240
      Plus:  Other acquisition costs                           190
      ---------------------------------------------------------------
        Total Acquisition Costs                            $38,430
      ===============================================================


                                      F-41
<PAGE>

                            FSP 380 Interlocken Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

These costs were recorded in the Company's Balance Sheets as follows:

     (in thousands)
     Land                                                 $ 5,287
     Building                                              27,190
     Acquired real estate leases                              953
     Acquired favorable real estate leases                  5,000
     ---------------------------------------------------------------
       Total recorded on Balance Sheets                   $38,430
     ===============================================================

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2005 and
2004, no such indicators of impairment were identified.

Depreciation expense of $698,000, $698,000, and $290,000 is included in
Depreciation and Amortization in the Company's Statements of Operations for the
periods ended December 31, 2005, 2004 and 2003, respectively.

ACQUIRED REAL ESTATE LEASES

Acquired real estate leases represents the estimated value of legal and leasing
costs related to acquired leases that were included in the purchase price when
the Company acquired the Property. Under Statement of Financial Accounting
Standards ("SFAS") No. 141 "Business Combinations", which was approved by the
Financial Accounting Standards Board ("FASB") in June 2001, the Company is
required to segregate these costs from its investment in real estate. The
Company subsequently amortizes these costs on a straight-line basis over the
life of the related leases. Amortization expense of approximately $249,000,
$248,000 and $104,000 is included in Depreciation and Amortization in the
Company's Statements of Operations for the periods ended December 31, 2005, 2004
and 2003, respectively.

Acquired real estate leases included in the purchase price of the Property were
$953,000 and are being amortized over the weighted-average period of four years
in respect of the leases assumed. Detail of the acquired real estate leases as
of December 31,:

      (in thousands)                    2005             2004
      --------------                  --------         --------
      Cost                            $    953         $    953
      Accumulated amortization            (601)            (352)
                                      --------         --------
      Book value                      $    352         $    601
                                      ========         ========

The estimated annual amortization expense for the two years succeeding December
31, 2005 are as follows:

      (in thousands)
      --------------
      2006                                    $ 249
      2007                                    $ 103

ACQUIRED FAVORABLE REAL ESTATE LEASE

The acquired favorable real estate lease is the estimated benefit the Company
receives when the lease payments due under a tenant's lease exceed the market
rate of the lease at the date the property was acquired. Under SFAS 141 the
Company is required to capitalize this difference and report it separately from
its investment in real estate. The Company subsequently amortizes this amount on
a straight-line basis over the remaining life of the tenant's lease.
Amortization of $1,304,000, $1,305,000 and $543,000 is shown as a reduction of
rental income in the Company's Statements of Operations for the periods ended
December 31, 2005, 2004 and 2003, respectively.


                                      F-42
<PAGE>

                            FSP 380 Interlocken Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

ACQUIRED FAVORABLE REAL ESTATE LEASE (continued)

Acquired favorable real estate lease included in the purchase price of the
property was $5,000,000 and is being amortized over the weighted-average period
of four years in respect of the leases assumed. Details of the acquired
favorable real estate leases as of December 31,:

      (in thousands)                    2005            2004
      --------------                  --------        --------
      Cost                            $  5,000        $  5,000
      Accumulated amortization          (3,152)         (1,848)
                                      --------        --------
      Book value                      $  1,848        $  3,152
                                      ========        ========

The estimated annual amortization for the two years succeeding December 31, 2005
are as follows:

      (in thousands)
      --------------
      2006                                    $ 1,304
      2007                                    $   544

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an initial maturity of
three months or less to be cash equivalents.

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. Although these funds typically are used for the payment of real estate
assets and deferred leasing commissions, there is no legal restriction on their
use and they may be used for any Company purpose.

RESTRICTED CASH

Restricted cash consists of tenant security deposits.

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the periods ended December 31, 2005, 2004 and 2003, rental income was
derived from various tenants. As such, future receipts are dependent upon the
financial strength of the lessees and their ability to perform under the lease
agreements.


                                      F-43
<PAGE>

                            FSP 380 Interlocken Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

CONCENTRATION OF CREDIT RISKS (continued)

The following tenants represent greater than 10% of the total revenue:

<TABLE>
<CAPTION>
                                               Year Ended         Year Ended       Period Ended
                                              December 31,       December 31,      December 31,
                                                  2005               2004              2003
===============================================================================================
<S>                                                <C>               <C>                <C>
Cooley Godward LLP                                 33%               31%                31%
Montgomery Watson Americas, Inc                    15%               14%                14%
McData Corporation                                 44%               42%                43%
</TABLE>

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents,
cash-funded reserves and restricted cash approximate their fair values based on
their short-term maturity and prevailing interest rates.

STEP RENT RECEIVABLE

Certain leases provide for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreements. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, is
$247,000, and $208,000 at December 31, 2005 and 2004, respectively.

DEFERRED LEASING COSTS

Deferred leasing commissions represent direct and incremental external leasing
costs incurred in the leasing of commercial space. These costs are capitalized
and are amortized on a straight-line basis over the terms of the related lease
agreements. Amortization expense was $1,000 for the year ended December 31,
2005. Detail of the deferred leasing costs as of December 31, 2005:

      (in thousands)                       2005
      --------------                     --------
      Cost                                $    9
      Accumulated amortization                (1)
                                          ------
      Book value                          $    8
                                          ======

The estimated annual amortization expense for the three years succeeding
December 31, 2005 are as follows:

      (in thousands)
      --------------
      2006                                  $  3
      2007                                  $  3
      2008                                  $  2

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$3,918,000 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.

TENANT RENT RECEIVABLE

Tenant rent receivable is reported at the amount the Company expects to collect
on balances outstanding at year-end. Management monitors outstanding balances
and tenant relationships and concluded that any realization losses would be
immaterial.


                                      F-44
<PAGE>

                            FSP 380 Interlocken Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial Property and accounts for its leases as
operating leases. Rental income from leases, which may include rent concession
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenants. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

<TABLE>
<CAPTION>
                                               Year Ended          Year Ended         Period Ended
                                              December 31,        December 31,        December 31,
(in thousands)                                    2005                2004                2003
==================================================================================================
<S>                                              <C>                 <C>                 <C>
Income from leases                               $4,713              $4,595              $1,710
Straight-line rent adjustment                        39                 (86)                294
Reimbursable expenses                             2,652               2,354                 932
Amortization of favorable lease                  (1,304)             (1,305)               (543)
- --------------------------------------------------------------------------------------------------

     Total                                       $6,100              $5,558              $2,393
==================================================================================================
</TABLE>

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per preferred share is computed by dividing
net income by the weighted average number of shares outstanding during the
period. Diluted net income per preferred share reflects the potential dilution
that could occur if securities or other contracts to issue shares were exercised
or converted into shares. There were no potential dilutive shares outstanding at
December 31, 2005, 2004 and 2003. Subsequent to the completion of the offering
of preferred shares, the holders of common stock are not entitled to share in
any income nor any related dividend.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

For the period ended December 31, 2003, the Company incurred a net operating
loss for income tax purposes of approximately $1,398,000 that can be carried
forward until it expires in the year 2023.


                                      F-45
<PAGE>

                            FSP 380 Interlocken Corp.
                          Notes to Financial Statements

3.    Income Taxes (continued)

At December 31, 2005, the Company's net tax basis of its real estate assets is
$36,460,000.

The following schedule reconciles net income (loss) to taxable income subject to
dividend requirements:

<TABLE>
<CAPTION>
                                                   Year Ended          Year Ended        Period Ended
                                                  December 31,        December 31,       December 31,
(in thousands)                                        2005                2004               2003
=====================================================================================================

<S>                                                  <C>                 <C>               <C>
GAAP net income (loss)                               $2,538              $2,133            $(1,751)

Add: Book depreciation and amortization                 948                 946                394
Add: Amortization of favorable lease                  1,304               1,305                543
Less:  Tax depreciation and amortization               (855)               (855)              (290)
Straight-line rents                                     (39)                 86               (294)
- -----------------------------------------------------------------------------------------------------
Taxable income (loss)[1]                             $3,896              $3,615            $(1,398)
=====================================================================================================
</TABLE>

(1)   A tax loss is not subject to a dividend requirement.

The following schedule summarizes the tax components of the distributions paid
for the period ended December 31:

<TABLE>
<CAPTION>
(in thousands)                           2005                            2004                           2003
                            ------------------------------  -----------------------------  -----------------------------
                            Preferred   Common       %      Preferred   Common      %      Preferred   Common      %
                            ---------  --------  ---------  ---------  --------  --------  ---------  --------  --------
<S>                           <C>        <C>       <C>        <C>        <C>        <C>       <C>        <C>       <C>
Ordinary income               $3,920     $ --       83%       $3,640     $ --        81%      $ --       $ --       --%
Return of Capital                780       --       17%          851       --        19%       153        318      100%
                            ---------  --------  ---------  ---------  --------  --------  ---------  --------  --------
Total                         $4,700     $ --      100%       $4,491     $ --       100%      $153       $318      100%
                            =========  ========  =========  =========  ========  ========  =========  ========  ========
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of shares of Preferred Stock ("Shares") is entitled to
receive ratably all dividends, if any, declared by the Board of Directors out of
funds legally available. The right to receive dividends shall be non-cumulative,
and no right to dividends shall accrue by reason of the fact that no dividend
has been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to share in any income nor any related
dividend.


                                      F-46
<PAGE>

                            FSP 380 Interlocken Corp.
                          Notes to Financial Statements

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the periods
ended December 31, 2005, 2004 and 2003, fees incurred under the agreement were
$71,000, $71,000 and $26,000, respectively.

An acquisition fee of $240,000 and other costs of $190,000 were paid in 2003 to
an affiliate of the Common Shareholder. Such fees were included in the cost of
the real estate.

Syndication fees of $3,840,000 were paid in 2003 to an affiliate of the Common
Shareholder for services related to syndication of the Company's preferred
stock.

During 2003, the Company borrowed and repaid in full a note payable to FSP,
principal of $38,000,000 with interest equal to the Citizens Bank base rate.
Interest paid to FSP was $94,000. The average interest rate during the time the
loan was outstanding was 4.50%.

A commitment fee of $2,760,000 was paid to FSP for obtaining the first mortgage
loan. Such amount is included in interest expense on the Statements of
Operations.

The Company paid a distribution in 2003 of $318,000 to the common stockholder
relating to the operations of the Company prior to the completion of the
offering of preferred shares.

6.    Commitments and Contingencies

The lease agreement with a tenant provides that 44% of the Company's rental
income expires April 30, 2006. The tenant has advised the Company that it will
not renew or extend the lease agreement. Management is currently seeking
tenant(s) to lease the space.

The Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:

                                       Year Ending
      (in thousands)                   December 31,            Amount
                                       ------------           ---------

                                           2006                $ 3,072
                                           2007                  2,391
                                           2008                  2,375
                                           2009                  1,614
                                           2010                  1,646
                                                              ---------
                                                               $11,098
                                                              =========

In addition, the lessees are liable for real estate taxes and certain operating
expenses of the Property.

Upon acquiring the commercial rental property in August 2003, the Company was
assigned the lease agreements between the seller of the Property and the
existing tenants. The original lease periods range from four to ten years with
renewal options.

7.    Subsequent Events

On January 20, 2006, the Board of Directors of the Company declared a cash
distribution of $1,168,000 payable on February 21, 2006 to stockholders of
record on January 31, 2006.


                                      F-47
<PAGE>

                                  SCHEDULE III

                            FSP 380 Interlocken Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2005

<TABLE>
<CAPTION>
                                                                        Initial Cost
                                                             -----------------------------------
                                                                                       Costs
                                                                       Buildings    Capitalized
                                                                     Improvements   (Disposals)
                                                                          and      Subsequent to
Description                                Encumbrances (1)   Land     Equipment    Acquisition
- -----------                                ----------------   ----     ---------    -----------

<S>                                        <C>                <C>        <C>          <C>

   380 Interlocken, Broomfield, CO                            5,287      27,190       33

<CAPTION>
                                                               Historical Costs
                                           ------------------------------------------------------------

                                                    Buildings                              Total Costs,
                                                   Improvements                               Net of     Depreciable
                                                       and                   Accumulated   Accumulated       Life      Date of
Description                                 Land    Equipment    Total (2)   Depreciation  Depreciation     Years     Acquisition
- -----------                                 ----    ---------    ---------  -------------  ------------     -----     -----------
                                             (in thousands)
<S>                                         <C>        <C>         <C>         <C>          <C>             <C>           <C>

   380 Interlocken, Broomfield, CO          5,287      27,223      32,510      1,686        30,824          39            2003
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $38,463.


                                      F-48
<PAGE>

                            FSP 380 Interlocken Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                         December 31,
                                               ---------------------------------
(in thousands)                                   2005        2004        2003
================================================================================

Real estate investments, at cost:
   Balance, beginning of period                 $32,494     $32,477     $    --
       Acquisitions                                  --          --      32,477
       Improvements                                  16          17          --
       Dispositions                                  --          --          --
- --------------------------------------------------------------------------------

   Balance, end of period                       $32,510     $32,494     $32,477
================================================================================

Accumulated depreciation:
   Balance, beginning of period                 $   988     $   290     $    --
       Depreciation                                 698         698         290
       Dispositions                                  --          --          --
- --------------------------------------------------------------------------------

    Balance, end of period                      $ 1,686     $   988     $   290
================================================================================


                                      F-49
<PAGE>

                                 380 INTERLOCKEN
                              FINANCIAL STATEMENTS
                                 FOR THE PERIOD
                     JANUARY 1, 2003 TO AUGUST 14, 2003 AND
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                    CONTENTS

                                                                           PAGE

Independent auditors' report                                               F-51

Statements of revenue over certain operating expenses                      F-52

Notes accompanying the statements of revenue over certain
      operating expenses                                                   F-53



                                      F-50
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders
FSP 380 Interlocken Corp.
Wakefield, Massachusetts


We have audited the accompanying statements of revenue over certain operating
expenses (the "Statements") of 380 Interlocken for the period January 1, 2003 to
August 14, 2003 and for the year ended December 31, 2002. These Statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these Statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the Statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the Statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall Statements'
presentation. We believe that our audits provide a reasonable basis for our
opinion.

The accompanying Statements were prepared to comply with the requirements of
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission, and
exclude certain expenses described in Note 2 and, therefore, are not intended to
be a complete presentation of the Property's revenue and expenses.

In our opinion, these Statements referred to above present fairly, in all
material respects, the revenue over certain operating expenses (as described in
Note 2) of 380 Interlocken for the period January 1, 2003 to August 14, 2003 and
for the year ended December 31, 2002, in conformity with the basis of accounting
described in Note 2.


/s/ Braver and Company, P.C.
Newton, Massachusetts
June 27, 2005


                                      F-51
<PAGE>

                                 380 INTERLOCKEN
              STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
              FOR THE PERIOD JANUARY 1, 2003 TO AUGUST 14, 2003 AND
                      FOR THE YEAR ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                       January 1, 2003     Year Ended
                                                             to           December 31,
                                                       August 14, 2003        2002
                                                       ---------------    ------------

<S>                                                      <C>               <C>
Revenue

  Rental income                                          $4,176,145        $6,863,127
                                                         ----------        ----------

Certain operating expenses (Note 2):

  Taxes and insurance                                       645,405         1,017,950
  Management fees                                           123,017           183,833
  Administrative                                             95,366           147,003
  Operating and maintenance                                 634,999           838,905
                                                         ----------        ----------

                                                          1,498,787         2,187,691
                                                         ----------        ----------

Excess of revenue over certain operating expenses        $2,677,358        $4,675,436
                                                         ==========        ==========
</TABLE>

               The accompanying notes are an integral part of the
             statements of revenue over certain operating expenses.


                                      F-52
<PAGE>

                                 380 INTERLOCKEN
  NOTES ACCOMPANYING THE STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
              FOR THE PERIOD JANUARY 1, 2003 TO AUGUST 14, 2003 AND
                      FOR THE YEAR ENDED DECEMBER 31, 2002


1.    DESCRIPTION OF THE PROPERTY:

The accompanying statements of revenue over certain operating expenses (the
"Statements") include the operations of a commercial building located at 380
Interlocken Crescent in Broomfield, Colorado (the "Property"). The Property is
positioned on approximately 13 acres of land within the acclaimed 963-acre
master- planned Interlocken Business Park. The Property is positioned
approximately halfway between downtown Denver and downtown Boulder. The Property
was owned by Amber Drive I, LLC and sold to FSP 380 Interlocken Corp. (the
"Company") on August 15, 2003.

2.    BASIS OF ACCOUNTING:

The accompanying Statements have been prepared on the accrual basis of
accounting. The Statements have been prepared in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, these Statements exclude
certain historical expenses not comparable to the operations of the Property
after acquisition such as amortization, depreciation, interest, corporate
expenses and certain other costs not directly related to future operations of
the Property.

3.    REVENUE RECOGNITION

Rental revenue includes income from leases, certain reimbursable expenses, and
straight-line rent adjustments associated with renting the Property.

                                              January 1, 2003        Year Ended
                                                    to              December 31,
                                              August 14, 2003           2002
                                              ---------------       ------------

      Income from leases                         $2,710,310          $4,312,902
      Straight-line rent adjustment                  34,416             293,596
      Reimbursable expenses                       1,431,419           2,256,629
                                                 ----------          ----------

            Total                                $4,176,145          $6,863,127
                                                 ==========          ==========

380 Interlocken has retained substantially all of the risks and benefits of the
Property and accounts for its leases as operating leases. Rental income from
leases, which include rent concessions (including free rent and tenant
improvement allowances) and scheduled increases in rental rates during the lease
term, is recognized on a straight-line basis. 380 Interlocken does not have any
percentage rent arrangements with its tenants. Reimbursable costs are included
in rental income in the period earned.

4.    USE OF ESTIMATES:

The preparation of the Statements in conformity with the basis of accounting
described in Note 2 requires management to make estimates and assumptions that
affect the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

5.    CONCENTRATIONS OF RISKS:

For the period January 1, 2003 to August 14, 2003 and for the year ended
December 31, 2002, rental income was received from various lessees. As such,
future receipts are dependent upon the financial strength of the lessees and
their ability to perform under the lease agreements.


                                      F-53
<PAGE>

                                 380 INTERLOCKEN
  NOTES ACCOMPANYING THE STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
              FOR THE PERIOD JANUARY 1, 2003 TO AUGUST 14, 2003 AND
                      FOR THE YEAR ENDED DECEMBER 31, 2002


6.    LEASES:

380 Interlocken, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:

                         Year Ending
                         December 31,            Amount
                         ------------           -------
(in thousands)
                             2003               $ 1,707
                             2004                 4,592
                             2005                 4,700
                             2006                 3,021
                             2007                 2,338
                          Thereafter              5,590
                                                --------

                                                $21,948
                                                ========

In addition, the lessees are liable for real estate taxes and operating expenses
as direct expenses to the lessees.


                                      F-54
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                              Financial Statements
                        December 31, 2005, 2004 and 2003

                                Table of Contents

                                                                            Page
                                                                            ----
Financial Statements

Independent Auditor's Report.............................................   F-56

Balance Sheets as of December 31, 2005 and 2004..........................   F-57

Statements of Operations for the years ended December 31, 2005 and 2004
      and the period September 3, 2003 (date of inception)
      to December 31, 2003...............................................   F-58

Statements of Changes in Stockholders' Equity for the years ended
      December 31, 2005 and 2004 and the period September 3, 2003
      (date of inception) to December 31, 2003...........................   F-59

Statements of Cash Flows for the years ended December 31, 2005 and
      2004 and the period September 3, 2003 (date of inception)
      to December 31, 2003...............................................   F-60

Notes to Financial Statements............................................   F-61


                                      F-55
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Blue Lagoon Drive Corp.
Wakefield, Massachusetts


We have audited the accompanying balance sheets of FSP Blue Lagoon Drive Corp.
as of December 31, 2005 and 2004, and the related statements of operations,
changes in stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Blue Lagoon Drive Corp. as
of December 31, 2005 and 2004, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The 2003 financial statements were compiled by us, and our report thereon, dated
February 14, 2005, stated that we did not audit or review those financial
statements and, accordingly, expressed no opinion or other form of assurance on
them.


/s/ Braver and Company, P.C.
Newton, Massachusetts
March 1, 2006


                                      F-56
<PAGE>

                                      FSP Blue Lagoon Drive Corp.
                                             Balance Sheets

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                            -----------------------
(in thousands,except shares and par value amounts)                             2005          2004
===================================================================================================

<S>                                                                          <C>           <C>
Assets:

Real estate investments, at cost:
     Land                                                                    $ 5,463       $ 5,463
     Buildings and improvements                                               41,684        41,684
- ---------------------------------------------------------------------------------------------------
                                                                              47,147        47,147

     Less accumulated depreciation                                             2,316         1,247
- ---------------------------------------------------------------------------------------------------

Real estate investments, net                                                  44,831        45,900

Acquired real estate leases, net of accumulated amortization
      of $801 and $431 respectively                                              616           986
Cash and cash equivalents                                                      1,659         1,294
Cash-funded reserves                                                           2,982         2,989
Step rent receivable                                                             304           243
Prepaid expenses and other assets                                                 41            22
- ---------------------------------------------------------------------------------------------------

      Total assets                                                           $50,433       $51,434
===================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                        $   502       $   174
Distributions payable                                                             --         1,099
- ---------------------------------------------------------------------------------------------------

     Total liabilities                                                           502         1,273
===================================================================================================

Commitments and Contingencies:                                                    --            --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 599 shares
        authorized, issued and outstanding                                        --            --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                        --            --
     Additional paid-in capital                                               55,035        55,035
     Retained deficit and dividends in excess of earnings                     (5,104)       (4,874)
- ---------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                               49,931        50,161
- ---------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                              $50,433       $51,434
===================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-57
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                                                    For the Period
                                                                                                  September 3, 2003
                                                              For the Year Ended December 31,   (date of inception) to
                                                             --------------------------------        December 31,
(in thousands, except shares and per share amounts)              2005               2004                 2003
======================================================================================================================
                                                                                                      (compiled)

<S>                                                              <C>                <C>             <C>
Revenues:
     Rental                                                      $5,371             $5,256          $    937
- ----------------------------------------------------------------------------------------------------------------------

      Total revenue                                               5,371              5,256               937
- ----------------------------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                      325                274                62
     Real estate taxes and insurance                                643                622               114
     Depreciation and amortization                                1,439              1,438               240
     Interest                                                        --                522             3,117
- ----------------------------------------------------------------------------------------------------------------------

       Total expenses                                             2,407              2,856             3,533
- ----------------------------------------------------------------------------------------------------------------------

Income (loss) before interest income                              2,964              2,400            (2,596)

Interest income                                                      95                 69                 1
- ----------------------------------------------------------------------------------------------------------------------

Net income (loss) before distributions to
    common stockholder                                            3,059              2,469            (2,595)

Distributions paid to common stockholder                             --                 34               217
- ----------------------------------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders         $3,059             $2,435          $ (2,812)
======================================================================================================================

Weighted average number of preferred shares
      outstanding, basic and diluted                              599.0              592.4             244.9
======================================================================================================================

Net income (loss) per preferred share, basic and diluted         $5,107             $4,110          $(11,482)
======================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-58
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                  Statements of Changes in Stockholders' Equity
           For the Years Ended December 31, 2005 and 2004 and for the
                            Period September 3, 2003
                             (date of inception) to
                                December 31, 2003

<TABLE>
<CAPTION>
                                                                                  Retained Deficit
                                                                    Additional    and Distributions        Total
                                            Preferred    Common      Paid in        in Excess of       Stockholders'
(in thousands, except shares)                 Stock       Stock      Capital          Earnings             Equity
=====================================================================================================================

<S>                                           <C>         <C>        <C>              <C>                 <C>
Private offering of 510.5 shares, net         $ --        $ --       $46,920          $    --             $46,920

Distributions                                   --          --            --             (462)               (462)

Net loss                                        --          --            --           (2,595)             (2,595)
- ---------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003 (compiled)           --          --        46,920           (3,057)             43,863

Private offering of  88.5 shares, net           --          --         8,115               --               8,115

Distributions                                   --          --            --           (4,286)             (4,286)

Net income                                      --          --            --            2,469               2,469
- ---------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                      --          --        55,035           (4,874)             50,161

Distributions                                   --          --            --           (3,289)             (3,289)

Net income                                      --          --            --            3,059               3,059
- ---------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2005                    $ --        $ --       $55,035          $(5,104)            $49,931
=====================================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-59
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                                 For the Period
                                                                                                               September 3, 2003
                                                                            For the Year Ended December 31,  (date of inception) to
                                                                           --------------------------------       December 31,
(in thousands)                                                                   2005              2004               2003
===================================================================================================================================
                                                                                                                   (compiled)

<S>                                                                             <C>             <C>                <C>
Cash flows from operating activities:
     Net Income (loss)                                                          $ 3,059         $ 2,469            $ (2,595)
     Adjustments to reconcile net income (loss) to net cash
         provided by (used for) operating activities:
                 Depreciation and amortization                                    1,439           1,438                 240
           Changes in operating assets and liabilities:
                 Cash-funded reserves                                                 7          (2,989)                 --
                 Tenant rent receivable                                              --             703                (703)
                 Step rent receivable                                               (61)           (153)                (90)
                 Prepaid expenses and other assets                                  (19)              9                 (31)
                 Accounts payable and accrued expenses                              328            (355)                529
                 Due to former owner                                                 --            (547)                547
- -----------------------------------------------------------------------------------------------------------------------------------
                       Net cash provided by (used for) operating activities       4,753             575              (2,103)
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                                  --              --             (47,147)
     Purchase of acquired real estate leases                                         --              --              (1,417)
- -----------------------------------------------------------------------------------------------------------------------------------
                       Net cash used for investing activities                        --              --             (48,564)
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Proceeds from sale of company stock                                             --           8,850              51,060
     Syndication costs                                                               --            (735)             (4,140)
     Distributions to stockholders                                               (4,388)         (3,649)                 --
     Proceeds from long-term debt                                                    --              --              48,000
     Principal payments on long-term debt                                            --          (4,117)            (43,883)
- -----------------------------------------------------------------------------------------------------------------------------------

                       Net cash provided by (used for) financing activities      (4,388)            349              51,037
- -----------------------------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                           365             924                 370

Cash and cash equivalents, beginning of period                                    1,294             370                  --
- -----------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                        $ 1,659         $ 1,294            $    370
===================================================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
     Interest                                                                   $    --         $   522            $  3,117

Disclosure of non-cash financing activities:
     Distributions declared but not paid                                        $    --         $ 1,099            $    462
</TABLE>

                 See accompanying notes to financial statements.


                                      F-60
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                          Notes to Financial Statements

1.    Organization

FSP Blue Lagoon Drive Corp. (the "Company") was organized on September 3, 2003
as a Corporation under the laws of the State of Delaware to purchase, own and
operate a nine-story Class "A" suburban office building containing approximately
212,619 rental square feet of space located on approximately 5 acres of land in
Miami-Dade County, FL (the "Property"). The Company acquired the Property on
November 6, 2003.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from inception to December 31, 2003 are not
necessarily indicative of the results to be obtained for other interim periods
or for the full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the asset are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation expense of $1,069,000, $1,069,000 and $178,000 is included in
Depreciation and Amortization in the Company's Statements of Operations for the
periods ended December 31, 2005, 2004 and 2003, respectively.

Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows:

      Category                             Years
      --------                             -----
      Building - Commercial                  39
      Building Improvements                 15-39
      Furniture & Equipment                  5-7

The following schedule reconciles the cost of the Property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheets:

      (in thousands)
      --------------

      Price per Offering Memorandum                               $  48,000
      Plus:  Acquisition fees                                           300
      Plus:  Other acquisition costs                                    264
      ------------------------------------------------------------------------
        Total Acquisition Costs                                   $  48,564
      ========================================================================


                                      F-61
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

These costs were recorded in the Company's Balance Sheets as follows:

      (in thousands)
      --------------
      Land                                                        $   5,463
      Building                                                       41,684
      Acquired real estate leases                                     1,417
      ------------------------------------------------------------------------
        Total reported on Balance Sheet                           $  48,564
      ========================================================================

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2005 and
2004, no such indicators of impairment were identified.

ACQUIRED REAL ESTATE LEASES

Acquired real estate leases represent the estimated value of legal and leasing
costs related to acquired leases that were included in the purchase price when
the Company acquired the Property. Under Statement of Financial Accounting
Standards ("SFAS") No. 141 "Business Combinations", which was approved by the
Financial Accounting Standards Board ("FASB") in June 2001, the Company is
required to segregate these costs from its investment in real estate. The
Company subsequently amortizes these costs on a straight-line basis over the
remaining life of the related leases. Amortization expense of $370,000, $369,000
and $62,000 is included in Depreciation and Amortization in the Company's
Statements of Operations for the periods ended December 31, 2005, 2004 and 2003,
respectively.

Acquired real estate lease costs included in the purchase price of the Property
were $1,417,000 and are being amortized over the weighted-average period of 3.8
years in respect of the leases assumed. Detail of the acquired real estate
leases as of December 31,:

      (in thousands)                            2005           2004
      --------------                           ------         ------
      Cost                                     $1,417         $1,417
      Accumulated amortization                   (801)          (431)
                                               ------         ------
      Book value                               $  616         $  986
                                               ======         ======

The estimated annual amortization expense for the two years succeeding December
31, 2005 are as follows:

      (in thousands)
      --------------
      2006                                    $  373
      2007                                       243

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an initial maturity of
three months or less to be cash equivalents.

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. These funds typically are used for the payment of real estate assets
and deferred leasing commissions; however, there is no legal restriction on
their use and they may be used for any Company purpose.


                                      F-62
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the period ended December 31, 2005, 2004 and 2003, rental income was derived
from one tenant. As such, future receipts are dependent upon the financial
strength of the lessee and their ability to perform under the lease agreement.

The following tenant represents greater than 10% of total revenue:

      Burger King Corporation                                100%

FINANCIAL INSTRUMENTS

The Company estimates that the carrying values of cash and cash equivalents and
cash-funded reserves approximate their fair values based on their short-term
maturity and prevailing interest rates.

TENANT RENT RECEIVABLE

Tenant rent receivable is reported at the amount the Company expects to collect
on balances outstanding at year-end. Management monitors outstanding balances
and tenant relationships and concluded that any realization losses would be
immaterial.

STEP RENT RECEIVABLE

The lease provides for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreement. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, is
$304,000 and $243,000 at December 31, 2005 and 2004, respectively.

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$4,875,000 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.


                                      F-63
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial properties and accounts for its lease as
an operating lease. Rental income from the lease, which may include rent
concession (including free rent and tenant improvement allowances) and scheduled
increases in rental rates during the lease term, is recognized on a
straight-line basis. The Company does not have any percentage rent arrangements
with its commercial property tenant. Reimbursable costs are included in rental
income in the period earned. A schedule showing the components of rental revenue
is shown below.

<TABLE>
<CAPTION>
                                            Year Ended         Year Ended        Period Ended
                                           December 31,       December 31,       December 31,
                                               2005               2004               2003
(in thousands)                                                                    (compiled)
- --------------------------------------------------------------------------------------------------
<S>                                            <C>                <C>                  <C>
Income from leases                             $4,432             $4,303               $653
Straight-line rent adjustment                      61                153                 90
Reimbursable expenses                             878                800                194
- --------------------------------------------------------------------------------------------------

     Total                                     $5,371             $5,256               $937
==================================================================================================
</TABLE>

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per preferred share is computed by dividing
net income by the weighted average number of preferred shares outstanding during
the period. Diluted net income per preferred share reflects the potential
dilution that could occur if securities or other contracts to issue shares were
exercised or converted into shares. There were no potential dilutive shares
outstanding at December 31, 2005, 2004 and 2003. Subsequent to the completion of
the offering of preferred shares, the holders of common stock are not entitled
to share in any income nor in any related dividend.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.


                                      F-64
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                          Notes to Financial Statements

3.    Income Taxes (continued)

For the period ended December 31, 2003, the Company incurred a net operating
loss for income tax purposes of approximately $2,566,000 that can be carried
forward until it expires in the year 2023.

At December 31, 2005, the Company's net tax basis of its real estate assets was
$46,215,000.

The following schedule reconciles net income (loss) to taxable income subject to
distributions requirements:

<TABLE>
<CAPTION>
                                                      Year Ended       Year Ended       Period Ended
                                                     December 31,     December 31,      December 31,
(in thousands)                                           2005             2004              2003
========================================================================================================
                                                                                         (compiled)

<S>                                                      <C>              <C>              <C>
GAAP net income (loss)                                   $3,059           $2,469           $(2,595)

Add: Book depreciation and amortization                   1,439            1,438               240
     Organizational Cost write-off                                            --                16
Less: Tax depreciation and amortization                  (1,108)          (1,250)             (139)
Straight-line rents                                         (61)            (153)              (90)
- --------------------------------------------------------------------------------------------------------

Taxable income (loss)[1]                                 $3,329           $2,504           $(2,568)
========================================================================================================
</TABLE>

(1)   A tax loss is not subject to a distributions requirement.

The following schedule summarizes the tax components of the distributions paid
for the year ended December 31:

<TABLE>
<CAPTION>
(in thousands)                           2005                            2004
                            ------------------------------  -----------------------------
                            Preferred   Common       %      Preferred   Common      %
                            ---------  --------  ---------  ---------  --------  --------
<S>                           <C>        <C>       <C>        <C>        <C>        <C>
Ordinary income               $3,359     $ --       77%       $2,361     $173        69%
Return of Capital              1,029       --       23%        1,037       78        31%
                            ---------  --------  ---------  ---------  --------  --------
Total                         $4,388     $ --      100%       $3,398     $251       100%
                            =========  ========  =========  =========  ========  ========
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of Shares of Preferred Stock is entitled to receive
ratably all dividends, if any, declared by the Board of Directors out of funds
legally available. The right to receive dividends shall be non-cumulative, and
no right to dividends shall accrue by reason of the fact that no dividend has
been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.


                                      F-65
<PAGE>

                           FSP Blue Lagoon Drive Corp.
                          Notes to Financial Statements

4.    Capital Stock (continued)

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to share in any earnings nor any related
dividend.

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the period
ended December 31, 2005, 2004 and 2003, fees incurred under the agreement were
$52,000, $54,000 and $7,000, respectively.

An acquisition fee of $299,500 and other costs of $264,000 were paid in 2003,
respectively, to an affiliate of the Common Shareholder. Such fees and costs
were recorded in connection with the acquisition of the Property.

Syndication fees of $735,000 and $4,140,000 were paid in 2004 and 2003,
respectively, to an affiliate of the Common Shareholder for services related to
syndication of the Company's preferred stock.

During 2004 and 2003, the Company borrowed and repaid in full a note payable to
FSP, principal of $48,000,000, with interest equal to the Citizens Bank base
rate. Interest paid to FSP in 2004 and 2003 was $13,000 and $182,000,
respectively. The average interest rate during the time the loan was outstanding
was 4.0%.

A commitment fee of $509,000 and $2,935,000 was paid to FSP in 2004 and 2003,
respectively, for obtaining the first mortgage loan. Such amount is included in
interest expense on the Statements of Operations.

The Company paid distributions in 2004 of $251,000 to the common shareholder
relating to earnings of the Company prior to the completion of the offering of
preferred shares.

On January 30, 2004, FSP purchased 49.25 preferred shares (approximately 8.2%)
of the Company for $4,925,000. FSP agreed to vote its shares in any matter
presented to a vote by the stockholders of the Company in the same proportion as
shares voted by other stockholders.

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:

                                 Year Ending
      (in thousands)             December 31,       Amount
                               -----------------   ---------
                                     2006          $ 4,565

                                     2007            4,667

                                     2008            3,500
                                                   ---------
                                                   $12,732
                                                   =========

In addition, the lessee is liable for real estate taxes and certain operating
expenses of the Property.

Upon acquiring the commercial rental property in November 2003, the Company was
assigned the lease agreement between the seller of the Property and the existing
tenant. The original lease period expires in three years with renewal options.
During 2005, the lease was amended to extend the original term to 2008 and to
grant additional renewal options..

7.    Subsequent Events

On January 20, 2006, the Board of Directors of the Company declared a cash
distribution of $1,132,000 payable on February 21, 2006 to stockholders of
record on January 31, 2006.


                                      F-66
<PAGE>

                                  SCHEDULE III

                           FSP Blue Lagoon Drive Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2005

<TABLE>
<CAPTION>
                                                                        Initial Cost
                                                             -----------------------------------
                                                                                       Costs
                                                                       Buildings    Capitalized
                                                                     Improvements   (Disposals)
                                                                          and      Subsequent to
Description                                Encumbrances (1)   Land     Equipment    Acquisition
- -----------                                ----------------   ----     ---------    -----------

<S>                                        <C>                <C>        <C>          <C>
Blue Lagoon Drive, Miami-Dade County, FL                      5,463      41,684       --

<CAPTION>
                                                               Historical Costs
                                           ------------------------------------------------------------

                                                    Buildings                              Total Costs,
                                                   Improvements                               Net of     Depreciable
                                                       and                   Accumulated   Accumulated       Life      Date of
Description                                 Land    Equipment    Total (2)   Depreciation  Depreciation     Years     Acquisition
- -----------                                 ----    ---------    ---------  -------------  ------------     -----     -----------
                                             (in thousands)
<S>                                         <C>        <C>         <C>         <C>          <C>             <C>           <C>
Blue Lagoon Drive, Miami-Dade County, FL    5,463      41,684      47,147      2,316        44,831          39            2003
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $48,564.


                                      F-67
<PAGE>

                           FSP Blue Lagoon Drive Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                        December 31,
                                             -----------------------------------
(in thousands)                                 2005         2004        2003
================================================================================

Real estate investments, at cost:
   Balance, beginning of period              $47,147      $47,147      $    --
       Acquisitions                               --           --       47,147
       Improvements                               --           --           --
       Dispositions                               --           --           --
- --------------------------------------------------------------------------------

   Balance, end of period                    $47,147      $47,147      $47,147
================================================================================

Accumulated depreciation:
    Balance, beginning of period             $ 1,247      $   178      $    --
        Depreciation                           1,069        1,069          178
        Dispositions                              --           --           --
- --------------------------------------------------------------------------------

    Balance, end of period                   $ 2,316      $ 1,247      $   178
================================================================================


                                      F-68
<PAGE>

                                BLUE LAGOON DRIVE
                              FINANCIAL STATEMENTS
                                 FOR THE PERIOD
                     JANUARY 1, 2003 TO NOVEMBER 5, 2003 AND
                               FOR THE YEAR ENDED
                                DECEMBER 31, 2002


                                    CONTENTS

                                                                            PAGE

Independent auditors' report                                                F-70

Statements of revenue over certain operating expenses                       F-70

Notes accompanying the statements of revenue over certain
      operating expenses                                                    F-72


                                      F-69
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders

FSP Blue Lagoon Drive Corp.
Wakefield, Massachusetts


We have audited the accompanying statements of revenue over certain operating
expenses (the "Statements") of Blue Lagoon Drive for the period January 1, 2003
to November 5, 2003 and for the year ended December 31, 2002. These Statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these Statements based on our audits.


We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the Statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the Statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall Statements'
presentation. We believe that our audits provide a reasonable basis for our
opinion.

The accompanying Statements were prepared to comply with the requirements of
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission, and
exclude certain expenses described in Note 2 and, therefore, are not intended to
be a complete presentation of the property's revenue and expenses.

In our opinion, these Statements referred to above present fairly, in all
material respects, the revenue over certain operating expenses (as described in
Note 2) of Blue Lagoon Drive for the period January 1, 2003 to November 5, 2003
and for the year ended December 31, 2002 in conformity with the basis of
accounting described in Note 2.


/s/ Braver and Company, P.C.
Newton, Massachusetts
June 27, 2005


                                      F-70
<PAGE>

                                BLUE LAGOON DRIVE
              STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
             FOR THE PERIOD JANUARY 1, 2003 TO NOVEMBER 5, 2003 AND
                      FOR THE YEAR ENDED DECEMBER 31, 2002


<TABLE>
<CAPTION>
                                                      January 1, 2003
                                                             to          For the Year Ended
                                                      November 5, 2003   December 31, 2002
                                                      ----------------   -----------------

<S>                                                      <C>                <C>
Revenue:

  Rental income                                          $3,955,561         $1,179,655
                                                         ----------         ----------

Certain Operating Expenses (Note 2):

  Taxes and insurance                                       651,371             73,019
  Management fees                                            83,333             25,000
  Administrative                                                256                297
  Operating and maintenance                                  93,059             21,379
                                                         ----------         ----------

                                                            828,019            119,695
                                                         ----------         ----------

Excess of revenue over certain operating expenses        $3,127,542         $1,059,960
                                                         ==========         ==========
</TABLE>

The accompanying notes are an integral part of the statements of revenue over
certain operating expenses.


                                      F-71
<PAGE>

                                BLUE LAGOON DRIVE
  NOTES ACCOMPANYING THE STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
             FOR THE PERIOD JANUARY 1, 2003 TO NOVEMBER 5, 2003 AND
                      FOR THE YEAR ENDED DECEMBER 31, 2002


1.    DESCRIPTION OF THE PROPERTY:

The accompanying statements of revenue over certain operating expenses (the
"Statements") include the operations of a commercial building located in
Miami-Dade County, Florida (the "Property"). Completed in October 2002, the
Property is a nine-story Class "A" suburban office tower containing 212,619
square feet located on approximately 5 acres of land. The Property was owned by
Teacher's Insurance and Annuity Association of America and TIAA Realty, Inc. and
sold to FSP Blue Lagoon Drive Corp (the "Company") on November 6, 2003.

2.    BASIS OF ACCOUNTING:

The accompanying Statements have been prepared on the accrual basis of
accounting. The Statements have been prepared in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, these Statements exclude
certain historical expenses not comparable to the operations of the Property
after acquisition such as amortization, depreciation, interest, corporate
expenses and certain other costs not directly related to future operations of
the Property.

3.    REVENUE RECOGNITION:

Rental revenue includes income from the lease, certain reimbursable expenses,
and straight-line rent adjustments associated with renting the property. A
summary of rental revenue is shown in the following table:

                                              January 1, 2003      Year Ended
                                                      to          December 31,
                                             November 5, 2003         2002
                                             ----------------     ------------

Income from leases                              $3,524,839          $1,036,518
Straight-line rent adjustment                      223,842              82,009
Reimbursable expenses                              206,880              61,128
                                                ----------          ----------

              Total                             $3,955,561          $1,179,655
                                                ==========          ==========

Blue Lagoon Drive has retained substantially all of the risks and benefits of
the Property and accounts for its lease as an operating lease. Rental income
from leases, which include rent concessions (including free rent and tenant
improvement allowances) and scheduled increases in rental rates during the lease
term, is recognized on a straight-line basis. Blue Lagoon Drive does not have
any percentage rent arrangements with its tenant. Reimbursable costs are
included in rental income in the period earned.

4.    USE OF ESTIMATES:

The preparation of the Statements in conformity with the basis of accounting
described in Note 2 requires management to make estimates and assumptions that
affect the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.


                                      F-72
<PAGE>

                                BLUE LAGOON DRIVE
  NOTES ACCOMPANYING THE STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
             FOR THE PERIOD JANUARY 1, 2003 TO NOVEMBER 5, 2003 AND
                      FOR THE YEAR ENDED DECEMBER 31, 2002


5.    CONCENTRATIONS OF RISKS:

For the period January 1, 2003 to November 5, 2005 and for the year ended
December 31, 2002, rental income was from one lessee. As such, future receipts
are dependent upon the financial strength of the lessee and its ability to
perform under the lease agreement.

6.    LEASES:

Blue Lagoon Drive, as lessor, has minimum future rentals due under a
non-cancelable operating lease as follows:

                                Year Ending
                                December 31,           Amount
                                ------------          --------
      (in thousands)
                                   2003               $   653
                                   2004                 4,303
                                   2005                 4,432
                                   2006                 4,565
                                   2007                 3,500
                                                      --------
                                                      $ 17,453
                                                      ========

In addition, the lessee is liable for real estate taxes and operating expenses
as direct expenses to the lessee.


                                      F-73
<PAGE>

                            FSP Eldridge Green Corp.
                              Financial Statements
                           December 31, 2005 and 2004

                                Table of Contents

                                                                            Page
                                                                            ----
Financial Statements

Independent Auditor's Report.............................................   F-75

Balance Sheets as of December 31, 2005 and 2004..........................   F-76

Statements of Operations for the years ended December 31, 2005 and 2004..   F-77

Statements of Changes in Stockholders' Equity for the years ended
      December 31, 2005 and 2004.........................................   F-78

Statements of Cash Flows for the years ended December 31, 2005 and 2004..   F-79

Notes to Financial Statements............................................   F-80


                                      F-74
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Eldridge Green Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP Eldridge Green Corp. as
of December 31, 2005 and 2004, and the related statements of operations, changes
in stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Eldridge Green Corp. as of
December 31, 2005 and 2004; and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.


/s/ Braver and Company, P.C.
Newton, Massachusetts
March 1, 2006
(except for Note 7, as to which the date is March 10, 2006)


                                      F-75
<PAGE>

                            FSP Eldridge Green Corp.
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                        -----------------------------
(in thousands, except shares and par value amounts)                         2005             2004
=====================================================================================================

<S>                                                                      <C>              <C>
Assets:

Real estate investments, at cost:
     Land                                                                $  2,356         $  2,356
     Buildings and improvements                                            33,054           33,054
- -----------------------------------------------------------------------------------------------------
                                                                           35,410           35,410

     Less accumulated depreciation                                          1,625              777
- -----------------------------------------------------------------------------------------------------

Real estate investments, net                                               33,785           34,633

Acquired real estate leases, net of accumulated amortization
      of $357 and $171                                                      1,165            1,351
Cash and cash equivalents                                                   2,391            2,569
Cash-funded reserves                                                        1,458            1,458
Tenant rent receivable                                                         19                9
Step rent receivable                                                          421              246
Deferred leasing costs, net of accumulated amortization
      of $93 and $27                                                          407              473
Prepaid expenses and other assets                                              23               46
- -----------------------------------------------------------------------------------------------------

      Total assets                                                       $ 39,669         $ 40,785
=====================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                    $  1,016         $  1,539
Distributions payable                                                          --              943
- -----------------------------------------------------------------------------------------------------

     Total liabilities                                                      1,016            2,482
- -----------------------------------------------------------------------------------------------------

Commitments and Contingencies:                                                 --               --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 452.5 shares
       authorized, issued and outstanding                                      --               --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                     --               --
     Additional paid-in capital                                            41,527           41,527
     Retained deficit and distributions in excess of earnings              (2,874)          (3,224)
- -----------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                            38,653           38,303
- -----------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                          $ 39,669         $ 40,785
=====================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-76
<PAGE>

                            FSP Eldridge Green Corp.
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                 For the Years Ended December 31,
                                                                ----------------------------------
(in thousands, except shares and per share amounts)                 2005                2004
==================================================================================================

<S>                                                                  <C>                <C>
Revenues:
     Rental                                                          $6,452             $5,585
- --------------------------------------------------------------------------------------------------

       Total revenue                                                  6,452              5,585
- --------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                          935                673
     Real estate taxes and insurance                                    926              1,015
     Depreciation and amortization                                    1,100                975
     Interest                                                            --              2,814
- --------------------------------------------------------------------------------------------------

       Total expenses                                                 2,961              5,477
- --------------------------------------------------------------------------------------------------

Income before interest income                                         3,491                108

Interest income                                                          67                 63
- --------------------------------------------------------------------------------------------------

Net income before distributions to common stockholder                 3,558                171

Distributions paid to common stockholder                                 --                327
- --------------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders             $3,558              $(156)
==================================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                452.5              451.6
==================================================================================================

Net income (loss) per preferred share, basic and diluted             $7,863              $(345)
==================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-77
<PAGE>

                            FSP Eldridge Green Corp.
                  Statement of Changes in Stockholders' Equity
                 For the Years Ended December 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                       Retained Deficit
                                                                      Additional      and Distributions          Total
                                               Preferred    Common      Paid-in          in Excess of        Stockholders'
        (in thousands, except shares)            Stock       Stock      Capital            Earnings              Equity
==========================================================================================================================

<S>                                               <C>        <C>         <C>              <C>                 <C>
Private offering of 452.5 shares, net             $ --       $ --        $41,527          $    --             $ 41,527

Distributions                                       --         --             --           (3,395)              (3,395)

Net income                                          --         --             --              171                  171
- --------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                          --         --         41,527           (3,224)              38,303

Distributions                                       --         --             --           (3,208)              (3,208)

Net income                                          --         --             --            3,558                3,558
- --------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2005                        $ --       $ --        $41,527          $(2,874)            $ 38,653
==========================================================================================================================
</TABLE>

                See accompanying notes to financial statements.


                                      F-78
<PAGE>

                            FSP Eldridge Green Corp.
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                For the Years Ended December 31,
                                                                                --------------------------------
(in thousands)                                                                      2005              2004
================================================================================================================

<S>                                                                                <C>             <C>
Cash flows from operating activities:
     Net income                                                                    $ 3,558         $    171
     Adjustments to reconcile net income to net cash provided by
        operating activities:
            Depreciation and amortization                                            1,100              975
         Changes in operating assets and liabilities:
            Cash-funded reserves                                                        --           (1,458)
            Tenant rent receivable                                                     (10)              (9)
            Step rent receivable                                                      (175)            (246)
            Prepaid expenses and other assets                                           23              (46)
            Accounts payable and accrued expenses                                     (523)           1,539
            Payment of deferred leasing costs                                           --             (500)
- ----------------------------------------------------------------------------------------------------------------

                       Net cash provided by operating activities                     3,973              426
- ----------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                                     --          (35,410)
     Purchase of acquired real estate leases                                            --           (1,522)
- ----------------------------------------------------------------------------------------------------------------

                       Net cash used for investing activities                           --          (36,932)
- ----------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Proceeds from sale of company stock                                                --           45,260
     Syndication costs                                                                  --           (3,733)
     Distributions to stockholders                                                  (4,151)          (2,452)
     Proceeds from long-term debt                                                       --           36,500
     Principal payments on long-term debt                                               --          (36,500)
- ----------------------------------------------------------------------------------------------------------------

                       Net cash provided by (used for) financing activities         (4,151)          39,075
- ----------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                                  (178)           2,569

Cash and cash equivalents, beginning of year                                         2,569               --
- ----------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year                                             $ 2,391         $  2,569
================================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
     Interest                                                                      $    --         $  2,814

Disclosure of non-cash financing activities:
     Distributions declared but not paid                                           $    --         $    943
</TABLE>

                 See accompanying notes to financial statements.


                                      F-79
<PAGE>

                            FSP Eldridge Green Corp.
                          Notes to Financial Statements

1.    Organization

FSP Eldridge Green Corp. (the "Company") was organized on December 4, 2003 as a
Corporation under the laws of the State of Delaware to purchase, own and operate
a five-story Class "A" suburban office building containing approximately 248,399
rental square feet of space located on approximately 8 acres of land in Houston,
TX (the "Property"). The Company acquired the Property on January 16, 2004.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from purchase of Property to date are not necessarily
indicative of the results to be obtained for other interim periods or for the
full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the asset are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows:

      Category                               Years
      --------                               -----
      Building - Commercial                    39
      Building Improvements                  15-39
      Furniture & Equipment                   5-7

The following schedule reconciles the cost of the Property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheet:

      (in thousands)
      --------------

      Price per offering memorandum                               $   36,500
      Plus:  Acquisition fees                                            226
      Plus:  Other acquisition costs                                     206
      -------------------------------------------------------------------------
        Total acquisition costs                                   $   36,932
      =========================================================================

These costs are reported in the Company's Balance Sheet as follows:

      (in thousands)
      --------------

      Land                                                        $    2,356
      Building                                                        33,054
      Acquired real estate leases                                      1,522
      -------------------------------------------------------------------------
        Total reported on balance sheet                           $   36,932
      =========================================================================


                                      F-80
<PAGE>

                            FSP Eldridge Green Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2005 and
2004, no such indicators of impairment were identified.

Depreciation expense of $848,000 and $777,000 is included in depreciation and
amortization in the Company's Statements of Operations for the years ended
December 31, 2005 and 2004.

ACQUIRED REAL ESTATE LEASES

Acquired real estate leases represent the estimated value of legal and leasing
costs related to acquired leases that were included in the purchase price when
the Company acquired the Property. Under Statement of Financial Accounting
Standards ("SFAS") No. 141 "Business Combinations", which was approved by the
Financial Accounting Standards Board ("FASB") in June 2001, the Company is
required to segregate these costs from its investment in real estate. The
Company subsequently amortizes these costs on a straight-line basis over the
remaining life of the related lease. Amortization expense of $186,000 and
$171,000 is included in Depreciation and Amortization in the Company's
Statements of Operations for the years ended December 31, 2005 and 2004.

Acquired real estate lease costs included in the purchase price of the Property
were $1,522,000 and are being amortized over the remaining life of the related
lease assumed, which is a weighted average period of eight years. Detail of the
acquired real estate lease as of December 31, 2005 and 2004:

      (in thousands)                                2005          2004
      ------------------------------------------------------------------

      Cost                                         $1,522        $1,522
      Accumulated amortization                       (357)         (171)
      ------------------------------------------------------------------
      Book value                                   $1,165        $1,351
      ==================================================================

The estimated annual amortization expense for the five years succeeding December
31, 2005 are as follows:

      (in thousands)
      --------------
      2006                                    $   186
      2007                                    $   186
      2008                                    $   186
      2009                                    $   186
      2010                                    $   186

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an initial maturity of
three months or less to be cash equivalents.

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. These funds typically are used for the payment of real estate assets
and deferred leasing commissions; however, there is no legal restriction on
their use and they may be used for any Company purpose.


                                      F-81
<PAGE>

                            FSP Eldridge Green Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the years ended December 31, 2005 and 2004, rental income was derived from
one tenant. As such, future receipts are dependent upon the financial strength
of the lessee and its ability to perform under the lease agreement.

The following tenants represent greater than 10% of total revenue:

      Citgo Petroleum Corporation                            100%

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents and
cash-funded reserves approximate their fair values based on their short-term
maturity and prevailing interest rates.

TENANT RENT RECEIVABLE

Tenant rents receivable are reported at the amount the Company expects to
collect on balances outstanding at year-end. Management monitors outstanding
balances and tenant relationship and concluded that any realization losses would
be immaterial.

STEP RENT RECEIVABLE

Certain leases provide for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreements. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, is
$421,000 and $246,000 as of December 31, 2005 and 2004.

DEFERRED LEASING COSTS

Deferred leasing commissions represent direct and incremental external leasing
costs incurred in the leasing of commercial space. These costs are capitalized
and are amortized on a straight-line basis over the terms of the related lease
agreements. Amortization expense was $66,000 and $27,000 for the years ended
December 31, 2005 and 2004. Detail of the deferred leasing costs as of December
31, 2005 and 2004:

      (in thousands)                            2005           2004
      --------------                          ----------------------
      Costs                                     $500           $500
      Accumulated Amortization                   (93)           (27)
                                              ----------------------
      Book Value                                $407           $473
                                              ======================


                                      F-82
<PAGE>

                            FSP Eldridge Green Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

DEFERRED LEASING COSTS

The estimated annual amortization expense for the five years succeeding December
31, 2005 are as follows:

      (in thousands)
      --------------
      2006                                      $66
      2007                                      $66
      2008                                      $66
      2009                                      $66
      2010                                      $66

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$3,733,500 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial property and accounts for its lease as
operating lease. Rental income from the lease, which may include rent concession
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenant. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

                                          Year Ended        Year Ended
                                         December 31,      December 31,
      (in thousands)                         2005              2004
      ==================================================================
      Income from leases                    $4,202            $3,635
      Straight-line rent adjustment            175               246
      Reimbursable expenses                  2,075             1,704
      ------------------------------------------------------------------

           Total                            $6,452            $5,585
      ==================================================================

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per preferred share is computed by dividing
net income by the weighted average number of preferred shares outstanding during
the period. Diluted net income per preferred share reflects the potential
dilution that could occur if securities or other contracts to issue shares were
exercised or converted into shares. There were no potential dilutive shares
outstanding at December 31, 2005 and 2004. Subsequent to the completion of the
offering of preferred shares, the holders of common stock are not entitled to
share in any income nor in any related dividend.


                                      F-83
<PAGE>

                            FSP Eldridge Green Corp.
                          Notes to Financial Statements

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

At December 31, 2005, the Company's net tax basis of its real estate assets was
$35,604,000.

The following schedule reconciles net income to taxable income subject to
distribution requirements:

                                                     Year Ended      Year Ended
                                                    December 31,    December 31,
(in thousands)                                          2005            2004
================================================================================

GAAP net income                                       $ 3,558           $ 171

Add: Book depreciation and amortization                 1,100             975
Less:  Tax depreciation and amortization                 (956)           (823)
Straight-line rents                                      (175)           (246)
- --------------------------------------------------------------------------------
Taxable income                                         $3,527             $77
================================================================================


The following schedule summarizes the tax components of the distributions paid
for the year ended December 31:

<TABLE>
<CAPTION>
(in thousands)                           2005                            2004
                            ------------------------------  -----------------------------
                            Preferred   Common       %      Preferred   Common      %
                            ---------  --------  ---------  ---------  --------  --------
<S>                           <C>        <C>       <C>        <C>        <C>        <C>
Ordinary income               $3,553     $ --       86%       $  112     $ 17         5%
Return of Capital                598       --       14%        2,013      310        95%
                            ---------  --------  ---------  ---------  --------  --------
Total                         $4,151     $ --      100%       $2,125     $327       100%
                            =========  ========  =========  =========  ========  ========
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of Shares of Preferred Stock is entitled to receive
ratably all dividends, if any, declared by the Board of Directors out of funds
legally available. The right to receive dividends shall be non-cumulative, and
no right to dividends shall accrue by reason of the fact that no dividend has
been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.


                                      F-84
<PAGE>

                            FSP Eldridge Green Corp.
                          Notes to Financial Statements

4.    Capital Stock (continued)

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to share in any earnings nor any related
dividend.

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the years
ended December 31, 2005 and 2004, fees incurred under the agreement were $63,000
and $53,000.

An acquisition fee of $226,250 and other costs of $206,000 were paid in 2004 to
an affiliate of the Common Shareholder. Such fees and costs were recorded in
connection with the acquisition of the property.

Syndication fees of $3,733,000 were paid in 2004 to an affiliate of the Common
Shareholder for services related to syndication of the Company's preferred
stock.

During 2004, the Company borrowed and repaid in full a note payable to FSP,
principal of $36,500,000, with interest equal to the Citizens Bank base rate.
Interest paid to FSP was $212,000. The average interest rate during the time the
loan was outstanding was 4.00%.

A commitment fee of $2,602,000 was paid in 2004 to FSP for obtaining the first
mortgage loan. Such amount is included in interest expense on the Statement of
Operations.

The Company paid a dividend of $327,000 in 2004 to the common shareholder
relating to earnings of the Company prior to the completion of the offering of
preferred shares.

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:

                                        Year Ending
      (in thousands)                    December 31,        Amount
                                        ------------       --------
                                            2006            $ 4,285
                                            2007              4,285
                                            2008              4,285
                                            2009              4,285
                                            2010              4,699
                                         Thereafter           5,578
                                                           ---------
                                                            $27,417
                                                           =========

In addition, the lessees are liable for real estate taxes and certain operating
expenses of the Property.

Upon acquiring the commercial rental property in January 2004, the Company was
assigned the lease agreement between the seller of the Property and the existing
tenant. The original lease period ends on February 29, 2012 with renewal
options.

7.    Subsequent Events

On January 20, 2006, the Board of Directors of the Company declared a cash
distribution of $1,133,000 payable on February 21, 2006 to stockholders of
record on January 31, 2006.

On March 10, 2006, the Board of Directors of the Company approved an agreement
to redeem 10 shares of Preferred Stock from one shareholder for an aggregate
amount of $1,241,000. The transaction was completed on March 14, 2006.


                                      F-85
<PAGE>

                                  SCHEDULE III

                            FSP Eldridge Green Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2005

<TABLE>
<CAPTION>
                                                                        Initial Cost
                                                             -----------------------------------
                                                                                       Costs
                                                                       Buildings    Capitalized
                                                                     Improvements   (Disposals)
                                                                          and      Subsequent to
Description                                Encumbrances (1)   Land     Equipment    Acquisition
- -----------                                ----------------   ----     ---------    -----------

<S>                                        <C>                <C>        <C>          <C>
   Eldridge Green, Houston, TX                                2,356      33,054       --

<CAPTION>
                                                              Historical Costs
                                          ------------------------------------------------------------

                                                   Buildings                              Total Costs,
                                                  Improvements                               Net of     Depreciable
                                                      and                   Accumulated   Accumulated       Life      Date of
Description                                Land    Equipment    Total (2)   Depreciation  Depreciation     Years     Acquisition
- -----------                                ----    ---------    ---------  -------------  ------------     -----     -----------
                                            (in thousands)
<S>                                        <C>        <C>         <C>         <C>          <C>             <C>           <C>
   Eldridge Green, Houston, TX             2,356      33,054      35,410      1,625        33,785          39            2004
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $36,932.


                                      F-86
<PAGE>

                            FSP Eldridge Green Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                                December 31,
                                                         -----------------------
(in thousands)                                             2005          2004
================================================================================

Real estate investments, at cost:
   Balance, beginning of period                           $35,410       $    --
       Acquisitions                                            --        35,410
       Improvements                                            --            --
       Dispositions                                            --            --
- --------------------------------------------------------------------------------

   Balance, end of period                                 $35,410       $35,410
================================================================================

Accumulated depreciation:
    Balance, beginning of period                          $   777       $    --
        Depreciation                                          848           777
        Dispositions                                           --            --
- --------------------------------------------------------------------------------

    Balance, end of period                                 $1,625          $777
================================================================================


                                      F-87
<PAGE>

                                 ELDRIDGE GREEN
                              FINANCIAL STATEMENTS
                                 FOR THE PERIOD
                     JANUARY 1, 2004 TO JANUARY 15, 2004 AND
                               FOR THE YEARS ENDED
                           DECEMBER 31, 2003 AND 2002


                                    CONTENTS

                                                                            PAGE

Independent auditors' report                                                F-89

Statements of revenue over certain operating expenses                       F-90

Notes accompanying the statements of revenue over certain operating
      expenses                                                              F-91


                                      F-88
<PAGE>

                          INDEPENDENT AUDITORS' REPORT



To the Stockholders

FSP Eldridge Green Corp.
Wakefield, Massachusetts


We have audited the accompanying statements of revenue over certain operating
expenses (the "Statements") of Eldridge Green for the period January 1, 2004 to
January 15, 2004 and for the years ended December 31, 2003 and 2002. These
Statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these Statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the Statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the Statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall Statements'
presentation. We believe that our audits provide a reasonable basis for our
opinion.

The accompanying Statements were prepared to comply with the requirements of
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission, and
exclude certain expenses described in Note 2 and, therefore, are not intended to
be a complete presentation of the Property's revenue and expenses.

In our opinion, these Statements referred to above present fairly, in all
material respects, the revenue over certain operating expenses (as described in
Note 2) of Eldridge Green for the period January 1, 2004 to January 15, 2004 and
for the years ended December 31, 2003 and 2002, in conformity with the basis of
accounting described in Note 2.


/s/ Braver and Company, P.C.
Newton, Massachusetts
June 27, 2005


                                      F-89
<PAGE>

                                 ELDRIDGE GREEN
              STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
             FOR THE PERIOD JANUARY 1, 2004 TO JANUARY 15, 2004 AND
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                       January 1, 2004
                                                              to           For the Years Ended December 31,
                                                       January 15, 2004         2003              2002
                                                       ----------------      ----------        ----------
Revenue

<S>                                                      <C>                 <C>               <C>
   Rental income                                         $  307,768          $5,695,920        $5,993,257
                                                         ----------          ----------        ----------

Certain operating expenses

   Taxes and insurance                                       37,005             919,210           967,190
   Management fees                                           22,858             178,147           202,185
   Administrative                                            17,134             144,954           140,027
   Operating and maintenance                                 40,322             226,360           411,322
                                                         ----------          ----------        ----------

                                                            117,319           1,468,671         1,720,724
                                                         ----------          ----------        ----------

Excess of revenue over certain operating expenses        $  190,449          $4,227,249        $4,272,533
                                                         ==========          ==========        ==========
</TABLE>

               The accompanying notes are an integral part of the
             statements of revenue over certain operating expenses.


                                      F-90
<PAGE>

                                 ELDRIDGE GREEN
  NOTES ACCOMPANYING THE STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
             FOR THE PERIOD JANUARY 1, 2004 TO JANUARY 15, 2004 AND
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


1.    DESCRIPTION OF THE PROPERTY:

The accompanying statements of revenue over certain operating expenses (the
"Statements") include the operations of a commercial building located in
Houston, Texas (the "Property"). The Property is a five-story Class "A" suburban
office building containing approximately 248,399 rentable square feet on
approximately eight acres of land. The Property was owned by Eldridge Office
Development, L.P. and sold to FSP Eldridge Green Corp. (the "Company") on
January 16, 2004.

2.    BASIS OF ACCOUNTING:

The accompanying Statements have been prepared on the accrual basis of
accounting. The Statements have been prepared in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, these Statements exclude
certain historical expenses not comparable to the operations of the Property
after acquisition such as amortization, depreciation, interest, corporate
expenses and certain other costs not directly related to future operations of
the Property.

3.    REVENUE RECOGNITION:

Rental revenue includes income from the lease, certain reimbursable expenses,
and straight-line rent adjustments associated with renting the Property.

                                January 1, 2004
                                        to            Year Ended December 31,
                                January 15, 2004       2003             2002
                                ----------------     ----------      ----------

Income from leases                   $157,837        $3,788,088      $3,774,293
Straight-line rent adjustment          15,460           371,094         386,726
Reimbursable expenses                 134,471         1,536,738       1,832,238
                                     --------        ----------      ----------

      Total                          $307,768        $5,695,920      $5,993,257
                                     ========        ==========      ==========

Eldridge Green has retained substantially all of the risks and benefits of the
Property and accounts for its lease as an operating lease. Rental income from
the lease, which includes rent concessions (including free rent and tenant
improvement allowances) and scheduled increases in rental rates during the lease
term, is recognized on a straight-line basis. Eldridge Green does not have any
percentage rent arrangements with its tenant. Reimbursable costs are included in
rental income in the period earned.

4.    USE OF ESTIMATES:

The preparation of the Statements in conformity with the basis of accounting
described in Note 2 requires management to make estimates and assumptions that
affect the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

5.    CONCENTRATIONS OF RISKS:

For the period January 1, 2004 to January 15, 2004 and for the years ended
December 31, 2003 and 2002, rental income was received from one lessee. As such,
future receipts are dependent upon the financial strength of the lessee and its
ability to perform under the lease agreement.


                                      F-91
<PAGE>

                                 ELDRIDGE GREEN
  NOTES ACCOMPANYING THE STATEMENTS OF REVENUE OVER CERTAIN OPERATING EXPENSES
             FOR THE PERIOD JANUARY 1, 2004 TO JANUARY 15, 2004 AND
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

6.    LEASES:

Eldridge Green, as lessor, has minimum future rentals due under the
non-cancelable operating lease as follows:

                               Year Ending
                               December 31,           Amount
                               ------------          --------
      (in thousands)
                                   2004               $ 3,635
                                   2005                 4,202
                                   2006                 4,285
                                   2007                 4,285
                                   2008                 4,285
                                Thereafter             14,563
                                                     ---------
                                                      $35,255
                                                     =========

In addition, the lessee is liable for real estate taxes and operating expenses
as direct expenses to the lessee.


                                      F-92
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>ex99-2.txt
<TEXT>

                                                                    Exhibit 99.2


            SELECTED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

      The following unaudited pro forma financial information gives effect to
the acquisition of the Target REITs by five wholly-owned acquisition
subsidiaries of FSP Corp., which was consummated on April 30, 2006.

      The unaudited pro forma financial information has been prepared based upon
certain pro forma adjustments to the historical consolidated financial
statements of FSP Corp. and the Target REITs. The pro forma consolidated balance
sheets have been presented as if the mergers occurred as of December 31, 2005.
The pro forma consolidated statements of income for the year ended December 31,
2005 and the consolidated pro forma statements of cash flow for the year ended
December 31, 2005 are presented as if the mergers occurred at the beginning of
the period presented.

      Certain balances in the Target REIT financial statements have been
reclassified to conform to FSP Corp.'s presentation.

      The unaudited pro forma financial information has been derived from the
consolidated financial statements of FSP Corp. and the Target REITs and should
be read in conjunction with those financial statements and notes, the
accompanying notes and for FSP Corp., "Management's Discussion and Analysis of
Financial Information and Results of Operations," which are included in this
current report on Form 8-K and in FSP Corp.'s Annual Report on Form 10-K for the
year ended December 31, 2005.

      The unaudited pro forma consolidated financial statement data are not
necessarily indicative of what the combined company's actual financial position
or results of operations would have been as of the date or for the period
indicated, nor do they purport to represent the combined company's financial
position or results of operations as of or for any future period.

<PAGE>

                        Franklin Street Properties Corp.
            Combining Condensed Consolidated Pro Forma Balance Sheets
                               For the Year Ended
                                December 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Pro Forma                Historical
                                              Historical    Adjustment   Adjusted      Target       Pro Forma
(in thousands)                                 FSP Corp.       (i)       FSP Corp.    REITs(k)     Adjustments        Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                            <C>           <C>         <C>          <C>          <C>                <C>
Assets:
Real estate assets, net                        $ 552,597     $(36,110)   $ 516,487    $ 160,833    $ 46,795(c)(d1)    $ 724,115
Acquired real estate leases, net                  30,952         (772)      30,180        4,762      13,769(d2)          48,711
Investment in non-consolidated REITs               5,006           --        5,006           --      (4,130)(d3)            876
Assets held for syndication                           --           --           --           --          --                  --
Assets held for sale                               6,631       37,451       44,082           --          --              44,082
Cash and cash equivalents                         69,715           --       69,715       18,902        (633)(b)          85,783
                                                                                --                     (960)(c)
                                                                                                      (1,241)(q)
Restricted cash                                      461           --          461          168          --                 629
Tenant rents receivable, net                       1,447           --        1,447          308          --               1,755
Straight line rents receivable, net                5,765         (569)       5,196        1,791      (1,791)(n)           5,196
Prepaid expenses                                     805           --          805          300          --               1,105
Other assets                                       1,199           --        1,199           --          --               1,199
Office computers & furniture, net                    311           --          311           --          --                 311
Deferred leasing commissions, net                  2,284           --        2,284          771        (771)(o)           2,284
- ------------------------------------------------------------------------------------------------------------------------------------

Total assets                                   $ 677,173     $     --    $ 677,173    $ 187,835    $ 51,038           $ 916,046
====================================================================================================================================

Liabilities and stockholders' equity:
Liabilities:
Bank note payable                              $      --     $     --    $      --    $      --    $     --           $      --
Accounts payable and accrued expenses             11,583           --       11,583        3,906          --              15,489
Accrued compensation                               1,891           --        1,891           --          --               1,891
Distribution payable                                  --           --           --           --       4,052(m)            4,052
Tenant security deposits                           1,293           --        1,293          168          --               1,461
Acquired unfavorable real estate leases, net         823           --          823           --         220(d4)           1,043
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                 15,590           --       15,590        4,074       4,272              23,936
- ------------------------------------------------------------------------------------------------------------------------------------

Stockholders' Equity:
Preferred stock                                       --           --           --           --          --                  --
Common stock                                           6           --            6           --           1(f)                7
Additional paid in capital                       677,397           --      677,397      203,161      28,606(f)          907,923
                                                                                                     (1,241)(q)
Treasury stock                                   (14,008)          --      (14,008)          --          --             (14,008)
Earnings(distributions) in excess of
   accumulated earnings/distributions             (1,812)          --       (1,812)     (19,400)     19,400(p)           (1,812)
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                       661,583           --      661,583      183,761      46,766             892,110
- ------------------------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity     $ 677,173     $     --    $ 677,173    $ 187,835    $ 51,038           $ 916,046
====================================================================================================================================
</TABLE>

<PAGE>

                        Franklin Street Properties Corp.
         Combining Condensed Consolidated Pro Forma Statements of Income
                               For the Year Ended
                                December 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      2005 Merger             Historical
                                                         Pro Forma     Pro Forma                Target
                                            Historical  Adjustments   Adjustment    Adjusted    REITS     Pro Forma
(in thousands, except per share amounts)     FSP Corp.      (i)           (j)      FSP Corp.     (l)      Adjustments     Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                          <C>          <C>          <C>        <C>          <C>       <C>       <C>  <C>
Revenue:
     Rental income                           $ 75,896     $(6,637)     $6,555     $ 75,814     $25,643   $(1,718)(d5)   $ 99,739
Related party revenue:
     Syndication fees                           9,268          --          --        9,268          --        --           9,268
     Transaction fees                           9,412          --          --        9,412          --        --           9,412
     Management fees and interest on loans      1,807          --          --        1,807          --      (264)(e)       1,543
     Other                                         10          --          --           10          --        --              10
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenue                                  96,393      (6,637)      6,555       96,311      25,643    (1,982)        119,972
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
     Rental operating expenses                 17,350      (1,612)      1,555       17,293       5,090      (264)(e)      22,119
     Real estate taxes and insurance           10,105        (488)        818       10,435       3,602        --          14,037
     Depreciation and amortization             15,927      (1,064)      1,648       16,511       5,230       999(d6)      24,466
                                                                                                           1,726(d7)
     Selling, general and administrative        7,452          --          --        7,452          --       633(b)        8,085
     Commissions                                5,005          --          --        5,005          --        --           5,005
     Interest                                   2,997          --          --        2,997          --        --           2,997
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses                                 58,836      (3,164)      4,021       59,693      13,922     3,094          76,709
- ------------------------------------------------------------------------------------------------------------------------------------

Income(loss) before interest income,
     equity in earnings in non-consolidated
     REITs, taxes, discontinued operations
     and gain on sales of properties           37,557      (3,473)      2,534       36,618      11,721    (5,076)         43,263
   Interest Income                              1,588          --         112        1,700         384        --           2,084
   Equity in income of non-consolidated
     REITs                                      1,397          --          --        1,397          --      (248)(g)       1,149
   Taxes on income(a)                            (422)         --          --         (422)         --        --            (422)
Income from discontinued operations             4,503       3,473          --        7,976          --        --           7,976
   Gain on sale of properties                  30,493          --          --       30,493          --        --          30,493
- ------------------------------------------------------------------------------------------------------------------------------------
Net income                                   $ 75,116     $    --      $2,646     $ 77,762     $12,105   $(5,324)       $ 84,543
====================================================================================================================================

Weighted average shares outstanding,
     basic and diluted                         56,847          --       3,612       60,459          --    10,972(f)       71,431
- ------------------------------------------------------------------------------------------------------------------------------------

Income per share attributable to:
   Continuing operations                     $   0.70     $    --      $   --     $   0.65     $    --   $    --        $   0.64
   Discontinued operations                       0.08          --          --     $   0.14          --        --        $   0.11
   Gain on sale of properties, net               0.54          --          --     $   0.50          --        --        $   0.43
- ------------------------------------------------------------------------------------------------------------------------------------
Basic and diluted net income per share       $   1.32     $    --      $   --     $   1.29     $    --   $    --        $   1.18
====================================================================================================================================
</TABLE>

<PAGE>

                        Franklin Street Properties Corp.
       Combining Condensed Consolidated Pro Forma Statements of Cash Flow
                               For the Year Ended
                                December 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  2005 Merger                Historical
                                                      Historical   Pro Forma     Adjusted   Target REITS    Pro Forma
(in thousands)                                        FSP Corp.    Adjustment   FSP Corp.        (r)       Adjustments     Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                                    <C>          <C>         <C>           <C>          <C>             <C>
Cash flows from operating activities:
Net income                                             $ 75,116     $ 2,646     $ 77,762      $ 12,105     $(5,324)        $ 84,543
Adjustments to reconcile net income to net
     cash provided by operating activities:
   Depreciation and amortization expense                 17,937       1,648       19,585         5,230       2,725(d6,d7)    27,540
   Amortization of above market lease                     4,310       1,368        5,678         1,304       1,718(d5)        8,700
   Gain on sale of real estate assets                   (30,493)         --      (30,493)           --          --          (30,493)
   Equity in earnings of non-consolidated REITs          (1,418)         --       (1,418)           --         248(g)        (1,170)
   Distributions from non-consolidated REITs              1,217          --        1,217            --        (361)(h)          856
   Increase to bad debt reserve                              --          --           --            --          --               --
   Shares issued as compensation                             31          --           31            --          --               31
Changes in operating assets and liabilities:
   Restricted cash                                          572          --          572           118          --              690
   Tenant rent receivables, net                            (678)         --         (678)         (202)         --             (880)
   Straight-line rents, net                              (1,692)       (115)      (1,807)         (388)         --           (2,195)
   Prepaid expenses and other assets, net                   586          --          586             3          --              589
   Accounts payable, accrued expenses & other items        (200)         --         (200)           15          --             (185)
   Accrued compensation                                   1,186          --        1,186            --          --            1,186
   Tenant security deposits                                 260          --          260          (118)         --              142
Payment of deferred leasing commissions                  (1,560)         --       (1,560)          (10)         --           (1,570)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities     65,174       5,547       70,721        18,057        (994)          87,784
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                        Franklin Street Properties Corp.
 Combining Condensed Consolidated Pro Forma Statements of Cash Flow, (Continued)
                               For the Year Ended
                                December 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  2005 Merger                Historical
                                                      Historical   Pro Forma     Adjusted   Target REITS    Pro Forma
(in thousands)                                        FSP Corp.    Adjustment   FSP Corp.        (r)       Adjustments     Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                                   <C>           <C>         <C>           <C>          <C>            <C>
Cash flows from investing activities:
   Cash from issuance of common stock
      in the merger                                      10,621         --         10,621           --            --         10,621
   Purchase of real estate assets and
      office computers and furniture,
      capitalized merger costs                          (75,988)        --        (75,988)         (16)         (960)(c)    (76,964)
   Acquired real estate leases                          (12,513)        --        (12,513)          --            --        (12,513)
   Investment in non-consolidated REITs                     (18)        --            (18)          --            --            (18)
   Merger costs paid                                       (402)        --           (402)          --            --           (402)
   Change in deposits on real estate assets                (710)        --           (710)          --            --           (710)
   Investment in assets held for syndication             59,532         --         59,532           --            --         59,532
   Proceeds received on sales of real estate assets     112,030         --        112,030           --            --        112,030
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
   investing activities                                  92,552         --         92,552          (16)         (960)        91,576
- ------------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Distributions to stockholders                        (67,208)        --        (67,208)     (17,845)          361(h)     (84,692)
   Purchases of treasury shares                         (14,008)        --        (14,008)          --            --        (14,008)
   Redemption of preferred shares                            --         --             --           --        (1,241)(q)     (1,241)
   Proceeds from (payments to) bank note
      payable, net                                      (59,439)        --        (59,439)          --            --        (59,439)
   Deferred financing costs                                (108)        --           (108)          --            --           (108)
- ------------------------------------------------------------------------------------------------------------------------------------
      Net cash  provided by (used for)
         financing activities                          (140,763)        --       (140,763)     (17,845)         (880)      (159,488)
- ------------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and
   cash equivalents                                      16,963      5,547         22,510          196        (2,834)        19,872
Cash and cash equivalents, beginning of year             52,752         --         52,752       18,706            --         71,458
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                $  69,715     $5,547      $  75,262     $ 18,902     $  (2,834)     $  91,330
====================================================================================================================================

Supplemental disclosure of cash flow information:
   Cash paid for:
     Interest                                         $   2,981     $   --      $   2,981     $     --     $      --      $   2,981
     Taxes on income                                  $     566     $   --      $     566     $     --     $      --      $     566
   Non-cash investing and financing activities:
     Assets acquired through issuance of common
       stock in the merger transaction, net           $ 153,943     $   --      $ 153,943     $     --     $ 220,849      $ 374,792
</TABLE>

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

BASIS OF PRESENTATION

      The following unaudited pro forma condensed consolidated financial
statement presentation has been prepared based upon certain pro forma
adjustments to the historical consolidated financial statements of FSP Corp. The
pro forma balance sheets are presented as if the mergers occurred as of December
31, 2005. The pro forma statements of income and the pro forma statements of
cash flow are presented as if the mergers occurred as of the beginning of the
periods presented.

      The mergers will be treated as a purchase of assets and each target REIT's
assets and liabilities will be recorded on FSP Corp.'s books at their fair value
as of the effective date of the mergers as determined in accordance with
generally accepted accounting principles in the United States (or "GAAP").
Pursuant to the Agreement and Plan of Merger dated March 15th, 2006 ("Plan of
Merger"), the Company issued 10,972,279 shares of common stock of FSP Corp (or
the "FSP Shares"), based on a share price of $20.94, as calculated on April
26th, 2006 ("the Measurement Date"). For pro forma presentation, the fair value
was calculated in accordance with GAAP and was measured by the issuance of the
10,972,279 shares at a market price of $21.01 (the "Market Price"), which
resulted in total stock consideration of $230,527,000; plus FSP's Corp's basis
in its investment in Blue Lagoon, which was $4,130,000 as of December 31, 2005;
plus $960,000 of capitalized acquistion costs paid by FSP Corp in connection
with the mergers.

      The Market Value of FSP Corp.'s common stock of $21.01 is based on a
volume weighted average price (or "VWAP") as reported by Bloomberg Financial
Markets, which is the average price at which the FSP Shares traded in all
reported public markets, adjusted for the size of each trade. It is calculated
by multiplying the size of every trade by the price, taking the sum of these
values, and then dividing by the total trade volume in all reported public
markets between April 24, 2006 and April 28, 2006. The trades between and
including these dates represent market prices for two days before, the day of,
and two days following the Measurement Date, which occurred prior to the
consummation of the mergers on April 30, 2006.

      The value ascribed to the net assets of the target REITs is estimated to
be $235,617,000, which includes real estate assets of $225,939,000, and net
current assets of $9,678,000 including cash. Other assets, net of liabilities,
are expected to be immaterial. The value allocated to the assets acquired in the
mergers is preliminary; the final value allocated to the assets acquired will be
determined as of the actual merger date in accordance with GAAP.

PRO FORMA ADJUSTMENTS

      Certain assumptions regarding the operations of FSP Corp. have been made
in connection with the preparation of the pro forma condensed consolidated
financial information. These assumptions are as follows:

      (a)   FSP Corp. and each of the target REITs have elected to be, and are
            qualified as, a real estate investment trust for federal income tax
            purposes. Each entity has met the various required tests; therefore,
            no provision for federal or state income taxes has been reflected on
            real estate operations.

            FSP Corp. has subsidiaries which are not in the business of real
            estate operations. Those subsidiaries are taxable as real estate
            investment trust subsidiaries, or TRS, and are subject to income
            taxes at statutory tax rates. The taxes on income shown in the pro

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)


            forma statements of income are the taxes on income of the TRS. There
            are no material items that would cause a deferred tax asset or a
            deferred tax liability.

      (b)   Costs of the mergers to the target REITs are estimated at $633,000
            and are reflected as paid at December 31, 2005, and are recorded as
            an administrative expense.

      (c)   The costs of the mergers to FSP Corp. are estimated at $960,000 and
            are reflected as paid as of December 31, 2005 and are capitalized to
            the assets acquired.

      (d)   The following schedule shows the merger consideration for the
            acquired properties and is reconciled to the purchase price of such
            properties (which is equal to the appraised value of such property
            plus capitalized merger costs attributable to such property).

<TABLE>
<CAPTION>
                                                                     380
(in thousands)                     Willow Bend     Innsbrook     Interlocken   Blue Lagoon    Eldridge      Total
                                   -----------     ---------     -----------   -----------    --------      -----
<S>                                  <C>            <C>           <C>            <C>          <C>         <C>
Merger consideration                 $ 20,669       $ 50,167      $ 50,568       $ 55,159     $ 53,964    $ 230,527
FSP's Corp.'s Basis in Blue Lagoon                                                  4,130                     4,130(d3)
Capitalized merger costs                   84            203           205            244          224          960
Adjusted Cash Reserves                   (976)        (2,508)       (2,942)        (2,901)        (351)      (9,678)
                                     ------------------------------------------------------------------------------
Purchase price of properties         $ 19,777       $ 47,862      $ 47,831       $ 56,632     $ 53,837    $ 225,939
                                     ==============================================================================
</TABLE>

            The cost of the property held by each target REIT (including
            capitalized merger costs of $960,000) has been allocated to real
            estate assets, acquired lease origination costs and acquired
            favorable leases. Acquired lease origination costs represent the
            value associated with acquiring an in-place lease (i.e. the market
            cost to execute a similar lease, including leasing commission,
            legal, vacancy and other related costs). Acquired favorable leases
            represents the value associated with a lease which has a rental
            stream with above market rates. The value assigned to buildings,
            land and leases approximates their fair value.

The following schedule shows the difference between historical costs (net of
accumulated depreciation and amortization) of the properties and their allocated
purchase price. The purchase price of the properties is determined based upon
the fair value of the assets acquired. Depreciation and amortization for the
target REITs is based on a preliminary allocation of the purchase price to real
estate investments and to the leases acquired. The allocation is subject to
change as additional information is obtained. An increase in the allocation to
acquired lease origination costs will result in an increase in amortization
expense. For each $1,000,000 increase in acquired real estate leases, the
related pro forma amortization expense will increase by approximately $255,000
per year.

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                   Depreciation
                                                                                                     Life or     and Amortization
                                                  Historical       Allocated                      Average Life      Year ended
(in thousands, except years)                       Cost, net    Purchase Price      Difference       (years)     December 31, 2005
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                                 <C>           <C>             <C>              <C>               <C>
Willow Bend
- ----------------------
Land                                                $  2,737      $   3,800       $  1,063              N/A          $    --
Building                                              13,402         14,905          1,503             39.0               39
Acquired real estate leases, favorable                    --             79             79              2.6               30
Acquired unfavorable real estate leases                   --           (220)          (220)             3.0              (73)
Acquired real estate leases, origination costs            --          1,213          1,213              2.3              527
                                                    --------      ---------       --------                           -------
Total                                               $ 16,139      $  19,777       $  3,638                           $   523
                                                    ========      =========       ========                           =======

Innsbrook
- ----------------------
Land                                                $  3,643      $   5,000       $  1,357              N/A          $    --
Building                                              31,611         39,838          8,227             39.0              211
Acquired real estate leases, favorable                    --            342            342             10.5               33
Acquired real estate leases, origination costs           781          2,682          1,901             10.5              181
                                                    --------      ---------       --------                           -------
Total                                               $ 36,035      $  47,862       $ 11,827                           $   425
                                                    ========      =========       ========                           =======

380 Interlocken
- ----------------------
Land                                                $  5,287      $   8,275       $  2,988              N/A          $    --
Building                                              25,537         34,706          9,169             39.0              235
Acquired real estate leases, favorable                 1,848          3,328          1,480              4.0              370
Acquired real estate leases, origination costs           352          1,522          1,170              3.5              334
                                                    --------      ---------       --------                           -------
Total                                               $ 33,024      $  47,831       $ 14,807                           $   939
                                                    ========      =========       ========                           =======

Blue Lagoon
- ----------------------
Land                                                $  5,463      $   6,350       $    887              N/A          $    --
Building                                              39,368         46,663          7,295             39.0              187
Acquired real estate leases, favorable                    --          2,394          2,394              2.4              998
Acquired real estate leases, origination costs           616          1,225            609              2.4              254
                                                    --------      ---------       --------                           -------
Total                                               $ 45,447      $  56,632       $ 11,185                           $ 1,439
                                                    ========      =========       ========                           =======

Eldridge
- ----------------------
Land                                                $  2,356      $   3,900       $  1,544              N/A          $    --
Building                                              31,429         44,191         12,762             39.0              327
Acquired real estate leases, favorable                    --          2,087          2,087              5.8              360
Acquired real estate leases, origination costs         1,165          3,659          2,494              5.8              430
                                                    --------      ---------       --------                           -------
Total                                               $ 34,950      $  53,837       $ 18,887                           $ 1,117
                                                    ========      =========       ========                           =======

Total
- ----------------------
Land                                                $ 19,486      $  27,325       $  7,839              N/A          $    --
Building                                             141,347        180,303         38,956             39.0              999(d6)
                                                    --------      ---------       --------                           -------
   Real estate assets, net                           160,833        207,628         46,795(d1)                           999

Acquired real estate leases, favorable                 1,848          8,230          6,382(d2)     2.4-10.5            1,791(d5)
Acquired unfavorable real estate leases                   --           (220)          (220)(d4)         3.0              (73)(d5)
Acquired real estate leases, origination costs         2,914         10,301          7,387(d2)     2.4-10.5            1,726(d7)
                                                    --------      ---------       --------                           -------
Total                                               $165,595      $ 225,939       $ 60,344                           $ 4,443
                                                    ========      =========       ========                           =======
</TABLE>

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

      (e)   Management fees of $264,000 charged by FSP Corp. to the target REITs
            for the year ended December 31, 2005 have been eliminated from
            revenue and expenses.

      (f)   Based on the assumption that the market value of the FSP common
            stock is $21.01, the weighted average stock price of the FSP common
            stock based on the stocks trading activity from April 24, 2006 to
            April 28, 2006 and 10,972,279 shares of FSP common stock will be
            issued in exchange for the 2,153.25 outstanding shares of target
            REIT preferred stock in connection with the mergers. Stockholders'
            equity will be adjusted by the net difference between the assets and
            liabilities acquired in the merger. The following schedule shows a
            reconciliation detailing the adjustments to additional
            paid-in-capital.

<TABLE>
<CAPTION>
                                                    FSP              Target
                                                    Corp              REIT           Total
                                                  ---------        ---------       ---------

<S>                                                 <C>            <C>              <C>
      Additional paid-in-capital:
      FSP Corp:
      Total excess of Allocated Purchase
         Price over Historical Cost                 $60,344
      Less Investment in non-consolidated REIT       (4,130)
      Less Estimated Merger Costs                      (960)
                                                   --------
                                                     55,254                         $55,254
      Adjustment to record Par Value                     (1)                             (1)

      Target REITS:
      Adjustments for:
      Estimated Merger Costs                                       $   (633)           (633)
      Straight-line rent receivables                                 (1,791)         (1,791)
      Deferred leasing commissions, net                                (771)           (771)
      Distribution payable                                           (4,052)         (4,052)
      Distributions in excess of earnings                           (19,400)        (19,400)
                                                 ---------------------------------------------
                                                    $55,253        $(26,647)        $28,606
                                                 =============================================
</TABLE>

      (g)   The $248,000 of equity in earnings of non-consolidated REITs for the
            year ended December 31, 2005 related to FSP Corp.'s investment in
            Blue Lagoon has been eliminated from revenue.

      (h)   The $361,000 of distributions from non-consolidated REITs for the
            year ended December 31, 2005 related to FSP Corp.'s investment in
            Blue Lagoon has been eliminated.

      (i)   The Discontinued Operations Proforma Adjustment reflects the
            adjustments needed to classify one property as an Asset Held for
            Sale.

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)


      (j)   The 2005 Merger Pro Forma Adjustment represents pro forma revenue
            and expenses for the period January 1, 2005 to April 30, 2005 from
            the 4 Sponsored REITs that were acquired by merger with FSP Corp.
            effective May 1, 2005 and are summarized below:

                                                          For the period
            (unaudited)                                   January 1, 2005
            (in thousands)                               to April 30, 2005
                                                        --------------------

            Revenue                                           $    6,555
            Real estate operating expenses                        (1,555)
            Real estate taxes and insurance                         (818)
            Depreciation and amortization                         (1,648)
            Interest income                                          112
                                                              ------------
            Net income                                        $    2,646
                                                              ============

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

      (k)   The following table combines the historical balance sheets of the
            target REITs as of December 31, 2005. Certain amounts from the
            Target REITs have been reclassified to conform with FSP Corp.'s
            presentation.

<TABLE>
<CAPTION>
(in thousands)
                                                                              380
                                             Willow Bend    Innsbrook      Interlocken   Blue Lagoon      Eldridge          Total
                                             -----------    ---------      -----------   -----------      --------          -----
<S>                                           <C>            <C>            <C>            <C>            <C>            <C>
Assets:
Land                                          $  2,737       $  3,643       $  5,287       $  5,463       $  2,356       $  19,486
Building                                        15,497         33,737         27,223         41,684         33,054         151,195
                                              --------       --------       --------       --------       --------       ---------
Real estate investments, cost                   18,234         37,380         32,510         47,147         35,410         170,681
  Less accumulated depreciation                  2,095          2,126          1,686          2,316          1,625           9,848
                                              --------       --------       --------       --------       --------       ---------
Real estate investments, net                    16,139         35,254         30,824         44,831         33,785         160,833

Acquired lease origination costs, net               --            781          2,200            616          1,165           4,762
Cash and equivalents                             1,718          3,660          5,034          4,641          3,849          18,902
Restricted cash                                    129             --             39             --             --             168
Tenant rent receivable, net                         47             --            242             --             19             308
Step rent receivable, net                          509            310            247            304            421           1,791
Prepaid expenses                                    23            109            104             41             23             300
Deferred leasing commissions, net                  356             --              8             --            407             771
                                              --------       --------       --------       --------       --------       ---------
    Total assets                              $ 18,921       $ 40,114       $ 38,698       $ 50,433       $ 39,669       $ 187,835
                                              ========       ========       ========       ========       ========       =========

Liabilities and stockholders' Equity:
Accounts payable and accrued expenses         $    433       $    646       $  1,309       $    502       $  1,016       $   3,906
Tenant security deposits                           129             --             39             --             --             168
                                              --------       --------       --------       --------       --------       ---------
    Total liabilities                              562            646          1,348            502          1,016           4,074
                                              --------       --------       --------       --------       --------       ---------

Stockholders' equity
Preferred stock                                     --             --             --             --             --              --
Common stock                                        --             --             --             --             --              --
Additional paid in capital                      18,900         43,607         44,092         55,035         41,527         203,161
Retained deficit and distributions in
  excess of earnings                              (541)        (4,139)        (6,742)        (5,104)        (2,874)        (19,400)
                                              --------       --------       --------       --------       --------       ---------
    Total stockholders' equity                  18,359         39,468         37,350         49,931         38,653         183,761
                                              --------       --------       --------       --------       --------       ---------

Total liabilities & stockholders' equity      $ 18,921       $ 40,114       $ 38,698       $ 50,433       $ 39,669       $ 187,835
                                              ========       ========       ========       ========       ========       =========
</TABLE>

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)


      (l)   The following table combines the historical operations of the target
            REITs for the year ended December 31, 2005.

<TABLE>
<CAPTION>
(in thousands)
                                                                  380
                                  Willow Bend     Innsbrook    Interlocken   Blue Lagoon     Eldridge        Total
                                  -----------     ---------    -----------   -----------     --------        -----

<S>                                  <C>           <C>           <C>           <C>           <C>           <C>
Revenue:
Rental                               $  2,129      $  5,591      $  6,100      $  5,371      $  6,452      $ 25,643
                                     --------      --------      --------      --------      --------      --------
Total revenue                           2,129         5,591         6,100         5,371         6,452        25,643
                                     --------      --------      --------      --------      --------      --------

Expenses:
Rental operating expenses                 860         1,528         1,442           325           935         5,090
Real estate taxes and insurance           334           416         1,283           643           926         3,602
Depreciation and amortization             677         1,066           948         1,439         1,100         5,230
                                     --------      --------      --------      --------      --------      --------
Total expenses                          1,871         3,010         3,673         2,407         2,961        13,922
                                     --------      --------      --------      --------      --------      --------

Income before interest                    258         2,581         2,427         2,964         3,491        11,721
Interest income                            48            63           111            95            67           384
                                     --------      --------      --------      --------      --------      --------
Net income                           $    306      $  2,644      $  2,538      $  3,059      $  3,558      $ 12,105
                                     ========      ========      ========      ========      ========      ========
</TABLE>

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)


      (m)   Distribution payable - The value ascribed to the net assets of the
            Target REITs includes real estate assets and net current assets that
            include cash. A final dividend was estimated to be paid to the
            shareholders of the target REITs, prior to the merger as of the date
            of the pro forma balance sheet for the target REITs, and is shown in
            the following table. The actual final dividend will consider
            earnings through March 31, 2006, cash available for distribution and
            other factors and may differ.

                  380 Interlocken               $  994
                  Blue Lagoon                    1,149
                  Eldridge                       1,121
                  Innsbrook                        483
                  Willow Bend                      305
                                               -------
                      Total                     $4,052
                                               =======

      (n)   The cumulative unbilled straight-line rents of the target REITs will
            be eliminated at acquisition.

      (o)   The cumulative net deferred leasing costs of the target REITs will
            be eliminated at acquisition.

      (p)   The cumulative deficit of the target REITs will be eliminated at
            acquisition.

      (q)   Cash redemption of 10 preferred shares by FSP Eldridge Green Corp.
            prior to merger.

<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

      (r)   The following table combines the historical cash flows for the
            target REITs for the year ended December 31, 2005. Certain amounts
            from the Target REITs have been reclassified to conform with FSP
            Corp.'s presentation.

<TABLE>
<CAPTION>
                                                                Willow                    380        Blue
(in thousands)                                                   Bend     Innsbrook   Interlocken   Lagoon     Eldridge      Total
- --------------                                                   ----     ---------   -----------   ------     --------      -----

<S>                                                             <C>        <C>          <C>         <C>         <C>        <C>
Cash flows from operating activities:
   Net income  (loss)                                           $   306    $ 2,644      $ 2,538     $ 3,059     $ 3,558    $ 12,105

   Adjustments to reconcile net income (loss)
     to net cash provided by (used for)
     operating activities:
       Depreciation and amortization expense                        677      1,066          948       1,439       1,100       5,230
       Amortization of above market lease                            --         --        1,304          --          --       1,304
  Changes in operating assets and liabilities:
     Restricted cash                                                125         --           (7)         --          --         118
     Tenant rent receivables, net                                    (4)        24         (212)         --         (10)       (202)
     Straight-line rents, net                                       (29)       (84)         (39)        (61)       (175)       (388)
     Prepaid expenses and other assets, net                          (9)         9           (1)        (19)         23           3
     Accounts payable and accrued expenses                           62         57           91         328        (523)         15
     Tenant security deposits                                      (125)        --            7          --          --        (118)
  Payment of deferred leasing commissions                            (1)        --           (9)         --          --         (10)
                                                                -------    -------      -------     -------     -------    --------

        Net cash provided by (used for)
           operating activities                                   1,002      3,716        4,620       4,746       3,973      18,057
                                                                -------    -------      -------     -------     -------    --------

Cash flows from investing activities:
      Purchase of real estate assets and related leases,
         office computers and furniture, capitalized
         merger costs                                                --         --          (16)         --          --         (16)
                                                                -------    -------      -------     -------     -------    --------

      Net cash provided by (used for) investing activities           --         --          (16)         --          --         (16)
                                                                -------    -------      -------     -------     -------    --------

Cash flows from financing activities:
      Distributions to stockholders                                (967)    (3,639)      (4,700)     (4,388)     (4,151)    (17,845)
                                                                -------    -------      -------     -------     -------    --------

      Net cash  provided by (used for) financing activities        (967)    (3,639)      (4,700)     (4,388)     (4,151)    (17,845)
                                                                -------    -------      -------     -------     -------    --------

Net increase in cash and cash equivalents                            35         77          (96)        358        (178)        196
Cash and cash equivalents, beginning of period                    1,683      3,583        5,130       4,283       4,027      18,706
                                                                -------    -------      -------     -------     -------    --------

Cash and cash equivalents, end of period                        $ 1,718    $ 3,660      $ 5,034     $ 4,641     $ 3,849    $ 18,902
                                                                =======    =======      =======     =======     =======    ========
</TABLE>

<PAGE>

                           COMPARATIVE PER SHARE DATA

               The following tables present on a per share basis:

      (a) Basic and diluted net income per share, book value per share, and
dividends per share declared for FSP Corp. and each of the target REITs on a
historical basis.

      (b) Consolidated pro forma basic and diluted net income per share, book
value per share and dividends per share for FSP Corp. This table shows the
effect of the mergers from the perspective of an owner of one share of FSP
common stock.

      (c) Equivalent pro forma basic and diluted net income per share,
equivalent pro forma book value per share and equivalent pro forma dividends per
share for each of the target REITs. This table shows the effect of the mergers
from the perspective of an owner of one share of stock of a Target REIT. The
consolidated pro forma data are multiplied by the number of shares of FSP common
stock issuable in exchange for each share of target stock, also known as the
exchange ratio, as shown in the following table:

          Target REIT                            Exchange Ratio
          -----------                            --------------
          Willow Bend                               4,775.55
          Innsbrook                                 5,026.89
          380 Interlocken                           5,014.33
          Blue Lagoon                               4,775.55
          Eldridge                                  5,804.53

      The pro forma financial data and equivalent pro forma data are unaudited
and are not necessarily indicative of the operating results that would have been
achieved had the mergers occurred as of the beginning of the period and should
not be construed as representative of future operations.

      FSP Corp. calculates historical book value per share by dividing
stockholders' equity by the number of shares of common stock (or preferred
stock, in the case of the target REITs) outstanding at the end of each period.

      FSP Corp. calculates consolidated pro forma net income per share data for
FSP Corp. as if the mergers occurred on January 1, 2005 and resulted in weighted
average shares of 71,431,000 for the year ended December 31, 2005, based on the
assumption that the market value of the FSP common stock is $21.55, the last
sale price of the FSP common stock on March 21, 2006.

      FSP Corp. calculates consolidated pro forma book value per share data for
FSP Corp. as if the mergers occurred on December 31, 2005 and resulted in an
ending number of shares of 70,767,000, based on the assumption that the market
value of the FSP common stock is $21.01, the weighted average stock price of the
FSP common stock based on the stocks trading activity from April 24, 2006 to
April 28, 2006 and 10,972,279 shares of FSP common stock was issued in exchange
for the 2,153.25 outstanding shares of target REIT preferred stock in connection
with the mergers.

      FSP Corp. calculates consolidated pro forma dividends per share by adding
the total dividends paid by FSP Corp. plus dividends paid by the target REITs
and dividing this sum by 71,431,000 shares, based on the assumption that FSP
issued 10,792,279 of common stock in exchange for the 2,153.25 outstanding
shares of target REIT preferred stock in connection with the mergers as shown in
the following table:

<PAGE>

                      COMPARATIVE PER SHARE DATA, Continued

                                             For the Year
                                                Ended
      (in thousands)                       December 31, 2005
      ---------------------------------------------------------

      FSP Corp.                               $67,208
      Willow Bend                                 967
      Innsbrook                                 3,639
      380 Interlocken                           4,700
      Blue Lagoon                               4,388
      Eldridge                                  4,151
                                             ---------

          Total                               $85,053
                                             =========

      FSP Corp. calculates equivalent pro forma net income per share for each
target REIT by multiplying the consolidated pro forma net income per share by
the exchange ratio.

      FSP Corp. calculates equivalent pro forma book value per share for each
target REIT by multiplying the consolidated pro forma book value per share by
the exchange ratio.

      FSP Corp. calculates equivalent pro forma dividends per share for each
target REIT by multiplying the consolidated pro forma dividends per share by the
exchange ratio.

<PAGE>

      For the purposes of the consolidated pro forma net income per share and
book value per share data, FSP Corp.'s historical financial data have been
consolidated with the target REITs' financial data.

                                                        Pro forma     Pro forma
                                          Historical   Consolidated   Equivalent
                                          ----------   ------------   ----------
Net income (loss) per share
  basic and diluted
    FSP Corp.                                 $ 1.32      $ 1.18      $    --

    Willow Bend                                1,485          --        5,635
    Innsbroook                                 5,566          --        5,932
    380 Interlocken                            5,288          --        5,917
    Blue Lagoon                                5,107          --        5,635
    Eldridge                                   7,863          --        6,849

Book value per share
    FSP Corp.                                 $11.06      $12.61      $    --

    Willow Bend                               89,121          --       60,220
    Innsbroook                                83,091          --       63,389
    380 Interlocken                           77,813          --       63,231
    Blue Lagoon                               83,357          --       60,220
    Eldridge                                  85,421          --       73,195

Dividends declared per share
    FSP Corp.                                 $ 1.24      $ 1.19      $    --

    Willow Bend                                4,694          --        5,683
    Innsbroook                                 7,661          --        5,982
    380 Interlocken                            9,792          --        5,967
    Blue Lagoon                                7,326          --        5,683
    Eldridge                                   9,173          --        6,907

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
