Edgar Filing: DCT Industrial Trust Inc.

Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33201

DCT INDUSTRIAL TRUST INC.

(Exact name of registrant as specified in its charter)


Maryland		82-0538520
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

518 17^th Street, Suite 800 Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (303) 597-2400

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which Registered
Common Stock		New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.

Yes [X] No [ ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [X]

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer [X]				Accelerated filer [ ]
Non-accelerated filer [ ] (do not check if smaller reporting company)				Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

As of June 30, 2011, the aggregate market value of the 242.5 million shares of voting and non-voting common stock held by non-affiliates of the registrant was $1.3 billion based on the closing sale price of $5.23 as reported on the New York Stock Exchange on June 30, 2011. (For this computation, the registrant has excluded the market value of all shares of Common Stock reported as beneficially owned by executive officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the registrant.) As of February 17, 2012 there were 247,088,176 shares of Common Stock outstanding.

Documents Incorporated by Reference

Portions of the registrant’s definitive proxy statement to be issued in conjunction with the registrant’s annual meeting of stockholders to be held April 26, 2012 are incorporated by reference into Part III of this Annual Report.

DCT INDUSTRIAL TRUST INC.

TABLE OF CONTENTS

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended December 31, 2011


		Page
PART I
Item 1.	Business		3
Item 1A.	Risk Factors		7
Item 1B.	Unresolved Staff Comments		28
Item 2.	Properties		29
Item 3.	Legal Proceedings		33
Item 4.	Mine Safety Disclosure		33

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		34
Item 6.	Selected Financial Data		37
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk		65
Item 8.	Financial Statements and Supplementary Data		65
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		65
Item 9A.	Controls and Procedures		66
Item 9B.	Other Information		68

PART III
Item 10.	Directors, Executive Officers and Corporate Governance		69
Item 11.	Executive Compensation		69
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		69
Item 13.	Certain Relationships and Related Transactions and Director Independence		69
Item 14.	Principal Accountant Fees and Services		69

PART IV
Item 15.	Exhibits and Financial Statement Schedules		70

FORWARD-LOOKING STATEMENTS

We make statements in this Annual Report on Form 10-K (“Annual Report”) that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation:

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national, international, regional and local economic conditions, including, in particular, the continuing impact of the ongoing economic downturn and the strength of the economic recovery and the impact of the financial crisis in Europe;

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the general level of interest rates and the availability of capital;

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the competitive environment in which we operate;

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real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;

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decreased rental rates or increasing vacancy rates;

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defaults on or non-renewal of leases by tenants;

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acquisition and development risks, including failure of such acquisitions and development projects to perform in accordance with projections;

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the timing of acquisitions and dispositions;

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natural disasters such as fires, tornadoes, hurricanes and earthquakes;

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energy costs;

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the terms of governmental regulations that affect us and interpretations of those regulations, including the costs of compliance with those regulations, changes in real estate and zoning laws and increases in real property tax rates;

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financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal, interest and other commitments;

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lack of or insufficient amounts of insurance;

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litigation, including costs associated with prosecuting or defending claims and any adverse outcomes;

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the consequences of future terrorist attacks or civil unrest;

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environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us; and

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other risks and uncertainties detailed in the section entitled “Risk Factors.”

In addition, our current and continuing qualification as a real estate investment trust, or REIT, involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.

We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The reader should carefully review our financial statements and the notes thereto, as well as the section entitled “Risk Factors” in this Annual Report.

PART I

ITEM 1.

BUSINESS

The Company

DCT Industrial Trust Inc. is a leading industrial real estate company that owns, operates and develops high-quality bulk distribution and light industrial properties in high-volume distribution markets in the U.S. and Mexico. As used herein, “DCT Industrial Trust,” “DCT,” “the Company,” “we,” “our” and “us” refer to DCT Industrial Trust Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires. We were formed as a Maryland corporation in April 2002 and have elected to be treated as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. We are structured as an umbrella partnership REIT under which substantially all of our current and future business is, and will be, conducted through a majority owned and controlled subsidiary, DCT Industrial Operating Partnership LP (the “operating partnership”), a Delaware limited partnership, for which DCT Industrial Trust Inc. is the sole general partner. We own our properties through our operating partnership and its subsidiaries. As of December 31, 2011, we owned approximately 90% of the outstanding equity interests in our operating partnership.

Available Information

Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to any of those reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable through our website at www.dctindustrial.com. The information contained on our website is not incorporated into this Annual Report. Our Common Stock is listed on the New York Stock Exchange under the symbol “DCT”.

Business Overview

Our portfolio primarily consists of high-quality functional bulk distribution warehouses and light industrial properties. The properties we target for acquisition or development are generally characterized by convenient access to major transportation arteries, proximity to densely populated markets and quality design standards that allow our customers’ efficient and flexible use of the buildings. In the future, we intend to continue to focus on properties that exhibit these characteristics in select U.S. markets where we believe we can achieve favorable returns and leverage our local expertise. We seek to maximize long-term earnings and shareholder value within the context of overall economic conditions, primarily through increasing rents and operating income at existing properties and acquiring and developing high-quality properties in major distribution markets. In addition, we will recycle our capital by disposing of existing assets and reinvesting the proceeds into newly acquired or developed assets where we believe the returns will be more favorable over time.

As of December 31, 2011, the Company owned interests in, managed or had under development approximately 75.5 million square feet of properties leased to approximately 900 customers, including:

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58.1 million square feet comprising 408 consolidated properties owned in our operating portfolio which were 90.6% occupied;

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0.2 million square feet comprising one consolidated property under redevelopment; and

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17.2 million square feet comprising 52 unconsolidated properties which were 86.3% occupied and one managed-only property operated on behalf of five institutional capital management partners.

As of December 31, 2011, our total consolidated portfolio consisted of 409 properties with an average size of 142,000 square feet and an average age of 20.2 years.

ownership interests were acquired for a total purchase price of approximately $222.6 million, including $9.8 million attributable to the noncontrolling interests’ share. We funded these acquisitions with proceeds from our equity offering, proceeds from asset sales, proceeds from our private placement of senior unsecured notes, borrowings under our senior unsecured revolving credit facility, proceeds from a nonrecourse mortgage financing, issuance of OP units and existing cash balances.

During the year ended December 31, 2011, we sold 16 operating properties totaling approximately 2.7 million square feet to third-parties. The properties were sold for combined gross proceeds of approximately $108.3 million, resulting in gains of $12.0 million and impairment losses of $7.8 million, which represented the difference between the carrying value and the fair value of the assets sold, net of sales costs.

We have a broadly diversified tenant base. As of December 31, 2011, our consolidated operating properties had leases with approximately 900 customers with no single customer accounting for more than 1.7% of the total annualized base rents of our properties. Our ten largest customers occupy approximately 10.6% of our consolidated properties based on square footage and account for approximately 12.8% of the annualized base rents of these properties. We believe that our broad national presence in the top U.S. distribution markets provides geographic diversity and is attractive to users of distribution space which allows us to build strong relationships with our customers. Furthermore, we are actively engaged in meeting our customers’ expansion and relocation requirements.

Our principal executive office is located at 518 Seventeenth Street, Suite 800, Denver, Colorado 80202; our telephone number is (303) 597-2400. We also maintain regional offices in Atlanta, Georgia; Baltimore, Maryland; Cincinnati, Ohio; Dallas, Texas; Houston, Texas; Moonachie, New Jersey; Newport Beach, California; Orlando, Florida; and Monterey, Mexico. Our website address is www.dctindustrial.com.

Business Strategy

Our primary business objectives are to maximize long-term growth in Funds From Operations, or FFO per share (see definition in “Selected Financial Data”), and to maximize the net asset value of our portfolio and total shareholder return. The strategies we intend to execute to achieve these objectives include:

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Maximizing Cash Flows From Existing Properties. We intend to maximize the cash flows from our existing properties by active leasing and management, maintaining strong customer relationships, controlling operating expenses and physically maintaining the quality of our properties. Renewing tenants, leasing space and effectively managing expenses are critical to achieving our objectives and are a primary focus of our local real estate teams.

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Profitably Acquiring Properties. We seek to acquire properties that meet our asset, location and financial criteria at prices and potential returns which we believe are attractive. We have indentified certain markets and sub-markets where we focus our efforts on identifying buildings to acquire. Acquisitions may include fully-leased buildings, vacant properties, or land where we think our leasing and development expertise can add value.

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Selectively Pursuing New Development. To meet current tenant demand, we intend to develop new assets in in-fill locations in select markets where rents and vacancy levels demonstrate the need for new construction. During 2011, we acquired five land parcels totaling approximately 102.2 acres. During 2011, we commenced construction of two buildings totaling 178,000 square feet on a 13.3 acre land site in the Dulles Corridor submarket of Washington D.C. which is expected to be completed early in 2012. In 2011, we also entered into a forward purchase commitment with an unrelated third-party to acquire a newly constructed industrial facility totaling approximately 267,000 square feet on a 16.0 acre site in the Northwest submarket of Houston, which is expected to be completed in mid-2012. There is active interest by a number of users for both projects.

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Recycling Capital. We intend to selectively dispose of non-strategic assets and redeploy the proceeds into higher growth acquisition and development opportunities. In 2011, we sold $108.3 million of non-strategic assets for deployment into higher growth assets.

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Conservatively Managing Our Balance Sheet. We plan to maintain financial metrics, including leverage and coverage ratios on a basis consistent with our investment grade peers. This strategy has provided protection from turmoil in the capital markets during the economic downturn and should keep us well positioned to finance capital deployment opportunities as they arise. In addition, we believe that a conservatively managed balance sheet provides a competitive long-term cost of capital by lowering borrowing costs over time.

Our Competitive Strengths

We believe that we distinguish ourselves from other owners, operators, acquirers and developers of industrial properties. Although our business strategy reflects current market conditions, we believe our long-term success is supported through the following competitive strengths:

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High-Quality Industrial Property Portfolio. Our portfolio of industrial properties primarily consists of high-quality bulk distribution facilities in high volume markets specifically designed to meet the warehousing needs of regional and national companies. The majority of our properties are specifically designed for use by major distribution users and are readily divisible to meet re-tenanting opportunities. We believe that our concentration of high-quality bulk distribution properties provides us with a competitive advantage in attracting and retaining distribution users across the markets in which we operate.

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Experienced and Committed Management Team. Our executive management team collectively has an average of nearly 26 years commercial real estate experience and 15 years of industrial real estate experience. Additionally, our executive management team has extensive public company operating experience.

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Strong Operating Platform. We have a team of 63 experienced transaction and property management professionals working in ten regional offices to maximize market opportunities effectively through local expertise, presence and relationships. We believe successfully meeting the needs of our customers and anticipating and responding to market opportunities will result in achieving superior returns from our properties.

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Proven Acquisition and Disposition Capabilities. The company has extensive experience in acquiring industrial real estate, including both smaller transactions as well as larger portfolio acquisitions. Our local market teams are an important advantage in sourcing potential transactions, both marketed as well as off-market. The average transaction size of our acquisitions in 2010 and 2011 was $12.1 million; demonstrating our ability to access a significant pipeline of smaller acquisitions. Further, consistent with our capital recycling strategy, we have disposed of a cumulative $931.3 million of real estate investments since inception. Our ability to acquire and sell real estate is driven by the experience of our transaction personnel and our extensive network of industry relationships within the brokerage, development and investor communities.

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Extensive Development and Redevelopment Expertise. Our local market teams have significant experience in all facets of value-add activities including build to suit, ground up development and redevelopment capabilities. We believe our teams’ knowledge of our focus markets’ opportunities and relationship with the key market participants, including land owners, users and brokers, combined with the technical expertise required to successfully execute on complex transactions, provides us with an excellent platform to create value while appropriately managing risk.

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Strong Industry Relationships. We believe that our extensive network of industry relationships with the brokerage, development and investor communities will allow us to execute successfully our acquisition, development and capital recycling strategies. These relationships augment our ability to source acquisitions in off-market transactions outside of competitive marketing processes, capitalize on development opportunities and capture repeat business and transaction activity. Our strong relationships with local and nationally focused brokers aids in attracting and retaining tenants.

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Capital Structure. Our capital structure and business plan provides us with sufficient financial flexibility and capacity to fund future growth. As of December 31, 2011 we had $290.2 million available under our senior unsecured revolving credit facility and 312 of our consolidated operating properties with a gross book value of $2.4 billion were unencumbered.

Operating Segments

During 2011, management reorganized internal reporting whereby the operating results used to assess performance were aggregated into three reportable segments, East, Central and West, which are based on the geographical locations of our properties. This change aligns the markets by which management and their operating teams conduct and monitor business. Management considers rental revenues and property net operating income aggregated by segment to be the appropriate way to analyze performance. See additional information in “Item 2. Properties” and in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements, Note 14—Segment Information.”

Competition

The market for the leasing of industrial real estate is highly competitive. We experience competition for tenants from other existing assets in proximity to our buildings as well as from proposed new developments. As a result, we may have to provide free rental periods, incur charges for tenant improvements or offer other inducements, all of which may have an adverse impact on our results of operations.

The market for the acquisition of industrial real estate is also very competitive. We compete for real property investments with other REITs and institutional investors such as pension funds and their advisors, private real estate investment funds, insurance company investment accounts, private investment companies, individuals and other entities engaged in real estate investment activities, some of which have greater financial resources than we do.

Employees

As of December 31, 2011, we had 117 full-time employees.

ITEM 1A.

RISK FACTORS

RISKS RELATED TO RECENT ECONOMIC CONDITIONS

Adverse economic conditions will negatively affect our returns and profitability.

Our operating results may be affected by weakness in the national economy as well as in the local economies where our properties are located. Specific impacts may include:

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increased levels of tenant defaults under leases;

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re-leasing may require concessions or reduced rental rates under the new leases due to reduced demand;

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adverse capital and credit market conditions may restrict our development and redevelopment activities; and

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reduced access to credit may result in tenant defaults, non-renewals under leases or inability of potential buyers to acquire our properties held for sale, including properties held through joint ventures.

Also, to the extent we purchase real estate in an unstable market, we are subject to the risk that if the real estate market ceases to attract the same level of capital investment in the future that it attracts at the time of our purchases, or the number of companies seeking to acquire properties decreases, the value of our investments may not appreciate or may decrease significantly below the amount we pay for these investments. The length and severity of any economic slowdown or downturn cannot be predicted. Our operations could be negatively affected to the extent that an economic slowdown or downturn is prolonged or becomes more severe.

Constrained credit markets and real estate markets could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to you.

Domestic and international financial markets continue to be constrained, which have impacted the availability of credit and contributed to rising costs associated with obtaining credit. If debt financing is not available on terms and conditions we find acceptable, we may not be able to obtain financing for investments. If the credit markets continue to be constrained, our ability to borrow monies to finance the purchase of, or other activities related to, real estate assets will be negatively impacted. If we are unable to borrow monies on terms and conditions that we find acceptable, we likely will have to reduce the number of properties we can purchase, and the return on the properties we do purchase may be lower. If interest rates are higher when the properties are refinanced, interest expense may increase and our income may be reduced. In addition, if we pay fees to lock-in a favorable interest rate, falling interest rates or other factors could require us to forfeit these fees. Also, if the value of our properties decline we may be unable to refinance all of our debt as it matures. All of these events would have a material adverse effect on our results of operations, financial condition and ability to pay distributions.

Substantial international, national and local government deficits and the weakened financial condition of these governments may adversely impact our business, financial condition and results of operations. In particular, for example, uncertainty about the financial stability of several countries in the European Union, the increasing risk that those countries may default on their sovereign debt and related stresses on financial markets could have an adverse effect on our business, results of operations and financial condition.

The values of, and the cash flows from, the properties we own are affected by developments in global, national and local economies. As a result of the recent severe recession and the significant government interventions, federal, state and local governments have incurred record deficits and assumed or guaranteed liabilities of private financial institutions or other private entities. These increased budget deficits and the weakened financial condition of federal, state and local governments may lead to reduced governmental spending, tax increases, public sector job losses, increased interest rates, currency devaluations, defaults on debt obligations or other adverse economic events, which may directly or indirectly adversely affect our business, financial condition and results of operations.

There can be no assurance that the market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not spread, nor can there be any assurance that future assistance packages will be available or, even if provided, will be sufficient to stabilize the affected countries and markets in Europe or elsewhere. Risks and ongoing concerns about the debt crisis in Europe could have a detrimental impact on the global economic recovery, financial markets and institutions and the availability of debt financing, which may directly or indirectly adversely affect our business, financial condition and results of operations.

RISKS RELATED TO OUR BUSINESS AND OPERATIONS

Our investments are concentrated in the industrial real estate sector, and our business would be adversely affected by an economic downturn in that sector.

Our investments in real estate assets are primarily concentrated in the industrial real estate sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included a more significant portion of other sectors of the real estate industry.

We depend on key personnel.

Our success depends to a significant degree upon the continued contributions of certain key personnel including, but not limited to, our management group, each of whom would be difficult to replace. If any of our key personnel were to cease employment with us, our operating results could suffer. Our ability to retain our management group or to attract suitable replacements should any member of the management group leave is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely impact our financial condition and cash flows. Further, such a loss could be negatively perceived in the capital markets. We have not obtained and do not expect to obtain key man life insurance on any of our key personnel.

We also believe that, as we expand, our future success depends, in large part, upon our ability to hire and retain highly skilled managerial, investment, financing, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure our stockholders that we will be successful in attracting and retaining such skilled personnel.

Our operating results and financial condition could be adversely affected if we do not continue to have access to capital on favorable terms.

As a REIT, we must meet certain annual distribution requirements. Consequently, we are largely dependent on external capital to fund our development and acquisition activities. Further, in order to maintain our REIT status and avoid the payment of income and excise taxes, we may need to borrow funds on a short-term basis to meet the REIT distribution requirements even if the then-prevailing market conditions are not favorable for these borrowings. These short-term borrowing needs could result from differences in timing between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments. Alternatively, pursuant to recent IRS guidance, we may elect to declare certain taxable dividends for the taxable year ended December 31, 2011, that are up to 90% payable in the form of our common stock (with the remainder payable in cash). In this event, stockholders will be required to include the full amount of the dividends in income, and stockholder’s tax liability could exceed the cash portion of their dividend. Additionally, our ability to access capital is dependent upon a number of factors, including general market conditions and competition from other real estate companies. To the extent that capital is not available to acquire or develop properties, profits may not be realized or their realization may be delayed, which could result in an earnings stream that is less predictable than some of our competitors and result in us not meeting our projected earnings and distributable cash flow levels in a particular reporting period. Failure to meet our projected earnings and distributable cash flow levels in a particular reporting period could have an adverse effect on our financial condition and on the market price of our common stock.

Our long-term growth will partially depend upon future acquisitions of properties, and we may be unable to consummate acquisitions on advantageous terms or acquisitions may not perform as we expect.

We acquire and intend to continue to acquire primarily high-quality generic bulk distribution warehouses and light industrial properties. The acquisition of properties entails various risks, including the risks that our investments may not perform as we expect, that we may be unable to integrate our new acquisitions into our existing operations quickly and efficiently and that our cost estimates for bringing an acquired property up to market standards may prove inaccurate. Further, we face significant competition for attractive investment opportunities from other well-capitalized real estate investors, including both publicly-traded REITs and private institutional investment funds, and these competitors may have greater financial resources than us and a greater ability to borrow funds to acquire properties. This competition increases as investments in real estate become increasingly attractive relative to other forms of investment. As a result of competition, we may be unable to acquire additional properties as we desire or the purchase price may be significantly elevated. In addition, we expect to finance future acquisitions through a combination of borrowings under our senior unsecured credit facility, proceeds from equity or debt offerings by us or our operating partnership or its subsidiaries and proceeds from property contributions and divestitures which may not be available and which could adversely affect our cash flows. Any of the above risks could adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on, and the market price of, our common stock.

We may be unable to source off-market deal flow in the future.

A key component of our growth strategy is to continue to acquire additional industrial real estate assets. Properties that are acquired off-market are typically more attractive to us as a purchaser because of the absence of a formal sales process, which could lead to higher prices. If we cannot obtain off-market deal flow in the future, our ability to locate and acquire additional properties at attractive prices could be adversely affected.

Our real estate development strategies may not be successful.

We are involved in the construction and expansion of distribution facilities and we intend to continue to pursue development and renovation activities as opportunities arise. In addition, we have entered into joint ventures to develop, or will self-develop, additional warehouse/distribution buildings on land we already own or control, and we have rights under master development agreements to acquire additional acres of land for future development activities. We will be subject to risks associated with our development and renovation activities that could adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on, and the market price of, our common stock, including, but not limited to:

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the risk that development projects in which we have invested may be abandoned and the related investment will be impaired;

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the risk that we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;

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the risk that we may not be able to obtain additional land on which to develop;

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the risk that we may not be able to obtain financing for development projects on favorable terms;

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the risk that construction costs of a project may exceed the original estimates or that construction may not be concluded on schedule, making the project less profitable than originally estimated or not profitable at all (including the possibility of contract default, the effects of local weather conditions, the possibility of local or national strikes and the possibility of shortages in materials, building supplies or energy and fuel for equipment);

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the risk that, upon completion of construction, we may not be able to obtain, or obtain on advantageous terms, permanent financing for activities that we have financed through construction loans; and

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the risk that occupancy levels and the rents that can be charged for a completed project will not be met, making the project unprofitable.

Our institutional capital management strategy of contributing properties to joint ventures we manage may not allow us to expand our business and operations as quickly or as profitably as we desire.

In general, our ability to contribute properties to joint ventures that are part of our institutional capital management program on advantageous terms will be dependent upon competition from other managers of similar joint ventures, current capital market conditions, including the yield expectations for industrial properties, and other factors beyond our control. Our ability to develop and timely lease properties will impact our ability to contribute these properties. Continued access to private and public debt and equity capital by these joint ventures is necessary in order for us to pursue our strategy of contributing properties to the joint ventures. Should we not have sufficient properties available that meet the investment criteria of current or future joint ventures, or should the joint ventures have limited or no access to capital on favorable terms, then these contributions could be delayed resulting in adverse effects on our liquidity and on our ability to meet projected earnings levels in a particular reporting period. Failure to meet our projected earnings levels in a particular reporting period could have an adverse effect on our results of operations, distributable cash flows and on the value of our common stock. Further, our inability to redeploy the proceeds from our divestitures in accordance with our investment strategy could have an adverse effect on our results of operations, distributable cash flows, and our ability to meet our debt obligations in a timely manner and the value of our common stock in subsequent periods.

Actions of our joint venture partners could negatively impact our performance.

Our organizational documents do not limit the amount of available funds that we may invest in partnerships, limited liability companies or joint ventures, and we intend to continue to develop and acquire properties through joint ventures, limited liability companies and partnerships with other persons or entities when warranted by the circumstances. Such partners may share certain approval rights over major decisions. Such investments may involve risks not otherwise present with other methods of investment in real estate, including, but not limited to:

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that our co-member, co-venturer or partner in an investment might become bankrupt, which would mean that we and any other remaining general partners, members or co-venturers would generally remain liable for the partnership’s, limited liability company’s or joint venture’s liabilities;

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that such co-member, co-venturer or partner may at any time have economic or business interests or goals which are or which become inconsistent with our business interests or goals;

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that such co-member, co-venturer or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives, including our current policy with respect to maintaining our qualification as a REIT;

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that, if our partners fail to fund their share of any required capital contributions, we may be required to contribute such capital;

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that joint venture, limited liability company and partnership agreements often restrict the transfer of a co-venturer’s, member’s or partner’s interest or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms;

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that our relationships with our partners, co-members or co-venturers are contractual in nature and may be terminated or dissolved under the terms of the agreements and, in such event, we may not continue to own or operate the interests or assets underlying such relationship or may need to purchase such interests or assets at an above-market price to continue ownership;

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that disputes between us and our partners, co-members or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business and result in subjecting the properties owned by the applicable partnership, limited liability company or joint venture to additional risk; and

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that we may in certain circumstances be liable for the actions of our partners, co-members or co-venturers.

We generally seek to maintain sufficient control of our partnerships, limited liability companies and joint ventures to permit us to achieve our business objectives; however, we may not be able to do so, and the occurrence of one or more of the events described above could adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on, and the market price of, our common stock.

If we invest in a limited partnership as a general partner we could be responsible for all liabilities of such partnership.

In some joint ventures or other investments we may make, if the entity in which we invest is a limited partnership, we may acquire all or a portion of our interest in such partnership as a general partner. As a general partner, we could be liable for all the liabilities of such partnership. Additionally, we may be required to take our interests in other investments as a non-managing general partner. Consequently, we would be potentially liable for all such liabilities without having the same rights of management or control over the operation of the partnership as the managing general partner or partners may have. Therefore, we may be held responsible for all of the liabilities of an entity in which we do not have full management rights or control, and our liability may far exceed the amount or value of the investment we initially made or then had in the partnership.

Investment in us may be subject to additional risks relating to our international investments.

We have operations in Mexico. Our foreign operations could be affected by factors peculiar to the laws and business practices of the jurisdictions in which the properties are located. These laws may expose us to risks that are different from and in addition to those commonly found in the United States. Foreign operations could be subject to the following risks:

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changing governmental rules and policies, including changes in land use and zoning laws;

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enactment of laws relating to the foreign ownership of real property or mortgages and laws restricting the ability of foreign persons or companies to remove profits earned from activities within the country to the person’s or company’s country of origin;

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variations in currency exchange rates;

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adverse market conditions caused by terrorism, civil unrest and changes in national or local governmental or economic conditions;

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the willingness of domestic or foreign lenders to make mortgage loans in certain countries and changes in the availability, cost and terms of mortgage funds resulting from varying national economic policies;

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the imposition of income and other taxes in those jurisdictions and changes in real estate and other tax rates and other operating expenses in particular countries;

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general political and economic instability;

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our limited experience and expertise in Mexico relative to our experience and expertise in the United States; and

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more stringent environmental laws or changes in such laws, or environmental consequences of less stringent environmental management practices in foreign countries relative to the United States.

The availability and timing of cash distributions is uncertain.

We expect to continue to pay quarterly distributions to our stockholders. However, we bear all expenses incurred by our operations, and our funds generated by operations, after payment of these expenses, may not be sufficient to cover desired levels of distributions to our stockholders. In addition, our board of directors, in its discretion, may retain any portion of such cash for working capital. We cannot assure our stockholders that sufficient funds will be available to pay distributions.

We may have difficulty funding our distributions with our available cash flows.

To date we have funded our quarterly distributions to investors with available cash flows and, to a lesser extent, with borrowings under our senior credit facility and other borrowings. Our corporate strategy is to fund the payment of quarterly distributions to our stockholders entirely from available cash flows. However, we may continue to fund our quarterly distributions to investors from a combination of available cash flows and proceeds from borrowings. In the event we are unable to consistently fund future quarterly distributions to investors entirely from available cash flows, net of recurring capital expenditures, the value of our shares may be negatively impacted.

Declining real estate valuations and impairment charges could adversely affect our earnings and financial condition.

The recent economic downturn has generally resulted in lower real estate valuations, which has required us to recognize real estate impairment charges on some of our assets and equity investments. We conduct a comprehensive review of all real estate asset classes in accordance with our policy of accounting for impairments (see further discussion of our accounting policies in “Notes to the Consolidated Financial Statements, Note 2—Summary of Significant Accounting Policies” and “Item 7—Critical Accounting Estimates”). The principal factor which has led to impairment charges in the recent past was the severe economic deterioration in many markets resulting in a decrease in leasing demand, rental rates, rising vacancies and an increase in capitalization rates.

There can be no assurance that the estimates and assumptions we use to assess impairments are accurate and will reflect actual results. A worsening real estate market or the failure to continue to improve may cause us to reevaluate the assumptions used in our impairment analysis and our intent to hold, sell, develop or contribute properties. Changes in these assumption may result in impairment charges that could adversely affect our financial condition, results of operations and our ability to pay cash dividends to our stockholders and distributions to the OP unitholders and the market price of our stock.

Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.

We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we change our intended holding period, due to our intention to sell or otherwise dispose of an asset, then we must reevaluate whether that asset is impaired. Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our results of operations in the period that it is recognized.

Adverse economic and geopolitical conditions could negatively affect our returns and profitability.

Among others, the following market and economic challenges may adversely affect our operating results:

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poor economic times may result in tenant defaults under our leases and reduced demand for industrial space;

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overbuilding may increase vacancies; and

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maintaining occupancy levels may require increased concessions, tenant improvement expenditures or reduced rental rates.

Our operations could be negatively affected to the extent that an economic downturn is prolonged or becomes more severe.

Events or occurrences that affect areas in which our properties are geographically concentrated may impact financial results.

In addition to general, regional, national and international economic conditions, our operating performance is impacted by the economic conditions of the specific markets in which we have concentrations of properties. We have significant holdings in the following markets of our consolidated portfolio: Atlanta, Baltimore/Washington D.C., Chicago, Cincinnati, Columbus, Dallas, Houston, Memphis, Nashville, Northern California and Southern California. Our operating performance could be adversely affected if conditions become less favorable in any of the markets in which we have a concentration of properties.

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.

RISKS RELATED TO CONFLICTS OF INTEREST

Our UPREIT structure may result in potential conflicts of interest.

As of December 31, 2011, we owned 90% of the units of limited partnership interest in our operating partnership, or OP Units, certain unaffiliated limited partners owned 8% of the OP Units and certain of our officers and directors, owned the remaining 2% of the OP Units. Persons holding OP Units in our operating partnership have the right to vote on certain amendments to the limited partnership agreement of our operating partnership, as well as on certain other matters. Persons holding such voting rights may exercise them in a manner that conflicts with the interests of our stockholders. Furthermore, circumstances may arise in the future when the interest of limited partners in our operating partnership may conflict with the interests of our stockholders. For example, the timing and terms of dispositions of properties held by our operating partnership may result in tax consequences to certain limited partners and not to our stockholders.

GENERAL REAL ESTATE RISKS

Our performance and value are subject to general economic conditions and risks associated with our real estate assets.

The investment returns available from equity investments in real estate depend on the amount of income earned and capital appreciation generated by the properties, as well as the expenses incurred in connection with the properties. If our properties do not generate income sufficient to meet operating expenses, including debt service and capital expenditures, then our ability to pay distributions to our stockholders could be adversely affected. In addition, there are significant expenditures associated with an investment in real estate (such as mortgage payments, real estate taxes and maintenance costs) that generally do not decline when circumstances reduce the income from the property. Income from and the value of our properties may be adversely affected by:

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changes in general or local economic climate;

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the attractiveness of our properties to potential tenants;

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changes in supply of or demand for similar or competing properties in an area;

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bankruptcies, financial difficulties or lease defaults by our tenants;

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changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive or otherwise reduce returns to stockholders;

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changes in operating costs and expenses and our ability to control rents;

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changes in or increased costs of compliance with governmental rules, regulations and fiscal policies, including changes in tax, real estate, environmental and zoning laws, and our potential liability thereunder;

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our ability to provide adequate maintenance and insurance;

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changes in the cost or availability of insurance, including coverage for mold or asbestos;

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unanticipated changes in costs associated with known adverse environmental conditions or retained liabilities for such conditions;

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periods of high interest rates and tight money supply;

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tenant turnover;

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general overbuilding or excess supply in the market areas; and

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disruptions in the global supply chain caused by political, regulatory or other factors including terrorism.

In addition, periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or public perception that any of these events may occur, would result in a general decrease in rents or an increased occurrence of defaults under existing leases, which would adversely affect our financial condition and results of operations. Future terrorist attacks may result in declining economic activity, which could reduce the demand for, and the value of, our properties. To the extent that future attacks impact our tenants, their businesses similarly could be adversely affected, including their ability to continue to honor their existing leases.

For these and other reasons, we cannot assure our stockholders that we will be profitable or that we will realize growth in the value of our real estate properties.

Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of our properties.

We compete with other developers, owners and operators of real estate, some of which own properties similar to ours in the same markets and submarkets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire. As a result, our financial condition, cash flows, cash available for distribution, trading price of our common stock and ability to satisfy our debt service obligations could be materially adversely affected.

We are dependent on tenants for our revenues.

Our operating results and distributable cash flows would be adversely affected if a significant number of our tenants were unable to meet their lease obligations. In addition, certain of our properties are occupied by a single tenant. As a result, the success of those properties will depend on the financial stability of a single tenant. Lease payment defaults by tenants could cause us to reduce the amount of distributions to stockholders. A default by a tenant on its lease payments could force us to find an alternative source of revenues to pay any mortgage loan on the property. In the event of a tenant default, we may experience delays in enforcing our rights as landlord and may incur substantial costs, including litigation and related expenses, in protecting our investment and re-leasing our property. If a lease is terminated, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss.

Our ability to renew leases or re-lease space on favorable terms as leases expire significantly affects our business.

Our results of operations, distributable cash flows and the value of our common stock would be adversely affected if we are unable to lease, on economically favorable terms, a significant amount of space in our

operating properties. The number of vacant or partially vacant industrial properties in a market or submarket could adversely affect both our ability to re-lease the space and the rental rates that can be obtained.

A property that incurs a vacancy could be difficult to sell or re-lease.

A property may incur a vacancy either by the continued default of a tenant under its lease or the expiration of one of our leases. We have significant lease expirations in 2012, as outlined in Item 2—lease expirations. In addition, certain of the properties we acquire may have some level of vacancy at the time of closing. Certain of our properties may be specifically suited to the particular needs of a tenant. We may have difficulty obtaining a new tenant for any vacant space we have in our properties. If the vacancy continues for a long period of time, we may suffer reduced revenues resulting in less cash available to be distributed to stockholders. In addition, the resale value of a property could be diminished because the market value of a particular property will depend principally upon the value of the leases of such property.

We may not have funding for future tenant improvements.

When a tenant at one of our properties does not renew its lease or otherwise vacates its space in one of our buildings, it is likely that we will be required to expend funds to construct new tenant improvements in the vacated space in order to attract one or more new tenants. Although we intend to manage our cash position or financing availability to pay for any improvements required for re-leasing, we cannot assure our stockholders that we will have adequate sources of funding available to us for such purposes in the future.

If our tenants are highly leveraged, they may have a higher possibility of filing for bankruptcy or insolvency.

Of our tenants that experience downturns in their operating results due to adverse changes to their business or economic conditions, those that are highly leveraged may have a higher possibility of filing for bankruptcy or insolvency. In bankruptcy or insolvency, a tenant may have the option of vacating a property instead of paying rent. Until such a property is released from bankruptcy, our revenues would be reduced and could cause us to reduce distributions to stockholders. We may have highly leveraged tenants in the future.

The fact that real estate investments are not as liquid as other types of assets may reduce economic returns to investors.

Real estate investments are not as liquid as other types of investments, and this lack of liquidity may limit our ability to react promptly to changes in economic or other conditions. In addition, our ability at any time to sell assets or contribute assets to property funds or other entities in which we have an ownership interest may be restricted by the potential for the imposition of the 100% “prohibited transactions” tax on gains from certain dispositions of property by REIT’s unless a safe harbor exception applies. This lack of liquidity may limit our ability to change our portfolio composition promptly in response to changes in economic or other conditions and, as a result, could adversely affect our financial condition, results of operations, cash flows and our ability to pay distributions on, and the market price of, our common stock.

Delays in acquisition and development of properties may have adverse effects.

Delays we encounter in the selection, acquisition and development of properties could adversely affect our returns. Where properties are acquired prior to the start of construction, it will typically take 12 to 18 months to complete construction and lease available space. Therefore, there could be delays in the payment of cash distributions attributable to those particular properties.

Development and construction of properties may incur delays and increased costs and risks.

In connection with our development strategy, we may acquire raw land upon which we will develop and construct improvements at a fixed contract price. In any such projects we will be subject to risks relating to the builder’s ability to control construction costs or to build in conformity with plans, specifications and timetables. The builder’s failure to perform may result in legal action by us to rescind the purchase or construction contract

or to enforce the builder’s obligations. Performance may also be affected or delayed by conditions beyond the builder’s control. Delays in completion of construction could also give tenants the right to terminate preconstruction leases for space at a newly developed project. We may incur additional risks when we make periodic progress payments or other advances to such builders prior to completion of construction. Each of these factors could result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects if they are not fully leased prior to the commencement of construction. Furthermore, the price we agree to for the land will be based on projections of rental income and expenses and estimates of construction costs as well as the fair market value of the property upon completion of construction. If our projections are inaccurate, we may pay too much for the land and fail to achieve our forecast of returns due to the factors discussed above.

Acquired properties may be located in new markets where we may face risks associated with investing in an unfamiliar market.

We have acquired, and may continue to acquire, properties in markets that are new to us. When we acquire properties located in these markets, we may face risks associated with a lack of market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity with local government and permitting procedures. We work to mitigate such risks through extensive diligence and research and associations with experienced partners; however, there can be no guarantee that all such risks will be eliminated.

Uninsured losses relating to real property may adversely affect our returns.

We attempt to ensure that all of our properties are adequately insured to cover casualty losses. However, there are certain losses, including losses from floods, earthquakes, acts of war, acts of terrorism or riots, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so. In addition, changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of our properties incurs a casualty loss that is not fully covered by insurance, the value of our assets will be reduced by the amount of any such uninsured loss, and we could experience a significant loss of capital invested and potential revenues in these properties and could potentially remain obligated under any recourse debt associated with the property. Moreover, as the general partner of our operating partnership, we generally will be liable for all of our operating partnership’s unsatisfied recourse obligations, including any obligations incurred by our operating partnership as the general partner of joint ventures. Any such losses could adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on, and the market price of, our common stock. In addition, we may have no source of funding to repair or reconstruct the damaged property, and we cannot assure that any such sources of funding will be available to us for such purposes in the future.

A number of our consolidated operating properties are located in areas that are known to be subject to earthquake activity. Properties located in active seismic areas include properties in Northern California, Southern California, Memphis, Seattle and Mexico. We carry replacement-cost earthquake insurance on all of our properties located in areas historically subject to seismic activity; subject to coverage limitations and deductibles that we believe are commercially reasonable. We evaluate our earthquake insurance coverage annually in light of current industry practice through an analysis prepared by outside consultants.

A number of our properties are located in Houston, Miami and Orlando, which are areas that are known to be subject to hurricane and/or flood risk. We carry replacement-cost hurricane and flood hazard insurance on all of our properties located in areas historically subject to such activity, subject to coverage limitations and deductibles that we believe are commercially reasonable. We evaluate our insurance coverage annually in light of current industry practice through an analysis prepared by outside consultants.

Contingent or unknown liabilities could adversely affect our financial condition.

We have acquired, and may in the future acquire, properties, or may have previously owned properties, subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a

result, if a liability were asserted against us based upon ownership of any of these entities or properties, then we might have to pay substantial sums to settle it, which could adversely affect our cash flows. Unknown liabilities with respect to entities or properties acquired might include:

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liabilities for clean-up or remediation of adverse environmental conditions;

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accrued but unpaid liabilities incurred in the ordinary course of business;

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tax liabilities; and

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claims for indemnification by the general partners, officers and directors and others indemnified by the former owners of the properties.

Environmentally hazardous conditions may adversely affect our operating results.

Under various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for the cost of removing or remediating hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third-parties may sue the owner or operator of a site for damages based on personal injury, natural resources or property damage or other costs, including investigation and clean-up costs, resulting from the environmental contamination. The presence of hazardous or toxic substances on one of our properties, or the failure to properly remediate a contaminated property, could give rise to a lien in favor of the government for costs it may incur to address the contamination, or otherwise adversely affect our ability to sell or lease the property or borrow using the property as collateral. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated. A property owner who violates environmental laws may be subject to sanctions which may be enforced by governmental agencies or, in certain circumstances, private parties. In connection with the acquisition and ownership of our properties, we may be exposed to such costs. The cost of defending against environmental claims, of compliance with environmental regulatory requirements or of remediating any contaminated property could materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution to our stockholders.

Environmental laws in the U.S. also require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third-parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos. Some of our properties may contain asbestos-containing building materials.

We invest in properties historically used for industrial, manufacturing and commercial purposes. Some of these properties contain, or may have contained, underground storage tanks for the storage of petroleum products and other hazardous or toxic substances. All of these operations create a potential for the release of petroleum products or other hazardous or toxic substances. Some of our properties are adjacent to or near other properties that have contained or currently contain underground storage tanks used to store petroleum products or other hazardous or toxic substances. In addition, certain of our properties are on or are adjacent to or near other properties upon which others, including former owners or tenants of our properties, have engaged, or may in the future engage, in activities that may release petroleum products or other hazardous or toxic substances.

We maintain a portfolio environmental insurance policy that provides coverage for potential environmental liabilities, subject to the policy’s coverage conditions and limitations, for most of our properties. From time to time, we may acquire properties or interests in properties, with known adverse environmental conditions where we believe that the environmental liabilities associated with these conditions are quantifiable and that the

acquisition will yield a superior risk-adjusted return. In such an instance, we underwrite the costs of environmental investigation, clean-up and monitoring into the cost. Further, in connection with property dispositions, we may agree to remain responsible for, and to bear the cost of, remediating or monitoring certain environmental conditions on the properties.

All of our properties were subject to a Phase I or similar environmental assessment by independent environmental consultants at the time of acquisition. Phase I assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties. Phase I assessments generally include a historical review, a public records review, an investigation of the surveyed site and surrounding properties, and preparation and issuance of a written report, but do not include soil sampling or subsurface investigations and typically do not include an asbestos survey. While some of these assessments have led to further investigation and sampling, none of our environmental assessments of our properties have revealed an environmental liability that we believe would have a material adverse effect on our business, financial condition or results of operations taken as a whole. However, we cannot give any assurance that such conditions do not exist or may not arise in the future. Material environmental conditions, liabilities or compliance concerns may arise after the environmental assessment has been completed. Moreover, there can be no assurance that (i) future laws, ordinances or regulations will not impose any material environmental liability or (ii) the current environmental condition of our properties will not be affected by tenants, by the condition of land or operations in the vicinity of our properties (such as releases from underground storage tanks), or by third-parties unrelated to us.

Costs of complying with governmental laws and regulations may adversely affect our income and the cash available for any distributions.

All real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. Tenants’ ability to operate and to generate income to pay their lease obligations may be affected by permitting and compliance obligations arising under such laws and regulations. Some of these laws and regulations may impose joint and several liability on tenants, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal. Leasing properties to tenants that engage in industrial, manufacturing, and commercial activities will cause us to be subject to the risk of liabilities under environmental laws and regulations. In addition, the presence of hazardous or toxic substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such property as collateral for future borrowings.

Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. Additionally, our tenants’ operations, the existing condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third-parties may affect our properties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply and which may subject us to liability in the form of fines or damages for noncompliance. Any material expenditures, fines or damages we must pay will reduce our ability to make distributions and may reduce the value of our common stock.

In addition, changes in these laws and governmental regulations, or their interpretation by agencies or the courts, could occur.

Compliance or failure to comply with the Americans with Disabilities Act and other similar regulations could result in substantial costs.

Under the Americans with Disabilities Act, places of public accommodation must meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of

fines by the federal government or the award of damages to private litigants. If we are required to make unanticipated expenditures to comply with the Americans with Disabilities Act, including removing access barriers, then our cash flows and the amounts available for distributions to our stockholders may be adversely affected. While we believe that our properties are currently in material compliance with these regulatory requirements, the requirements may change or new requirements may be imposed that could require significant unanticipated expenditures by us that will affect our cash flows and results of operations.

We own several of our properties subject to ground leases that expose us to the loss of such properties upon breach or termination of the ground leases and may limit our ability to sell these properties.

We own several of our properties through leasehold interests in the land underlying the buildings and we may acquire additional buildings in the future that are subject to similar ground leases. As lessee under a ground lease, we are exposed to the possibility of losing the property upon termination, or an earlier breach by us, of the ground lease, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

Our ground leases contain certain provisions that may limit our ability to sell certain of our properties. In order to assign or transfer our rights and obligations under certain of our ground leases, we generally must obtain the consent of the landlord which, in turn, could adversely impact the price realized from any such sale.

We may be unable to sell a property if or when we decide to do so, including as a result of uncertain market conditions, which could adversely affect the return on an investment in our common stock.

We expect to hold the various real properties in which we invest until such time as we decide that a sale or other disposition is appropriate given our investment objectives. Our ability to dispose of properties on advantageous terms depends on factors beyond our control, including competition from other sellers and the availability of attractive financing for potential buyers of our properties. We cannot predict the various market conditions affecting real estate investments which will exist at any particular time in the future. Due to the uncertainty of market conditions which may affect the future disposition of our properties, we cannot assure our stockholders that we will be able to sell our properties at a profit in the future. Accordingly, the extent to which our stockholders will receive cash distributions and realize potential appreciation on our real estate investments will be dependent upon fluctuating market conditions.

Furthermore, we may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure our stockholders that we will have funds available to correct such defects or to make such improvements.

In acquiring a property, we may agree to restrictions that prohibit the sale of that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These provisions would restrict our ability to sell a property.

If we sell properties and provide financing to purchasers, defaults by the purchasers would adversely affect our cash flows.

If we decide to sell any of our properties, we presently intend to use our best efforts to sell them for cash. However, in some instances we may sell our properties by providing financing to purchasers. If we provide financing to purchasers, we will bear the risk that the purchaser may default, which could negatively impact our cash distributions to stockholders and result in litigation and related expenses. Even in the absence of a purchaser default, the distribution of the proceeds of sales to our stockholders, or their reinvestment in other assets, will be delayed until the promissory notes or other property we may accept upon a sale are actually paid, sold, refinanced or otherwise disposed of.

We may acquire properties with “lock-out” provisions which may affect our ability to dispose of the properties.

We may acquire properties through contracts that could restrict our ability to dispose of the property for a period of time. These “lock-out” provisions could affect our ability to turn our investments into cash and could affect

cash available for distributions to our stockholders. Lock-out provisions could also impair our ability to take actions during the lock-out period that would otherwise be in the best interest of our stockholders and, therefore, may have an adverse impact on the value of our common stock relative to the value that would result if the lock-out provisions did not exist.

RISKS RELATED TO OUR DEBT FINANCINGS

Our operating results and financial condition could be adversely affected if we are unable to make required payments on our debt.

Our charter and bylaws do not limit the amount or percentage of indebtedness that we may incur, and we are subject to risks normally associated with debt financing, including the risk that our cash flows will be insufficient to meet required payments of principal and interest. There can be no assurance that we will be able to refinance any maturing indebtedness, that such refinancing would be on terms as favorable as the terms of the maturing indebtedness or that we will be able to otherwise obtain funds by selling assets or raising equity to make required payments on maturing indebtedness.

In particular, loans obtained to fund property acquisitions may be secured by first mortgages on such properties. If we are unable to make our debt service payments as required, a lender could foreclose on the property or properties securing its debt. This could cause us to lose part or all of our investment, which in turn could cause the value of our common stock and distributions payable to stockholders to be reduced. Certain of our existing and future indebtedness is and may be cross-collateralized and, consequently, a default on this indebtedness could cause us to lose part or all of our investment in multiple properties.

Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to make distributions to our stockholders.

We have incurred and may continue to incur variable rate debt whereby increases in interest rates raise our interest costs, which reduces our cash flows and our ability to make distributions to our stockholders. If we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flows and our financial condition would be adversely affected, and we may lose the property securing such indebtedness. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments in properties at times which may not permit realization of the maximum return on such investments.

Covenants in our credit agreements could limit our flexibility and adversely affect our financial condition.

The terms of our senior credit facility and other indebtedness require us to comply with a number of customary financial and other covenants, such as covenants with respect to consolidated leverage, net worth and unencumbered assets. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we have satisfied our payment obligations. As of December 31, 2011, we had certain non-recourse, secured loans which are cross-collateralized by multiple properties. If we default on any of these loans we may then be required to repay such indebtedness, together with applicable prepayment charges, to avoid foreclosure on all cross-collateralized properties within the applicable pool. In addition, our senior credit facility contains certain cross-default provisions which are triggered in the event that our other material indebtedness is in default. These cross-default provisions may require us to repay or restructure the senior credit facility in addition to any mortgage or other debt that is in default. If our properties were foreclosed upon, or if we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flows and our financial condition would be adversely affected.

If we enter into financing arrangements involving balloon payment obligations, it may adversely affect our ability to make distributions.

Some of our financing arrangements require us to make a lump-sum or “balloon” payment at maturity. Our ability to make a balloon payment at maturity is uncertain and may depend upon our ability to obtain additional

financing or our ability to sell the property. At the time the balloon payment is due, we may or may not be able to refinance the existing financing on terms as favorable as the original loan or sell the property at a price sufficient to make the balloon payment. The effect of a refinancing or sale could affect the rate of return to stockholders and the projected time of disposition of our assets. In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to pay the distributions that we are required to pay to maintain our qualification as a REIT.

High interest rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire and the amount of cash distributions we can make.

If debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on properties, we run the risk of being unable to refinance such debt when the loans come due or of being unable to refinance such debt on favorable terms. If interest rates are higher when we refinance such debt, our income could be reduced. We may be unable to refinance such debt at appropriate times, which may require us to sell properties on terms that are not advantageous to us or could result in the foreclosure of such properties. If any of these events occur, our cash flows would be reduced. This, in turn, would reduce cash available for distribution to our stockholders and may hinder our ability to raise more capital by issuing more stock or by borrowing more money.

Our hedging strategies may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on investment in our common stock.

We use various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can protect us completely. These instruments involve risks, such as the risk that the counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes and that a court could rule that such agreements are not legally enforceable. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT income tests. In addition, the nature and timing of hedging transactions may influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Moreover, hedging strategies involve transaction and other costs. We cannot assure our stockholders that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses that may reduce the overall return on investment in our common stock.

RISKS RELATED TO OUR CORPORATE STRUCTURE

Our charter and Maryland law contain provisions that may delay, defer or prevent a change of control transaction.

Our charter contains a 9.8% ownership limit.

Our charter, subject to certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT and to limit any person to actual or constructive ownership of no more than 9.8% by value or number of shares, whichever is more restrictive, of any class or series of our outstanding shares of our capital stock. Our board of directors, in its sole discretion, may exempt, subject to the satisfaction of certain conditions, any person from the ownership limit. However, our board of directors may not grant an exemption from the ownership limit to any person whose ownership, direct or indirect, in excess of 9.8% by value or number of shares of any class or series of our outstanding shares of our capital stock could jeopardize our status as a REIT. These restrictions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT. The ownership limit may delay or impede a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

We could authorize and issue stock without stockholder approval.

Our board of directors could, without stockholder approval, issue authorized but unissued shares of our common stock or preferred stock and amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. In addition, our board of directors could, without stockholder approval, classify or reclassify any unissued shares of our common stock or preferred stock and set the preferences, rights and other terms of such classified or reclassified shares. Our board of directors could establish a series of stock that could, depending on the terms of such series, delay, defer or prevent a transaction or change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Majority stockholder vote may discourage changes of control.

If declared advisable by our board of directors, our stockholders may take some actions, including approving amendments to our charter, by a vote of a majority or, in certain circumstances, two thirds of the shares outstanding and entitled to vote. If approved by the holders of the appropriate number of shares, all actions taken would be binding on all of our stockholders. Some of these provisions may discourage or make it more difficult for another party to acquire control of us or to effect a change in our operations.

Provisions of Maryland law may limit the ability of a third-party to acquire control of our company.

Certain provisions of Maryland law may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change of control under certain circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then prevailing market price of such shares, including:

•

“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter would require the recommendation of our board of directors and impose special appraisal rights and special stockholder voting requirements on these combinations; and

•

“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

We have opted out of these provisions of Maryland law with respect to any person, provided, in the case of business combinations, that the business combination is first approved by our board of directors. However, our board of directors may opt in to the business combination provisions and the control share provisions of Maryland law in the future.

Additionally, Title 8, Subtitle 3 of the Maryland General Corporation Law, or MGCL, permits our board of directors, without stockholder approval and regardless of what is currently provided in our charter or our bylaws, to implement takeover defenses, some of which (for example, a classified board) we do not currently have. These provisions may have the effect of inhibiting a third-party from making an acquisition proposal for our company or of delaying, deferring or preventing a change in control of our company under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-current market price.

Our charter, our bylaws, the limited partnership agreement of our operating partnership and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Our board of directors can take many actions without stockholder approval.

Our board of directors has overall authority to oversee our operations and determine our major corporate policies. This authority includes significant flexibility. For example, our board of directors can do the following:

•

within the limits provided in our charter, prevent the ownership, transfer and/or accumulation of shares in order to protect our status as a REIT or for any other reason deemed to be in the best interests of us and our stockholders;

•

issue additional shares without obtaining stockholder approval, which could dilute the ownership of our then-current stockholders;

•

amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series, without obtaining stockholder approval;

•

classify or reclassify any unissued shares of our common stock or preferred stock and set the preferences, rights and other terms of such classified or reclassified shares, without obtaining stockholder approval;

•

employ and compensate affiliates;

•

direct our resources toward investments that do not ultimately appreciate over time;

•

change creditworthiness standards with respect to third-party tenants; and

•

determine that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

Any of these actions could increase our operating expenses, impact our ability to make distributions or reduce the value of our assets without giving our stockholders the right to vote.

We may change our investment and financing strategies and enter into new lines of business without stockholder consent, which may result in riskier investments than our current investments.

We may change our investment and financing strategies and enter into new lines of business at any time without the consent of our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this prospectus. A change in our investment strategy or our entry into new lines of business may increase our exposure to interest rate and other risks of real estate market fluctuations.

Our rights and the rights of our stockholders to take action against our directors and officers are limited.

Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter eliminates our directors’ and officers’ liability to us and our stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment and which is material to the cause of action. Our bylaws require us to indemnify our directors and officers to the maximum extent permitted by Maryland law for liability actually incurred in connection with any proceeding to which they may be made, or threatened to be made, a party, except to the extent that the act or omission of the director or officer was material to the matter giving rise to the proceeding and was either committed in bad faith or was the result of active and deliberate dishonesty, the director or officer actually received an improper personal benefit in money, property or services, or, in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our directors and officers.

RISKS RELATED TO OUR COMMON STOCK

Our distributions to stockholders may change.

Distributions will be authorized and determined by our board of directors in its sole discretion from time to time and will depend upon a number of factors, including:

•

cash available for distribution;

•

our results of operations;

•

our financial condition, especially in relation to our anticipated future capital needs of our properties;

•

the distribution requirements for REITs under the Code;

•

our operating expenses; and

•

other factors our board of directors deems relevant.

Consequently, we may not continue our current level of distributions to stockholders, and our distribution levels may fluctuate.

Future offerings of debt securities, which would be senior to our common stock upon liquidation, or equity securities, which would dilute our existing stockholders and may be senior to our common stock for the purposes of distributions, may adversely affect the market price of our common stock.

In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities, including commercial paper, medium-term notes, senior or subordinated notes and classes of preferred or common stock. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock or both. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their proportionate ownership.

FEDERAL INCOME TAX RISKS

Failure to qualify as a REIT could adversely affect our operations and our ability to make distributions.

We operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. Our qualification as a REIT will depend on our satisfaction of numerous requirements (some on an annual and quarterly basis) established under highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. The fact that we hold substantially all of our assets through our operating partnership and its subsidiaries further complicates the application of the REIT requirements for us. No assurance can be given that we will qualify as a REIT for any particular year. If we were to fail to qualify as a REIT in any taxable year for which a REIT election has been made, we would not be allowed a deduction for dividends paid to our stockholders in computing our taxable income and would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at corporate rates unless certain relief provision apply. As a consequence, we would not be compelled to make distributions under the Code. Moreover, unless we were to obtain relief under certain statutory provisions, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. This treatment would reduce our net earnings available for investment or distribution to our stockholders because of the additional tax liability to us for the years involved. As a result of the additional tax liability, we might need to borrow funds or liquidate certain investments on terms that may be disadvantageous to us in order to pay the applicable tax. If we fail to qualify as a REIT but are eligible for certain relief provisions, then we may retain our status as a REIT but may be required to pay a penalty tax, which could be substantial.

To qualify as a REIT, we must meet annual distribution requirements.

To obtain the favorable tax treatment accorded to REITs, among other requirements, we normally will be required each year to distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and by excluding net capital gains. We may declare certain taxable dividends that are payable in our stock. Under the Internal Revenue Service, or IRS, Revenue Procedure 2010-12, up to 90% of any such taxable dividend for taxable years ending on or before December 31, 2011 could be payable in shares of our common stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for United States federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of the cash received. If a U.S. stockholder sells the shares of common stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time

of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in shares of our common stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in

order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock. We will be subject to federal income tax on our undistributed taxable income and net capital gain. In addition, if we fail to distribute during each calendar year at least the sum of (a) 85% of our ordinary income for such year, (b) 95% of our capital gain net income for such year, and (c) any undistributed taxable income from prior periods, we will be subject to a 4% excise tax on the excess of the required distribution over the sum of (i) the amounts actually distributed by us, plus (ii) retained amounts on which we pay income tax at the corporate level. We intend to make distributions to our stockholders to comply with the requirements of the Code for REITs and to minimize or eliminate our corporate income tax obligation. However, differences between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis or partially pay dividends in shares of our commons stock to meet the distribution requirements of the Code. Certain types of assets generate substantial mismatches between taxable income and available cash. Such assets include rental real estate that has been financed through financing structures which require some or all of available cash flows to be used to service borrowings. As a result, the requirement to distribute a substantial portion of our taxable income could cause us to: (1) sell assets in adverse market conditions, (2) borrow on unfavorable terms or (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, in order to comply with REIT requirements. Further, amounts distributed will not be available to fund our operations.

Legislative or regulatory action could adversely affect our stockholders.

In recent years, numerous legislative, judicial and administrative changes have been made to the federal income tax laws applicable to investments in REITs and similar entities. Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our common stock. All stockholders are urged to consult with their tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in common stock.

Distributions payable by REITs do not qualify for the reduced tax rates that apply to certain other corporate distributions.

Tax legislation enacted in 2006 and 2010 generally reduces the maximum tax rate for distributions payable by corporations to individuals to 15% through December 31, 2012. Distributions payable by REITs, however, generally continue to be taxed at the normal rate applicable to the individual recipient rather than the 15% preferential rate. Although this legislation does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of

non-REIT corporations that pay distributions, which could adversely affect the value of the stock of REITs, including our common stock. It is not yet clear whether the reduced rate will be extended beyond 2012 and if so, at what rate.

Recharacterization of transactions under our operating partnership’s private placement may result in a 100% tax on income from prohibited transactions, which would diminish our cash distributions to our stockholders.

The IRS could recharacterize transactions under our operating partnership’s private placement such that our operating partnership is treated as the bona fide owner, for tax purposes, of properties acquired and resold by the entity established to facilitate the transaction. Such recharacterization could result in the income realized on these transactions by our operating partnership being treated as gain on the sale of property that is held as inventory or otherwise held primarily for the sale to customers in the ordinary course of business. In such event, such gain would constitute income from a prohibited transaction and would be subject to a 100% tax. If this occurs, our ability to pay cash distributions to our stockholders will be adversely affected.

In certain circumstances, we may be subject to federal and state income taxes, which would reduce our cash available for distribution to our stockholders.

Even if we qualify and maintain our status as a REIT, we may be subject to federal income taxes or state taxes in various circumstances. For example, net income from a “prohibited transaction” will be subject to a 100% tax. In addition, we may not be able to distribute all of our income in any given year, which would result in corporate level taxes, and we may not make sufficient distributions to avoid excise taxes. We may also decide to retain certain gains from the sale or other disposition of our property and pay income tax directly on such gains. In that event, our stockholders would be required to include such gains in income and would receive a corresponding credit for their share of taxes paid by us. We may also be subject to U.S. state and local and non-U.S. taxes on our income or property, either directly or at the level of our operating partnership or at the level of the other companies through which we indirectly own our assets. In addition, any net taxable income earned directly by any of our taxable REIT subsidiaries, which we refer to as TRSs, will be subject to federal and state corporate income tax. In addition, we may be subject to federal or state taxes in other various circumstances. Any taxes we pay will reduce our cash available for distribution to our stockholders.

If our operating partnership was classified as a “publicly traded partnership” under the Code, our status as a REIT and our ability to pay distributions to our stockholders could be adversely affected.

Our operating partnership is organized as a partnership for U.S. federal income tax purposes. Even though our operating partnership will not elect to be treated as an association taxable as a corporation, it may be taxed as a corporation if it is deemed to be a “publicly traded partnership.” A publicly traded partnership is a partnership whose interests are traded on an established securities market or are considered readily tradable on a secondary market or the substantial equivalent thereof. We believe and currently take the position that our operating partnership should not be classified as a publicly traded partnership because interests in our operating partnership are not traded on an established securities market, and our operating partnership should satisfy certain safe harbors which prevent a partnership’s interests from being treated as readily tradable on an established securities market or substantial equivalent thereof. No assurance can be given, however, that the IRS would not assert that our operating partnership constitutes a publicly traded partnership or that facts and circumstances will not develop which could result in our operating partnership being treated as a publicly traded partnership. If the IRS were to assert successfully that our operating partnership is a publicly traded partnership, and substantially all of our operating partnership’s gross income did not consist of the specified types of passive income, our operating partnership would be treated as an association taxable as a corporation and would be subject to corporate tax at the entity level. In such event, the character of our assets and items of gross income would change and would result in a termination of our status as a REIT. In addition, the imposition of a corporate tax on our operating partnership would reduce the amount of cash available for distribution to our stockholders.

Certain property transfers may generate prohibited transaction income, resulting in a penalty tax on gain attributable to the transaction.

From time to time, we may transfer or otherwise dispose of some of our properties, including the contribution of properties to our joint venture funds or other commingled investment vehicles. Under the Code, any gain resulting from transfers of properties that we hold as inventory or primarily for sale to customers in the ordinary course of business would be treated as income from a prohibited transaction subject to a 100% penalty tax, unless a safe harbor exception applies. Since we acquire properties for investment purposes, we do not believe that our occasional transfers or disposals of property or our contributions of properties into our joint venture funds, or commingled investment vehicles, are properly treated as prohibited transactions. However, whether property is held for investment purposes is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. The IRS may contend that certain transfers or disposals of properties by us or contributions of properties into our joint venture funds are prohibited transactions if they do not meet the safe harbor requirements. While we believe that the IRS would not prevail in any such dispute, if the IRS were to argue successfully that a transfer or disposition or contribution of property constituted a prohibited transaction, we would be required to pay a 100% penalty tax on any gain allocable to us from the prohibited transaction. In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a real estate investment trust for federal income tax purposes.

Foreign investors may be subject to Foreign Investment Real Property Tax Act, or FIRPTA, tax on certain distributions and on sale of common stock if we are unable to qualify as a “domestically controlled” REIT or if our stock is not considered to be regularly traded on an established securities market.

A foreign person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests or USRPIs is generally subject to a tax, known as FIRPTA tax, on the gain recognized on the disposition. Such FIRPTA tax does not apply, however, to the disposition of stock in a REIT if the REIT is a “domestically controlled qualified investment entity.” A domestically controlled qualified investment entity includes a REIT in which, at all times during a specified testing period, less than 50% in value of its shares is held directly or indirectly by non-U.S. holders. In the event that we do not constitute a domestically controlled qualified investment entity, a person’s sale of stock nonetheless will generally not be subject to tax under FIRPTA as a sale of a USRPI, provided that (1) the stock owned is of a class that is “regularly traded,” as defined by applicable Treasury regulations, on an established securities market, and (2) the selling non-U.S. holder held 5% or less of our outstanding stock of that class at all times during a specified testing period. If we were to fail to so qualify as a domestically controlled qualified investment entity and our common stock were to fail to be “regularly traded,” gain realized by a foreign investor on a sale of our common stock would be subject to FIRPTA tax and applicable withholding. No assurance can be given that we will be a domestically controlled qualified investment entity. Additionally, any distributions we make to our non-U.S. stockholders that are attributable to gain from the sale of any USRPI will also generally be subject to FIRPTA tax and applicable withholdings, unless the recipient non-U.S. stockholder has not owned more than 5% of our common stock at any time during the year preceding the distribution.

Congress has introduced legislation that, if enacted, could cause our operating partnership to be taxable as a corporation for U.S. federal income tax purposes under the publicly traded partnership rules.

Congress has considered and the Obama administration has indicated its support for, legislative proposals to treat all or part of certain income allocated to a partner by a partnership in respect of certain services provided to or for the benefit of the partnership (“carried interest revenue”) as ordinary income for U.S. federal income tax purposes. While more recent proposals would not adversely affect the character of the income for purposes of the REIT qualification tests, it is not clear what form any such final legislation would take. Additionally, while the more recent proposals purport to treat carried interest revenue as qualifying income of certain operating partnerships of publicly-traded REITs for purposes of the “qualifying income” exception to the publicly-traded partnership rules, our operating partnership may not qualify under this exception in the proposed legislation. As a result, the proposed legislation, if enacted, could cause our operating partnership to be taxable as a corporation

for U.S. federal income tax purposes if it is a publicly-traded partnership and the amount of any such carried interest revenue plus any other non-qualifying income earned by our operating partnership exceeds 10% of its gross income in any taxable year.

ITEM1 B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

Geographic Distribution

The following table describes the geographic diversification of our consolidated properties as of December 31, 2011.


Markets	Number of Buildings		Percent Owned⁽¹⁾			Square Feet		Occupancy Percentage⁽²⁾			Annualized Base Rent⁽³⁾		Percentage of Total Annualized Base Rent
Markets	Number of Buildings		Percent Owned⁽¹⁾			Square Feet		Occupancy Percentage⁽²⁾			Annualized Base Rent⁽³⁾		Percentage of Total Annualized Base Rent
						(in thousands)		(in thousands)
Operating Properties:
Atlanta		52		100.0	%		6,592		95.3	%	$	19,318		9.8	%
Baltimore/Washington D.C.		17		100.0	%		2,057		87.6	%		9,185		4.7	%
Central Pennsylvania		8		100.0	%		1,453		74.0	%		4,282		2.2	%
Charlotte		1		100.0	%		80		0.0	%		—		0.0	%
Chicago		19		100.0	%		3,570		97.5	%		10,436		5.3	%
Cincinnati		32		100.0	%		4,491		86.9	%		12,031		6.1	%
Columbus		14		100.0	%		4,301		84.6	%		9,505		4.8	%
Dallas⁽⁴⁾		46		100.0	%		4,288		84.9	%		13,998		7.1	%
Denver		2		100.0	%		278		100.0	%		1,247		0.6	%
Houston		49		100.0	%		3,414		96.4	%		17,462		8.8	%
Indianapolis		7		100.0	%		2,299		99.2	%		6,938		3.5	%
Louisville		4		100.0	%		1,330		99.3	%		4,195		2.1	%
Memphis		11		100.0	%		5,218		97.8	%		13,871		7.0	%
Mexico		15		100.0	%		1,653		93.3	%		6,472		3.3	%
Miami		6		100.0	%		762		94.0	%		4,972		2.5	%
Nashville		4		100.0	%		1,839		77.0	%		3,253		1.6	%
New Jersey		12		100.0	%		1,669		79.3	%		7,161		3.6	%
Northern California		25		100.0	%		2,784		87.2	%		13,835		7.0	%
Orlando		20		100.0	%		1,864		79.9	%		5,704		2.9	%
Phoenix		14		100.0	%		1,718		83.0	%		4,989		2.5	%
San Antonio		13		100.0	%		1,176		97.8	%		3,868		2.0	%
Seattle		9		100.0	%		1,421		86.3	%		5,607		2.9	%
Southern California		28		89.0	%		3,842		99.2	%		18,992		9.6	%

Total/weighted average—operating properties		408		99.3	%		58,099		90.6	%		197,321		99.9	%

CONSOLIDATED REDEVELOPMENT PROPERTIES:
Chicago		1		100.0	%		156		78.7	%		100		0.1	%

Total/weighted average—redevelopment properties		1		100.0	%		156		78.7	%		100		0.1	%

Total/weighted average—consolidated properties		409		99.3	%		58,255		90.5	%	$	197,421		100.0	%

⁽¹⁾

Percent owned is based on ownership weighted by square footage.

⁽²⁾

Based on leases commenced as of December 31, 2011.

⁽³⁾

Annualized Base Rent is calculated as monthly contractual base rent (cash basis) per the terms of the lease, as of December 31, 2011, multiplied by 12.

⁽⁴⁾

Three of our buildings in this market totaling approximately 0.7 million square feet are subject to ground leases.

Occasionally our leases contain provisions giving the tenant rights to purchase the property, which can take the form of a fixed price purchase option, a fair market value option, a right of first refusal option or a right of first offer option. The following chart summarizes such rights related to our consolidated operating properties as of December 31, 2011.


	Number of Leases		Square Feet		Annualized Base Rent
			(in thousands)		(in thousands)
Fixed Price Purchase Options		3		498	$	1,912
Fair Market Value Options		5		572	$	2,483
Right of First Refusal Options		5		920	$	4,676
Right of First Offer Options		8		506	$	3,052

The following table describes the geographic diversification of our investments in unconsolidated properties as of December 31, 2011.


Markets	Number of Buildings		Percent Owned⁽¹⁾			Square Feet		Occupancy Percentage			Annualized Base Rent		Percentage of Total Annualized Base Rent


						(in thousands)					(in thousands)
Operating Properties:
IDI (Chicago, Nashville, Savannah)		3		50.0	%		1,423		44.9	%		—		—
Southern California Logistics Airport⁽²⁾		6		50.0	%		1,983		95.4	%		3,632		7.8	%

Total/weighted average		9		50.0	%		3,406		74.3	%		3,632		7.8	%

Operating Properties in Co-Investment Ventures:
Atlanta		2		17.2	%		703		80.4	%		1,391		3.0	%
Central Pennsylvania		4		8.6	%		1,210		96.7	%		4,836		10.4	%
Charlotte		1		4.4	%		472		100.0	%		1,510		3.3	%
Chicago		4		18.1	%		1,525		100.0	%		6,009		13.0	%
Cincinnati		4		15.6	%		1,243		94.7	%		3,761		8.1	%
Columbus		2		6.3	%		451		100.0	%		1,318		2.8	%
Dallas		4		16.8	%		1,726		86.0	%		4,914		10.6	%
Denver		5		20.0	%		773		89.3	%		3,171		6.8	%
Indianapolis		1		11.4	%		475		100.0	%		1,785		3.9	%
Louisville		5		10.0	%		900		100.0	%		2,557		5.5	%
Memphis		1		20.0	%		1,039		74.1	%		2,331		5.0	%
Minneapolis		3		4.4	%		472		100.0	%		2,339		5.1	%
Nashville		2		20.0	%		1,020		44.7	%		1,373		3.0	%
New Jersey		2		10.7	%		216		96.3	%		968		2.1	%
Northern California		1		4.4	%		396		100.0	%		1,758		3.8	%
Orlando		2		20.0	%		696		100.0	%		2,688		5.8	%

Total/weighted average—fund operating properties		43		14.6	%		13,317		89.4	%		42,709		92.2	%

Total/weighted average—unconsolidated properties		52		21.8	%		16,723		86.3	%	$	46,341		100.0	%

⁽¹⁾

Percentage owned is based on ownership weighted by square footage, if applicable.

⁽²⁾

Although we contributed 100% of the initial cash equity capital required by the venture, after return of certain preferential distributions on capital invested, profits and losses are generally split 50/50.

Property Types

The following table reflects our consolidated portfolio by property type, in terms of square footage, as of December 31, 2011 (square feet in thousands).


	Bulk Distribution							Light Industrial							Service Center							Total Portfolio
	Number of Buildings		Square Feet		Occ. % ⁽¹⁾			Number of Buildings		Square Feet		Occ. % ⁽¹⁾			Number of Buildings		Square Feet		Occ. % ⁽¹⁾			Number of Buildings		Square Feet		Occ. % ⁽¹⁾
Operating Properties		253		49,999		91.0	%		113		6,614		89.8	%		42		1,486		79.7	%		408		58,099		90.6	%
Properties Under Redevelopment		—		—		—			1		156		78.7	%		—		—		—			1		156		78.7	%

Total/Weighted Average		253		49,999		91.0	%		114		6,770		89.5	%		42		1,486		79.7	%		409		58,255		90.5	%

⁽¹⁾

Occupancy percentage is based on leases commenced as of December 31, 2011.

Lease Expirations

Our industrial properties are typically leased to tenants for terms ranging from 3 to 10 years with a weighted average remaining term of approximately 3.3 years as of December 31, 2011. Following is a schedule of expiring leases for our consolidated properties by square feet and by annualized minimum base rents as of December 31, 2011 and assuming no exercise of lease renewal options.


Year	Square Feet Related to Expiring Leases		Annualized Base Rent of Expiring Leases⁽¹⁾		Percentage of Total Annualized Base Rent
Year	Square Feet Related to Expiring Leases		Annualized Base Rent of Expiring Leases⁽¹⁾		Percentage of Total Annualized Base Rent
	(in thousands)		(in thousands)
2012⁽²⁾		10,591	$	40,551		20.3	%
2013		8,986		38,535		19.2	%
2014		8,218		31,882		15.9	%
2015		6,936		25,319		12.7	%
2016		6,527		25,222		12.6	%
Thereafter		11,482		38,569		19.3	%

Total occupied		52,740	$	200,078		100.0	%

Available or leased not occupied		5,515

Total consolidated properties		58,255

⁽¹⁾

Includes contractual rent changes.

⁽²⁾

Includes leases that are on month-to-month terms.

Customer Diversification

As of December 31, 2011, there were no customers that occupied more than 1.7% of our properties based on annualized base rent. The following table reflects our ten largest customers, based on annualized base rent as of December 31, 2011. These ten customers occupy a combined 6.2 million square feet of our consolidated properties.


Customer	Percentage of Annualized Base Rent
Deutsche Post World Net (DHL & Excel)		1.7	%
CEVA Logistics		1.7	%
Technicolor		1.3	%
United Parcel Service (UPS)		1.3	%
The Glidden Company		1.3	%
YRC, LLC		1.2	%
United Stationers Supply Company		1.2	%
Crayola LLC		1.1	%
The Dial Corporation		1.0	%
Ozburn-Hessey Logistics, LLC		1.0	%

Total		12.8	%

Although base rent is supported by long-term lease contracts, tenants who file bankruptcy have the legal right to reject any or all of their leases. In the event that a tenant with a significant number of leases in our properties files bankruptcy and cancels its leases, we could experience a reduction in our revenues and tenant receivables.

Reports have indicated that the parent company, YRC Worldwide, Inc., of one of our top ten tenants, YRC, LLC has encountered financial difficulties and therefore has the potential to file for bankruptcy. YRC, LLC currently leases three truck terminals in infill locations of Los Angeles, at below market rents totaling $13.7 million, net of accumulated amortization as of December 31, 2011. YRC, LLC has paid all rents due and has no balances outstanding through December 31, 2011.

We continuously monitor the financial condition of our tenants. We communicate often with those tenants who have been late on payments or filed bankruptcy. We are not currently aware of the pending bankruptcy of any other tenants beyond those described above that would individually cause a material reduction in our revenues, and no tenant represents more than 5% of our annual base rent.

Industry Diversification

The table below illustrates the diversification of our consolidated portfolio by the industry classification of our tenants as of December 31, 2011, (dollar amounts in thousands).


	Number of Leases		Annualized Base Rent		Percentage of Total Annualized Base Rent			Occupied Square Feet (in thousands)		Percentage of Total Occupied Square Feet
Manufacturing		283	$	65,961		33.4	%		18,111		34.4	%
Wholesale Trade		268		46,611		23.6	%		11,879		22.5	%
Transportation and Warehousing		122		28,730		14.6	%		8,340		15.8	%
Retail Trade		93		20,267		10.2	%		5,705		10.8	%
Professional, Scientific and Technical Services		49		8,490		4.3	%		1,715		3.3	%
Administrative Support and Waste Management Services		63		7,017		3.5	%		1,917		3.6	%
Media and Information		18		4,848		2.5	%		1,593		3.0	%
Construction		39		3,729		1.9	%		858		1.6	%
Rental Companies		19		3,368		1.7	%		999		1.9	%
Other		73		8,400		4.3	%		1,623		3.1	%

Total		1,027	$	197,421		100.0	%		52,740		100.0	%

Indebtedness

As of December 31, 2011, 97 of our 409 consolidated properties, with a combined gross book value of $735.1 million were encumbered by mortgage indebtedness totaling $311.3 million (excluding net premiums). See “Notes to Consolidated Financial Statements, Note 5—Outstanding Indebtedness” and the accompanying Schedule III beginning on page F-45 for additional information.

ITEM 3.

LEGAL PROCEEDINGS

We are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which may be covered by liability insurance, and none of which we expect to have a material adverse effect on our consolidated financial condition or results of operations.

ITEM 4.

MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock is listed on the New York Stock Exchange, or the NYSE, under the symbol “DCT”. The following table illustrates the high and low sales prices during periods presented.


Quarter ended in 2011:	High		Low
December 31	$	5.22	$	3.88
September 30	$	5.61	$	3.96
June 30	$	5.89	$	4.88
March 31	$	5.89	$	5.02

Quarter ended in 2010:	High		Low
December 31	$	5.49	$	4.57
September 30	$	5.07	$	4.07
June 30	$	5.71	$	4.29
March 31	$	5.73	$	4.45

On February 17, 2012 the closing price of our Common Stock was $5.71 share, as reported on the NYSE and there were 247,088,176 shares of Common Stock outstanding, held by approximately 2,522 stockholders of record. The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing agency, but does include each such broker or clearing agency as one record holder.

Distribution Policy

We intend to continue to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes. U.S. federal income tax law requires that a REIT distribute with respect to each year at least 90% of its annual REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain. We will not be required to make distributions with respect to income derived from the activities conducted through our taxable REIT subsidiaries that is not distributed to us. To the extent our taxable REIT subsidiaries’ income is not distributed and is instead reinvested in the operations of these entities, the value of our equity interest in our taxable REIT subsidiaries will increase. The aggregate value of the securities that we hold in our taxable REIT subsidiaries may not exceed 25% of the total value of our gross assets. Distributions from our taxable REIT subsidiaries to us will qualify for the 95% gross income test but will not qualify for the 75% gross income test.

To satisfy the requirements to qualify as a REIT and generally not be subject to U.S. federal income and excise tax, we intend to make regular quarterly distributions of our taxable net income to holders of our Common Stock out of assets legally available therefore. Any future distributions we make will be at the discretion of our board of directors and will depend upon our earnings and financial condition, maintenance of REIT qualification, applicable provisions of the MGCL and such other factors as our board of directors deems relevant.

We anticipate that, for U.S. federal income tax purposes, distributions (including certain part cash, part stock distributions) generally will be taxable to our stockholders as ordinary income, although some portion of our distributions may constitute qualified dividend income, capital gains or a return of capital.

The following table sets forth the distributions that have been declared by our board of directors on our Common Stock during the fiscal years ended December 31, 2011 and 2010.


Amount Declared During Quarter Ended in 2011:	Per Share		Date Paid
December 31	$	0.07		January 12, 2012
September 30		0.07		October 18, 2011
June 30		0.07		July 19, 2011
March 31		0.07		April 19, 2011

Total 2011	$	0.28


Amount Declared During Quarter Ended in 2010:	Per Share		Date Paid
December 31	$	0.07		January 13, 2011
September 30		0.07		October 14, 2010
June 30		0.07		July 15, 2010
March 31		0.07		April 15, 2010

Total 2010	$	0.28

Performance Graph

The graph below shows a comparison of cumulative total stockholder returns for DCT Industrial Trust Inc. Common Stock with the cumulative total return on the Standard and Poor’s 500 Index, the MSCI US REIT Index, and the FTSE NAREIT Equity Industrial Index. The MSCI US REIT Index represents performance of publicly traded REITs while the FTSE NAREIT Equity Industrial Index represents only the performance of our publicly traded industrial REIT peers. Stockholders’ returns over the indicated period are based on historical data and should not be considered indicative of future stockholder returns.

LOGO


	December 31, 2006		December 31, 2007		December 31, 2008		December 31, 2009		December 31, 2010		December 31, 2011
DCT Industrial Trust Inc.	$	100.00	$	83.73	$	49.02	$	52.07	$	58.31	$	59.43
S&P 500^®	$	100.00	$	105.49	$	66.46	$	84.05	$	96.71	$	98.76
MSCI US REIT Index	$	100.00	$	83.18	$	51.60	$	66.36	$	85.26	$	92.67
FTSE NAREIT Equity Industrial Index	$	100.00	$	100.38	$	32.66	$	36.63	$	39.62	$	41.37

Note:

The graph covers the period from December 31, 2006 to December 31, 2011 and assumes that $100 was invested in DCT Industrial Trust Inc. Common Stock and in each index on December 31, 2006 and that all dividends were reinvested.

ITEM 6.

SELECTED FINANCIAL DATA

The following table sets forth selected financial data relating to our historical financial condition and results of operations for the years ended December 31, 2011, 2010, 2009, 2008 and 2007. Certain amounts presented for the periods ended December 31, 2010, 2009, 2008 and 2007 have been reclassified to conform to the 2011 presentation. The financial data in the table should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes in “Item 8. Financial Statements and Supplementary Data.”


	For the Years Ended December 31,
	2011			2010			2009			2008			2007
	(amounts in thousands, except per share data and building count)
Operating Data:
Rental revenues	$	249,158		$	225,699		$	229,797		$	232,504		$	231,006
Total revenues	$	253,449		$	229,832		$	232,498		$	235,428		$	233,877
Rental expenses and real estate taxes	$	(70,417	)	$	(67,304	)	$	(64,838	)	$	(61,907	)	$	(57,960	)
Total operating expenses	$	(221,001	)	$	(211,595	)	$	(198,945	)	$	(192,691	)	$	(181,768	)
Loss from continuing operations	$	(36,456	)	$	(42,469	)	$	(26,456	)	$	(16,061	)	$	(3,965	)
Income (loss) from discontinued operations	$	7,613		$	(597	)	$	4,742		$	22,293		$	17,268
Gain on dispositions of real estate interests	$	—		$	13		$	5		$	503		$	30,748
Net income (loss) attributable to common stockholders	$	(25,250	)	$	(37,830	)	$	(18,585	)	$	9,486		$	40,112

Earnings per Common Share—Basic and Diluted:
Income (loss) from continuing operations	$	(0.14	)	$	(0.18	)	$	(0.12	)	$	(0.10	)	$	0.12
Income (loss) from discontinued operations		0.03			(0.00	)		0.02			0.15			0.12

Net income (loss) attributable to common stockholders	$	(0.11	)	$	(0.18	)	$	(0.10	)	$	0.05		$	0.24

Weighted average common shares outstanding, basic and diluted		242,591			212,412			192,900			171,695			168,359
Amounts Attributable to Common Stockholders:
Income (loss) from continuing operations⁽¹⁾	$	(32,145	)	$	(37,300	)	$	(22,676	)	$	(17,512	)	$	19,567
Income (loss) from discontinued operations		6,895			(530	)		4,091			26,998			20,545

Net income (loss) attributable to common stockholders	$	(25,250	)	$	(37,830	)	$	(18,585	)	$	9,486		$	40,112

Common Share Distributions:
Common share cash distributions, declared	$	68,789		$	60,110		$	59,364		$	96,223		$	107,618
Common share cash distributions, declared per share	$	0.28		$	0.28		$	0.30		$	0.56		$	0.64

Other Data:
Consolidated operating square feet		58,099			56,652			52,910			51,209			50,364
Consolidated operating buildings		408			390			375			370			364
Total consolidated buildings		409			398			394			391			397

(See footnotes definitions beginning on page 39)


	As of and For the Years Ended December 31,
	2011			2010			2009			2008			2007
	(dollar amounts in thousands, except per share data)
Balance Sheet Data:
Net investment in real estate	$	2,711,027		$	2,647,186		$	2,576,410		$	2,605,909		$	2,674,965
Total assets	$	2,793,298		$	2,719,889		$	2,664,292		$	2,703,843		$	2,778,992
Senior Unsecured Notes	$	935,000		$	786,000		$	625,000		$	625,000		$	507,000
Mortgage notes	$	317,783		$	425,359		$	511,715		$	574,634		$	649,568
Total liabilities	$	1,389,183		$	1,319,051		$	1,220,659		$	1,302,343		$	1,266,538
Cash Flow Data:
Net cash provided by operating activities	$	106,966		$	91,002		$	109,749		$	128,349		$	116,949
Net cash used in investing activities	$	(178,307	)	$	(138,334	)	$	(17,673	)	$	(42,317	)	$	(3,670	)
Net cash provided by (used in) financing activities	$	66,845		$	45,542		$	(92,637	)	$	(96,832	)	$	(106,108	)
Funds From Operations⁽²⁾:
Net income (loss) attributable to common stockholders	$	(25,250	)	$	(37,830	)	$	(18,585	)	$	9,486		$	40,112
Adjustments:
Real estate related depreciation and amortization		128,989			115,904			111,250			119,604			115,465
Equity in (income) loss of unconsolidated joint ventures, net		2,556			2,986			(2,698	)		(2,267	)		(433	)
Equity in FFO of unconsolidated joint ventures		4,732			4,001			11,807			6,806			2,742
Loss on business combinations		—			395			10,325			—			—
Impairment losses on depreciable real estate		10,160			8,012			681			6,014			—
Gain on dispositions of real estate interests		(12,030	)		(2,091	)		(1,354	)		(21,991	)		(42,873	)
Gain on dispositions of non-depreciable real estate		—			13			783			219			15,135
Noncontrolling interest in the operating partnership’s share of the above adjustments		(14,252	)		(13,426	)		(17,907	)		(17,664	)		(14,711	)
FFO attributable to unitholders		9,901			8,678			14,881			19,795			22,180

FFO attributable to common stockholders and unitholders–basic and diluted		104,806			86,642			109,183			120,002			137,617

Adjustments:
Impairment losses on non-depreciable real estate		—			3,992			300			4,732			—
Debt modification costs		—			1,136			—			—			—
Acquisition costs		1,902			1,228			—			—			—

FFO, as adjusted, attributable to common stockholders and unitholders, basic and diluted⁽²⁾^::	$	106,708		$	92,998		$	109,483		$	124,734		$	137,617

FFO per common share and unit—basic and diluted	$	0.39		$	0.36		$	0.48		$	0.58		$	0.68

FFO as adjusted, per common share and unit—basic and diluted⁽²⁾^(3)::	$	0.40		$	0.39		$	0.49		$	0.60		$	0.68

FFO weighted average common shares and units outstanding:
Common shares		242,591			212,412			192,900			171,695			168,358
Participating securities		1,601			1,689			1,535			1,106			688
Units		25,310			26,351			30,660			35,868			32,496

FFO weighted average common shares, participating securities and units outstanding—basic:		269,502			240,452			225,095			208,669			201,542
Dilutive common stock equivalents		449			357			189			3			1

FFO weighted average common shares and units outstanding—diluted:		269,951			240,809			225,284			208,672			201,543

(See footnotes definitions beginning on page 39)

The following table is a reconciliation of our property net operating income, or NOI, to our reported “Loss From Continuing Operations” for the years ended December 31, 2011, 2010, 2009, 2008 and 2007 (in thousands):


	For the Years Ended December 31,
	2011			2010			2009			2008			2007
Property NOI⁽⁴⁾	$	178,741		$	158,395		$	164,959		$	170,597		$	173,046
Institutional capital management and other fees		4,291			4,133			2,701			2,924			2,871
Real estate related depreciation and amortization		(124,244	)		(110,373	)		(104,883	)		(108,986	)		(104,261	)
Casualty gains		33			—			—			—			—
Impairment losses		(448	)		(8,656	)		—			(4,314	)		—
General and administrative expenses		(25,925	)		(25,262	)		(29,224	)		(21,799	)		(19,547	)
Equity in income (loss) of unconsolidated joint ventures, net		(2,556	)		(2,986	)		2,698			2,267			433
Loss on business combinations		—			(395	)		(10,325	)		—			—
Impairment losses on investments in unconsolidated joint ventures		(1,953	)		(216	)		(300	)		(4,733	)		—
Interest expense		(63,941	)		(56,548	)		(52,338	)		(52,520	)		(59,854	)
Interest income and other income (expense)		(310	)		357			1,918			1,258			4,666
Income tax expense and other taxes		(144	)		(918	)		(1,662	)		(755	)		(1,320	)

Loss from continuing operations	$	(36,456	)	$	(42,469	)	$	(26,456	)	$	(16,061	)	$	(3,966	)

⁽¹⁾

Includes gain on dispositions of real estate interests.

⁽²⁾

We believe that net income attributable to common stockholders, as defined by GAAP, is the most appropriate earnings measure. However, we consider funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), to be a useful supplemental, non-GAAP measure of DCT Industrial’s operating performance. NAREIT developed FFO as a relative measure of performance of an equity REIT in order to recognize that the value of income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is generally defined as net income attributable to common stockholders, calculated in accordance with GAAP, plus real estate-related depreciation and amortization, less gains from dispositions of operating real estate held for investment purposes, plus impairment losses on depreciable real estate and impairments of in substance real estate investments in investees that are driven by measureable decreases in the fair value of the depreciable real estate held by the unconsolidated joint ventures and adjustments to derive our pro rata share of FFO of unconsolidated joint ventures. We exclude gains and losses on business combinations and include the gains or losses from dispositions of properties which were acquired or developed with the intention to sell or contribute to an investment fund in our definition of FFO. Although the NAREIT definition of FFO predates the guidance for accounting for gains and losses on business combinations, we believe that excluding such gains and losses is consistent with the key objective of FFO as a performance measure. We also present FFO excluding acquisition costs, debt modification costs and impairment losses on properties which are not depreciable. We believe that FFO excluding acquisition costs, debt modification costs and impairment losses on non-depreciable real estate is useful supplemental information regarding our operating performance as it provides a more meaningful and consistent comparison of our operating performance and allows investors to more easily compare our operating results. Readers should note that FFO captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. NAREIT’s definition of FFO is subject to interpretation, and modifications to the NAREIT definition of FFO are

common. Accordingly, our FFO may not be comparable to other REITs’ FFO and FFO should be considered only as a supplement to net income as a measure of our performance.

⁽³⁾

NAREIT recently reiterated that under NAREIT’s definition of FFO, impairment write-downs of depreciable real estate should be excluded in calculating NAREIT FFO. In addition, impairments of in substance real estate investments in investees that are driven by measureable decreases in the fair value of the depreciable real estate held by the unconsolidated joint ventures should be excluded in determining NAREIT FFO. Historically, we have added back impairments of depreciable real estate to NAREIT FFO in order to arrive at FFO, as adjusted.

⁽⁴⁾

Property net operating income, or property NOI, is defined as rental revenues, including reimbursements, less rental expenses and real estate taxes, which excludes depreciation, amortization, impairment, casualty gains, general and administrative expenses, loss on business combinations and interest expense. We consider property NOI to be an appropriate supplemental performance measure because property NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of the property such as depreciation, amortization, impairment, general and administrative expenses, interest income and interest expense. However, property NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our property NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating property NOI. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of results of operations and financial condition should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.

Overview

DCT Industrial Trust Inc. is a leading industrial real estate company that owns, operates and develops high-quality bulk distribution and light industrial properties in high-volume distribution markets in the U.S. and Mexico. DCT is the sole general partner of, and as of December 31, 2011 owned an approximate 90% ownership interest in DCT Industrial Operating Partnership L.P., a Delaware limited partnership.

Our primary business objectives are to maximize long-term growth in Funds From Operations, or FFO, as defined on page 39, the net asset value of our portfolio and total shareholder returns. In our pursuit of these long-term objectives, we seek to:

•

maximize cash flows from existing properties;

•

deploy capital into high quality acquisitions or development opportunities which meet our asset location and financial criteria; and

•

recycle capital by selling assets that no longer fit our investment criteria and reinvesting the proceeds in higher growth opportunities.

Outlook

We seek to maximize long-term earnings growth and value within the context of overall economic conditions, primarily through increasing rents and operating income at existing properties and acquiring and developing high-quality properties in major distribution markets.

Fundamentals for industrial real estate continue to modestly improve in response to general improvement in the economy. According to national statistics, net absorption (the net change in total occupied space) of industrial real estate turned positive in the second quarter of 2010 and national occupancy rates have increased each quarter since then. We expect moderate economic growth to continue throughout 2012, which should result in continued positive demand for warehouse space as companies expand their distribution and production platforms. Rental rates in our markets appeared to have bottomed and in a number of markets have begun to increase, although they do remain below peak levels. Consistent with recent experience and based on current market conditions, we expect average GAAP rental rates on most new leases signed to continue to decline in 2012 compared to the rates on expiring leases. However, these declines appear to be moderating. As positive net absorption of warehouse space continues and demand comes more into balance with supply, the rental rate environment should continue to improve. According to a national research company, average market rental rates nationally are expected to increase moderately in 2012 as vacancy rates drop below 10% of available supply.

Further, we continue to expect limited new development of speculative warehouse space until rental rates and other leasing fundamentals improve sufficiently to justify the risks and financial returns necessary for new construction or to obtain project financing. With limited new supply over the next several years, we expect that the operating environment will become increasingly favorable for landlords with meaningful improvement of rental and occupancy rates.

For DCT Industrial, we expect same store net operating income to be slightly higher in 2012 than it was in 2011. The benefit of higher occupancy in 2012 is expected to mostly offset the impact of continued negative GAAP releasing rent spreads.

In terms of capital investment, we will continue to pursue acquisitions of well-located distribution facilities at prices where we can apply our leasing experience and market knowledge to generate attractive returns. During

the year ended December 31, 2011, we acquired 24 buildings comprising 2.8 million square feet and controlling ownership interests in three buildings totaling 0.4 million square feet. We also acquired land totaling approximately 102.2 acres for future development. These properties, land and ownership interests were acquired for a total purchase price of approximately $222.6 million, including $9.8 million attributable to the noncontrolling interests’ share. We will also pursue the acquisition of land and consider selective development of new buildings in markets where we perceive demand and market rental rates will provide attractive financial returns.

As of December 31, 2011, we have $57.7 million of debt principal payments due during 2012, comprised of maturities of $50.0 million of fixed-rate secured borrowings and regularly scheduled principal amortization.

On August 1, 2011, we issued $225.0 million of senior unsecured notes. The proceeds were partially used to pay down borrowings under our senior unsecured revolving credit facility, with the remainder used to pay down expiring mortgage notes and for general corporate purposes. We anticipate having sufficient liquidity to fund our operating expenses, including costs to maintain our properties and distributions, though we may finance investments, including acquisitions and developments, with the issuance of new shares, proceeds from asset sales or through additional borrowings. Please see “Liquidity and Capital Resources” for additional discussion.

Inflation

Although the U.S. economy has recently been experiencing a slight increase in inflation rates, and a wide variety of industries and sectors are affected differently by changing commodity prices, inflation has not had a significant impact on us in our markets. Most of our leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, most of our leases expire within five years which enables us to replace existing leases with new leases at then-existing market rates.

Summary of Significant Transactions

Significant transactions for the year ended December 31, 2011

•

Equity Offering

•

On February 18, 2011, we issued 21.9 million shares of common stock in a public offering at a price of $5.35 per share, for net proceeds of $111.9 million. We used the offering proceeds to repay outstanding indebtedness for general corporate purposes, including, the funding of acquisitions.

•

Debt Activity

•

In April 2011, we refinanced $50.0 million of maturing senior unsecured notes. The new fixed-rate notes bear interest of 5.43%, mature in April 2020 and require quarterly interest payments.

•

On June 3, 2011, we entered into a term loan agreement with a syndicate of 12 banks, pursuant to which we borrowed $175.0 million through a senior unsecured loan. The term loan is scheduled to mature on June 3, 2015 and may be prepaid in whole or in part at any time. The term loan agreement provides for a variable interest rate based on either the base rate under the agreement or LIBOR, at our election, plus a margin that is initially based on our leverage ratio. The margins on base rate loans initially may range from 0.80% to 1.65% per annum, and the margins on LIBOR-based loans may range from 1.80% to 2.65% per annum. We used the term loan, together with proceeds from a draw under our senior unsecured revolving credit facility, to repay our existing $200.0 million unsecured term loan that was scheduled to mature on June 6, 2011.

•

On June 3, 2011, we entered into an amendment to extend the maturity date of our $300.0 million senior unsecured revolving credit facility from August 19, 2013 until June 3, 2015. This amendment also increased the number of banks included on the facility from nine to twelve and reduced the interest rate payable to either 0.65% to 1.35% over prime or 1.65% to 2.35% over LIBOR, per annum at our election, depending upon the Company’s leverage ratio. The amendment

also provides us the ability, from time to time, to extend the size of the facility by up to an additional $200.0 million, to a total of $500.0 million, subject to lender commitments and certain other conditions.

•

On August 1, 2011, we issued $225.0 million of new fixed rate, senior unsecured notes through a private placement. These senior unsecured notes have a weighted average maturity of 8.5 years and a weighted average interest rate of 4.93%. The notes have maturities of 5, 7, 8, 10, 11 or 12 years. Proceeds from these notes were used to repay outstanding indebtedness and for general corporate use.

•

On November 4, 2011, we issued a non-recourse mortgage note for $20.0 million in connection with a property acquisition. The note bears interest of 4.25%, requires monthly payments of principal and interest and matures in December 2021.

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During the year ended December 31, 2011, we assumed two non-recourse mortgage notes with outstanding balances of approximately $3.9 million and $3.4 million, respectively, in connection with two property acquisitions. The assumed notes bear interest at rates of 4.96% and 6.0%, respectively, and require monthly payments of principal and interest. The notes mature in August 2023 and April 2014, respectively.

•

During the year ended December 31, 2011, we retired $124.7 million of maturing mortgage notes which were repaid using proceeds from our senior unsecured revolving credit facility, our senior unsecured notes issued through the private placement and equity offering, as previously referenced.

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Acquisitions

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During the year ended December 31, 2011, we acquired 24 buildings comprising 2.8 million square feet and controlling ownership interests in three buildings totaling 0.4 million square feet. These properties and controlling interests were acquired for a total purchase price of approximately $196.9 million, including $9.8 million attributable to the noncontrolling interests’ share, using proceeds from our equity offering, proceeds from asset sales, proceeds from our private placement of senior unsecured notes, borrowings under our senior unsecured revolving credit facility, proceeds from a nonrecourse mortgage financing, issuance of OP units and existing cash balances.

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Development

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During 2011, we commenced construction on two buildings totaling 178,000 square feet in the Dulles Corridor submarket of Washington D.C. In addition, we entered into a forward purchase commitment with an unrelated third party to acquire a newly constructed industrial facility totaling 267,000 square feet in the Northwest submarket of Houston. We also acquired five land parcels which totaled approximately 102.2 acres for future development.

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Dispositions

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During the year ended December 31, 2011, we sold 16 operating properties totaling approximately 2.7 million square feet to third-parties. The properties were sold for combined gross proceeds of approximately $108.3 million, resulting in gains of $12.0 million and impairment losses totaling $7.8 million. See “Notes to Consolidated Financial Statements Note 3—Investment in Properties and Note 15—Discontinued Operations” for further information.

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Significant Activity with Joint Ventures

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During the year ended December 31, 2011, in our unconsolidated joint ventures we disposed of three properties in Cincinnati, Kansas City and Northern California for gross proceeds, net of joint venture partners’ interest, of $13.8 million. We recognized deferred gains upon disposition of these properties totaling $0.7 million.

Critical Accounting Estimates

General

Our discussion and analysis of financial condition and results of operations is based on our Consolidated Financial Statements which have been prepared in accordance with United States generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following discussion pertains to accounting policies management believes are most critical to the portrayal of our financial condition and results of operations that require management’s most difficult, subjective or complex estimates.

Revenue Recognition

We record rental revenues on a straight-line basis under which contractual rent increases are recognized evenly over the lease term. Certain properties have leases that provide for tenant occupancy during periods where no rent is due or where minimum rent payments change during the term of the lease. Accordingly, we record receivables from tenants that we expect to collect over the remaining lease term, which are recorded as a straight-line rent receivable. When we acquire a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation.

We maintain an allowance for estimated losses that may result from the inability of our tenants to make required payments. This estimate requires significant judgment related to the lessees ability to fulfill their obligations under the leases. If a tenant is insolvent or files for bankruptcy protection and fails to make contractual payments beyond any allowance, we may recognize additional bad debt expense in future periods equal to the net outstanding balances, which include amounts recognized as straight-line revenue not realizable until future periods.

Early lease termination fees are recorded in “Rental revenues” on a straight-line basis over the estimated remaining contractual lease term or upon collection if collectability is not assured.

We earn revenues from asset management fees, acquisition fees, property management fees and fees for other services pursuant to joint venture and other agreements. These are included in our Consolidated Statements of Operations in “Institutional capital management and other fees.” We recognize revenues from asset management fees, acquisition fees, property management fees and fees for other services when the related fees are earned and are realized or realizable.

Principles of Consolidation

We hold interests in both consolidated and unconsolidated joint ventures. All joint ventures over which we have financial and operating control, and variable interest entities (“VIE’s”) in which we have determined that we are the primary beneficiary, are included in the Consolidated Financial Statements. We use the equity method of accounting for joint ventures over which we do not have a controlling interest or where we do not exercise significant control over major operating and management decisions but where we exercise significant influence and include our share of earnings or losses of these joint ventures in our consolidated net loss.

We analyze our joint ventures in accordance with GAAP to determine whether they are VIE’s and, if so, whether we are the primary beneficiary. Our judgment with respect to our level of influence or control over an entity and whether we are the primary beneficiary of a VIE involves consideration of various factors including the form of our ownership interest, our representation on the entity’s board of directors, the size of our investment (including loans) and our ability to participate in major decisions. Our ability to correctly assess our influence or control over an entity and the determination of whether the agreement constitutes a VIE includes complex models forecasting of the future expected cash flows, which affects the presentation of these investments in the Consolidated Financial Statements and, consequently, our financial position and results of operations.

Capitalization of Costs

We capitalize costs directly related to the development, predevelopment, redevelopment or improvement of our investment in real estate, referred to as capital projects and other activities included within this paragraph. Costs associated with our capital projects are capitalized as incurred. If the project is abandoned, these costs are expensed during the period in which the project is abandoned. Costs considered for capitalization include, but are not limited to, construction costs, interest, real estate taxes, insurance and leasing costs, if appropriate. We capitalize indirect costs such as personnel, office, and administrative expenses that are directly related to our projects based on an estimate of the time spent on the construction or development. Costs incurred for maintaining and repairing our properties, which do not extend their useful lives, are expensed as incurred.

Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rates in effect during the period. We also capitalize interest on qualifying investments in unconsolidated joint ventures. Interest is capitalized based on the average capital invested in a venture during the period when development or predevelopment begins until planned principle operations commence, at our weighted average borrowing rates in effect during the period.

Fair Value

The Financial Accounting Standards Board (“FASB”) issued guidance related to accounting for fair value measurements which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined as the exit price or price at which an asset (in its highest and best use) would be sold or liability assumed by an informed market participant in a transaction that is not distressed and is executed in the most advantageous market. This guidance provides a framework of how to determine such measurements on reported balances which are required or permitted to be measured at fair value under existing accounting pronouncements and emphasizes that fair value is a market-based rather than an entity-specific measurement. Therefore, our fair value measurement is determined based on the assumptions that market participants would use to price the asset or liability. As a basis for considering market participant assumptions in fair value measurements, this guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals, and the contracted sales price for assets held for sale. Level 3 inputs are unobservable inputs for the asset or liability that are typically based on management’s own assumptions, as there is little, if any, related observable market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Investment in Properties

We record the assets, liabilities and noncontrolling interests associated with property acquisitions which qualify as business combinations at their respective acquisition-date fair values which are derived using a market, income or replacement cost approach, or a combination thereof. Acquisition-related costs associated with business combinations are expensed as incurred. As defined by GAAP, a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants. We generally do not consider acquisitions of land or unoccupied buildings to be business combinations. Rather, these transactions are treated as asset acquisitions and recorded at cost.

The fair value of identifiable tangible assets such as land, building, building and land improvements and tenant improvements is determined on an “as-if-vacant” basis which requires significant judgment by management. Management considers Level 3 inputs such as the replacement cost of such assets, appraisals, property condition reports, comparable market rental data and other related information in determining the fair value of the tangible assets. The recorded fair value of intangible lease assets or liabilities includes Level 3 inputs including the value associated with leasing commissions, legal and other costs, as well as the estimated period necessary to lease such property and lease commencement. An intangible asset or liability resulting from in-place leases that are above or below the market rental rates are valued based upon managements estimates of prevailing market rates for similar leases. Intangible lease assets or liabilities are amortized over the estimated, reasonably assured lease term of the remaining in-place leases as an adjustment to “Rental revenues” or “Real estate related depreciation and amortization” depending on the nature of the intangible. The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to “Interest expense” over the life of the debt assumed. The valuation of assumed liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

We have certain properties which we have acquired or removed from service with the intention to redevelop the property. Buildings under redevelopment require significant construction activities prior to being placed back into service. We generally do not depreciate properties classified as redevelopment until the date that the redevelopment properties are ready for their intended use.

Real estate, including land, building, building and land improvements, and tenant improvements, leasehold improvements, leasing costs and intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization, unless circumstances indicate that the cost cannot be recovered, in which case, the carrying value of the property is reduced to estimated fair value. Our estimate of the useful life of our assets is evaluated upon acquisition and when circumstances indicate a change in the useful life, which requires significant judgment regarding the economic obsolescence of tangible and intangible assets.

Impairment of Properties

For investments in properties that we intend to hold long-term, the recoverability is based on the estimated future undiscounted cash flows. If the asset carrying value is not recoverable on an undiscounted cash flow basis, the amount of impairment is measured as the difference between the carrying value and the fair value of the asset and is reflected in “Impairment losses” on the Consolidated Statements of Operations. The determination of fair value of real estate assets to be held for use is derived using the discounted cash flow method and involves a number of management assumptions relating to future economic events that could materially affect the determination of the ultimate value, and therefore, the carrying amounts of our real estate. Such assumptions are Level 3 inputs and include, but are not limited to, projected vacancy rates, rental rates, property operating expenses and capital expenditures. The capitalization rate is also a significant driving factor in determining the property valuation and requires management’s judgment of factors such as market knowledge, market supply and demand factors, historical experience, lease terms, tenant’s financial strength, economy, demographics, environment, property location, visibility, age, physical condition and expected return requirements, among other things. The aforementioned factors are taken as a whole by management in determining the valuation of investment property. The valuation is sensitive to the actual results of many of these uncertain factors, either individually or taken as a whole. Should the actual results differ from management’s estimates, the valuation could be negatively affected and may result in additional impairments recorded in the Consolidated Financial Statements.

Investments in properties classified as held for sale are measured at the lower of their carrying amount or fair value (typically, the contracted sales price, a Level 2 input) less costs to sell. Impairment of assets held for sale is a component of “Income (loss) from discontinued operations” in the Consolidated Statements of Operations and is further detailed in “Notes to Consolidated Financial Statements Note 15 – Discontinued Operations and Assets Held for Sale.”

Investments in and Advances to Unconsolidated Joint Ventures

We account for our investments in and advances to unconsolidated joint ventures under the equity method because we exercise significant influence over, but do not control, these entities. Under the equity method, these investments (including advances to joint ventures) are initially recorded at cost and are subsequently adjusted to reflect our proportionate share of net earnings or losses of each of the joint ventures, distributions received, contributions made and certain other adjustments, as appropriate. Such investments are included in “Investments in and advances to unconsolidated joint ventures” in our Consolidated Balance Sheets. Distributions from these investments that are related to earnings from operations are included as operating activities and distributions that are related to capital transactions are included as investing activities in our Consolidated Statements of Cash Flows.

real estate interests.” Any gain related to the remaining proceeds reduces our basis in the investment in the unconsolidated joint venture, and is recognized into earnings over the weighted average life of the related property’s real estate assets. We recognize our proportionate share of the ongoing earnings or losses of each unconsolidated joint venture in “Equity in loss of unconsolidated joint ventures, net” in our Consolidated Statements of Operations.

Impairment of Investments in and Advances to Unconsolidated Joint Ventures

We evaluate our investments in unconsolidated entities for impairment whenever events or changes in circumstances indicate that there may be an other-than-temporary decline in value. To do so, we calculate the estimated fair value of the investment using a market, income or replacement cost approach, or combination thereof. The amount of impairment recognized, if any, would be the excess of the investment’s carrying amount over its estimated fair value. We consider various factors to determine if a decline in the value of the investment is other-than-temporary. These factors are Level 2 and 3 inputs and include but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, expected term of the investment and the relationships with the other joint venture partners and its lenders. If we believe that the decline in the fair value is temporary, no impairment is recorded. The aforementioned factors are taken as a whole by management in determining the valuation of our investment property. Should the actual results differ from management’s estimates, the valuation could be negatively affected and may result in additional impairments in the Consolidated Financial Statements.

Derivative Instruments and Hedging Activities

We record derivatives at fair value which are presented on a gross basis in “Other Assets” or “Other Liabilities” in our Consolidated Balance Sheets. Accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the designation of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

Currently, we use interest rate swaps to manage certain interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. We use valuation experts in determining the fair value of derivative instruments.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties.

As of December 31, 2011, our hedge was designated as a cash flow hedge. For derivatives designated as “cash flow” hedges, the effective portion of the changes in the fair value of the derivative is initially reported in “Accumulated other comprehensive loss” in our Consolidated Statements of Stockholders’ Equity, Comprehensive Income (Loss) and Noncontrolling Interests (i.e., not included in earnings) and subsequently reclassified into earnings when the hedged transaction affects earnings or the hedging relationship is no longer effective at which time the ineffective portion of the derivative’s changes in fair value is recognized directly into earnings. We assess the effectiveness of each hedging relationship whenever financial statements are issued or earnings are reported and at least every three months. We do not use derivatives for trading or speculative purposes.

Our objective in using derivatives is to manage our exposure to interest rate volatility associated with our forecasted debt issuances including refinancing of our fixed-rate debt and certain variable rate borrowings. To accomplish this objective, we primarily use treasury locks, forward-starting swaps and interest rate swaps as part of our cash flow hedging strategy. These derivatives are designed to mitigate the risk of future interest rate fluctuations by providing a future fixed interest rate for a limited, pre-determined period of time.

Our agreements with each of our derivative counterparties contain provisions where if we default on the underlying indebtedness, including defaults where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. We also have agreements with our derivative counterparties that incorporate the loan covenant provisions of our indebtedness with lender affiliates of the derivative counterparties. Failure to comply with the loan covenant provisions would cause us to be in default on any derivative instrument obligations covered by the agreements.

Stock-Based Compensation

On October 10, 2006, we established the Long-Term Incentive Plan, as amended, to grant restricted stock, stock options and other awards to our personnel and directors. Awards granted under this plan are measured at fair value on the grant date and amortized to compensation expense on a straight-line basis over the service period during which the awards fully vest. Such expense is included in “General and administrative” expense in our Consolidated Statements of Operations. Options issued under the Long-Term Incentive Plan are valued using the Black-Scholes option pricing model, which relies on assumptions we make related to the expected term of the options, volatility, dividend yield, and risk free interest rate. LTIP Unit awards granted under the Long Term Incentive Plan are valued on the grant date using a lattice-binomial option-pricing model based on a Monte Carlo simulation using assumptions for the volatility factor and risk-free interest rates. We use valuation experts in determining the fair value of LTIP Units granted.

Results of Operations

The following discussion is based on our Consolidated Financial Statements for the years ended December 31, 2011 and 2010.

Summary of the year ended December 31, 2011 compared to the year ended December 31, 2010

The Company owned interests in, managed or had under development approximately 75.5 million square feet of properties leased to approximately 900 customers, including 17.2 million square feet of unconsolidated properties on behalf of five institutional capital management joint venture partners. As of December 31, 2011, we consolidated 408 operating properties and one redevelopment property. As of December 31, 2010, we consolidated 390 operating properties, seven development properties and one redevelopment properties.

Comparison of the year ended December 31, 2011 to the year ended December 31, 2010

The following table illustrates the changes in rental revenues, rental expenses and real estate taxes, property net operating income, other revenue and other income (loss) and other expenses for the year ended December 31, 2011 compared to the year ended December 31, 2010. Our same store portfolio includes all operating properties that we owned for the entirety of both the current and prior year reporting periods for which the operations had been stabilized. Non-same store operating properties include properties not meeting the same-store criteria and exclude development and redevelopment properties. The same store portfolio for the periods presented totaled 351 operating properties and was comprised of 49.7 million square feet. A discussion of these changes follows the table (in thousands).


	Year Ended December 31,
	2011			2010			$ Change
Rental Revenues
Same store, excluding revenues related to early lease terminations	$	215,725		$	217,135		$	(1,410	)
Non-same store operating properties		32,574			6,934			25,640
Development and redevelopment properties		235			964			(729	)
Revenues related to early lease terminations		624			666			(42	)

Total rental revenues		249,158			225,699			23,459

Rental Expenses and Real Estate Taxes
Same store properties		61,619			62,712			(1,093	)
Non-same store operating properties		8,541			3,115			5,426
Development and redevelopment properties		257			1,477			(1,220	)

Total rental expenses and real estate taxes		70,417			67,304			3,113

Property Net Operating Income ⁽¹⁾
Same store properties		154,106			154,423			(317	)
Non-same store operating properties		24,033			3,819			20,214
Development and redevelopment properties		(22	)		(513	)		491
Revenues related to early lease terminations		624			666			(42	)

Total property net operating income		178,741			158,395			20,346

Other Revenue and Other Income (Loss)
Institutional capital management and other fees		4,291			4,133			158
Gain on dispositions of real estate interests		—			13			(13	)
Equity in loss of unconsolidated joint ventures, net		(2,556	)		(2,986	)		430
Interest and other income (expense)		(310	)		357			(667	)
Casualty gain		33			—			33

Total other revenue and other income		1,458			1,517			(59	)

Other Expenses
Real estate related depreciation and amortization		124,244			110,373			13,871
Loss on business combinations		—			395			(395	)
Interest expense		63,941			56,548			7,393
General and administrative		25,925			25,262			663
Impairment losses		2,401			8,872			(6,471	)
Income tax (benefit) expense and other taxes		144			918			(774	)

Total other expenses		216,655			202,368			14,287
Income (loss) from discontinued operations		7,613			(597	)		8,210
Net loss attributable to noncontrolling interests		3,593			5,223			(1,630	)

Net loss attributable to common stockholders	$	(25,250	)	$	(37,830	)	$	12,580

(1)

For a discussion as to why we view property net operating income to be an appropriate supplemental performance measure see Page 40, above. For a reconciliation of our property net operating income to our reported “Loss From Continuing Operations”, see “Notes to Consolidated Financial Statements, Note 14—Segment Information.”

Rental Revenues

Rental revenues, which is comprised of base rent, straight-line rent, amortization of above and below market rent intangibles, tenant recovery income, early lease termination fees and other rental revenues, increased by approximately $23.5 million, or 10.4%, for the year ended December 31, 2011 as compared to the same period in 2010, primarily due to the following:

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$25.6 million increase in our non-same store operating properties rental revenues, primarily driven by the net addition of 19 properties, which resulted from the acquisition of 27 properties and completion of development and redevelopment of eight properties, partially offset by disposition of 16 properties. Average occupancy of the non-same store properties increased during 2011 to 85.7% from 42.7% during 2010, which resulted in a significant increase in base rent; partially offset by

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$1.4 million decrease in our same store revenues due primarily to the following:

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$2.0 million decrease in base rent resulting from decreased rental rates which more than offset an increase in average occupancy in our same store portfolio of 220 basis points to 89.0% for 2011; and

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$0.8 million decrease related to a settlement with a tenant in liquidation which was recorded in 2010; partially offset by

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$0.8 million increase in straight-line rent which is primarily related to increases in free rent periods; and

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$0.6 million increase in revenues related to above market rent adjustments which have fully amortized; and

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$0.7 million decrease in rental revenues in our development and redevelopment portfolios as eight properties were placed into operation and whose results are included in our non-same store portfolio.

The following table illustrates the components of our consolidated rental revenues for the years ended December 31, 2011 and 2010 (in thousands).


	For the Years Ended December 31,
	2011		2010		$ Change
Base rent	$	187,853	$	171,825	$	16,028
Straight-line rent		9,274		6,008		3,266
Tenant recovery income		48,175		44,238		3,937
Other		3,232		2,962		270
Revenues related to early lease terminations		624		666		(42	)

Total rental revenues	$	249,158	$	225,699	$	23,459

Rental Expenses and Real Estate Taxes

Rental expenses and real estate taxes increased by approximately $3.1 million, or 4.6%, for the year ended December 31, 2011 as compared to the same period in 2010, primarily due to the following:

•

$4.2 million net increase in rental expenses and real estate taxes related to the properties acquired and development and redevelopment properties placed into operation; partially offset by

•

$1.1 million net decrease in rental expenses and real estate taxes in our same store portfolio, which was primarily driven by decreases in property taxes, repairs, maintenance and non-recoverable expenses, partially offset by increases in property insurance and utilities.

Other Revenue and Other Income (Loss)

Total other revenue and other income (loss) decreased by approximately $0.1 million, or 3.9%, for the year ended December 31, 2011 as compared to the same period in 2010, primarily due to:

•

$0.7 million decrease in interest and other income (expense), primarily as a result of an exchange rate loss from Mexico operations; and

•

$0.4 million decrease in equity in loss of unconsolidated joint ventures primarily as a result of an increase in occupancy at two of our projects in unconsolidated development joint ventures partially offset by an increase in depreciation of properties as development became complete; partially offset by

•

$0.2 million increase in institutional capital management and other fees as a result of a disposition fee earned on the sale of an unconsolidated joint venture property offset in part by lower asset management fees resulting from assets sold out of the ventures.

Other Expenses

Other expenses increased by approximately $14.3 million, or 7.1%, for the year ended December 31, 2011 as compared to the same period in 2010, primarily due to:

•

$13.9 million increase in real estate depreciation and amortization expense resulting from real estate acquisitions and capital additions;

•

$7.4 million increase in interest expense primarily related to higher interest rates on debt which has been refinanced and issued since 2010, as well as higher average debt balances in 2011; and

•

$0.7 million increase in general and administrative expenses, primarily related to an increase in acquisition costs of approximately $0.7 million for the increased number of properties acquired during 2011; which are partially offset by

•

$6.5 million decrease in impairments from a $2.0 million impairment loss recorded on one of our investments in unconsolidated joint ventures and a $0.4 million held for use impairment recorded in 2011 as compared to a $8.7 million impairment recorded on properties held for use and $0.2 million impairment loss on one of our investments in unconsolidated joint ventures recorded in 2010; and

•

$1.2 million decrease in expenses related to a $0.4 million loss on a business combination in 2010 and a $0.8 million decrease in income tax expense in 2011, related to tax benefits recognized in 2011.

Income (Loss) from Discontinued Operations

Income (loss) from discontinued operations increased $8.2 million during the year ended December 31, 2011 as compared to the same period in 2010, which is related to the disposition of 16 properties during 2011, which had income before casualty gains of $2.0 million, casualty gains of $1.3 million, gain on sales totaling $12.0 million and impairment losses of $7.8 million, as compared to the sale of eight properties in 2010, which had income of $0.8 million, gains of $2.1 million and impairment losses of $3.5 million.

Noncontrolling Interests

Net loss attributable to noncontrolling interests decreased by approximately $1.6 million, or 31.2%, during the year ended December 31, 2011 as compared to the same period in 2010, primarily related to a decrease of consolidated net loss period over period. We owned approximately 90.4% and 89.8% of our operating partnership as of December 31, 2011 and 2010, respectively. The change in ownership was primarily due to the equity offering in February 2011, see “Notes to Consolidated Financial Statements, Note 9 – Stockholders’ Equity” for additional information), partially offset by issuance of OP Units in connection with property acquisitions and redemption of OP Units (see “Notes to Consolidated Financial Statements, Note 8—Noncontrolling Interests” for additional information).

Summary of the year ended December 31, 2010 compared to the year ended December 31, 2009

As of December 31, 2010, we consolidated 390 operating properties, seven development properties and one redevelopment properties. As of December 31, 2009, we consolidated 375 operating properties, 15 development properties and four redevelopment properties.

Comparison of the year ended December 31, 2010 to the year ended December 31, 2009

The following table illustrates the changes in rental revenues, rental expenses and real estate taxes, property net operating income, other revenue and other income and other expenses for the year ended December 31, 2010 compared to the year ended December 31, 2009. Our same store portfolio includes all operating properties that we owned for the entirety of both the current and prior year reporting periods. The same store portfolio for the periods presented totaled 345 buildings comprised of approximately 47.8 million square feet. A discussion of these changes follows the table (in thousands).


	Year Ended December 31,
	2010			2009			$ Change
Rental Revenues
Same store, excluding revenues related to early lease terminations terminations	$	208,841		$	220,951		$	(12,110	)
Non-same store operating properties		15,228			3,123			12,105
Development and redevelopment properties		964			3,646			(2,682	)
Revenues related to early lease terminations		666			2,077			(1,411	)

Total rental revenues		225,699			229,797			(4,098	)

Rental Expenses and Real Estate Taxes
Same store properties		61,239			62,140			(901	)
Non-same store operating properties		4,588			717			3,871
Development and redevelopment properties		1,477			1,981			(504	)

Total rental expenses and real estate taxes		67,304			64,838			2,466

Property Net Operating Income ⁽¹⁾
Same store properties		147,602			158,811			(11,209	)
Non-same store operating properties		10,640			2,406			8,234
Development and redevelopment properties		(513	)		1,665			(2,178	)
Revenues related to early lease terminations		666			2,077			(1,411	)

Total property net operating income		158,395			164,959			(6,564	)

Other Revenue and Other Income (Loss)
Institutional capital management and other fees		4,133			2,701			1,432
Gain on dispositions of real estate interests		13			5			8
Equity in income of unconsolidated joint ventures, net		(2,986	)		2,698			(5,684	)
Interest and other income		357			1,918			(1,561	)

Total other revenue and other income		1,517			7,322			(5,805	)

Other Expenses
Real estate related depreciation and amortization		110,373			104,883			5,490
Loss on business combinations		395			10,325			(9,930	)
Interest expense		56,548			52,338			4,210
General and administrative		25,262			29,224			(3,962	)
Impairment losses		8,872			300			8,572
Income tax expense and other taxes		918			1,662			(744	)

Total other expenses		202,368			198,732			3,636
Income (loss) from discontinued operations		(597	)		4,742			(5,339	)
Net loss attributable to noncontrolling interests		5,223			3,124			2,099

Net income (loss) attributable to noncontrolling interests	$	(37,830	)	$	(18,585	)	$	(19,245	)

⁽¹⁾

Rental Revenues

Rental revenues which is comprised of base rent, straight-line rent, amortization of above and below market rent intangibles, tenant recovery income, early lease termination fees and other rental revenues, decreased by approximately $4.1 million, or 1.8%, for the year ended December 31, 2010 as compared to the same period in 2009, primarily due to the following:

•

$12.1 million decrease in our same store revenues due primarily to the following:

•

a 250 basis point decrease in average occupancy of 86.3% in our same store portfolio in 2010 as compared to 88.8% in 2009, as well as decreases in rental rates, which resulted in a $12.8 million decrease of base rent;

•

$3.2 million decrease in operating expense recoveries;

•

$2.6 million increase in straight line rents, primarily related to increases in free rent periods;

•

$0.8 million increase related to a settlement of a tenant in liquidation recorded in 2010; and

•

$0.5 million increase in revenues related to above market rent adjustment which have fully amortized;

•

$12.1 million increase in our non-same store operating properties rental revenues, primarily driven by the net addition of 13 properties, which resulted from the acquisition of 12 properties, completion of development and redevelopment of nine properties and disposition of eight properties;

•

$2.7 million decrease in development and redevelopment properties as nine properties were placed into operation and whose results are included in our non-same store portfolio; and

•

$1.4 million decrease in fees paid by tenants related to early terminations.

The following table illustrates the various components of our rental revenues for the years ended December 31, 2010 and 2009 (in thousands):


	For the Years Ended December 31,				$ Change
	2010		2009		$ Change
Base rent	$	171,825	$	179,023	$	(7,198	)
Straight-line rent		6,008		1,832		4,176
Tenant recovery income		44,238		45,731		(1,493	)
Other		2,962		1,134		1,828
Revenues related to early lease terminations		666		2,077		(1,411	)

Total rental revenues	$	225,699	$	229,797	$	(4,098	)

Rental Expenses and Real Estate Taxes

Rental expenses and real estate taxes increased by approximately $2.5 million, or 3.8%, for the year ended December 31, 2010 compared to the same period in 2009, primarily due to:

•

$3.4 million net increase in rental expenses and real estate taxes related to the properties acquired and development and redevelopment properties placed into operations; partially offset by

•

$0.9 million net decrease in our rental expenses and real estate taxes in our same store portfolio, primarily driven by decreases in property taxes and lower bad debt expense.

Other Revenue and Other Income (Loss)

Total other revenue and other income (loss) decreased by approximately $5.8 million or 79.3% for the year ended December 31, 2010 as compared to the same period in 2009, primarily due to:

•

$5.7 million decrease in equity in earnings on unconsolidated joint ventures primarily related to a $5.1 million land sale gain recognized in 2009 at the SCLA unconsolidated joint venture and an increase in our losses in unconsolidated joint ventures; and

•

$1.6 million decrease interest and other income resulting from a decrease in interest income on notes paid off in 2010 and costs expensed in 2010 related to debt modifications that were not incurred in 2009; partially offset by

•

$1.4 million increase in institutional capital management fees resulting from property management fees earned in 2010.

Other Expenses

Other expenses increased by approximately $3.6 million, or 1.8%, for the year ended December 31, 2010 as compared to the same period in 2009, primarily due to:

•

$5.5 million increase in depreciation primarily related to real estate acquisitions, completed development and capital additions in 2010;

•

$4.2 million increase in interest expense primarily resulting from a reduction of capitalized interest expense as we completed development activities on eight buildings;

•

$8.6 million increase in impairment losses recorded on properties held for use in 2010; which were partially offset by

•

$9.9 million decrease in loss on business combinations which occurred in 2009;

•

$4.0 million decrease in general and administrative expenses related to a decrease in severance costs; and

•

$0.7 million decrease in income taxes related to activity in our taxable REIT subsidiary associated with income taxes on the land sale gain in 2009.

Income (Loss) from Discontinued Operations

Income (loss) from discontinued operations decreased by $5.3 million during the year ended December 31, 2010 as compared to the same period in 2009, which is related to the disposition of eight properties during 2010, which had income of $0.8 million, gains of $2.1 million and impairment losses of $3.5 million, as compared to the sale of three properties in 2009, which had income of $4.1 million, gains of $1.3 million and impairment losses of $0.7 million.

Noncontrolling Interests

Net loss attributable to noncontrolling interests increased by approximately $2.1 million due to an increase in consolidated net loss, period over period, and an increase of 2% in our ownership of the operating partnership. We owned approximately 90% and 88% of our operating partnership as of December 31, 2010 and 2009, respectively. The change in ownership was primarily due to redemption of OP Units (see “Notes to Consolidated Financial Statements, Note 8—Noncontrolling Interests” for additional information).

Segment Summary for the years ended December 31, 2011, 2010 and 2009

During 2011, management reorganized internal reporting whereby the operating results used to assess performance were aggregated into three reportable segments, East, Central and West, which are based on the geographical locations of our properties. This change aligns the markets by which management and their operating teams conduct and monitor business (see further detail on our Segment reorganization in “Notes to the Consolidated Financial Statements, Note 14—Segment Information”). Management considers rental revenues and property net operating income aggregated by segment to be the appropriate way to analyze performance.

The following table illustrates the changes in our consolidated operating properties in continuing operations by segment as of, and for the years ended, December 31, 2011 compared to December 31, 2010 and December 31, 2009, respectively (dollar amounts and square feet in thousands).


As of and for the year ended December 31,	Number of buildings	Square feet		Occupancy at period end (%)			Segment assets ($)⁽¹⁾		Rental revenues($)⁽²⁾		Property net operating income($)⁽³⁾
EAST:
2011	131		21,534		89.2	%	$	913,867	$	89,486	$	65,215
2010	119		20,156		89.7	%	$	912,977	$	79,255	$	57,262
2009	112		18,442		87.3	%	$	860,601	$	75,619	$	55,049
CENTRAL:
2011	201		26,800		91.5	%	$	1,020,650	$	105,643	$	73,247
2010	188		25,398		88.3	%	$	1,008,298	$	103,081	$	71,940
2009	181		24,146		87.9	%	$	984,689	$	105,746	$	74,751
WEST:
2011	76		9,764		91.1	%	$	631,370	$	53,794	$	40,301
2010	67		8,431		90.6	%	$	551,594	$	42,399	$	29,706
2009	58		7,121		90.4	%	$	460,918	$	44,728	$	33,436

⁽¹⁾

Segment assets include all assets held by operating properties included in a segment, less non-segment cash and cash equivalents.

⁽²⁾

Segment rental revenues include operating properties only. Revenues from development properties and properties which were sold during the period are not included in these results.

⁽³⁾

Property net operating income, or property NOI, is defined in “Item 6. Selected Financial Data”. For a reconciliation of our property net operating income to our reported “Income (Loss) from Continuing Operations,” see “Notes to Consolidated Financial Statements, Note 14—Segment Information.”

East Segment

East Segment property NOI increased approximately $8.0 million, for the year ended December 31, 2011 as compared to the same period in 2010 primarily as a result of:

•

$10.2 million increase in rental revenues as a result of the acquisition of seven operating properties and completion of development of five properties which were placed into operations since December 31, 2010; partially offset by

•

$2.2 million increase in operating expenses, primarily as a result of an increase in property taxes and insurance.

East Segment property NOI increased approximately $2.2 million, for the year ended December 31, 2010 as compared to the same period in 2009 primarily as a result of:

•

$3.6 million increase in rental revenues as a result of the acquisition of five operating properties and completion of development of two properties which were placed into operations since December 31, 2009; partially offset by

•

$1.4 million increase in operating expenses, primarily as a result of an increase in property taxes.

Central Segment

Central Segment property NOI increased approximately $1.3 million, for the year ended December 31, 2011 as compared to the same period in 2010 primarily as a result of:

•

$2.6 million increase in rental revenues resulting primarily from:

•

the acquisition of ten operating properties and completion of development of three properties which were placed into operations since December 31, 2010; and

•

320 basis point increase in period end occupancy to 91.5% for the year ended December 31, 2011 as compared to 2010; partially offset by

•

$0.8 million decrease related to a settlement of a tenant in liquidation which was recorded in 2010.

•

$1.3 million increase in operating expenses, including a 7.3% increase in property taxes.

Central Segment property NOI decreased approximately $2.8 million, for the year ended December 31, 2010 as compared to the same period in 2009 primarily as a result of:

•

$3.5 million decrease in rental revenues, despite the addition of seven properties, two from acquisitions and five properties on which development was completed since December 31, 2009, mainly as a result of a 5.1% decrease in base rent period over period; and

•

$0.1 million increase in operating expenses, primarily related to an increase in non-recoverable expenses; partially offset by

•

$0.8 million increase related to a settlement of a tenant in liquidation recorded in 2010.

West Segment

West Segment property NOI increased approximately $10.6 million for year ended December 31, 2011 as compared to the same period in 2010 primarily as a result of:

•

$11.4 million increase in rental revenues as a result of the acquisition of nine operating properties since December 31, 2010; and

•

$0.8 million increase in operating expenses, primarily related to an increase in maintenance costs and insurance.

West Segment property NOI decreased approximately $3.7 million for the year ended December 31, 2010 as compared to the same period in 2009 primarily as a result of:

•

$2.3 million decrease in rental revenues, despite the addition of nine properties, eight from acquisitions and one property on which development was completed since December 31, 2009, mainly as a result of a 5.8% decrease in base rent period over period; and

•

$1.4 million increase in operating expenses, primarily resulting from an increase in property taxes and insurance as a result of property additions.

The following table reflects our total assets, net of accumulated depreciation and amortization, by segment (in thousands).


	December 31, 2011		December 31, 2010		December 31, 2009
Segments:
East	$	913,867	$	912,977	$	860,601
Central		1,020,650		1,008,298		984,689
West		631,370		551,594		460,918

Total segment assets⁽¹⁾		2,565,887		2,472,869		2,306,208
Non-segment assets:
Development and redevelopment assets		13,993		57,076		177,217
Properties in pre-development including land held		47,972		24,664		24,577
Non-segment cash and cash equivalents		11,624		14,071		19,967
Other non-segment assets ⁽²⁾		153,822		151,209		136,323

Total Assets	$	2,793,298	$	2,719,889	$	2,664,292

⁽¹⁾

Total segment assets include all assets held by operating properties included in a segment, less non-segment cash and cash equivalents.

⁽²⁾

Other non-segment assets primarily consists of corporate assets including investments in and advances to unconsolidated joint ventures, notes receivable, deferred loan costs, straight-line rent and other receivables and other assets.

Liquidity and Capital Resources

Overview

We currently expect that our principal sources of working capital and funding for potential capital requirements for expansions and renovation of properties, developments, acquisitions, and debt service and distributions to shareholders will include:

•

Cash flows from operations;

•

Proceeds from capital recycling, including dispositions and asset contributions;

•

Borrowings under our senior unsecured revolving credit facility;

•

Other forms of secured or unsecured financings;

•

Offerings of common stock or other securities;

•

Current cash balances; and

•

Distributions from institutional capital management and other joint ventures.

Our sources of capital will be used to meet our liquidity requirements and capital commitments, including operating activities, debt service obligations, equityholder distributions, capital expenditures at our properties, development funding requirements and future acquisitions. We expect to utilize the same sources of capital to meet our short-term and long-term liquidity requirements.

Cash Flows

Year ended December 31, 2011 compared to year ended December 31, 2010

“Cash and cash equivalents” were $12.8 million and $17.3 million as of December 31, 2011 and December 31, 2010, respectively. Net cash provided by operating activities increased by $16.0 million to $107.0 million during the year ended December 31, 2011 compared to $91.0 million during the same period in 2010. This change was

primarily due to an increase in property net operating income and a decrease in cash paid for accounts payable, accrued expenses and other liabilities during the periods.

Net cash used in investing activities increased $40.0 million to $178.3 million during the year ended December 31, 2011 compared to $138.3 million during the same period in 2010. This increase was primarily due to more acquisitions in 2011 than in 2010, which resulted in an increase in cash outflows for real estate acquisitions of $112.8 million. During 2011 there was also a $17.7 million increase in capital expenditures as well as a $17.7 million decrease in proceeds from repayment on notes receivable. These increases were partially offset by a $12.4 million decrease in contributions to unconsolidated joint ventures; a $87.1 million increase in proceeds from dispositions resulting from eight additional property dispositions in 2011 than in 2010; and a $12.4 million increase in distributions of investments in unconsolidated joint ventures resulting from the sale of three properties in our unconsolidated joint ventures.

Net cash provided by financing activities increased $21.3 million to $66.8 million during the year ended December 31, 2011 compared to $45.5 million during the same period in 2010. This change was primarily related to an increase of $90.0 million in net proceeds from issuance and repayments of senior unsecured notes; and an increase of $50.6 million in net proceeds from the issuance of common stock; partially offset by an increase of $102.0 million in net payments on the senior unsecured revolving line of credit; an increase of $9.1 million in net payments on mortgage notes; and an increase of $8.1 million in our dividends paid to common stockholders.

Year ended December 31, 2010 compared to year ended December 31, 2009

“Cash and cash equivalents” were $17.3 million as of December 31, 2010, which was a decrease of $1.8 million from our “Cash and cash equivalents” balance as of December 31, 2009. Net cash provided by operating activities decreased by $18.7 million to $91.0 million during the year ended December 31, 2010 compared to $109.7 million during the same period in 2009. This decrease was primarily due to an increase in the consolidated loss of DCT Industrial Trust Inc., which resulted from overall decreases in revenues, driven by lower rental rates, a decrease in average consolidated occupancy and increases in expenses.

Net cash used in investing activities increased by $120.6 million to $138.3 million during the year ended December 31, 2010 when compared to $17.7 million during the same period in 2009. This change was primarily due to a $74.1 million increase in expenditures on acquisitions of real estate; a $28.0 million increase in investments in unconsolidated joint ventures; a $11.4 million increase in capital expenditures; a $6.6 million decrease in distributions of investments in unconsolidated joint ventures; and a decrease of $9.6 million in proceeds from real estate dispositions; which were partially offset by a $5.5 million increase in repayments received on our notes receivable.

Net cash provided by (used in) financing activities increased $138.1 million to $45.5 million provided by financing activities during the year ended December 31, 2010 when compared to $(92.6) million used in financing activities during the same period in 2009. This change was primarily due to an increase in net draws on our line of credit of $51.0 million; and an increase of net issuances of senior unsecured notes totaling $110.0 million; which were partially offset by decrease in net payments of $23.1 million on mortgage notes; and a decrease of $56.5 million in proceeds from issuance of common stock.

Common Stock

As of December 31, 2011, approximately 245.9 million shares of common stock were issued and outstanding.

On February 18, 2011, we issued 21.9 million shares of common stock in a public offering at a price of $5.35 per share, for net proceeds of $111.9 million before offering expenses.

On March 23, 2010, we registered a “continuous equity” offering program. Pursuant to this offering program, we may sell up to 20 million shares of common stock from time-to-time through March 23, 2013 in “at-the-market”

offerings or certain other transactions. We did not issue any shares through this program during the year ended December 31, 2011. During the year ended December 31, 2010, we issued 12.6 million shares of common stock through this program and raised gross proceeds of $61.2 million. Our proceeds net of offering fees were $60.4 million. We used the proceeds from sale of shares for general corporate purposes, which included funding acquisitions and repaying debt. As of December 31, 2011, 7.4 million shares remain available to be issued under the program.

The net proceeds from the sales of our securities were transferred to our operating partnership for a number of OP Units equal to the shares of common stock sold in our offerings, including the offerings noted above.

Dividend Reinvestment and Stock Purchase Plan

We offer shares of our common stock through our Dividend Reinvestment and Stock Purchase Plan (the “Plan”). The Plan permits stockholders to acquire additional shares with quarterly dividends and to make additional cash investments to buy shares directly through our third party transfer agent. Shares of common stock may be purchased in the open market or through privately negotiated transactions.

Distributions

During the years ended December 31, 2011 and 2010, our board of directors declared distributions to stockholders totaling approximately $76.8 million and $67.9 million, respectively, including distributions to OP unitholders. Existing cash balances, cash provided from operations and borrowings under our credit facility were used for distributions paid during 2011 and 2010.

The payment of quarterly distributions is determined by our board of directors and may be adjusted at its discretion at any time. During February 2012, our board of directors declared a quarterly cash dividend of $0.07 per share, payable on April 18, 2012 to stockholders of record as of April 6, 2012.

Outstanding Indebtedness

As of December 31, 2011, our outstanding indebtedness of $1.3 billion consisted of mortgage notes and senior unsecured notes, excluding $61.7 million representing our proportionate share of debt associated with unconsolidated joint ventures. As of December 31, 2010, our outstanding indebtedness of $1.2 billion consisted of mortgage notes, senior unsecured notes and a senior unsecured revolving credit facility, excluding $62.3 million representing our proportionate share of debt associated with unconsolidated joint ventures. As of December 31, 2011, the gross book value of our consolidated properties was approximately $3.2 billion and the gross book value of all properties securing our mortgage debt was approximately $735.1 million. As of December 31, 2010, the total gross book value of our consolidated properties was approximately $3.0 billion and the gross book value of all properties securing our mortgage debt was approximately $1.0 billion. Our debt has various covenants with which we were in compliance as of December 31, 2011 and 2010.

Our debt instruments require monthly, quarterly or semiannual payments of interest and many require monthly or quarterly repayments of principal. Currently, cash flows from our operations are sufficient to satisfy these debt service requirements and we anticipate that cash flows from operations will continue to be sufficient to satisfy our debt service excluding principal maturities. During the years ended December 31, 2011 and 2010, our debt payments, including principal, interest and extinguishments, totaled $222.4 million and $383.9 million, respectively.

All of our senior unsecured notes contain certain cross-default provisions which may be triggered in the event that any material indebtedness is in default. These cross-default provisions may require us to repay such senior unsecured debt. We are not in default and do not have any unsecured debt maturities through December 31, 2012.

We have certain non-recourse, secured loans which are cross-collateralized by multiple properties. In the event of a default, we may then be required to repay such indebtedness, together with applicable prepayment charges, to avoid foreclosure on all cross-collateralized properties within the applicable pool. We generally have broad

substitution rights that afford DCT the opportunity to replace encumbered properties with replacement properties. We are not in default and do not have any cross-collateralized debt maturing through December 31, 2012.

In the event of default or foreclosure, or if we are unable to refinance our indebtedness at maturity or meet our payment obligations, the amount of our distributable cash flows and our financial condition would be adversely affected.

Financing Strategy

Our charter and our bylaws do not limit the amount of debt we incur, however, we intend to operate so that our financial metrics are generally consistent with our publicly held investment grade REIT peers. The metrics we consider most significant include leverage, fixed charge coverage and net debt to EBITDA. We are also subject to certain covenants which may limit our outstanding indebtedness.

Debt Retirement and Refinancing

During the year ended December 31, 2011, we retired $124.7 million of maturing mortgage notes which were repaid using proceeds from the Company’s senior unsecured revolving credit facility and with proceeds from our senior unsecured notes issued through a private placement discussed below.

In April 2011, we refinanced $50.0 million of maturing senior unsecured notes. The new fixed-rate notes bear interest of 5.43%, mature in April 2020 and require quarterly interest payments.

Debt Issuances

On June 3, 2011, we entered into a term loan agreement with a syndicate of twelve banks, pursuant to which we borrowed $175.0 million through a senior unsecured loan. The term loan is scheduled to mature on June 3, 2015 and may be prepaid in whole or in part at any time. The term loan agreement provides for a variable interest rate based on either the base rate under the agreement or LIBOR, at our election, plus a margin that is initially based on our leverage ratio. The margins on base rate loans initially may range from 0.80% to 1.65% per annum, and the margins on LIBOR-based loans may range from 1.80% to 2.65% per annum. This loan agreement has various covenants with which we are in compliance as of December 31, 2011. We used the term loan, together with proceeds from a draw under our senior unsecured revolving credit facility, to repay our unsecured term loan that was scheduled to mature on June 6, 2011.

On August 1, 2011 we issued $225.0 million of new fixed rate, senior unsecured notes through a private placement. These senior unsecured notes have a weighted average maturity of 8.5 years and a weighted average interest rate of 4.93%. The notes have maturities of 5, 7, 8, 10, 11 or 12 years. The notes and related purchase agreement contain various covenants with which we are in compliance with as of December 31, 2011. Proceeds from these notes were used to repay outstanding indebtedness and for general corporate purposes.

On November 4, 2011, we issued a non-recourse mortgage note for $20.0 million in connection with a property acquisition. The note bears interest at a rate of 4.25%, requires monthly payments of principal and interest and matures in December 2021.

Line of Credit

As of December 31, 2011, we did not have an outstanding balance on our senior unsecured revolving credit facility; however we have issued two letters of credit secured by the unsecured revolving credit facility totaling $9.8 million. As of December 31, 2010 we had $51.0 million outstanding on our senior unsecured revolving credit facility.

On June 3, 2011, we entered in an amendment to extend the maturity date of our $300.0 million senior unsecured revolving credit facility from August 19, 2013 until June 3, 2015. This amendment also increased the number of

banks included on the facility from nine to twelve and reduced the interest rate payable to either 0.65% to 1.35% over prime or 1.65% to 2.35% over LIBOR, per annum at our election, depending upon the Company’s leverage ratio. The amendment also provides us the ability, from time to time, to extend the size of the facility by up to an additional $200.0 million, to a total of $500.0 million, subject to certain lender commitments and other conditions. We incurred a total of approximately $2.1 million in fees paid to the creditor and third-party costs which have been deferred and will be amortized over the life of the new credit facility. Proceeds from draws on the line have been used to repay mortgage notes and senior unsecured notes as they became due, to finance our property acquisitions and for general corporate purposes including payment of distributions. The senior unsecured revolving credit facility agreement contains various covenants with which we are in compliance with as of December 31, 2011.

Debt Assumption

During the year ended December 31, 2011, we assumed two non-recourse notes with outstanding balances of approximately $3.9 million and $3.4 million, respectively, in connection with two property acquisitions. The assumed notes bear interest at rates of 4.96% and 6.00%, respectively, and require monthly payments of principal and interest. The maturity dates of the assumed notes are August 2023 and April 2014, respectively.

Interest rate swap

As of December 31, 2011, we had one forward-starting swap in place to hedge the variability of cash flows associated with forecasted issuances of debt. This derivative has a notional value of $90.0 million, a LIBOR based swap strike rate of 5.43%, an effective date of June 2012 and a maturity date of September 2012. The associated counterparty is PNC Bank, NA. The fair value of the swap was a liability of approximately $26.7 million as of December 31, 2011.

Debt Maturities

The following table sets forth the scheduled maturities of our debt and regularly scheduled principal amortization, excluding unamortized premiums, as of December 31, 2011 (amounts in thousands).


Year	Senior Unsecured Notes		Mortgage Notes		Unsecured Credit Facility		Total
2012	$	—	$	57,659	$	—	$	57,659
2013		175,000		44,295		—		219,295
2014		50,000		9,975		—		59,975
2015		215,000		48,343		—		263,343
2016		99,000		5,724		—		104,724
Thereafter		396,000		149,196		—		545,196

Total	$	935,000	$	315,192	$	—	$	1,250,192

Contractual Obligations

The following table reflects our contractual obligations as of December 31, 2011; specifically our obligations under long-term debt agreements, operating and ground lease agreements and purchase obligations (amounts in thousands):


	Payments due by Period
Contractual Obligations⁽¹⁾	Total		Less than 1 Year		1-3 Years		4-5 Years		More Than 5 Years
Scheduled long-term debt maturities, including interest⁽²⁾	$	1,594,588	$	122,352	$	381,770	$	442,652	$	647,814
Operating lease commitments		2,955		656		1,274		995		30
Ground lease commitments⁽³⁾		13,733		474		963		1,088		11,208
Forward purchase commitments		12,353		12,353		—		—		—

Total	$	1,623,629	$	135,835	$	384,007	$	444,735	$	659,052

⁽¹⁾

From time-to-time in the normal course of our business, we enter into various contracts with third-parties that may obligate us to make payments, such as maintenance agreements at our properties. Such contracts, in the aggregate, do not represent material obligations, are typically short-term and cancellable within 90 days and are not included in the table above. Excluded from the total are our estimated construction costs to complete development projects of approximately $8.2 million, none of which is legally committed until work is completed.

⁽²⁾

Variable interest rate payments are estimated based on the LIBOR rate at December 31, 2011.

⁽³⁾

Three of our buildings comprised of 0.7 million square feet reside on 38 acres of land which is leased from an airport authority.

Off-Balance Sheet Arrangements

As of December 31, 2011 and 2010, we had no off-balance sheet arrangements, other than those disclosed under contractual obligations, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors, other than items discussed herein.

As of December 31, 2011, there are no lines of credit or side agreements related to, or between, our unconsolidated joint ventures and us, and there are no other derivative financial instruments between our unconsolidated joint ventures and us. In addition, we believe we have no material exposure to financial guarantees, except as discussed above.

As of December 31, 2011, our proportionate share of the total construction loans of our unconsolidated development joint ventures, including undrawn amounts, was $24.1 million; $13.5 million is scheduled to mature by the end of 2012 and $10.6 million is scheduled to mature by the end of 2013. Our proportionate share of the total construction loans of our unconsolidated development joint ventures includes 50% of the construction loans associated with the SCLA joint venture which are non-recourse to the venture partners.

We may elect to fund additional capital to a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not required contractually or otherwise. As of December 31, 2011, our proportionate share of non-recourse debt associated with unconsolidated joint ventures is $61.7 million. The maturities of our proportionate share of the non-recourse debt are summarized in the table below (in thousands):


Year	DCT’s Proportionate Share of Secured Non-Recourse Debt in Unconsolidated Joint Ventures
2012	$	13,452
2013		17,168
2014		4,513
2015		2,560
2016		1,189
Thereafter		22,823

Total	$	61,705

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to losses resulting from changes in market prices such as interest rates, foreign currency exchange rates and rental rates. Our future earnings and cash flows are dependent upon prevailing market rates. Accordingly, we manage our market risk by matching projected cash inflows from operating, investing and financing activities with projected cash outflows for debt service, acquisitions, capital expenditures, distributions to stockholders and OP unitholders, and other cash requirements. The majority of our outstanding debt has fixed interest rates, which minimizes the risk of fluctuating interest rates.

Interest Rate Risk

Our exposure to market risk includes interest rate fluctuations in connection with our senior unsecured revolving credit facility and other variable rate borrowings and forecasted fixed rate debt issuances, including refinancing of existing fixed rate debt. Interest rate risk may result from many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control. To manage interest rate risk for variable rate debt and issuances of fixed rate debt, we primarily use treasury locks and forward-starting swaps as part of our cash flow hedging strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. During the years ended December 31, 2011 and 2010, such derivatives were in place to hedge some of the variable cash flows associated with forecasted issuances of debt that are expected to occur during the period from 2010 through 2012, and to mitigate fluctuations in certain variable rate borrowings. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on their credit rating and other factors. As of December 31, 2011, we had one forward-starting swap in place to hedge the variability of cash flows associated with forecasted issuances of debt. This derivative has a notional value of $90 million, a LIBOR based swap strike rate of 5.43%, an effective date of June 2012 and a maturity date of September 2012. The associated counterparty is PNC Bank, NA.

As of December 31, 2011 and 2010 the derivative had a fair value that resulted in a liability of $26.7 million and $10.1 million, respectively, included in “Other liabilities” in our Consolidated Balance Sheet. No ineffectiveness was recorded during the years ended December 31, 2011 and 2010.

The net liability associated with our derivative would increase approximately $1.0 million if the market interest rate of the referenced swap index were to decrease 10 basis points based upon the prevailing market rate as of December 31, 2011.

Similarly, our variable rate debt is subject to risk based upon prevailing market interest rates. As of December 31, 2011, we had approximately $175.0 million of variable rate debt outstanding indexed to LIBOR rates. If there was a 10% change in prevailing market interest rates relevant to our remaining variable rate debt, interest expense during the year ended December 31, 2011 would have increased by approximately $0.6 million. Additionally, if weighted average interest rates on our fixed rate debt were to have changed by 100 basis points due to refinancing, interest expense would have changed by approximately $9.9 million during the year ended December 31, 2011.

As of December 31, 2011, the estimated fair value of our debt was approximately $1.4 billion based on our estimate of the then-current market interest rates.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See “Index to Financial Statements” on Page 72 of this Form 10-K.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) under the Exchange Act, as of December 31, 2011, the end of the period covered by this annual report. Based on this evaluation, our management, including our principal executive officer and our principal financial officer, concluded that our disclosure controls and procedures were effective as of December 31, 2011 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. There was no change in our internal controls during the fiscal year ended December 31, 2011 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). In addition, management is required to report their assessment, including their evaluation criteria, on the design and operating effectiveness of our internal control over financial reporting in this Form 10-K.

Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer. During 2011, management conducted an assessment of the internal control over financial reporting reflected in the financial statements, based upon criteria established in the “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on management’s assessment, which included a comprehensive review of the design and operating effectiveness of our internal control over financial reporting, management has concluded that our internal control over financial reporting is effective as of December 31, 2011.

The effectiveness of our internal control over financial reporting as of December 31, 2011 has been audited by Ernst & Young LLP, an independent registered public accounting firm. Their report appears below.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

DCT Industrial Trust Inc. and subsidiaries:

We have audited DCT Industrial Trust Inc. and subsidiaries (the “Company”) internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of the Company as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity, comprehensive income (loss) and noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 2011, and our report dated February 29, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Denver, Colorado

February 29, 2012

ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE

The information required for this Item is incorporated by reference from our definitive Proxy Statement to be filed in connection with our 2012 annual meeting of stockholders.

ITEM 11.

EXECUTIVE COMPENSATION

The information required for this Item is incorporated by reference from our definitive Proxy Statement to be filed in connection with our 2012 annual meeting of stockholders.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The information required for this Item is incorporated by reference from our definitive Proxy Statement to be filed in connection with our 2012 annual meeting of stockholders.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required for this Item is incorporated by reference from our definitive Proxy Statement to be filed in connection with our 2012 annual meeting of stockholders.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES AND DIRECTOR INDEPENDENCE

The information required for this Item is incorporated by reference from our definitive Proxy Statement to be filed in connection with our 2012 annual meeting of stockholders.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

A. Financial Statements and Financial Statement Schedules.

1. Financial Statements.

The Consolidated Financial Statements listed in the accompanying Index to Financial Statements on Page 72 are filed as a part of this report.

2. Financial Statement Schedules.

The financial statement schedule required by this Item is filed with this report and is listed in the accompanying Index to Financial Statements on Page 72. All other financial statement schedules are not applicable.

B. Exhibits.

The Exhibits required by Item 601 of Regulation S-K are listed in the Index to Exhibits on page E-1 to E-3 of this report, which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


DCT INDUSTRIAL TRUST INC.

By:		/s/ Philip L. Hawkins
		Philip L. Hawkins,
		President and Chief Executive Officer

Date: February 29, 2012

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/S/ THOMAS G. WATTLES Thomas G. Wattles	Executive Chairman and Director	February 29, 2012

/S/ PHILIP L. HAWKINS Philip L. Hawkins	President, Chief Executive Officer and Director (Principal Executive Officer)	February 29, 2012

/S/ MATTHEW T. MURPHY Matthew T. Murphy	Chief Financial Officer and Treasurer (Principal Financial Officer)	February 29, 2012

/S/ MARK SKOMAL Mark Skomal	Chief Accounting Officer (Principal Accounting Officer)	February 29, 2012

/S/ MARILYN A. ALEXANDER Marilyn A. Alexander	Director	February 29, 2012

/S/ THOMAS F. AUGUST Thomas F. August	Director	February 29, 2012

/S/ JOHN S. GATES, JR. John S. Gates, Jr.	Director	February 29, 2012

/S/ RAYMOND B. GREER Raymond B. Greer	Director	February 29, 2012

/S/ TRIPP H. HARDIN Tripp H. Hardin	Director	February 29, 2012

/S/ JOHN C. O’KEEFFE John C. O’Keeffe	Director	February 29, 2012

/S/ BRUCE L. WARWICK Bruce L. Warwick	Director	February 29, 2012

INDEX TO FINANCIAL STATEMENTS


Financial Statements:
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of December 31, 2011 and 2010		F-2
Consolidated Statements of Operations for the Years Ended December 31, 2011, 2010 and 2009		F-3
Consolidated Statements of Stockholders’ Equity, Comprehensive Income (Loss) and Noncontrolling Interests for the Years Ended December 31, 2011, 2010 and 2009		F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009		F-6
Notes to Consolidated Financial Statements		F-7
Financial Statement Schedule:
Schedule III-Real Estate and Accumulated Depreciation		F-45

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

DCT Industrial Trust Inc. and subsidiaries:

We have audited the accompanying consolidated balance sheets of DCT Industrial Trust Inc. and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity, comprehensive income (loss) and noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 2011. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial position of the Company at December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Denver, Colorado

February 29, 2012

F-1

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share information)


	December 31,			December 31,
	2011			2010
ASSETS
Land	$	647,552		$	567,152
Buildings and improvements		2,393,346			2,343,835
Intangible lease assets		84,779			93,497
Construction in progress		35,386			32,952

Total investment in properties		3,161,063			3,037,436
Less accumulated depreciation and amortization		(589,314	)		(528,705	)

Net investment in properties		2,571,749			2,508,731
Investments in and advances to unconsolidated joint ventures		139,278			138,455

Net investment in real estate		2,711,027			2,647,186
Cash and cash equivalents		12,834			17,330
Notes receivable		1,053			1,222
Deferred loan costs, net		8,567			5,883
Straight-line rent and other receivables, net of allowance for doubtful accounts of $1,256 and $2,088, respectively		42,349			33,278
Other assets, net		17,468			14,990

Total assets	$	2,793,298		$	2,719,889

LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued expenses	$	45,785		$	38,354
Distributions payable		19,057			17,458
Tenant prepaids and security deposits		22,864			20,759
Other liabilities		29,797			12,373
Intangible lease liability, net		18,897			18,748
Line of credit		—			51,000
Senior unsecured notes		935,000			735,000
Mortgage notes		317,783			425,359

Total liabilities		1,389,183			1,319,051

Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none outstanding		—			—
Shares-in-trust, $0.01 par value, 100,000,000 shares authorized, none outstanding		—			—
Common stock, $0.01 par value, 350,000,000 shares authorized, 245,943,100 and 222,946,676 shares issued and outstanding as of December 31, 2011 and December 31, 2010, respectively		2,459			2,229
Additional paid-in capital		2,018,075			1,898,289
Distributions in excess of earnings		(783,229	)		(689,127	)
Accumulated other comprehensive loss		(29,336	)		(15,289	)

Total stockholders’ equity		1,207,969			1,196,102
Noncontrolling interests		196,146			204,736

Total equity		1,404,115			1,400,838

Total liabilities and equity	$	2,793,298		$	2,719,889

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-2

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share information)


	For the year ended December 31,
	2011			2010			2009
REVENUES:
Rental revenues	$	249,158		$	225,699		$	229,797
Institutional capital management and other fees		4,291			4,133			2,701

Total revenues		253,449			229,832			232,498

OPERATING EXPENSES:
Rental expenses		34,217			32,389			31,429
Real estate taxes		36,200			34,915			33,409
Real estate related depreciation and amortization		124,244			110,373			104,883
General and administrative		25,925			25,262			29,224
Impairment losses		448			8,656			—
Casualty gains		(33	)		—			—

Total operating expenses		221,001			211,595			198,945

Operating income		32,448			18,237			33,553

OTHER INCOME AND EXPENSE:
Equity in income (loss) of unconsolidated joint ventures, net		(2,556	)		(2,986	)		2,698
Impairment losses from investments in unconsolidated joint ventures		(1,953	)		(216	)		(300	)
Loss on business combinations		—			(395	)		(10,325	)
Interest expense		(63,941	)		(56,548	)		(52,338	)
Interest and other income (expense)		(310	)		357			1,918
Income tax expense and other taxes		(144	)		(918	)		(1,662	)

Loss from continuing operations		(36,456	)		(42,469	)		(26,456	)
Income (loss) from discontinued operations		7,613			(597	)		4,742

Loss before gain on dispositions of real estate interests		(28,843	)		(43,066	)		(21,714	)
Gain on dispositions of real estate interests		—			13			5

Consolidated net loss of DCT Industrial Trust Inc.		(28,843	)		(43,053	)		(21,709	)
Net loss attributable to noncontrolling interests		3,593			5,223			3,124

Net loss attributable to common stockholders		(25,250	)		(37,830	)		(18,585	)

Distributed and undistributed earnings allocated to participating securities		(443	)		(480	)		(436	)

Adjusted net loss attributable to common stockholders	$	(25,693	)	$	(38,310	)	$	(19,021	)

EARNINGS PER COMMON SHARE—BASIC AND DILUTED:
Loss from continuing operations	$	(0.14	)	$	(0.18	)	$	(0.12	)
Income (loss) from discontinued operations		0.03			(0.00	)		0.02

Net loss attributable to common stockholders	$	(0.11	)	$	(0.18	)	$	(0.10	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		242,591			212,412			192,900

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-3

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity,

Comprehensive Income (Loss) and Noncontrolling Interests

For the Years Ended December 31, 2011, 2010 and 2009 (in thousands)


	Total Equity			DCT Industrial Trust Inc. and Subsidiaries
								Additional Paid-in Capital		Distributions in Excess of Earnings			Accumulated Other Compre- hensive Income (Loss)			Non- controlling Interests
				Common Stock
				Shares		Amount
Balance at December 31, 2008	$	1,401,500			175,141	$	1,751	$	1,657,923	$	(513,040	)	$	(22,463	)	$	277,329

Comprehensive income (loss):
Net loss		(21,709	)		—		—		—		(18,585	)		—			(3,124	)
Net unrealized gains on cash flow hedging derivatives		15,980			—		—		—		—			14,117			1,863
Realized losses related to hedging activities		(2,894	)		—		—		—		—			(2,557	)		(337	)
Amortization of cash flow hedging derivatives		1,072			—		—		—		—			947			125
Allocation of interests		—			—		—		—		—			(1,056	)		1,056

Comprehensive income (loss)		(7,551	)								(18,585	)		11,451			(417	)

Issuance of common stock, net of offering costs		111,388			27,600		276		111,112		—			—			—
Issuance of common stock, stock based compensation plans		479			222		2		477		—			—			—
Amortization of stock-based compensation		8,602			—		—		1,926		—			—			6,676
Distributions to common stockholders and noncontrolling interests		(68,839	)		—		—		—		(59,462	)		—			(9,377	)
Partner contributions from noncontrolling interests		158			—		—		—		—			—			158
Purchase of noncontrolling interests		(155	)		—		—		48		—			—			(203	)
Redemptions of noncontrolling interests		(1,949	)		5,083		51		46,168		—			—			(48,168	)

Balance at December 31, 2009	$	1,443,633			208,046	$	2,080	$	1,817,654	$	(591,087	)	$	(11,012	)	$	225,998

Comprehensive income (loss):
Net loss		(43,053	)		—		—		—		(37,830	)		—			(5,223	)
Net unrealized losses on cash flow hedging derivatives		(7,491	)		—		—		—		—			(6,664	)		(827	)
Realized gains related to hedging activities		2,040			—		—		—		—			1,815			225
Amortization of cash flow hedging derivatives		889			—		—		—		—			791			98
Allocation of interests		—			—		—		—		—			(219	)		219

Comprehensive income (loss)		(47,615	)								(37,830	)		(4,277	)		(5,508	)

Issuance of common stock, net of offering costs		59,999			12,571		126		59,873		—			—			—
Issuance of common stock, stock based compensation plans		77			106		1		76		—			—			—
Amortization of stock-based compensation		4,827			—		—		1,479		—			—			3,348
Distributions to common stockholders and noncontrolling interests		(67,882	)		—		—		—		(60,210	)		—			(7,672	)
Partner contributions from noncontrolling interests		8,801			—		—		—		—			—			8,801
Purchase of noncontrolling interests		—			—		—		281		—			—			(281	)
Redemptions of noncontrolling interests		(1,002	)		2,224		22		18,926		—			—			(19,950	)

Balance at December 31, 2010	$	1,400,838			222,947	$	2,229	$	1,898,289	$	(689,127	)	$	(15,289	)	$	204,736

(table continued on next page)

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4


	Total Equity			DCT Industrial Trust Inc. and Subsidiaries
								Additional Paid-in Capital			Distributions In Excess of Earnings			Accumulated Other Compre- hensive Income (Loss)			Non- controlling Interests
				Common Stock
				Shares		Amount
Balance at December 31, 2010	$	1,400,838			222,947	$	2,229	$	1,898,289		$	(689,127	)	$	(15,289	)	$	204,736

Comprehensive income (loss):
Net loss		(28,843	)		—		—		—			(25,250	)		—			(3,593	)
Net unrealized losses on cash flow hedging derivatives		(16,637	)		—		—		—			—			(15,066	)		(1,571	)
Realized gains related to hedging activities		129			—		—		—			—			117			12
Amortization of cash flow hedging derivatives		970			—		—		—			—			878			92
Allocation of interests		—			—		—		—			—			24			(24	)

Comprehensive income (loss)		(44,381	)									(25,250	)		(14,047	)		(5,084	)

Issuance of common stock, net of offering costs		111,588			21,850		219		111,369			—			—			—
Issuance of common stock, stock based compensation plans		(88	)		215		2		(90	)		—			—			—
Amortization of stock-based compensation		4,552			—		—		1,564			—			—			2,988
Distributions to common stockholders and noncontrolling interests		(76,848	)		—		—		—			(68,852	)		—			(7,996	)
Issuance of noncontrolling interests		4,880			—		—		(5	)		—			—			4,885
Partner contributions from noncontrolling interests		4,632			—		—		—			—			—			4,632
Purchase of noncontrolling interests		(687	)		—		—		(191	)		—			—			(496	)
Redemptions of noncontrolling interests		(371	)		931		9		7,139			—			—			(7,519	)

Balance at December 31, 2011	$	1,404,115			245,943	$	2,459	$	2,018,075		$	(783,229	)	$	(29,336	)	$	196,146

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity,

Comprehensive Income (Loss) and Noncontrolling Interests

For the Years Ended December 31, 2011, 2009 and 2008 (in thousands)

continued

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)


	For the year ended December 31,
	2011			2010			2009
OPERATING ACTIVITIES:
Consolidated net loss of DCT Industrial Trust Inc.	$	(28,843	)	$	(43,053	)	$	(21,709	)
Adjustments to reconcile consolidated net loss of DCT Industrial Trust Inc. to net cash provided by operating activities:
Real estate related depreciation and amortization		128,989			115,904			111,250
Gain on dispositions of real estate interests		(12,030	)		(2,091	)		(1,354	)
Loss on business combinations		—			395			10,325
Distributions of earnings from unconsolidated joint ventures		3,267			3,470			3,915
Equity in (income) loss of unconsolidated joint ventures, net		2,556			2,986			(2,698	)
Impairment losses		10,160			12,328			981
Stock-based compensation		4,552			4,827			8,602
Casualty gains		(1,298	)		—			—
Straight-line rent		(9,526	)		(5,622	)		(1,943	)
Other		3,731			5,228			6,636
Changes in operating assets and liabilities:
Other receivables and other assets		(1,197	)		(3,572	)		(4,261	)
Accounts payable, accrued expenses and other liabilities		6,605			202			5

Net cash provided by operating activities		106,966			91,002			109,749

INVESTING ACTIVITIES:
Real estate acquisitions		(200,909	)		(88,120	)		(14,023	)
Capital expenditures and development activities		(76,035	)		(58,361	)		(46,914	)
Refunds (payments) in deferred acquisition costs and deposits		(1,559	)		(13	)		143
Proceeds from dispositions of real estate investments, net		106,455			19,391			29,008
Investments in unconsolidated joint ventures		(21,991	)		(34,425	)		(6,425	)
Distributions of investments in unconsolidated joint ventures		12,941			565			7,161
Repayment of notes receivable		169			17,862			12,353
Insurance proceeds from casualty reimbursement for capital expenditures		3,813			—			—
Other investing activities		(1,191	)		4,767			1,024

Net cash used in investing activities		(178,307	)		(138,334	)		(17,673	)

FINANCING ACTIVITIES:
Proceeds from senior unsecured revolving line of credit		260,500			283,000			8,000
Repayments of senior unsecured revolving line of credit		(311,500	)		(232,000	)		(8,000	)
Proceeds from senior unsecured debt		400,000			210,000			—
Repayments of senior unsecured debt		(200,000	)		(100,000	)		—
Proceeds from mortgage debt		20,000			123,000			—
Principal payments on mortgage debt		(133,898	)		(227,830	)		(127,925	)
Payments of deferred loan costs		(5,028	)		(4,423	)		(2,188	)
Issuance of common stock		111,931			61,303			117,777
Offering costs for issuance of common stock and OP Units		(348	)		(1,227	)		(5,910	)
Redemption of OP Units		(371	)		(1,002	)		(1,949	)
Payments related to settlement of cash flow hedge		—			—			(3,630	)
Dividends to common stockholders		(67,250	)		(59,151	)		(58,901	)
Distributions to noncontrolling interests		(7,422	)		(7,802	)		(10,069	)
Contributions from noncontrolling interests		231			1,674			158

Net cash provided by (used in) financing activities		66,845			45,542			(92,637	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(4,496	)		(1,790	)		(561	)
CASH AND CASH EQUIVALENTS, beginning of period		17,330			19,120			19,681

CASH AND CASH EQUIVALENTS, end of period	$	12,834		$	17,330		$	19,120

Supplemental Disclosures of Cash Flow Information
Cash paid for interest, net of capitalized interest	$	58,461		$	54,532		$	50,366
Supplemental Disclosures of Non-Cash Activities
Retirement of fully depreciated and amortized assets, net	$	42,149		$	29,927		$	68,013
Assumption of mortgage notes in connection with real estate acquired	$	7,653		$	19,556		$	65,979
Redemptions of OP Units settled in shares of common stock	$	7,148		$	19,228		$	46,218
Issuance of notes receivable in connection with real estate acquisitions	$	—		$	—		$	1,050
Contributions of real estate from non-controlling interests	$	4,401		$	7,127		$	—
Issuance of OP Units in connection with real estate acquisition	$	4,885		$	—		$	—

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6

DCT INDUSTRIAL TRUST INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Organization

DCT Industrial Trust Inc. is a leading industrial real estate company that owns, operates and develops high-quality bulk distribution and light industrial properties in high-volume distribution markets in the U.S. and Mexico. As used herein, “DCT Industrial Trust,” “DCT,” “the Company,” “we,” “our” and “us” refer to DCT Industrial Trust Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires. We were formed as a Maryland corporation in April 2002 and have elected to be treated as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. We are structured as an umbrella partnership REIT under which substantially all of our current and future business is, and will be, conducted through a majority owned and controlled subsidiary, DCT Industrial Operating Partnership LP (the “operating partnership”), a Delaware limited partnership, for which DCT Industrial Trust Inc. is the sole general partner. We own our properties through our operating partnership and its subsidiaries. As of December 31, 2011, we owned approximately 90.4% of the outstanding equity interests in our operating partnership.

As of December 31, 2011, the Company owned interests in, managed or had under development approximately 75.5 million square feet of properties leased to approximately 900 customers, including:

•

58.1 million square feet comprising 408 consolidated properties owned in our operating portfolio which were 90.6% occupied;

•

17.2 million square feet comprising 52 unconsolidated properties which were 86.3% occupied and one managed-only property operated on behalf of five institutional capital management partners; and

•

0.2 million square feet comprising one consolidated property under redevelopment.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Consolidated Financial Statements include the financial position, results of operations and cash flows of the Company, its wholly-owned qualified REIT and taxable REIT subsidiaries, the operating partnership and its consolidated joint ventures, in which it has a controlling interest. Third-party equity interests in the operating partnership and consolidated joint ventures are reflected as noncontrolling interests in the Consolidated Financial Statements. We also have noncontrolling partnership interests in unconsolidated institutional capital management and other joint ventures, which are accounted for under the equity method. All significant intercompany amounts have been eliminated.

All square feet, acres, occupancy, number of properties and number of customers disclosed in the notes to the Consolidated Financial Statements are unaudited.

Principles of Consolidation

F-7

our ownership interest, our representation on the entity’s board of directors, the size of our investment (including loans) and our ability to participate in major decisions. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in the Consolidated Financial Statements and, consequently, our financial position and results of operations.

Reclassifications

Certain items in our Consolidated Financial Statements for 2010 and 2009 have been reclassified to conform to the 2011 presentation.

Use of Estimates

The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Capitalization of Costs

We capitalize costs directly related to the development, predevelopment, redevelopment or improvement of our investment in real estate, referred to as capital projects and other activities included within this paragraph. Costs associated with our capital projects are capitalized as incurred. If the project is abandoned, these costs are expensed during the period in which the project is abandoned. Costs considered for capitalization include, but are not limited to, construction costs, interest, real estate taxes, insurance and leasing costs, if appropriate. We capitalize indirect costs such as personnel, office, and administrative expenses that are directly related to our projects based on an estimate of the time spent on the development activities. Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rates during the period. Costs incurred for maintaining and repairing our properties, which do not extend their useful lives, are expensed as incurred.

We also capitalize interest on qualifying investments in unconsolidated joint ventures. Interest is capitalized based on the average capital invested in a venture during the period when development or predevelopment begins until planned principle operations commence, at our weighted average borrowing rates during the period.

Discontinued Operations

We classify certain properties and related assets and liabilities as held for sale when certain criteria are met. At such time, the respective assets and liabilities are presented separately on our Consolidated Balance Sheets. We include liabilities related to assets held for sale that will be transferred in the transaction in “Liabilities related to assets held for sale.” Assets held for sale are reported at the lower of carrying value or estimated fair value less estimated costs to sell. The operating results of such properties are presented in “Income (loss) from discontinued operations” in current periods and all comparable periods presented. Depreciation is not recorded on properties held for sale; however, depreciation expense recorded prior to classification as held for sale is included in “Income (loss) from discontinued operations.” Gains on sales of real estate assets are recognized if the specific transaction terms and any continuing involvement in the form of management or financial assistance meet the various sale recognition criteria as defined by GAAP. If the criteria are not met, we defer the gain until such time that the criteria for sale recognition have been met. Net gains on sales and any impairment losses associated with assets held for sale are presented in “Income (loss) from discontinued operations” when recognized.

Fair Value

F-8

not distressed and is executed in the most advantageous market. This guidance provides a framework of how to determine such measurements on reported balances which are required or permitted to be measured at fair value under existing accounting pronouncements and emphasizes that fair value is a market-based rather than an entity-specific measurement. Therefore, our fair value measurement is determined based on the assumptions that market participants would use to price the asset or liability. As a basis for considering market participant assumptions in fair value measurements, this guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs classified within Level 3 of the hierarchy).

Investment in Properties

We record the assets, liabilities and noncontrolling interests associated with property acquisitions which qualify as business combinations at their respective acquisition-date fair values which are derived using a market, income or replacement cost approach, or a combination thereof. Acquisition-related costs associated with business combinations are expensed as incurred. As defined by GAAP, a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants. We do not consider acquisitions of land or unoccupied buildings to be business combinations. Rather, these transactions are treated as asset acquisitions and recorded at cost.

The fair value of identifiable tangible assets such as land, building, building and land improvements and tenant improvements is determined on an “as-if-vacant” basis. Management considers Level 3 inputs such as the replacement cost of such assets, appraisals, property condition reports, market data and other related information in determining the fair value of the tangible assets. The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to “Interest expense” over the life of the debt assumed. The valuation of assumed liabilities is based on the current market rate for similar liabilities. The recorded fair value of intangible lease assets includes Level 3 inputs and represents the value associated with in-place leases which include leasing commissions, legal and other costs, as well as an intangible asset or liability resulting from in-place leases being above or below the market rental rates over the lease term on the date of the acquisition. Intangible lease assets or liabilities are amortized over the reasonably assured lease term of the remaining in-place leases as an adjustment to “Rental revenues” or “Real estate related depreciation and amortization” depending on the nature of the intangible.

F-9

Real estate, including land, building, building and land improvements, tenant improvements, leasehold improvements, leasing costs and intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization, unless circumstances indicate that the cost cannot be recovered, in which case, the carrying value of the property is reduced to estimated fair value.

Depreciation and Useful Lives of Real Estate Assets

Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets or liabilities. Our ability to assess the useful lives of our real estate assets accurately is critical to the determination of the appropriate amount of depreciation and amortization expense recorded and the carrying values of the underlying assets. Any change to the estimated depreciable lives of these assets would have an impact on the depreciation and amortization expense we recognize.

The following table reflects the standard depreciable lives typically used to compute depreciation and amortization. However, such depreciable lives may be different based on the estimated useful life of such assets or liabilities. The carrying value of assets sold or retired and the related accumulated depreciation and/or amortization is derecognized and the resulting gain or loss, if any, is recorded during the period in which such sale or retirement occurs.


Description		Standard Depreciable Life
Land		Not depreciated
Building		20 – 40 years
Building and land improvements		5 – 20 years
Tenant improvements		Shorter of lease term or useful life
Leasehold improvements		5 – 20 years
Leasing costs		Lease term
Other intangible lease assets		Average term of leases for property
Above/below market rent assets/liabilities		Reasonably assured lease term

Depreciation is not recorded on real estate assets currently held for sale or contribution, in pre-development, or being developed or redeveloped until the building is substantially completed and ready for its intended use, not later than one year from cessation of major construction activity.

Impairment of Properties

Investments in properties classified as held for use are carried at cost and evaluated for impairment at least annually and when events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Examples of such changes in circumstances include the point at which we deem a building to be held for sale, our intended hold period changes, or when a building remains vacant significantly longer than expected. For investments in properties that we intend to hold long-term, the recoverability is based on the estimated future undiscounted cash flows. If the asset carrying value is not supported on an undiscounted cash flow basis, the amount of impairment is measured as the difference between the carrying value and the fair value of the asset and is reflected in “Impairment losses” on the Consolidated Statements of Operations. The determination of fair value of real estate assets to be held for use is derived using the discounted cash flow method and involves a number of management assumptions relating to future economic events that could materially affect the determination of the ultimate value, and therefore, the carrying amounts of our real estate. Such assumptions are Level 3 inputs and include, but are not limited to, projected vacancy rates, rental rates, property operating expenses and capital expenditures. The capitalization rate is also a significant driving factor in determining the property valuation and requires management’s judgment of factors such as market knowledge, historical experience, lease terms, tenant financial strength, economy, demographics, environment, property location, visibility, age, physical condition and expected return requirements, among other things. The aforementioned factors are taken as a whole by management in determining the valuation of investment property.

F-10

The valuation is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole. Should the actual results differ from management’s estimates, the valuation could be negatively affected and may result in additional impairments recorded in the Consolidated Financial Statements.

Investments in properties classified as held for sale are measured at the lower of their carrying amount or fair value (typically, the contracted sales price, a Level 2 input) less costs to sell. Impairment of assets held for sale is a component of “Income (loss) from discontinued operations” in the Consolidated Statements of Operations and is further detailed in Note 15—Discontinued Operations and Assets Held for Sale.

During the year ended December 31, 2011, we determined our cost was not recoverable on one operating property in the Atlanta market based upon a change in our future estimated hold period. Based on our analysis, the total carrying amount of the property located in our East operating segment was no longer recoverable by the future estimated undiscounted cash flows. Consequently, we recognized an impairment loss of $0.4 million in our consolidated portfolio based on the estimated fair value (see “Fair Value” discussion above). The property was classified as held-for-use at December 31, 2011.

In June 2010, we entered into a lease with a purchase option with a third-party on an industrial property located in New Jersey classified as held for use which resulted in a reassessment of the probable hold period of the property. Consequently, we determined that the total carrying amount of the property was no longer recoverable by the future estimated undiscounted cash flows and recognized an impairment loss of $4.6 million based on the estimated fair value.

During the year ended December 31, 2010, we determined our cost was not recoverable on certain land parcels held for future development. Based on our analysis, the total carrying amount of three land parcels located in Baltimore/Washington, Orlando and Atlanta markets were no longer recoverable by the future estimated undiscounted cash flows, as a result of changes in the anticipated timing of the commencement of the development. Consequently, we recognized impairment losses of $4.1 million and $0.2 million on properties in our consolidated portfolio and unconsolidated portfolios, respectively, based on their estimated fair values (see “Fair Value” discussion above).

Investments in and Advances to Unconsolidated Joint Ventures

Investment properties that are contributed to unconsolidated joint ventures are not considered discontinued operations due to our continuing involvement through maintaining an ownership interest in these investment properties and continuing to act as manager of the assets. We recognize any gains from the contribution of investment properties into an unconsolidated joint venture if the recognition criteria have been met and the cash received is not required to be reinvested. Such gains are recognized to the extent of the outside ownership interest in the joint venture in our Consolidated Statements of Operations under the heading of “Gain on dispositions of real estate interests.” Any gain related to the remaining proceeds reduces our basis in the investment in the unconsolidated joint venture, and is recognized into earnings over the weighted average life of the related property’s real estate assets. We recognize our proportionate share of the ongoing earnings or losses of each unconsolidated joint venture in “Equity in income (loss) of unconsolidated joint ventures, net” in our Consolidated Statements of Operations.

F-11

Impairment of Investments in and Advances to Unconsolidated Joint Ventures

We evaluate our investments in unconsolidated entities for impairment whenever events or changes in circumstances indicate that there may be an other-than-temporary decline in value. To do so, we calculate the estimated fair value of the investment using a market, income or replacement cost approach, or combination thereof. The amount of impairment recognized, if any, would be the excess of the investment’s carrying amount over its estimated fair value. We consider various factors to determine if a decline in the value of the investment is other-than-temporary. These factors are Level 2 and 3 inputs and include but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, expected term of the investment and the relationships with the other joint venture partners and its lenders. If we believe that the decline in the fair value is temporary, no impairment is recorded. The aforementioned factors are taken as a whole by management in determining the valuation of our investment property. Should the actual results differ from management’s estimates, the valuation could be negatively affected and may result in a negative impact on the Consolidated Financial Statements. See Note 4—Investments in and Advances to Unconsolidated Joint Ventures for additional information.

Cash and Cash Equivalents

Cash and cash equivalents include cash held in financial institutions and other highly liquid short-term investments with original maturities of three months or less. We have not realized any losses in our cash and cash equivalents and believe that these short-term instruments are not exposed to any significant credit risk.

Notes Receivable

As of December 31, 2011 and 2010, we had approximately $1.1 million and $1.2 million in notes receivable outstanding with non-affiliates, respectively. The interest rates on notes receivable range from approximately 7.5% to 10%, and the notes mature on dates ranging from June 2012 to June 2017.

Deferred Loan Costs

Deferred loan costs include fees and costs incurred to obtain long-term financing. These fees and costs are amortized to “Interest expense” over the terms of the related loans. Accumulated amortization of deferred loan costs was approximately $3.1 million and $4.2 million as of December 31, 2011 and 2010, respectively. Unamortized deferred loan costs are fully amortized when debt is retired before the maturity. Our interest expense for the years ended December 31, 2011, 2010 and 2009 includes $2.1 million, $2.3 million and $2.3 million for the amortization of loan costs, respectively.

Straight-line Rent and Other Receivables

Straight-line rent and other receivables include all straight line rent and current accounts receivable, net of allowances. We maintain an allowance for estimated losses that may result from the inability of our tenants to make required payments. If a tenant fails to make contractual payments beyond any allowance, we may recognize additional bad debt expense in future periods equal to the net outstanding balances. As of December 31, 2011 and 2010, our allowance for doubtful accounts was $1.3 million and $2.1 million, respectively.

Debt

Debt consists of fixed and variable rate secured mortgage notes, senior unsecured notes and a senior unsecured revolving credit facility. Secured mortgage notes assumed in connection with business combinations includes a premium or discount for the difference between the fair value and face value of assumed notes at the date of acquisition, and is amortized to “Interest expense” over the remaining life of the underlying notes. The aggregated premium balances, net of accumulated amortization, were approximately $2.6 million and $3.6 million as of December 31, 2011 and 2010, respectively.

F-12

Derivative Instruments and Hedging Activities

We record derivatives at fair value which are presented on a gross basis in “Other Liabilities” in our Consolidated Balance Sheets. Accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the designation of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

As of December 31, 2011, our hedge was designated as a cash flow hedge. For derivatives designated as “cash flow” hedges, the effective portion of the changes in the fair value of the derivative is initially reported in “Accumulated other comprehensive loss” in our Consolidated Statements of Stockholders’ Equity, Accumulated Other Comprehensive Income (Loss) and Noncontrolling Interests (i.e., not included in earnings) and subsequently reclassified into earnings when the hedged transaction affects earnings or the hedging relationship is no longer effective at which time the ineffective portion of the derivative’s changes in fair value is recognized directly into earnings. We assess the effectiveness of each hedging relationship whenever financial statements are issued or earnings are reported and at least every three months. We do not use derivatives for trading or speculative purposes.

F-13

Comprehensive Income (Loss)

We report comprehensive income or loss in our Consolidated Statements of Stockholders’ Equity, Comprehensive Income (Loss) and Noncontrolling Interests. Amounts reported in “Accumulated other comprehensive income (loss)” related to settled hedging transactions will be amortized to “Interest expense” as the hedged forecasted transactions occur. Any ineffectiveness related to our hedging transactions is reported in our Consolidated Statements of Operations. See Note 6—Financial Instruments and Hedging Activities for additional information.

Revenue Recognition

We record rental revenues on a straight-line basis under which contractual rent increases are recognized evenly over the full lease term. Certain properties have leases that provide for tenant occupancy during periods where no rent is due or where minimum rent payments change during the term of the lease. Accordingly, we record receivables from tenants that we expect to collect over the remaining lease term rather than currently, which are recorded as a straight-line rent receivable. When we acquire a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. The total increase to “Rental revenues” due to straight-line rent adjustments was approximately $9.3 million, $6.0 million and $1.8 million, respectively, for the years ended December 31, 2011, 2010 and 2009.

Tenant recovery income includes payments and amounts due from tenants pursuant to their leases for real estate taxes, insurance and other recoverable property operating expenses and is recognized as “Rental revenues” during the same period the related expenses are incurred. Tenant recovery income recognized as “Rental revenues” was approximately $48.2 million, $44.2 million and $45.7 million, respectively, for the years ended December 31, 2011, 2010 and 2009.

In connection with property acquisitions qualifying as business combinations, we may acquire leases with rental rates above or below the market rental rates. Such differences are recorded as an intangible lease asset or liability and amortized to “Rental revenues” over the reasonably assured term of the related leases. The unamortized balances of these assets and liabilities associated with the early termination of leases are fully amortized to their respective revenue line items in our Consolidated Statements of Operations on a straight-line basis over the estimated remaining contractual lease term. The total net impact to “Rental revenues” due to the amortization of above and below market rents and accelerated amortization due to early lease terminations was a increase of approximately $0.5 million, a decrease of $0.1 million and a decrease of $1.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Future minimum base rental payments, i.e., cash monthly contractual rent, due to us from our tenants under the terms of non-cancelable operating leases in effect as of December 31, 2011 were as follows (in thousands):


Year Ended December 31,	Amount
2012	$	178,780
2013		139,904
2014		105,526
2015		77,266
2016		51,872
Thereafter		171,625

Total	$	724,973

The schedule does not reflect future rental revenues from the potential renewal or replacement of existing and future leases and excludes tenant recovery income. Additionally, leases where the tenant can terminate the lease with short-term notice are not included.

F-14

Early lease termination fees are recorded in “Rental revenues” on a straight-line basis over the estimated remaining contractual lease term or upon collection if collectability is not assured. During the years ended December 31, 2011, 2010 and 2009, early lease termination fees were $0.6 million, $0.7 million and $2.1 million, respectively.

Stock-Based Compensation

On October 10, 2006, we established the Long-Term Incentive Plan, as amended, to grant restricted stock, LTIP Units, stock options and other awards to our personnel and directors. Awards granted under this plan are measured at fair value on the grant date and amortized to compensation expense on a straight-line basis over the service period during which the awards fully vest. Such expense is included in “General and administrative” expense in our Consolidated Statements of Operations. Options issued under the Long-Term Incentive Plan are valued using the Black-Scholes option pricing model, which relies on assumptions we make related to the expected term of the options, volatility, dividend yield and risk free interest rate.

Income and Other Taxes

We have elected to be taxed as a REIT, as defined under the Internal Revenue Code of 1986, as amended. As a REIT, we generally will not be subject to U.S. federal income taxes on our net income that is distributed to our stockholders if we distribute at least 90% of our REIT taxable income to our stockholders. REITs are also subject to a number of other organizational and operational requirements. If we fail to qualify as a REIT in any taxable year, our taxable income will be subject to U.S. federal income tax at regular corporate rates (including any applicable alternative minimum tax). Even if we qualify as a REIT, we may be subject to certain U.S. federal, state and local and non-U.S. income taxes. We also will be required to pay a 100% tax on non-arms length transactions between us and our taxable REIT subsidiary (“TRS”) and on any net income from gain on property that was held for sale to customers in the ordinary course of business.

Certain of our operations (property management, asset ownership or management, sales of certain assets, etc.) may be conducted through taxable REIT subsidiaries, which are subsidiaries of the operating partnership and each of which we refer to as a TRS. A TRS is a C-corporation for which a REIT and its subsidiary C-corporation have jointly elected for the C-corporation to be a taxable REIT subsidiary of the REIT and therefore is subject to U.S. federal corporate income tax.

For our taxable REIT subsidiaries, deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for U.S federal income tax purposes, as well as interest and loss carryforwards, and are measured using current enacted tax rates and laws that are expected to be in effect when the differences reverse. We reduce deferred tax assets by recording a valuation allowance when we determine based on available evidence that it is more likely than not that the assets will not be realized.

The Company follows FASB issued guidance for accounting for uncertainty in income taxes, which clarifies the accounting and disclosure for uncertainty in tax positions and seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. The Company was subject to the provisions of this guidance as of January 1, 2007, and has analyzed its various federal and state filing positions, including the assertion that the income earned by the Company is not taxable.

F-15

The Company recognizes penalties and interest accrued related to unrecognized tax benefits, if any, as income tax expense. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax expense. We had no interest expense or penalties related to unrecognized tax benefits for the years ended December 31, 2011, 2010 or 2009. As of December 31, 2011 and 2010, there were no unrecognized tax benefits. We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next 12 months. Our tax returns are subject to examination in various jurisdictions for the calendar years 2007 through 2011.

New Accounting Standards

During the second quarter of 2011, the FASB issued Accounting Standards Update No. 201-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which generally aligns the principles for fair value measurements and the related disclosure requirements under US GAAP and International Financial Reporting Standards (“IFRS”). This standard requires new disclosures, with a particular focus on Level 3 measurements, including; quantitative information about the significant unobservable inputs used for all Level 3 measurements; qualitative discussion about the sensitivity of recurring Level 3 measurements to changes in the unobservable inputs disclosed, including the interrelationship between inputs and a description of the company’s valuation processes. This standard also requires disclosure of any transfers between Levels 1 and 2 of the fair value hierarchy; information about when the current use of a non-financial asset measured at fair value differs from its highest and best use and the hierarchy classification for items whose fair value is not recorded on the balance sheet but is disclosed in the notes. This standard is effective for interim and annual periods beginning after December 15, 2011. Early application is not permitted. We plan to adopt this standard during the first quarter of 2012 and do not expect that this standard will have a material effect on our Consolidated Financial Statements.

Also during the second quarter of 2011, the FASB issued Accounting Standards Update No. 2011-05, Presentation of Comprehensive Income, which eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity. Entities will have the option to present the components of net income and other comprehensive income either in a single continuous statement or in two separate but consecutive statements. This standard requires retrospective application and is effective for interim and annual periods beginning after December 15, 2011. Early application is permitted. We plan to adopt this standard during the first quarter of 2012 and have determined that we will present the components of net income and other comprehensive income in two separate but consecutive statements.

Note 3 - Investment in Properties

Our consolidated investment in properties consist of operating properties, redevelopment properties, properties under development and properties in pre-development including land held for future development or other purposes. The historical cost of our investment in properties was (in thousands):


	December 31, 2011			December 31, 2010
Operating properties	$	3,100,172		$	2,954,754
Properties under redevelopment		4,284			3,316
Properties under development		9,525			55,698
Properties in pre-development including land held		47,082			23,668

Total Investment in Properties		3,161,063			3,037,436
Less accumulated depreciation and amortization		(589,314	)		(528,705	)

Net Investment in Properties	$	2,571,749			2,508,731

F-16

Acquisition Activity

2011 Acquisition Activity

During the year ended December 31, 2011, we acquired 24 buildings comprising 2.8 million square feet and controlling interests in three buildings totaling 0.4 million square feet. The properties are located in the Southern California, New Jersey, Miami, Orlando, Chicago, Phoenix, Atlanta, Denver, Houston, Seattle, Northern California and Chicago markets. These properties and controlling interests were acquired from unrelated third-parties, except as disclosed in Note 12—Related Party Transactions for a total purchase price of approximately $187.1 million, using proceeds from our equity offering, proceeds from asset sales, proceeds from our private placement of senior unsecured notes, borrowings under our senior unsecured revolving credit facility, proceeds from a nonrecourse mortgage financing, issuance of OP units and existing cash balances. We have consolidated the three properties in which we acquired controlling interests and, as a result, we recorded $196.9 million on our balance sheet, in the aggregate, for these three properties and the 24 other properties that we acquired during the year ended December 31, 2011. This amount included $9.8 million attributable to the noncontrolling interests’ share of these three properties. We expensed as incurred acquisition costs of approximately $1.9 million during the year ended December 31, 2011, included in “General and administrative” in our Consolidated Statement of Operations.

2010 Acquisition Activity

During the year ended December 31, 2010, we acquired ten properties comprising 1.0 million square feet and controlling interests in two buildings totaling 0.5 million square feet. These properties are located in the New Jersey, Southern California, Baltimore/Washington D.C., Houston, Chicago and Seattle markets. These properties and controlling interests were acquired from unrelated third-parties, except as disclosed in Note 12—Related Party Transactions, for a total purchase price of approximately $92.8 million using borrowings under our senior unsecured revolving credit facility, the private placement of our senior unsecured notes and existing cash balances, including those from our equity offering. We have consolidated the two properties in which we acquired controlling interests and, as a result, we recorded $106.8 million on our balance sheet, in the aggregate, for these two properties and the ten other properties that we acquired during the year ended December 31, 2010. This amount included $14.0 million attributable to the noncontrolling interests’ share of these two properties. We expensed as incurred acquisition costs of approximately $1.2 million during the year ended December 31, 2010, included in “General and administrative” in our Consolidated Statement of Operations.

Development Activity

2011 Development Activity

During the year ended December 31, 2011, construction was commenced on two projects located in our Baltimore/Washington D.C. and Houston markets. In Baltimore/Washington D.C. we are constructing two buildings which total 0.2 million square feet and are expected to be completed in 2012. In addition, we have entered into a forward purchase commitment for the construction of a 0.3 million square foot building located in the Houston market where construction is expected to be completed in 2012. (See Note 7—Commitments and Contingencies, for further information related to this forward purchase commitment.) The total costs incurred on these two projects as of December 31, 2011 was $9.6 million.

During the year ended December 31, 2011, we acquired five land parcels which total approximately 102.2 acres located in the Houston, Miami, Cincinnati and Southern California markets. The land parcels were acquired from unrelated third-parties for a total purchase price of $25.7 million, using proceeds from our equity offering, proceeds from asset sales, proceeds from our private placement of senior unsecured notes, borrowings under our senior unsecured revolving credit facility and existing cash balances.

F-17

2010 Development Activity

We acquired a 19.3 acre land parcel in Southern California through our 8^th and Vineyard joint venture, which is with a related party, for a total purchase price of approximately $4.7 million using borrowings under our senior unsecured revolving credit facility, the private placement of our senior unsecured notes and existing cash balances, including those from our equity offering. (See additional details in Note 12—Related Party Transactions, related to the 8^thand Vineyard joint venture.)

Disposition Activity

2011 Disposition Activity

During the year ended December 31, 2011, we sold 16 operating properties totaling approximately 2.7 million square feet to third-parties. The properties, located in the Minneapolis, Kansas City, Nashville, San Antonio and Charlotte markets were sold for combined gross proceeds of approximately $108.3 million. Seven property sales resulted in gains of approximately $12.0 million. Prior to the closing of the remaining property sales, which was a portfolio sale of nine properties in the Charlotte market, we incurred impairment losses totaling $7.8 million, which represented the difference between the carrying value and the fair value of the assets sold, net of sales costs. All gains and impairments associated with these sales are reflected in “Income (loss) from discontinued operations” in the Consolidated Financial Statements.

2010 Disposition Activity

During the year ended December 31, 2010, we sold eight operating properties totaling approximately 0.5 million square feet to third-parties. The properties, located in the Atlanta, Northern California, Miami, Cincinnati and Phoenix markets were sold for combined gross proceeds of approximately $21.6 million. Two property sales resulted in gains of approximately $2.1 million. Prior to the closing of the remaining property sales, we incurred impairment losses totaling $3.5 million, which represented the difference between the carrying value and the fair value of the assets sold, net of sales costs. All gains and impairments associated with these sales are reflected in “Income (loss) from discontinued operations” in the Consolidated Financial Statements.

Intangible Assets

Aggregate amortization expense for intangible lease assets recognized in connection with property acquisitions (excluding assets and liabilities related to above and below market rents; see Note 2—Summary of Significant Accounting Policies for additional information) was approximately $11.5 million, $11.1 million and $17.2 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Our intangible lease assets and liabilities included the following as of December 31, 2011 and 2010 (in thousands):


	December 31, 2011									December 31, 2010
	Gross			Accumulated Amortization			Net			Gross			Accumulated Amortization			Net
Other intangible lease assets	$	77,692		$	(38,549	)	$	39,143		$	83,394		$	(42,168	)	$	41,226
Above market rent		7,087			(5,191	)		1,896			10,103			(6,955	)		3,148
Below market rent		(26,905	)		8,008			(18,897	)		(25,043	)		6,295			(18,748	)

F-18

The following table describes the estimated net amortization of such intangible assets and liabilities for the next five years and thereafter. In addition, the table describes the net impact to rental revenues due to the amortization of above and below market rents for the next five years and thereafter (in thousands):


For the Period Ended December 31,	Estimated Net Amortization of Intangible Lease Assets		Estimated Net (Increase) to Rental Revenues Related to Above and Below Market Rents
2012		9,551		(720	)
2013		6,348		(1,211	)
2014		5,033		(1,061	)
2015		3,881		(899	)
2016		2,720		(691	)
Thereafter		11,610		(12,419	)

Total	$	39,143	$	(17,001	)

Casualty Events

In February 2011, a storm caused significant damage to one of our properties in our Nashville market. The property was insured by the tenant in an amount for storms which was sufficient to cover any losses. In April 2011, we received an initial payment from the tenant of approximately $5.0 million for damages related to this casualty. Our cost of repairing the total damages was approximately $5.1 million. The recoveries received for damages were in excess of the sum of our incurred losses of approximately $3.8 million for clean-up costs and the net book value write-off of the damaged property. All contingencies relating to the casualty have been resolved and we have recorded a casualty gain of approximately $1.3 million which was included in “Income (loss) from discontinued Operations” in the Consolidated Statements of Operations during the year ended December 31, 2011, as the property was sold in the fourth quarter of 2011.

F-19

Note 4 - Investments in and Advances to Unconsolidated Joint Ventures

We enter into joint ventures primarily for purposes of developing industrial real estate and to establish funds or other commingled investment vehicles with institutional partners. Our investments in these joint ventures are included in “Investments in and advances to unconsolidated joint ventures” in our Consolidated Balance Sheets. The following describes our unconsolidated joint ventures as of December 31, 2011 and 2010.


Unconsolidated Joint Ventures	DCT Ownership Percentage as of December 31, 2011			Number of Buildings		Unconsolidated Net Equity Investment as of
Unconsolidated Joint Ventures	DCT Ownership Percentage as of December 31, 2011			Number of Buildings		December 31, 2011			December 31, 2010
						(in thousands)
Institutional Funds:
DCT/SPF Industrial Operating LLC		20	%		14	$	45,510		$	47,243
TRT-DCT Venture I		4.4	%		13		548			774
TRT-DCT Venture II⁽³⁾		11.4	%		5		2,172			2,437
TRT-DCT Venture III⁽³⁾		10	%		5		1,491			1,594
DCT Fund I LLC		20	%		6		(313	)		376

Total Institutional Funds					43		49,408			52,424
Other:
Stirling Capital Investments (SCLA)⁽¹⁾		50	%		6		58,629			45,313
IDI/DCT, LLC⁽²⁾⁽³⁾		50	%		3		28,240			37,721
IDI/DCT Buford, LLC (land only)		75	%		—		3,001			2,997

Total Other					9		89,870			86,031

Total					52	$	139,278		$	138,455

⁽¹⁾

Although we contributed 100% of the initial cash equity capital required by the venture, our partners retain certain participation rights in the venture’s available cash flows.

⁽²⁾

See discussion of impairment recorded on our investment in this unconsolidated joint venture during 2011 below.

⁽³⁾

During 2011, our unconsolidated joint ventures completed dispositions of three properties in Cincinnati, Kansas City and Northern California for gross proceeds, net of joint venture partners’ interest, of $13.8 million. We recognized deferred gains upon disposition of these properties totaling $0.7 million.

Institutional Capital Management Joint Ventures

DCT/SPF Industrial Operating LLC

During 2007, we entered into a joint venture agreement with Industrial Acquisition LLC (“JP Morgan”), an entity advised by JPMorgan Asset Management, to form DCT/SPF Industrial Operating LLC (“JP Morgan Venture”) that owns and operates industrial properties located in the United States. Our actual ownership percentage may vary depending on amounts of capital contributed and the timing of contributions and distributions. As of December 31, 2011 our ownership interest is 20.0%. As a result of our contribution of properties into the JP Morgan Venture in 2007, we have deferred gains of $3.1 million as of December 31, 2011, which will be recognized through earnings over the weighted average life of the related properties, or upon disposition of the properties to a third-party.

TRT-DCT Industrial Joint Ventures I, II and III

We entered into our first joint venture agreement with Dividend Capital Total Realty Trust Inc. (“DCTRT”) TRT-DCT Venture I on September 1, 2006 that owns and operates industrial properties located in the United States. Our actual ownership percentage may vary depending on amounts of capital contributed and the timing of contributions and distributions. As of December 31, 2011 our ownership interest is 4.4%. As a result of our

F-20

contribution of properties into TRT-DCT Venture I in 2006, we have deferred gains of $0.4 million as of December 31, 2011, which will be recognized through earnings over the weighted average life of the related properties, or upon disposition of the properties to a third-party. No further assets are planned to be acquired by the joint venture.

We formed our second joint venture agreement with DCTRT, TRT-DCT Industrial Joint Venture II G.P. (“TRT-DCT Venture II”), on March 27, 2007, that owns and operates industrial properties located in the United States. Our actual ownership percentage may vary depending on amounts of capital contributed and the timing of contributions and distributions. As of December 31, 2011 our ownership interest is 11.4%. As a result of our contribution of properties into TRT-DCT Venture II in 2007, we have deferred gains of $0.6 million as of December 31, 2011, which will be recognized through earnings over the weighted average life of the related properties, or upon disposition of the properties to a third-party.

We formed our third joint venture agreement with DCTRT, TRT-DCT Industrial Joint Venture III, G.P. (“TRT-DCT Venture III”), on September 9, 2008, that owns and operates industrial properties located in the United States. TRT-DCT Venture III is also structured and funded in a manner similar to TRT-DCT Venture I. Our actual ownership percentage may vary depending on amounts of capital contributed and the timing of contributions and distributions. As of December 31, 2011 our ownership interest is 10.0%.

DCT Fund I LLC

On February 21, 2006, we entered into a joint venture with affiliates of Boubyan Bank of Kuwait (“BBK”), an unrelated third-party, to create an institutional fund, DCT Fund I LLC (“Fund I”), that owns and operates industrial properties located in the United States. Our actual ownership percentage may vary depending on amounts of capital contributed and the timing of contributions and distributions. Our actual ownership percentage may vary depending on amounts of capital contributed and the timing of contributions and distributions. As of December 31, 2011 our ownership interest is 20.0%. As a result of our contribution of properties into Fund I in 2006, we have deferred gains of $1.6 million as of December 31, 2011, which will be recognized through earnings over the weighted average life of the related properties, or upon disposition of the properties to a third-party.

Development Projects in Unconsolidated Joint Ventures

SCLA

During 2006, we entered into a joint venture agreement with Stirling Airports International, LLC, or Stirling, an unrelated third-party, to be the master developer of up to 4,350 acres in Victorville, California, part of the Inland Empire submarket in Southern California. The development project is located at the former George Air Force Base which closed in 1992 and is now known as Southern California Logistics Airport (“SCLA”). We refer to this joint venture as the SCLA joint venture. Stirling entered into two master development agreements which gave it certain rights to be the exclusive developer of the SCLA development project through 2019 (including only certain extensions) and assigned these rights to the SCLA joint venture upon the closing of the venture. While our exact share of the equity interests in the SCLA joint venture will depend on the amount of capital we contribute and the timing of contributions and distributions, the SCLA joint venture contemplates an equal sharing between us and Stirling of residual profits and cash flows after all priority distributions. As of December 31, 2011, the SCLA joint venture had six operating buildings comprised of 2.0 million square feet which were 95.4% occupied and an additional 209 acres of land available for development.

IDI/DCT, LLC

During 2007, we entered into a joint venture agreement with Industrial Developments International, Inc. (“IDI”), an unrelated third-party developer, to acquire approximately 113 acres of land to develop four distribution buildings comprising approximately 1.9 million square feet in the Savannah, GA, Nashville, TN, Chicago, IL, and Stockton, CA markets. DCT has the right of first offer to buy each of the projects and the buildings are operating.

F-21

In December of 2010, DCT and IDI entered into an amendment to the LLC agreement and made additional capital contributions of $6.0 million each to reduce the overall debt to equity ratio of IDI/DCT, LLC. Simultaneously, DCT made an additional capital contribution of $24.2 million to pay down our proportionate share of the outstanding debt and accrued interest to zero. At the same time, IDI/DCT, LLC refinanced the remaining $24.1 million of debt, and IDI’s parent guaranteed this debt, including future interest and principal payments.

In June 2011, the joint venture entered into a sale agreement with a third-party for one of its four buildings, which closed in August 2011. As a result of the contracted sales price less costs to sell being lower than the carrying amount of the related real estate assets, the joint venture recognized an impairment loss. Our portion of the impairment loss was approximately $2.0 million, which is included in “Impairment losses from unconsolidated joint ventures” in our Consolidated Statement of Operations for the year ended December 31, 2011.

IDI/DCT Buford, LLC

During 2008, we entered into a joint venture agreement with IDI to form IDI/DCT Buford, LLC. This joint venture was funded for the purpose of developing four distribution buildings comprised of approximately 0.6 million square feet in Atlanta, Georgia on approximately 47 acres contributed to the joint venture by DCT. During the year ended December 31, 2010, we recognized impairment on our investment in the joint venture of $0.2 million as a result of the anticipated timing of the commencement of the development (see further discussion of the land impairment in Note 2—Summary of Significant Accounting Policies).

The following table provides unaudited selected combined financial information for unconsolidated joint ventures as of and for the years ended December 31, 2011, 2010 and 2009 (in thousands).


	2011			2010			2009
Real estate, net of accumulated depreciation	$	739,373		$	801,048		$	828,452
Total assets	$	765,427		$	824,188		$	849,645
Secured notes payable	$	290,983		$	317,143		$	355,840
Total liabilities	$	368,018		$	391,647		$	431,879
Partners’ capital	$	397,409		$	432,541		$	417,766
Rental revenues	$	62,971		$	64,322		$	68,180
Operating expenses	$	16,270		$	16,559		$	17,662
Depreciation expense	$	33,769		$	33,003		$	37,370
Interest expense	$	20,754		$	20,591		$	19,706
Net income (loss)	$	(12,767	)	$	(8,285	)	$	1,317

Our aggregate investment in these partnerships at December 31, 2011 and 2010 of $139.3 million and $138.5 million, respectively, exceeds our share of the underlying equity in net assets of our joint ventures by approximately $16.7 million and $15.8 million, respectively, primarily due to capitalized interest and other costs incurred in connection with the ventures.

Guarantees

There are no lines of credit or side agreements related to, or between, our unconsolidated joint ventures and us, and there are no derivative financial instruments between our unconsolidated joint ventures and us. In addition, we believe we have no material exposure to financial guarantees.

F-22

Note 5—Outstanding Indebtedness

As of December 31, 2011, our outstanding indebtedness of approximately $1.3 billion consisted of mortgage notes and senior unsecured notes, excluding $61.7 million representing our proportionate share of debt associated with unconsolidated joint ventures. As of December 31, 2010, our outstanding indebtedness consisted of mortgage notes, senior unsecured notes and a senior unsecured revolving credit facility and totaled approximately $1.2 billion, excluding $62.3 million representing our proportionate share of debt associated with unconsolidated joint ventures.

As of December 31, 2011, the gross book value of our consolidated properties was approximately $3.2 billion and the gross book value of all properties securing our mortgage debt was approximately $0.7 billion. As of December 31, 2010, the total gross book value of our consolidated properties was approximately $3.0 billion and the gross book value of all properties securing our mortgage debt was approximately $1.0 billion. Our debt has various covenants with which we were in compliance as of December 31, 2011 and 2010.

F-23

Our outstanding indebtedness as of December 31, 2011 is summarized below (dollars in thousands).


	Interest Rate⁽¹⁾			Maturity Date		Outstanding Balance as of December 31,

						2011		2010
Senior Unsecured Notes:
5 year, fixed rate⁽²⁾		5.53	%		April 2011	$	—	$	50,000
2 year, variable rate		1.91	%		June 2011		—		200,000
5 year, fixed rate		6.11	%		June 2013		175,000		175,000
8 year, fixed rate⁽²⁾		5.68	%		January 2014		50,000		50,000
3 year, variable rate⁽³⁾		2.63	%		June 2015		175,000		—
9 year, fixed rate		5.43	%		April 2020		50,000		—
10 year, fixed rate⁽²⁾		5.77	%		April 2016		50,000		50,000
Private Placement 5 year, fixed rate		5.63	%		June 2015		40,000		40,000
Private Placement 7 year, fixed rate		6.31	%		June 2017		51,000		51,000
Private Placement 8 year, fixed rate		6.52	%		June 2018		41,500		41,500
Private Placement 11 year, fixed rate		6.95	%		June 2021		77,500		77,500
2011 Private Placement 5 year, fixed rate		4.02	%		August 2016		49,000		—
2011 Private Placement 7 year, fixed rate		4.69	%		August 2018		40,000		—
2011 Private Placement 8 year, fixed rate		4.97	%		August 2019		46,000		—
2011 Private Placement 10 year, fixed rate		5.42	%		August 2021		15,000		—
2011 Private Placement 11 year, fixed rate		5.50	%		August 2022		40,000		—
2011 Private Placement 12 year, fixed rate		5.57	%		August 2023		35,000		—
Mortgage Notes:
Variable:
Cabot		1.46	%		October 2011		—		25,237
Fixed:
7 year, fixed rate		5.00	%		March 2011		—		35,686
Kennedy Drive		7.55	%		April 2011		—		3,786
Memphis Distriplex		6.79	%		July 2011		—		4,283
Business Center		7.48	%		August 2011		—		3,681
Cabot		4.79	%		October 2011		—		13,507
Cabot		4.92	%		October 2011		—		37,043
Roosevelt Distribution Center.		7.11	%		December 2011		—		1,961
Baltimore-Washington		6.25	%		September 2012		24,480		24,999
Willowbrook		6.84	%		September 2012		7,570		7,726
Greens Crossing		6.44	%		October 2012		6,329		6,505
Mid South Logistics Center		6.40	%		November 2012		11,641		11,859
Louisville Logistics Center		6.04	%		January 2013		5,120		5,464
111 Lake Drive.		5.79	%		April 2013		4,981		5,073
Binney & Smith Distribution Center		6.97	%		June 2013		7,058		7,968
8 year, fixed rate		4.97	%		October 2013		16,776		17,283
Shelby 5		5.69	%		December 2013		6,055		6,436
1700 Desoto		6.00	%		April 2014		3,407		—
10 year, fixed rate⁽²⁾		5.31	%		January 2015		47,539		48,952
Shelby 4		7.40	%		December 2017		859		979
Miami Commerce Center		6.91	%		October 2018		3,928		4,406
Cabot		6.17	%		March 2019		51,814		52,477
Cabot		6.11	%		February 2020		68,339		69,230
Rollins Road		4.25	%		December 2021		19,962		—
Haven A		7.29	%		October 2022		8,845		9,410
Shelby 19		6.72	%		November 2022		9,444		10,065
6^th & Rochester		4.96	%		August 2023		3,630		—
Mohawk		5.75	%		August 2025		7,415		7,793

Weighted Avg./Totals⁽⁴⁾		5.36	%				1,250,192		1,156,809
Premiums/Discounts, Net of Amortization⁽⁵⁾		N/A					2,591		3,550

Total Senior Unsecured Notes and Mortgage Notes		N/A					1,252,783		1,160,359
Senior Unsecured Revolving Credit Facility⁽⁶⁾		2.38	%		June 2015		—		51,000

Total Carrying Value of Debt		N/A				$	1,252,783	$	1,211,359

Fixed Rate Debt⁽⁴⁾		5.81	%			$	1,075,192	$	931,572
Premiums/Discounts, Net of Amortization ⁽⁵⁾		N/A					2,591		3,550
Variable Rate Debt⁽⁴⁾		2.63	%				175,000		276,237

Total Carrying Value of Debt		N/A				$	1,252,783	$	1,211,359

(footnotes on following page)

F-24

(footnotes to previous page)

⁽¹⁾

Interest rates for fixed rate debt are stated rates. Interest rates for variable rate debt are the interest rate charged as of the last payment in 2011.

⁽²⁾

We assigned certain derivative instruments to these notes and the fair value of these derivative instruments are amortized to interest expense over the life of the assigned notes.

⁽³⁾

The $175.0 million term loan agreement bears interest at either 0.80% to 1.65% over prime or 1.80% to 2.65% over LIBOR, per annum at our election, depending upon our leverage ratio.

⁽⁴⁾

Weighted average interest rates are based upon outstanding balances as of December 31, 2011.

⁽⁵⁾

Certain mortgages were assumed in conjunction with the acquisition of properties and the difference between the fair value and the face value of these notes at the date of acquisition is reflected as a premium or discount which are amortized to interest expense over the remaining life of the underlying note.

⁽⁶⁾

The Company refinanced its $300 million senior unsecured revolving credit facility in June 2011. The new facility expires on June 3, 2015 and bears interest at either 0.65% to 1.35% over prime or 1.65% to 2.35% over LIBOR, per annum at our election, depending upon our leverage ratio. We have issued two letters of credit secured by the senior unsecured credit facility totaling $9.8 million.

Debt Payoffs, Refinancing and Issuance

In April 2011, we refinanced $50.0 million of maturing senior unsecured notes. The new fixed-rate notes bear interest of 5.43%, mature in April 2020 and require quarterly interest payments.

On June 3, 2011, we entered into a term loan agreement with a syndicate of 12 banks, pursuant to which we borrowed $175.0 million through a senior unsecured loan. The term loan is scheduled to mature on June 3, 2015 and may be prepaid in whole or in part at any time. The term loan agreement provides for a variable interest rate based on either the base rate under the agreement or LIBOR, at our election, plus a margin that is initially based on our leverage ratio. The margins on base rate loans initially may range from 0.80% to 1.65% per annum, and the margins on LIBOR-based loans may range from 1.80% to 2.65% per annum. This loan agreement has various covenants with which we are in compliance as of December 31, 2011. We used the term loan, together with proceeds from a draw under our senior unsecured revolving credit facility, to repay our unsecured term loan that was scheduled to mature on June 6, 2011.

On August 1, 2011 we issued $225.0 million of new fixed rate, senior unsecured notes through a private placement. These senior unsecured notes have a weighted average maturity of 8.5 years and a weighted average interest rate of 4.93%. The notes have maturities of 5, 7, 8, 10, 11 or 12 years. Proceeds from these notes were used to repay outstanding indebtedness and for general corporate purposes.

In January 2010, we repaid approximately $42.0 million of $112.0 million of debt previously scheduled to mature in 2012. The remaining balance of approximately $70.0 million was refinanced at a fixed rate of 6.11% with a new maturity of 2020 and mortgages on five properties were released. In February 2010, we repaid approximately $49.9 million of $102.9 million of debt previously scheduled to mature in 2011. The remaining balance of approximately $53.0 million was refinanced at a fixed rate of 6.17% with a new maturity of 2019 and mortgages on 11 properties were released. The debt repayments were funded using borrowings under our senior unsecured revolving credit facility and cash flows from operations. These transactions were treated as debt modifications pursuant to GAAP.

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On June 6, 2010, we repaid $100.0 million of our senior unsecured term loan using funds borrowed on our senior unsecured revolving credit facility and extended the maturity on the remaining $200 million balance for one year. The $200 million term loan has a new interest rate based on LIBOR plus 1.25% to 1.80% or at prime, at our election and was treated as a debt modification pursuant to GAAP.

On June 22, 2010, we issued $210.0 million of fixed rate, senior unsecured notes to a group of 12 investors in a private placement offering. These notes were issued with a weighted average term of 8.3 years, include five, seven, eight and 11 year maturities and have a weighted average interest rate of approximately 6.46%. Proceeds from the transaction were used to repay amounts outstanding on our senior unsecured revolving credit facility.

Debt Assumptions

During the year ended December 31, 2011, we assumed two non-recourse mortgage notes with outstanding balances of approximately $3.9 million and $3.4 million, respectively, in connection with two property acquisitions. The assumed notes bear interest at 4.96% and 6.0%, respectively, and require monthly payments of principal and interest. The notes mature in August 2023 and April 2014, respectively.

During the year ended December 31, 2010, we assumed secured, non-recourse notes with outstanding balances totaling approximately $19.6 million in connection with three property acquisitions. These assumed notes bear interest at fixed rates ranging from 7.29% to 7.55% and require monthly payments of principal and interest. The maturity dates of the assumed notes range from April 2011 to October 2022. In accordance with GAAP, the difference between the fair value and face value of these assumed notes at the date of acquisition resulted in a premium of approximately $1.5 million, which is amortized to interest expense over the remaining life of the underlying notes.

For the years ended December 31, 2011, 2010 and 2009, the amortization of all premiums/discounts resulted in a reduction of interest expense of approximately $1.1 million, $1.1 million and $1.0 million, respectively.

Line of Credit

On June 3, 2011 we entered in an amendment to extend the maturity date of our $300.0 million senior unsecured revolving credit facility from August 19, 2013 until June 3, 2015. This amendment also increased the number of banks included on the facility from nine to twelve and reduced the interest rate payable to either 0.65% to 1.35% over prime or 1.65% to 2.35% over LIBOR, per annum at our election, depending upon the Company’s leverage ratio. The amendment also provides us the ability, from time to time, to extend the size of the facility by up to an additional $200.0 million, to a total of $500.0 million, subject to receipt of lender commitments and other conditions. We incurred a total of approximately $2.1 million in fees paid to the creditor and third-party costs which have been deferred and will be amortized over the life of the new credit facility. Proceeds from draws on the line have been used to pay off mortgage notes and senior unsecured notes as they became due, to finance our property acquisitions and for general corporate purposes including payment of distributions. See Note 3—Investment in Properties for further detail related to our property acquisitions.

As of December 31, 2011 we had no balance outstanding on our senior unsecured revolving credit facility; however we have issued two letters of credit secured by the senior unsecured revolving credit facility totaling $9.8 million. As of December 31, 2010, we had $51.0 million outstanding on our senior unsecured revolving credit facility.

Capitalized Interest

During the years ended December 31, 2011, 2010 and 2009, we incurred interest expense of approximately $64.3 million, $57.0 million and $52.9 million, respectively, including amounts from discontinued operations. We capitalized approximately $2.7 million, $2.2 million and $6.1 million of interest in 2011, 2010 and 2009, respectively, associated with certain development and redevelopment, and other construction activities.

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Debt Maturities

The following table sets forth the scheduled maturities of our debt and regularly scheduled principal amortization, excluding unamortized premiums, as of December 31, 2011 (amounts in thousands).


Year	Senior Unsecured Notes		Mortgage Notes		Unsecured Credit Facility		Total
2012	$	—	$	57,659	$	—	$	57,659
2013		175,000		44,295		—		219,295
2014		50,000		9,975		—		59,975
2015		215,000		48,343		—		263,343
2016		99,000		5,724		—		104,724
Thereafter		396,000		149,196		—		545,196

Total	$	935,000	$	315,192	$	—	$	1,250,192

Note 6 - Financial Instruments and Hedging Activities

Fair Value of Financial Instruments

As of December 31, 2011 and 2010, the fair values of cash and cash equivalents, restricted cash held in escrow, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. The estimated fair values of other financial instruments subject to fair value disclosures were determined based on available market information and valuation methodologies we believe to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates. These are our best estimates; however, they may differ from the actual amounts that we could realize upon disposition. The following table summarizes these financial instruments (in thousands).


	Balances as of December 31, 2011						Balances as of December 31, 2010
	Carrying Amounts			Estimated Fair Value			Carrying Amounts			Estimated Fair Value
Notes receivable⁽¹⁾	$	1,053		$	1,058		$	1,222		$	1,423
Borrowings⁽¹⁾:
Senior unsecured revolving credit facility	$	—		$	—		$	51,000		$	51,000
Fixed rate debt⁽²⁾	$	1,077,783		$	1,218,321		$	935,122		$	977,258
Variable rate debt	$	175,000		$	174,979		$	225,237		$	224,304
Interest rate contracts:
Interest rate swaps⁽³⁾	$	(26,746	)	$	(26,746	)	$	(10,109	)	$	(10,109	)

⁽¹⁾

The fair values of our notes receivable and borrowings were estimated using a discounted cash flow methodology. Credit spreads and market interest rates used to determine the fair value of these instruments are based on unobservable Level 3 inputs which management has determined to be its best estimate of current market values.

⁽²⁾

The carrying amount of our fixed rate debt includes premiums and discounts as a result of the difference between the fair value and face value of debt assumed in connection with our acquisition activities.

⁽³⁾

The fair value of our interest rate swap is determined using the market standard methodology of netting the discounted future fixed cash flows and the discounted expected variable cash flows based on an expectation of future interest rates derived from Level 2 observable market interest rate curves. We also incorporate a credit valuation adjustment, which is derived using unobservable Level 3 inputs, to appropriately reflect both our nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurement. For further discussion on the fair value of our interest rate swap, see Note 2—Significant Accounting Policies.

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The following table displays a reconciliation of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2011 and 2010. During the same periods, we had no assets measured at fair value on a recurring basis. The table also displays gains and losses due to changes in fair value, including both realized and unrealized, recognized in the Consolidated Statements of Operations for Level 3 liabilities. When assets and liabilities are transferred between levels, we recognize the transfer at the beginning of the period.


	For the Year Ended December 31,
	2011			2010
Level 3 Liabilities:	(in thousands)
Interest Rate Swaps:
Beginning balance at January 1	$	(10,109	)	$	(4,070	)
Net unrealized loss included in accumulated other comprehensive loss		(16,637	)		(7,358	)
Realized losses (effective portion) recognized in interest expense		—			1,319

Ending balance at December 31	$	(26,746	)	$	(10,109	)

Hedging Activities

To manage interest rate risk for variable rate debt and issuances of fixed rate debt, we primarily use treasury locks and interest rate swaps as part of our cash flow hedging strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. During 2011, such derivatives have been used to hedge the variability in existing and future interest expense associated with existing variable rate borrowings and forecasted issuances of debt, which may include the issuances of new debt, as well as refinancing of existing debt upon maturity.

As of December 31, 2011, we had one forward-starting swap in place to hedge the variability of future cash flows associated with forecasted issuances of debt. This derivative has a notional value of $90.0 million, a LIBOR based swap strike rate of 5.43%, an effective date of June 2012 and a maturity date of September 2012. The associated counterparty is PNC Bank, NA.

We measure our derivative at fair value, which was a liability of approximately $26.7 million and $10.1 million as of December 31, 2011 and 2010, respectively, included in “Other liabilities” in our Consolidated Balance Sheets. The fair value of the derivative was determined using Level 2 and 3 inputs. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in “Accumulated other comprehensive loss” and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings and is recorded as “Interest and other income” in our Consolidated Statements of Operations. During the years ended December 31, 2011, 2010 and 2009, we recorded no ineffectiveness.

During the years ended December 31, 2011 and 2010, we recorded approximately $16.6 million and $7.4 million, respectively, of net unrealized losses, including the noncontrolling interests’ portions of $1.6 million and $0.8 million, respectively, in “Accumulated other comprehensive loss” as a result of the change in fair value of our outstanding hedges. As of December 31, 2011 and 2010, the “Accumulated other comprehensive loss” balances pertaining to the hedges were losses of approximately $32.6 million and $17.0 million, respectively, including the noncontrolling interests’ portion.

Amounts reported in “Accumulated other comprehensive loss” related to derivatives will be amortized to “Interest expense” as interest payments are made on our current debt and anticipated debt issuances. During the next 12 months, we estimate that approximately $2.6 million will be reclassified from “Accumulated other comprehensive loss” to “Interest expense” resulting in an increase in such expense.

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Note 7 - Commitments and Contingencies

Forward Purchase Commitment

In August 2011, we entered into a forward purchase commitment with an unrelated third-party developer to acquire a newly constructed industrial facility totaling approximately 267,000 square feet in the Houston market. The forward purchase commitment allows us to acquire the building and related land upon completion of construction, subject to a variety of conditions including the building complying with approved drawings and specifications. The purchase price of $12.4 million includes estimates for allowances for tenant improvements and leasing commissions. The closing under the forward purchase commitment is expected in mid 2012. We made two deposits on the project; the first was in cash totaling $1.0 million and the second was in the form of an unconditional standby letter of credit totaling $3.3 million. The cash deposit and letter of credit will be applied towards the purchase price at closing in accordance with the agreement.

Legal Matters

Operating Leases

We are obligated under non-cancelable office space, ground and equipment operating leases. Approximate minimum annual rentals under operating leases are as follows (in thousands):


Year Ended December 31:	Operating Leases		Ground Leases
2012	$	656	$	474
2013		636		474
2014		638		489
2015		560		544
2016		435		544
Thereafter		30		11,208

Total	$	2,955	$	13,733

Substantially all of the office space and equipment subject to the operating leases described above are for the use at our corporate and regional offices. Rent expense recognized was approximately $1.1 million, $1.2 million and $0.9 million during the years ended December 31, 2011, 2010 and 2009, respectively.

Note 8 - Noncontrolling Interests

Noncontrolling interests are the portion of equity, or net assets, in a subsidiary not attributable, directly or indirectly, to a parent. Our noncontrolling interests primarily represent limited partnership interests in our operating partnership and equity interests held by third-party partners in our consolidated real estate joint ventures. Our noncontrolling interests held by third-party partners in our consolidated joint ventures totaled $11.7 million and $9.2 million as of December 31, 2011 and 2010, respectively.

Noncontrolling interests representing interests in our operating partnership include preferred shares in our Mexico REIT and Cabot REIT, OP Units and LTIP units which are classified as permanent equity in accordance with GAAP and are included in “Noncontrolling interests” in our Consolidated Balance Sheets.

OP Units

As of December 31, 2011 and 2010, we owned approximately 90% of the outstanding equity interests of our operating partnership. Upon redemption by the unitholder, we have the option of redeeming the OP Units with cash or with shares of our common stock on a one-for-one basis, subject to adjustment.

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During November 2011, we issued approximately 1.0 million OP units, at a price of $5.20 per share, representing a portion of the purchase price in connection with a property acquisition in the Northern California market.

During the year ended December 31, 2011, 1.0 million OP Units were redeemed for approximately $0.3 million in cash and 0.9 million shares of common stock. As of December 31, 2011, there was a total of 25.1 million OP Units outstanding with a redemption value of approximately $128.5 million based on the closing price of our common stock on December 31, 2011, all of which were redeemable for cash or stock, at our election.

During the year ended December 31, 2010, 2.4 million OP Units were redeemed for approximately $1.0 million in cash and 2.2 million shares of common stock. As of December 31, 2010, there was a total of 25.0 million OP Units outstanding with a redemption value of approximately $132.9 million based on the closing price of our common stock on December 31, 2010.

LTIP Units

We may grant limited partnership interests in our operating partnership called LTIP Units. LTIP Units, which we grant either as free-standing awards or together with other awards under our Long-Term Incentive Plan, are valued by reference to the value of our common stock, and are subject to such conditions and restrictions as our compensation committee may determine, including continued employment or service, computation of financial metrics and/or achievement of pre-established performance goals and objectives. During the years ended December 31, 2011 and 2010, we granted 0.6 million and 0.6 million LTIP Units, respectively, to certain officers and senior executives. The total fair value of these LTIP Units on the date of grant was $3.0 million and $3.0 million, respectively.

During the years ended December 31, 2011 and 2010, 0.1 million and 0.3 million vested LTIP Units, were redeemed on a one-for-one basis into OP Units, respectively. As of December 31, 2011 and 2010, 1.9 million and 1.6 million LTIP Units were outstanding, respectively, of which 0.9 million and 0.3 million were vested, respectively. Our LTIP unit grants are further discussed in Note 11—Equity Based Compensation.

The following table illustrates the noncontrolling interests’ share of our consolidated net income (loss) during the years ended December 31, 2011, 2010 and 2009 (in thousands).


	For the Years Ended December 31,
	2011			2010		2009
Noncontrolling interests’ share of loss from continuing operations	$	4,311		$	5,156	$	3,775
Noncontrolling interests’ share of (income) loss from discontinued operations		(718	)		67		(651	)

Net loss attributable to noncontrolling interests	$	3,593		$	5,223	$	3,124

Note 9 - Stockholders’ Equity

Common Stock

As of December 31, 2011 and 2010, approximately 245.9 million and 222.9 million shares of common stock were issued and outstanding, respectively.

On February 18, 2011, we issued 21.9 million shares of common stock in a public offering at a price of $5.35 per share for net proceeds of $111.9 million.

On March 23, 2010, we registered a “continuous equity” offering program. Pursuant to this offering, we may sell up to 20 million shares of common stock from time-to-time through March 23, 2013 in “at-the-market” offerings

F-30

or certain other transactions. We intend to use the proceeds from any sale of shares for general corporate purposes, which may include funding acquisitions and repaying debt. We did not issue any shares under this offering during 2011. During the year ended December 31, 2010, we issued approximately 12.6 million shares of common stock through this offering.

During the year ended December 31, 2011, we issued approximately 0.9 million shares of common stock related to the redemption of OP Units (see additional information in Note 8 – Noncontrolling Interests), and approximately 0.2 million shares of common stock related to vested shares of restricted stock, phantom shares and stock option exercises.

During the year ended December 31, 2010, we issued approximately 2.2 million shares of common stock in connection with redemptions of OP Units and approximately 0.1 million shares of common stock related to vested shares of restricted stock, phantom shares and stock option exercises.

The net proceeds from the sales of our securities were transferred to our operating partnership for a number of OP Units equal to the shares of common stock sold in our public and private offerings, including the offerings noted above.

The holders of shares of our common stock are entitled to one vote per share on all matters voted on by stockholders, including election of our directors. Our articles of incorporation do not provide for cumulative voting in the election of our directors. Therefore, the holders of the majority of the outstanding shares of common stock can elect the entire board of directors. Subject to any preferential rights of any outstanding series of our preferred stock and to the distribution of specified amounts upon liquidation with respect to shares-in-trust, the holders of our common stock are entitled to such distributions as may be declared from time to time by our board of directors out of legally available funds and, upon liquidation, are entitled to receive all assets available for distribution to stockholders. All shares issued in our public offerings are fully paid and non-assessable shares of common stock. Holders of our common stock will not have preemptive rights.

Dividend Reinvestment and Stock Purchase Plan

In April 2007, we began offering shares of common stock through the Dividend Reinvestment and Stock Purchase Plan (the “Plan”). The Plan permits stockholders to acquire additional shares with quarterly dividends and to make additional cash investments to buy shares directly. Shares of common stock may be purchased in the open market, through privately negotiated transactions, or directly from us as newly issued shares of common stock. All shares issued under the Plan were either acquired in the open market or newly issued.

Preferred Shares

Our board of directors, through the articles of incorporation, has the authority to authorize the issuance of 50,000,000 preferred shares of any class or series. The rights and terms of such preferred shares will be determined by our board of directors. However, the voting rights of preferred stockholders shall never exceed the voting rights of common stockholders. As of December 31, 2011 and 2010, we had no outstanding shares of preferred stock.

Shares-in-Trust

Our board of directors, through the articles of incorporation, has the authority to authorize the issuance of shares-in-trust which are shares that are automatically exchanged for common or preferred shares as a result of an event that would cause an investor to own, beneficially or constructively, a number of shares in excess of certain limitations. As of December 31, 2011 and 2010, we had no outstanding shares-in-trust.

F-31

Distributions

Our distributions are calculated based upon the total number of shares of our common stock or limited partnership units of our operating partnership outstanding on the distribution record date as declared by our board of directors. We accrue and pay distributions on a quarterly basis. The following table sets forth the distributions that have been paid and/or declared to date by our board of directors.


Amount Declared During Quarter Ended in 2011:	Per Share		Date Paid
December 31,	$	0.0700		January 12, 2012
September 30,		0.0700		October 18, 2011
June 30,		0.0700		July 19, 2011
March 31,		0.0700		April 19, 2011

Total 2011	$	0.2800


Amount Declared During Quarter Ended in 2010:	Per Share		Date Paid
December 31,	$	0.0700		January 13, 2011
September 30,		0.0700		October 14, 2010
June 30,		0.0700		July 15, 2010
March 31,		0.0700		April 15, 2010

Total 2010	$	0.2800


Amount Declared During Quarter Ended in 2009:	Per Share		Date Paid
December 31,	$	0.0700		January 15, 2010
September 30,		0.0700		October 16, 2009
June 30,		0.0800		July 17, 2009
March 31,		0.0800		April 17, 2009

Total 2009	$	0.3000

Note 10 - Earnings per Share

We use the two-class method of computing earnings per common share which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period.

A participating security is defined by GAAP as an unvested share-based payment award containing non-forfeitable rights to dividends and must be included in the computation of earnings per share pursuant to the two-class method. Our nonvested restricted stock and LTIP units are considered participating securities as these share-based awards contain non-forfeitable rights to dividends irrespective of whether the awards ultimately vest or expire.

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The following table sets forth the computation of our basic and diluted earnings per common share (in thousands except per share information):


	For the Years Ended December 31,
	2011			2010			2009
Earnings per Common share—Basic and Diluted
Numerator
Loss from continuing operations	$	(36,456	)	$	(42,469	)	$	(26,456	)
Gain on dispositions of real estate interests		—			13			5
Loss from continuing operations and gain attributable to noncontrolling interests		4,311			5,156			3,775

Loss from continuing operations attributable to common stockholders		(32,145	)		(37,300	)		(22,676	)
Less: Distributed and undistributed earnings allocated to participating securities		(443	)		(480	)		(436	)

Numerator for adjusted loss from continuing operations attributable to common stockholders		(32,588	)		(37,780	)		(23,112	)
Numerator for income (loss) from discontinued operations attributable to common stockholders		6,895			(530	)		4,091

Adjusted net loss attributable to common stockholders	$	(25,693	)	$	(38,310	)	$	(19,021	)

Denominator
Weighted average common shares outstanding—basic and dilutive		242,591			212,412			192,900

Earnings per Common Share—Basic and Diluted
Loss from continuing operations	$	(0.14	)	$	(0.18	)	$	(0.12	)
Income (loss) from discontinued operations		0.03			(0.00	)		0.02

Net loss attributable to common stockholders	$	(0.11	)	$	(0.18	)	$	(0.10	)

Potentially Dilutive Shares

We have excluded from diluted earnings per share the weighted average common share equivalents related to approximately 5.7 million, 5.5 million and 4.1 million stock options, phantom stock and warrants for the years ended December 31, 2011, 2010, and 2009 respectively, because their effect would be anti-dilutive.

Note 11 - Equity Based Compensation

Long-Term Incentive Plan

On October 10, 2006, we adopted, and our stockholders approved, our Long-Term Incentive Plan. We use our Long-Term Incentive Plan to grant restricted stock, stock options and other equity awards to our eligible employees. Subject to adjustment upon certain corporate transactions or events, the total number of shares of our common stock subject to such awards may not exceed 23.0 million shares and in no event may any optionee receive options for more than 2.0 million shares on an annual basis.

Phantom Shares

Pursuant to the Long-Term Incentive Plan, we may grant phantom shares to our non-employee directors. Our phantom shares typically vest upon the first anniversary of the grant date, depending on the grant. Once vested and at the discretion of the grantee, the phantom stock can be converted into either cash or common stock at the option of the Company. Phantom shares are recorded at their fair value on the date of grant and are amortized on a straight-line basis over the service period during which term the shares fully vest. For the years ended December 31, 2011, 2010 and 2009, we incurred approximately $0.3 million, $0.3 million, $0.3 million,

F-33

respectively, of such expense which is included in “General and administrative” in our Consolidated Statements of Operations. As of December 31, 2011, approximately $0.1 million of such expense remained unrecognized which reflects the unamortized portion of the value of such shares issued pursuant to the Long-Term Incentive Plan. We expect to recognize such expense over a remaining period of six months.

During the years ended December 31, 2011, 2010 and 2009, we issued 46,054, 17,390 and 15,970 shares of common stock for vested phantom stock, respectively. Based on the share’s fair value at grant date for each grant, the total fair value of phantom stock vested in 2011, 2010 and 2009 was $0.3 million, $0.3 million and $0.3 million, respectively. As of December 31, 2011, 2010 and 2009 we had 120,895, 112,324 and 75,562 phantom shares outstanding.

Restricted Stock

Our restricted stock is recorded at fair value on the date of grant and amortized on a straight-line basis over the service period during which term the stock fully vests. Our restricted stock typically vests ratably over a period of four to five years, depending on the grant. For the years ended December 31, 2011, 2010 and 2009, we incurred approximately $0.7 million, $0.6 million and $0.7 million, respectively, of such expense which is included in “General and administrative” in our Consolidated Statements of Operations. As of December 31, 2011, approximately $1.2 million of such expense remained unrecognized which reflects the unamortized portion of the value of such shares issued pursuant to the Long-Term Incentive Plan. We expect to recognize such expense over a weighted average remaining period of 2.3 years.

During the years ended December 31, 2011, 2010 and 2009, we issued 119,984, 84,887 and 65,490 shares of common stock for vested restricted stock. Based on the share’s fair value at grant date for each grant, the total fair value of restricted stock vested in 2011, 2010 and 2009 was $0.6 million, $0.4 million and $0.6 million, respectively.

LTIP Units

Pursuant to our Long-Term Incentive Plan, we may grant newly established limited partnership interests in our operating partnership called LTIP Units (“LTIP Units”). LTIP Units, which we grant either as free-standing awards or together with other awards under our Long-Term Incentive Plan, are valued by reference to the value of our common stock, and are subject to such conditions and restrictions as our compensation committee may determine, including continued employment or service, computation of financial metrics and/or achievement of pre-established performance goals and objectives. Our LTIP Units typically vest ratably over a period of four to five years, depending on the grant. Vested LTIP Units can be redeemed for OP Units on a one-for-one basis.

During the year ended December 31, 2011, 0.6 million LTIP Units were granted to senior executives which vest over a period of four to five years. The total fair value of the LTIP Units granted was $3.0 million at their respective grant dates. The fair value for each grant was determined using a lattice-binomial option-pricing model based on a Monte Carlo simulation using volatility factors ranging from 67% to 71% and risk-free interest rates ranging from 0.85% to 2.18%.

During the year ended December 31, 2010, we granted 0.6 million LTIP Units to senior executives which vest over a period of three to four years. The total fair value of the LTIP Units granted was $3.0 million at their respective grant dates. The fair value for each grant was determined using a lattice-binomial option-pricing model based on a Monte Carlo simulation using volatility factors ranging from 61% to 62% and risk-free interest rates ranging from 2.39% to 2.55%.

During the year ended December 31, 2009, we granted 0.4 million LTIP Units in total to certain senior executives which vest 25% annually over four years and had a total fair value of $1.5 million at the date of grant as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulations using a volatility factor of 48% and a risk-free interest rate of 1.79%.

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Our LTIP Units are recorded at their fair value on the date of grant and are amortized on a straight-line basis over the service period during which term the units fully vest. We incurred approximately $2.9 million, $2.9 million and $4.6 million including $0.9 million due to a change in our estimated forfeiture rate, of such expense for the years ended December 31, 2011, 2010 and 2009, respectively, which is included in “General and administrative expense” in our Consolidated Statements of Operations. As of December 31, 2011, approximately $3.4 million of such expense remained unrecognized which reflects the unamortized portion of the value of such LTIP Units which we expect to recognize over a remaining weighted average period of 3.1 years.

During the years ended December 31, 2011, 2010, and 2009, 0.1 million, 0.3 million and 0.2 million vested LTIP Units were redeemed for OP Units and converted to common stock on a one for one basis, respectively. Based on the LTIP Unit’s fair value at grant date for each grant, the fair value of LTIP Units vested in 2011, 2010, and 2009 was $4.6 million, $0.4 million and $3.8 million, respectively. As of December 31, 2011, 2010 and 2009, we had 1.9 million, 1.6 million and 1.3 million LTIP Units outstanding, respectively.

The following table summarizes additional information concerning our unvested phantom shares, restricted stock and LTIP Units (shares in thousands).


	Phantom Shares					Restricted Stock					LTIP Units
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2008		30		$	9.36		173		$	9.30		994		$	9.70
Granted		61			4.60		252			3.49		473			3.22
Vested		(30	)		9.36		(66	)		9.17		(464	)		8.21
Forfeited		(9	)		4.60		(39	)		6.07		—			—

Unvested at December 31, 2009		52		$	4.60		320		$	5.14		1,003		$	7.33
Granted		54			5.17		171			4.64		636			4.62
Vested		(52	)		4.60		(85	)		5.50		(310	)		7.86
Forfeited		—			—		(20	)		5.55		—			—

Unvested at December 31, 2010		54		$	5.17		386		$	4.82		1,329		$	5.91
Granted		55			5.71		159			5.54		553			5.41
Vested		(54	)		5.17		(123	)		5.01		(653	)		7.03
Forfeited		—			—		(74	)		5.35		(219	)		5.54

Unvested at December 31, 2011		55		$	5.71		348		$	4.97		1,010		$	5.04

Stock Options

We may grant stock options to certain employees pursuant to our Long-Term Incentive Plan. The term of such options is 10 years from the date of grant unless forfeited earlier and the period during which the right to exercise such options fully vests ranges from four to five years from the date of grant. No stock options were granted under our Long-Term Incentive Plan prior to 2007. During the year ended December 31, 2011, we issued approximately 50,000 shares of common stock upon the exercise of options to purchase our common stock by certain employees.

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During the years ended December 31, 2011, 2010 and 2009, options issued under the Long-Term Incentive Plan were valued using the Black-Scholes option pricing model. The table below sets forth the assumptions used in valuing such options.


	2011			2010			2009
Expected term of options⁽¹⁾		5.50 –36.25 years			6.20 –6.25 years			5.50 –6.25 years
Expected volatility – range used		48.18% -64.51	%		53.18% -55.90	%		42.96% -51.55	%
Expected volatility – weighted average		48.04	%		53.46	%		43.71	%
Expected dividend yield – range used		5.05% – 5.77	%		4.97% – 6.14	%		5.73% - 10.60	%
Expected dividend yield – weighted average		5.02	%		6.12	%		9.36	%
Risk-free interest rate		0.97% – 2.55	%		1.82% - 2.81	%		1.90% - 2.80	%

⁽¹⁾

We use the simplified method to determine the estimated life of our option awards as sufficient historical exercise data is unavailable. Under the simplified method the expected term is calculated as the midpoint between the vesting and the end of the contractual term of the option.

Multi-Year Outperformance Program

On January 11, 2010, we adopted a multi-year outperformance program, which is a long-term incentive compensation program, and granted awards under the program to certain officers and senior executives.

The awards entitle participants to receive shares of common stock with a maximum value of $10 million based on the absolute and relative total return to stockholders during the three-year performance period beginning on December 31, 2009. Half of the awards are based on our absolute total return to stockholders during the performance period and the other half are based on our relative total return to stockholders during the performance period compared to the performance of the MSCI US REIT Index during the same period.

Each participant’s award is designated as a specified percentage of the aggregate award value earned during the performance period, and participants are also entitled to a share of any unallocated portion of the aggregate award value. At the end of the performance period, each participant will be issued shares of our common stock with a value equal to that participant’s share of the aggregate award value. Half of the shares of common stock issued will be fully vested upon issuance at the end of the performance period and the remaining half will vest on the first anniversary of that date based on continued employment. We may also permit participants to elect to receive their awards in the form of LTIP Units or other equivalent forms of equity in lieu of shares of common stock.

We did not grant any awards under the program during 2011. The grant date fair value of the awards granted under the program during the year ended December 31, 2010 was approximately $1.6 million. During the years ended December 31, 2011 and 2010 we recognized approximately $0.1 million and $0.5 million of expense which is included in “General and administrative” in our Consolidated Statement of Operations related the amortization of these awards.

2006 Outperformance Program

On December 13, 2006, we adopted an outperformance program which provided for certain grants to be made under (and subject to) our Long-Term Incentive Plan, under which LTIP Units (as described above) are earned by selected senior executives if certain pre-established performance targets related to our compound annual stockholder return are met. Pursuant to the outperformance program, participating executives could share in a “performance pool” if our total stockholder return for the three year performance period, beginning December 13, 2006, exceeded the greater of an absolute compound annual total stockholder return of 10% or 110% of the compound annual return of the MSCI US REIT Index. The size of the pool for the initial program was 10% of the outperformance amount in excess of the performance hurdle, subject to a maximum amount of $40 million. Each executive’s award under the program was designated as a specified percentage of the aggregate

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performance pool and such awards were to be made in the form of LTIP Units. These LTIP Units were not entitled to distributions until and unless the performance pool is established. Half of the LTIP Units earned awards under the program (i.e. the number of LTIP Units earned) were scheduled to vest at the end of the three-year performance period, if the performance pool was established, after which the other half would vest ratably over the following two-year period. In October 2009, the outperformance program was canceled.

The LTIP Units associated with the program were originally recorded at their fair value of $2.9 million on the date of grant as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 16.31% and a risk-free interest rate of 4.62%, and amortized on a straight-line basis over the period during which the grant of such units fully vest. During the year ended December 31, 2009, we incurred approximately $2.1 million expense, which includes $1.4 million in accelerated amortization resulting from the program’s cancellation, which is included in “General and administrative” in our Consolidated Statements of Operations.

Employee Option Plan

Prior to October 6, 2006, we issued stock options under the Employee Option Plan, which was designed to enable us, our Former Advisor and its affiliates to obtain or retain the services of employees (not to include our directors) of our Former Advisor and its affiliates considered essential to our long-term success and the success of our Former Advisor and its affiliates by offering such employees an opportunity to participate in our growth through ownership of our shares. The Employee Option Plan was administered by our compensation committee, which was authorized to grant “non-qualified” stock options (the “Employee Options”) to certain employees of our Former Advisor and its affiliates. The compensation committee set the exercise price for the Employee Options in its discretion, which could not be less than the greater of (1) $11.00 per share or (2) the fair market value of the shares on the date the Employee Option was granted. A total of 1.0 million shares were authorized and reserved for issuance under the Employee Option Plan. The compensation committee set the term of Employee Options in its discretion, which could not exceed the later of five years from the date of grant or five years from the date of a listing of our common stock. Our compensation committee set the period during which the right to exercise an Employee Option fully vests at three years from the date of grant. Since the adoption of the Long-Term Incentive Plan on October 6, 2006, no further grants were made pursuant to the Employee Option Plan.

During the year ended December 31, 2007, options issued under the Employee Option Plan were valued using the Black-Scholes option pricing model. No employee options were granted under this plan subsequent to 2006.

Independent Director Option Plan

Prior to October 6, 2006, we granted stock options under the Independent Director Option Plan, which we used in an effort to attract and retain qualified independent directors. We granted non-qualified stock options to purchase 10,000 shares to each independent director pursuant to the Independent Director Option Plan effective upon the later of (1) the sale of 0.2 million shares in our first continuous public offering, and (2) the independent director becoming a member of our board of directors. These options vest 20% upon grant date and 20% each year for the following four years and have an exercise price of $12.00 per share. In addition, we issued options to purchase 5,000 shares to each independent director then in office on the date of each annual stockholder’s meeting and these options vest 100% upon the second anniversary from the grant date and have an exercise price equal to the greater of (1) $12.00 per share or (2) the fair market value of the shares on the date they are granted. Options granted under the Independent Director Option Plan shall lapse on the first to occur of (1) the tenth anniversary of the date we grant them, (2) the removal the independent director for cause, or (3) three months following the date the independent director ceases to be a director for any reason, other than death or disability. Since the adoption of the Long-Term Incentive Plan, no further grants were made pursuant to the Independent Director Option Plan. During the years ended December 31, 2007, options issued under the Independent Director Option Plan were valued using the Black-Scholes option pricing model. No options were issued under this plan subsequent to 2006.

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Stock Options Summary Table

Stock options granted under the Long-Term Incentive Plan, the Employee Option Plan and the Independent Director Option Plan are amortized on a straight-line basis over the service period during which the right to exercise such options fully vests. For the years ended December 31, 2011, 2010 and 2009 we incurred approximately $0.6 million, $0.6 million, and $1.0 million, respectively, of such expense which is included in “General and administrative” in our Consolidated Statements of Operations. As of December 31, 2011, approximately $0.8 million of such expense remained unrecognized which reflects the unamortized portion of the value of such options issued pursuant to the aforementioned plans. We expect to recognize such expense over a remaining weighted average period of 2.4 years.

The following table describes the total options outstanding, granted, exercised, expired and forfeited as of and during the years ended December 31, 2011, 2010, 2009, as well as the total options exercisable as of December 31, 2011.


	Independent Director Option Plan			Employee Option Plan			Long-Term Incentive Plan			Weighted Average Option Price Per Share		Weighted Average Fair Value of Options Granted During the Year		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
	(options in thousands)															(in thousands)
Issued and Outstanding as of December 31, 2008		80			289			2,165		$	9.61
Granted		—			—			1,553			3.42	$	0.55
Exercised					—			(140	)		3.41					$	297
Forfeited and/or expired		—			(100	)		(404	)		9.29

Issued and Outstanding as of December 31, 2009		80			189			3,174		$	7.11
Granted		—			—			499			4.58	$	1.38
Exercised		—			—			(6	)		3.41					$	10
Forfeited and/or expired		—			(115	)		(69	)		9.85

Issued and Outstanding as of December 31, 2010		80			74			3,598		$	6.65
Granted		—			—			441			5.54	$	1.66
Exercised		—			—			(243	)		3.64
Forfeited and/or expired		(15	)		(74	)		(757	)		7.57

Issued and Outstanding as of December 31, 2011		65			—			3,039		$	6.48				6.26	$	1,901

Exercisable as of December 31, 2011		65			—			1,890		$	7.17				6.26	$	1,210

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Note 12 - Related Party Transactions

8^th and Vineyard Consolidated Joint Venture

In May 2010 we entered into the 8^th and Vineyard joint venture with Iowa Investments, LLC, an entity owned by one of our executives, to purchase 19.3 acres of land held for development in Southern California. Pursuant to the joint venture agreement, we will first receive a return of all capital along with a preferred return. Thereafter, Iowa Investments, LLC will receive a return of all capital along with a promoted interest. The land parcel acquired by 8^th and Vineyard was purchased from an entity in which the same executive had a minority ownership. The total acquisition price of $4.7 million was determined to be at fair value.

Southern California Consolidated Ventures

We entered into four agreements, two in December 2010 and two in January 2011, whereby we acquired a weighted average controlling interest, based on square feet, of approximately 48.4% in five bulk industrial buildings located in the Southern California market. One of our executives has a weighted average noncontrolling interest in these properties of approximately 43.7%, based on square feet, and the remaining 7.9% is held by a third-party. Each venture partner will earn returns in accordance with their ownership interests. DCT has controlling rights including management of the operations of the properties and we have consolidated the properties and accounted for the transactions as business combinations. The total acquisition price of $46.3 million was determined to be at fair value.

Shared services agreement

During 2009, we had a shared services agreement with Overhead Services, Inc., formerly DC Services, LLC, (“Overhead Services”), an affiliate of Dividend Capital Advisors Group LLC (“DCAG”) whereby we received enumerated services (including IT services, human resources and payroll services) for a monthly fee payable to Overhead Services, which totaled approximately $0.6 million during the year ended December 31, 2009. Effective October 2009, we no longer had a related party relationship with DCAG.

Note 13 - Income and Other Taxes

We operate and expect to continue to operate in a manner to meet all the requirements to qualify for REIT status. We have made our REIT election under Internal Revenue Code Section 856 for the taxable year ended December 31, 2003 and have not revoked such election. In order for a former C corporation to elect to be a REIT, it must distribute 100% of its C corporation earnings and profits and agree to be subject to federal tax at the corporate level to the extent of any subsequently recognized built-in gains within a 10 year period. We did not have any built-in gains at the time of our conversion to REIT status. As a REIT, we generally will not be subject to federal income taxation at the corporate level to the extent we annually distribute 100% of our REIT taxable income, as defined in the Internal Revenue Code, to our stockholders and satisfy other requirements. To continue to qualify as a REIT for federal tax purposes, we must distribute at least 90% of our REIT taxable income annually. As of December 31, 2011, 2010 and 2009 we had recorded a $0.7 million benefit, a $0.3 million benefit, and a $0.7 million expense in provisions for federal and state income taxes on our taxable REIT subsidiaries, respectively. We are also subject to state and local taxes and recorded $0.8 million, $1.1 million and $1.0 million of such tax expenses during the years ended December 31, 2011, 2010 and 2009, respectively.

Foreign income taxes are accrued for foreign countries in which DCT operates in accordance with the applicable local laws and regulations, taking into account provisions of applicable double tax treaties. During the years ended December 31, 2011, 2010, and 2009, we incurred $20,000, $0.1 million and $0.1 million of foreign income tax expenses, respectively, resulting from our operations in Mexico.

Note 14 - Segment Information

During 2011, management reorganized internal reporting whereby the operating results used to assess performance were aggregated into four operating regions or segments to align the markets by which management and their operating teams conduct and monitor business. We manage our operations based on four operating

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segments and have aggregated our operations into three reportable segments (East, Central and West, which are based on the geographical locations of our properties). Management considers rental revenues and property net operating income aggregated by segment to be the appropriate way to analyze performance. Certain reclassifications have been made to prior year results to conform to the current presentation, related to discontinued operations and our reorganization resulting in three reportable segments. The following segment disclosures exclude the results from discontinued operations (see Note 15—Discontinued Operations and Assets Held for Sale for additional information).

The following table reflects our total assets, net of accumulated depreciation and amortization, by segment, as of December 31, 2011 and 2010 (in thousands).


	December 31,
	2011		2010
Segments:
East assets	$	913,867	$	912,977
Central assets		1,020,650		1,008,298
West assets		631,370		551,594

Total segment assets		2,565,887		2,472,869
Non-segment assets:
Development and redevelopment assets		13,993		57,076
Properties in pre-development including land held		47,972		24,664
Non-segment cash and cash equivalents		11,624		14,071
Other non-segment assets ⁽¹⁾		153,822		151,209

Total assets	$	2,793,298	$	2,719,889

⁽¹⁾

The following table sets forth the rental revenues of our segments in continuing operations and a reconciliation of our segment rental revenues to our reported consolidated total revenues for the years ended December 31, 2011, 2010 and 2009 (in thousands).


	2011		2010		2009
East	$	89,486	$	79,255	$	75,619
Central		105,643		103,081		105,746
West		53,794		42,399		44,728

Total rental revenues from operating properties in continuing operations		248,923		224,735		226,093
Rental revenues from development and redevelopment properties		235		964		3,704

Rental revenues		249,158		225,699		229,797
Institutional capital management and other fees		4,291		4,133		2,701

Total revenues	$	253,449	$	229,832	$	232,498

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The following table sets forth property net operating income of our segments in continuing operations and a reconciliation of our property NOI to our reported “Loss from continuing operations” for the years ended December 31, 2011, 2010 and 2009 (in thousands).


	2011			2010			2009
East	$	65,215		$	57,262		$	55,049
Central		73,247			71,940			74,751
West		40,301			29,706			33,436

Property NOI ⁽²⁾		178,763			158,908			163,236
NOI from development and redevelopment properties		(22	)		(513	)		1,723

Total property NOI		178,741			158,395			164,959
Institutional capital management and other fees		4,291			4,133			2,701
Real estate related depreciation and amortization		(124,244	)		(110,373	)		(104,883	)
Impairment losses		(448	)		(8,656	)		—
Casualty gains		33			—			—
General and administrative		(25,925	)		(25,262	)		(29,224	)
Equity in income (loss) of unconsolidated joint ventures, net		(2,556	)		(2,986	)		2,698
Impairment losses on investments in unconsolidated joint ventures		(1,953	)		(216	)		(300	)
Loss on business combinations		—			(395	)		(10,325	)
Interest expense		(63,941	)		(56,548	)		(52,338	)
Interest and other income (expense)		(310	)		357			1,918
Income tax expense and other taxes		(144	)		(918	)		(1,662	)

Loss from continuing operations	$	(36,456	)	$	(42,469	)	$	(26,456	)

⁽²⁾

Property net operating income (“property NOI”) is defined as rental revenues, including reimbursements, less rental expenses and real estate taxes, which excludes depreciation, amortization, impairment, general and administrative expenses and interest expense. We consider property NOI to be an appropriate supplemental performance measure because property NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of the property such as depreciation, amortization, impairment, general and administrative expenses, and interest expense. However, property NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our property NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating property NOI. Therefore, we believe net income (loss) attributable to common stockholders, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.

Included in the Central operating segment rental revenues for the years ended December 31, 2011, 2010 and 2009 was approximately $7.0 million, $5.4 million and $5.0 million, respectively, attributable to the Mexico operations. Included in the Central operating segment net assets as of December 31, 2011 and 2010 was approximately $77.0 million and $76.5 million, respectively, attributable to the Mexico operations.

Note 15 - Discontinued Operations and Assets Held for Sale

We report results of operations from real estate assets that meet the definition of a component of an entity and have been sold, or meet the criteria to be classified as held for sale, as discontinued operations. During the year ended December 31, 2011, we sold 16 operating properties to unrelated third-parties. Six of these properties were in the Central operating segment and ten were in the East operating segment, together totaling approximately 2.7 million square feet. These sales resulted in gains of approximately $12.0 million and impairment losses totaling $7.8 million.

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During the year ended December 31, 2010, we sold eight operating properties to unrelated third-parties. Two of the properties sold were in the West operating segment, five were in the East operating segment and one was in the Central operating segment, together totaling approximately 0.5 million square feet, and resulted in gains of approximately $2.1 million and impairment losses of $3.5 million.

During the year ended December 31, 2009, we sold three operating properties to unrelated third-parties. These three properties were in our Central operating segment and totaled approximately 0.9 million square feet. We also sold two land parcels in the East segment comprised of approximately 4.3 acres. These sales resulted in gains of approximately $1.3 million and impairment losses totaling $0.7 million.

For the years ended December 31, 2011, 2010 and 2009 income from discontinued operations includes the results of operations of these properties prior to the date of sale. We included all results of these discontinued operations in a separate component of income in our Consolidated Statements of Operations under the heading “Income (loss) from discontinued operations.” This treatment resulted in certain reclassifications of financial statement amounts for the years ended December 31, 2011, 2010 and 2009. For further details of our policy on discontinued operations, impairment of assets held for sale and related fair value measurements, see Note 2—Summary of Significant Accounting Policies.

The following is a summary of the components of income (loss) from discontinued operations for the years ended December 31, 2011, 2010 and 2009 (in thousands).


	2011			2010			2009
Rental revenues	$	9,120		$	9,770		$	13,626
Rental expenses and real estate taxes		(2,044	)		(2,943	)		(2,980	)
Real estate related depreciation and amortization		(4,745	)		(5,531	)		(6,368	)
General and administrative		(2	)		—			(220	)

Operating income		2,329			1,296			4,058
Interest expense		(312	)		(450	)		(512	)
Interest income and other income (expense)		61			(45	)		721
Income tax benefit (expense) and other taxes		—			(19	)		(193	)
Casualty gain		1,265			—			—

Income (loss) before gain on dispositions of real estate interests and impairment losses		3,343			782			4,074
Gain on dispositions of real estate interests		12,030			2,077			1,349
Impairment losses		(7,760	)		(3,456	)		(681	)

Income (loss) from discontinued operations	$	7,613	)	$	(597	)	$	4,742

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Note 16 - Quarterly Results (Unaudited)

The following table presents selected unaudited quarterly financial data for each quarter during the year ended December 31, 2011 (in thousands except per share information).


	For the Quarter Ended												For the Year Ended December 31, 2011
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011			For the Year Ended December 31, 2011
Total revenues	$	61,013		$	61,989		$	64,314		$	66,133		$	253,449
Total operating expenses	$	54,576		$	55,484		$	56,451		$	54,490		$	221,001
Operating income	$	6,437		$	6,505		$	7,863		$	11,643		$	32,448
Loss from continuing operations	$	(10,297	)	$	(11,462	)	$	(10,019	)	$	(4,678	)	$	(36,456	)
Income from discontinued operations	$	452		$	1,927		$	927		$	4,307		$	7,613
Net loss attributable to common stockholders	$	(8,536	)	$	(8,475	)	$	(8,076	)	$	(163	)	$	(25,250	)
Earnings per common share – basic and diluted:
Loss from continuing operations	$	(0.04	)	$	(0.05	)	$	(0.03	)	$	(0.02	)	$	(0.14	)
Income from discontinued operations		0.00			0.01			0.00			0.02			0.03

Net loss attributable to common stockholders	$	(0.04	)	$	(0.04	)	$	(0.03	)	$	(0.00	)	$	(0.11	)

Basic and diluted common shares outstanding		233,288			245,413			245,805			245,939			242,591

The following table presents selected unaudited quarterly financial data for each quarter during the year ended December 31, 2010 (in thousands except per share information).


	For the Quarter Ended												For the Year Ended December 31, 2010
	March 31, 2010			June 30, 2010			September 30, 2010			December 31, 2010			For the Year Ended December 31, 2010
Total revenues	$	56,279		$	56,989		$	58,702		$	57,862		$	229,832
Total operating expenses	$	50,344		$	55,438		$	51,276		$	54,537		$	211,595
Operating income	$	5,935		$	1,551		$	7,426		$	3,325		$	18,237
Loss from continuing operations	$	(8,402	)	$	(12,161	)	$	(9,278	)	$	(12,628	)	$	(42,469	)
Income (loss) from discontinued operations	$	165		$	44		$	(541	)	$	(265	)	$	(597	)
Gain (loss) on dispositions of real estate interests	$	16		$	—		$	(3	)	$	—		$	13
Net loss attributable to common stockholders	$	(7,224	)	$	(10,731	)	$	(8,680	)	$	(11,195	)	$	(37,830	)
Earnings per common share – basic and diluted:
Loss from continuing operations	$	(0.04	)	$	(0.05	)	$	(0.04	)	$	(0.05	)	$	(0.18	)
Income (loss) from discontinued operations		0.00			0.00			(0.00	)		(0.00	)		(0.00	)

Net income (loss) attributable to common stockholders	$	(0.04	)	$	(0.05	)	$	(0.04	)	$	(0.05	)	$	(0.18	)

Basic and diluted common shares outstanding		208,350			210,841			211,634			218,723			212,412

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Note 17 - Subsequent Events

GAAP requires an entity to disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”) as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, (“recognized subsequent events”). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (“nonrecognized subsequent events”). No significant recognized or nonrecognized subsequent events were noted.

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SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition			Land		Building & Improvements ⁽¹⁾		Total Costs ⁽³⁾⁽⁵⁾		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
Newpoint I		1	$	—	$	2,143	$	12,908	$	15,051	$	(446	)⁽²⁾	$	2,088	$	12,517	$	14,605	$	(3,264	)		03/31/04	1997
Eagles Landing		1		—		2,595		13,475		16,070		(999	)⁽²⁾		2,595		12,476		15,071		(3,695	)		06/08/04	2003
Southcreek		4		—		7,843		45,385		53,228		6,929			8,342		51,815		60,157		(13,961	)		6/8/2004- 2/13/2009	1999-2006
Breckinridge Industrial		2		—		1,950		10,159		12,109		(902	)⁽²⁾		1,950		9,257		11,207		(2,016	)		10/01/04	2000
Westgate Industrial		1		—		2,140		4,801		6,941		1,434			2,140		6,235		8,375		(1,185	)		10/01/04	1988
Westpark Industrial		2		—		2,176		6,719		8,895		1,117			2,176		7,836		10,012		(2,773	)		10/01/04	1981
Cobb Industrial		2		—		1,120		5,249		6,369		391			1,120		5,640		6,760		(1,868	)		10/01/04	1996
Cabot Parkway Industrial		1		—		1,102		6,617		7,719		417			1,103		7,033		8,136		(2,449	)		10/01/04	2000
Atlanta NE Portolio		1		—		1,197		9,647		10,844		291			1,197		9,938		11,135		(2,497	)		11/05/04	1987
Northmont Parkway		1		—		1,029		2,103		3,132		(296	)⁽²⁾		1,029		1,807		2,836		(713	)		12/03/04	2003
Fulton Industrial Boulevard		3		—		1,850		13,480		15,330		1,297			1,850		14,777		16,627		(4,492	)		07/21/05	1973-1996
Penney Road		1		—		401		4,145		4,546		167			401		4,312		4,713		(933	)		07/21/05	2001
Southfield Parkway		1		1,709		523		3,808		4,331		(117	)⁽²⁾		523		3,691		4,214		(834	)		07/21/05	1994
Livingston Court		2		2,249		919		6,878		7,797		(169	)⁽²⁾		919		6,709		7,628		(2,017	)		07/21/05	1985
Peterson Place		4		2,737		596		6,900		7,496		122			596		7,022		7,618		(2,083	)		07/21/05	1984
Oakbrook Parkway		5		7,528		1,823		17,185		19,008		1,724			1,823		18,909		20,732		(5,533	)		07/21/05	1982
Regency Parkway		7		6,883		1,521		16,084		17,605		1,795			1,521		17,879		19,400		(5,199	)		07/21/05	1984-1989
Jimmy Carter Boulevard		2		2,206		488		5,159		5,647		904			488		6,063		6,551		(1,974	)		07/21/05	1984
McGinnis Ferry		1		—		700		6,855		7,555		1,534			691		8,398		9,089		(1,153	)		07/21/05	1993
South Royal Atlanta Drive		1		—		174		1,896		2,070		189			174		2,085		2,259		(487	)		07/21/05	1986
Buford Development		1		—		1,370		7,151		8,521		1,848			1,370		8,999		10,369		(1,455	)		03/31/06	2006
Northmont Parkway		4		—		3,528		20,622		24,150		1,641			3,528		22,263		25,791		(4,600	)		06/09/06	1998-2000
Evergreen Boulevard		2		—		3,123		14,265		17,388		(449	)⁽²⁾		3,123		13,816		16,939		(2,689	)		06/09/06	1999
Greenwood Parkway		1		—		1,326		3,977		5,303		2,095			1,461		5,937		7,398		(878	)		03/14/07	1995
Pleasantdale		1		—		790		1,503		2,293		146			819		1,620		2,439		(66	)		07/11/11	1995

TOTAL ATLANTA MARKET		52		23,312		42,427		246,971		289,398		20,663			43,027		267,034		310,061		(68,814	)
Delta Portfolio		7		24,480		8,762		36,806		45,568		792			8,699		37,661		46,360		(8,140	)		04/12/05	1986-1993
Charwood Road		1		4,790		1,960		10,261		12,221		447			1,960		10,708		12,668		(2,394	)		07/21/05	1986
Greenwood Place		2		4,852		2,566		12,918		15,484		640			2,566		13,558		16,124		(2,911	)		7/21/2005- 6/9/2006	1978-1984
Guilford Road ⁽⁶⁾		1		—		1,879		6,650		8,529		1,331			1,879		7,981		9,860		(2,016	)		06/09/06	1989
Bollman Place		1		—		1,654		6,202		7,856		265			1,654		6,467		8,121		(1,164	)		06/09/06	1986
Dulles		4		—		8,431		21,517		29,948		1,890			8,431		23,407		31,838		(2,956	)		08/04/06	2007
Beckley		1		—		3,002		10,700		13,702		143			3,002		10,843		13,845		(1,195	)		09/10/10	1992

TOTAL BALTIMORE/WASHINGTON MARKET		17		34,122		28,254		105,054		133,308		5,508			28,191		110,625		138,816		(20,776	)

F-45

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition			Land		Building & Improvements ⁽¹⁾		Total Costs ⁽³⁾⁽⁵⁾		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
Route 22		1		7,058		5,183		20,100		25,283		(79	)⁽²⁾		5,183		20,021		25,204		(6,815	)		07/20/05	2003
High Street Portfolio (6)		3		—		4,853		10,334		15,187		434			4,853		10,768		15,621		(2,706	)		10/26/05	1975-1988
Independence Avenue		1		—		3,133		17,542		20,675		(224	)⁽²⁾		3,133		17,318		20,451		(2,837	)		12/26/06	1999
Bobali Drive (6)		3		—		4,107		9,288		13,395		484			4,107		9,772		13,879		(1,721	)		02/09/07	1998-1999

TOTAL CENTRAL PENNSYLVANIA MARKET		8		7,058		17,276		57,264		74,540		615			17,276		57,879		75,155		(14,079	)
Wyoming Avenue		1		—		622		3,655		4,277		(169	)⁽²⁾		622		3,486		4,108		(918	)		11/02/05	1997

TOTAL CHARLOTTE MARKET		1		—		622		3,655		4,277		(169	)⁽²⁾		622		3,486		4,108		(918	)
Mallard Lake		1		—		2,561		8,809		11,370		14			2,561		8,823		11,384		(2,958	)		10/29/03	2000
Gary Ave		1		—		3,191		18,506		21,697		2,196			3,191		20,702		23,893		(3,830	)		01/05/05	2001
Blackhawk Portfolio		5		—		6,671		40,877		47,548		1,284			6,667		42,165		48,832		(12,168	)		06/13/05	1974-1987
East Fabyan Parkway		1		4,204		1,790		10,929		12,719		742			1,790		11,671		13,461		(3,811	)		07/21/05	1975
Frontenac Road		1		—		1,647		5,849		7,496		267			1,647		6,116		7,763		(1,751	)		07/21/05	1995
Stern Avenue		1		—		505		4,947		5,452		(1,867	)⁽²⁾		505		3,080		3,585		(889	)		07/21/05	1979
South Wolf Road		1		8,495		4,836		18,794		23,630		3,499			4,836		22,293		27,129		(7,136	)		07/21/05	1982
Laramie Avenue (6)		1		3,684		1,442		7,985		9,427		688			1,412		8,703		10,115		(2,545	)		07/21/05	1972
West 123rd Place		1		704		644		5,935		6,579		1,355			644		7,290		7,934		(2,072	)		07/21/05	1975
Veterans Parkway		1		—		2,108		—		2,108		7,599			2,108		7,599		9,707		(2,247	)		10/20/05	2005
Lunt Avenue		1		—		1,620		1,988		3,608		240			1,620		2,228		3,848		(631	)		03/17/06	2005
Mitchell Court		1		—		5,036		8,578		13,614		506			5,036		9,084		14,120		(2,307	)		05/01/07	1985
Mission Street		1		—		1,765		2,377		4,142		180			1,765		2,557		4,322		(1,021	)		09/08/08	1991
Wolf Road		1		—		1,908		2,392		4,300		70			1,930		2,440		4,370		(205	)		11/22/10	1971
Arthur Avenue		1		—		3,231		1,469		4,700		—			3,219		1,481		4,700		—			12/30/11	1959

TOTAL CHICAGO MARKET		19		17,087		38,955		139,435		178,390		16,773			38,931		156,232		195,163		(43,571	)
Park West		6		—		10,441		63,682		74,123		(2,637	)⁽²⁾		10,319		61,167		71,486		(17,912	)		12/15/2003- 6/8/2004	1997-2003
Northwest Business Center		1		—		299		4,486		4,785		272			299		4,758		5,057		(3,183	)		05/03/04	1995
New Buffington Road		2		5,275		1,618		8,500		10,118		3,817			1,618		12,317		13,935		(3,732	)		07/21/05	1981
Olympic Boulevard		3		5,877		2,096		11,788		13,884		1,834			2,096		13,622		15,718		(4,050	)		07/21/05	1989
Mineola Pike		1		2,201		625		4,642		5,267		91			625		4,733		5,358		(1,228	)		07/21/05	1983
Industrial Road		2		1,660		629		3,344		3,973		1,195			628		4,540		5,168		(1,211	)		07/21/05	1987
Dolwick Drive		1		2,186		579		4,670		5,249		374			579		5,044		5,623		(1,475	)		07/21/05	1979
Best Place		1		—		1,131		5,516		6,647		2,104			1,131		7,620		8,751		(2,215	)		07/21/05	1996
Distribution Circle		1		—		688		6,838		7,526		1,109			688		7,947		8,635		(1,987	)		07/21/05	1981
Creek Road		1		—		377		4,925		5,302		39			377		4,964		5,341		(1,493	)		06/09/06	1983
Power Line Drive		1		—		70		261		331		(10	)⁽²⁾		70		251		321		(43	)		06/09/06	1984
Foundation Drive		4		—		706		3,471		4,177		104			706		3,575		4,281		(826	)		06/09/06	1984-1987
Jamilke Drive		6		—		1,206		8,887		10,093		466			1,206		9,353		10,559		(2,176	)		06/09/06	1984-1987
Port Union (6)		2		—		7,649		22,780		30,429		2,209			7,649		24,989		32,638		(1,257	)		11/09/07	2007

TOTAL CINCINNATI MARKET		32		17,199		28,114		153,790		181,904		10,967			27,991		164,880		192,871		(42,788	)

F-46

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition			Land		Building & Improvements ⁽¹⁾		Total Costs ⁽³⁾⁽⁵⁾		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
Commodity Boulevard		2		—		3,891		36,799		40,690		(594	)⁽²⁾		3,891		36,205		40,096		(8,323	)		07/21/05	2000-2005
Industrial Drive		1		2,932		683		7,136		7,819		(305	)⁽²⁾		683		6,831		7,514		(1,489	)		07/21/05	1995
Zane Trace Drive		1		—		288		3,091		3,379		130			288		3,221		3,509		(1,036	)		03/14/06	1980
Rickenbacker		2		9,577		3,532		34,172		37,704		(787	)⁽²⁾		3,532		33,385		36,917		(6,408	)		4/13/2006- 5/19/2006	1998-2000
Creekside		4		—		5,210		52,437		57,647		1,120			5,210		53,557		58,767		(12,996	)		05/19/06	1999-2002
SouthPark		3		—		1,628		13,504		15,132		574			1,628		14,078		15,706		(3,190	)		05/19/06	1990-1999
Lasalle Drive		1		7,415		1,839		12,391		14,230		535			2,304		12,461		14,765		(2,715	)		08/08/07	2004

TOTAL COLUMBUS MARKET		14		19,924		17,071		159,530		176,601		673			17,536		159,738		177,274		(36,157	)
Freeport Parkway		1		—		981		10,392		11,373		(362	)⁽²⁾		981		10,030		11,011		(3,664	)		12/15/03	1999
Pinnacle (6)		1		—		521		9,683		10,204		376			521		10,059		10,580		(3,241	)		12/15/03	2001
Market Industrial		5		—		1,481		15,507		16,988		(848	)⁽²⁾		1,481		14,659		16,140		(3,387	)		10/01/04	1981-1985
Shiloh Industrial		1		—		459		4,173		4,632		(211	)⁽²⁾		459		3,962		4,421		(920	)		10/01/04	1984
Perimeter Industrial		2		—		261		2,901		3,162		(350	)⁽²⁾		261		2,551		2,812		(618	)		10/01/04	1979
Avenue R Industrial I		1		—		189		2,231		2,420		(49	)⁽²⁾		189		2,182		2,371		(546	)		10/01/04	1980
Avenue R Industrial II		1		—		271		1,139		1,410		168			271		1,307		1,578		(352	)		10/01/04	1980
Westfork Center Industrial		3		—		503		5,977		6,480		280			503		6,257		6,760		(1,433	)		10/01/04	1980
Grand River Rd		1		—		1,380		14,504		15,884		(1,713	)⁽²⁾		1,380		12,791		14,171		(3,855	)		12/03/04	2004
Diplomat Drive		1		—		532		3,136		3,668		1,951			532		5,087		5,619		(1,459	)		05/26/05	1986
North 28th Street		1		—		—		6,145		6,145		(73	)⁽²⁾		—		6,072		6,072		(2,469	)		07/21/05	2000
Esters Boulevard		5		—		2,428		50,618		53,046		540			2,870		50,716		53,586		(14,656	)		07/21/05	1984-1999
Royal Lane		1		—		—		3,200		3,200		251			—		3,451		3,451		(1,035	)		07/21/05	1986
West Story Drive		1		—		777		4,646		5,423		418			777		5,064		5,841		(1,628	)		07/21/05	1997
Meridian Drive		1		—		410		4,135		4,545		1,365			410		5,500		5,910		(2,256	)		07/21/05	1975
Gateway Drive		1		—		463		2,152		2,615		601			463		2,753		3,216		(733	)		07/21/05	1988
Valwood Parkway		3		2,706		2,271		15,351		17,622		1,324			2,271		16,675		18,946		(5,562	)		07/21/05	1984-1996
108th Street		1		—		83		899		982		(61	)⁽²⁾		83		838		921		(263	)		07/21/05	1972
Sanden Drive		1		—		207		2,258		2,465		219			207		2,477		2,684		(486	)		07/21/05	1994
North Great Southwest Parkway		2		2,385		1,384		3,727		5,111		1,555			1,904		4,762		6,666		(1,073	)		07/21/05	1963-1964
Webb Chapel Road		1		303		110		732		842		(457	)⁽²⁾		110		275		385		(107	)		07/21/05	1978
Belt Line Road		6		3,210		1,167		7,811		8,978		1,023			1,167		8,834		10,001		(2,982	)		07/21/05	1978
Springlake Road		2		1,832		534		4,457		4,991		768			534		5,225		5,759		(1,731	)		07/21/05	1984
Hurd Drive (6)		1		1,256		420		2,332		2,752		207			420		2,539		2,959		(521	)		07/21/05	1982
Champion Drive		1		1,442		672		2,598		3,270		880			672		3,478		4,150		(716	)		07/21/05	1984
GSW Gateway Three		1		—		1,669		11,622		13,291		1			1,669		11,623		13,292		(3,531	)		01/13/06	2001

TOTAL DALLAS MARKET		46		13,134		19,173		192,326		211,499		7,803			20,135		199,167		219,302		(59,224	)
Interpark 70		1		4,633		1,383		7,566		8,949		(770	)⁽²⁾		1,383		6,796		8,179		(1,869	)		09/30/04	1998
Peccos Street		1		—		1,860		4,821		6,681		35			1,860		4,856		6,716		(168	)		08/08/11	2003

TOTAL DENVER MARKET		2		4,633		3,243		12,387		15,630		(735	)⁽²⁾		3,243		11,652		14,895		(2,037	)

F-47

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition			Land		Building & Improvements ⁽¹⁾		Total Costs ⁽³⁾⁽⁵⁾		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
West by Northwest		1		—		1,033		7,564		8,597		1			1,033		7,565		8,598		(2,078	)		10/30/03	1997
Bondesen Business. Park		7		—		1,007		23,370		24,377		1,495			1,007		24,865		25,872		(8,999	)		06/03/04	2001-2002
Beltway 8 Business Park		7		—		1,679		25,565		27,244		100			1,679		25,665		27,344		(8,961	)		6/3/2004- 7/1/2005	2001-2003
Corporate Industrial		2		—		613		3,989		4,602		451			613		4,440		5,053		(994	)		10/01/04	1981
Reed Industrial		1		—		568		6,331		6,899		1,157			568		7,488		8,056		(3,597	)		10/01/04	1973
Julie Rivers Industrial		2		—		272		3,123		3,395		681			272		3,804		4,076		(1,573	)		10/01/04	1982
Wynwood Industrial		1		—		180		1,634		1,814		(66	)⁽²⁾		180		1,568		1,748		(361	)		10/01/04	1980
Wynpark Industrial		1		—		154		1,404		1,558		90			154		1,494		1,648		(459	)		10/01/04	1966
Siber Industrial		1		—		742		4,644		5,386		(490	)⁽²⁾		742		4,154		4,896		(1,620	)		10/01/04	1966
Greenbriar Industrial		1		—		1,200		7,998		9,198		3,167			1,200		11,165		12,365		(4,753	)		10/01/04	1981
Greens Crossing		3		6,329		1,225		10,202		11,427		133			1,225		10,335		11,560		(2,841	)		07/01/05	1998-2000
Willowbrook		4		7,570		1,274		12,842		14,116		1,255			1,274		14,097		15,371		(3,918	)		07/01/05	1998-2000
Gateway at Central Green		2		—		1,079		9,929		11,008		427			1,079		10,356		11,435		(2,640	)		09/20/05	2001
Fairbanks Center		1		—		707		5,205		5,912		205			707		5,410		6,117		(1,287	)		03/27/06	1999
Bondesen North		4		—		3,345		11,030		14,375		114			3,345		11,144		14,489		(2,724	)		06/08/07	2006
Northwest Place		1		—		1,821		11,406		13,227		701			1,821		12,107		13,928		(2,040	)		06/14/07	1997
Warehouse Center Drive		1		—		1,296		6,782		8,078		12			1,296		6,794		8,090		(1,453	)		12/03/07	2006
Air Center Drive		1		—		763		1,876		2,639		42			711		1,970		2,681		(278	)		11/09/10	1997
Beltway Antoine Portfolio		7		—		7,058		31,875		38,933		322			7,058		32,197		39,255		(1,327	)		08/11/11	2007-2008
Greens Parkway		1		—		704		4,093		4,797		89			704		4,182		4,886		(20	)		12/07/11	2007

TOTAL HOUSTON MARKET		49		13,899		26,720		190,862		217,582		9,886			26,668		200,800		227,468		(51,923	)
Plainfield		2		—		3,095		31,369		34,464		(40	)⁽²⁾		3,095		31,329		34,424		(8,077	)		12/22/2003- 4/13/2006	1997-2000
Guion Road		1		—		2,200		11,239		13,439		(224	)⁽²⁾		2,200		11,015		13,215		(2,852	)		12/15/05	1995
Franklin Road		3		—		2,292		11,949		14,241		4,229			2,292		16,178		18,470		(4,875	)		02/27/06	1973
Perry Road		1		—		1,106		7,268		8,374		353			1,106		7,621		8,727		(1,657	)		10/10/07	1995

TOTAL INDIANAPOLIS MARKET		7		—		8,693		61,825		70,518		4,318			8,693		66,143		74,836		(17,461	)
Trade Pointe III		1		4,797		1,020		7,240		8,260		(713	)⁽²⁾		1,020		6,527		7,547		(1,712	)		09/28/04	2001
Riverport		1		—		1,279		8,812		10,091		(969	)⁽²⁾		1,279		7,843		9,122		(2,202	)		05/03/04	1996
Freeport		1		—		2,523		18,693		21,216		(547	)⁽²⁾		2,523		18,146		20,669		(3,342	)		03/14/07	1999
Louisville Logistics Center		1		5,120		2,177		11,932		14,109		(14	)⁽²⁾		2,177		11,918		14,095		(2,888	)		10/12/07	2002

TOTAL LOUISVILLE MARKET		4		9,917		6,999		46,677		53,676		(2,243	)⁽²⁾		6,999		44,434		51,433		(10,144	)

F-48

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition			Land		Building & Improvements ⁽¹⁾		Total Costs ⁽³⁾⁽⁵⁾		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
Chickasaw		2		—		1,141		13,837		14,978		(576	)⁽²⁾		1,141		13,261		14,402		(4,129	)		07/22/03	2000-2002
Memphis Portfolio		7		33,133		18,088		114,739		132,827		1,638			19,757		114,708		134,465		(34,370	)		2/5/2005- 5/13/2005	1997-2003
Memphis Distriplex		1		—		1,525		10,444		11,969		(868	)⁽²⁾		1,525		9,576		11,101		(2,084	)		06/13/05	2000
Deltapoint		1		—		2,299		24,436		26,735		5,494			2,299		29,930		32,229		(3,670	)		06/29/07	2006

TOTAL MEMPHIS MARKET		11		33,133		23,053		163,456		186,509		5,688			24,722		167,475		192,197		(44,253	)
Logistik Park, San Luis Potosi		1		—		565		2,638		3,203		245			565		2,883		3,448		(438	)		08/15/07	2006
Monterrey Portfolio ⁽⁶⁾		7		—		7,138		29,660		36,798		9,581			8,098		38,281		46,379		(4,683	)		11/16/2007- 8/21/2009	2007-2009
Guadalajara Portfolio		3		—		4,683		8,366		13,049		332			4,761		8,620		13,381		(1,283	)		9/28/2007- 10/18/2007	1999-2007
Tijuana Portfolio ⁽⁶⁾		3		—		2,746		7,977		10,723		1,002			2,746		8,979		11,725		(1,191	)		12/06/07	1989-1992
Avenida de las Fuentes, Queretaro		1		—		846		4,237		5,083		1,512			846		5,749		6,595		(603	)		10/06/08	2003

TOTAL MEXICO MARKET		15		—		15,978		52,878		68,856		12,672			17,016		64,512		81,528		(8,198	)
Miami Service Center		1		—		1,110		3,811		4,921		580			1,110		4,391		5,501		(1,201	)		04/07/05	1987
Miami Commerce Center		1		3,928		3,050		10,769		13,819		4,402			3,050		15,171		18,221		(2,566	)		04/13/05	1991
Northwest 70th Avenue		2		—		10,025		16,936		26,961		4,942			10,025		21,878		31,903		(6,942	)		06/09/06	1972-1976
North Andrews Avenue		1		—		6,552		6,101		12,653		651			6,552		6,752		13,304		(1,511	)		06/09/06	1999
Northwest 30th Terrace		1		—		3,273		4,196		7,469		429			3,273		4,625		7,898		(224	)		02/18/11	1994

TOTAL MIAMI MARKET		6		3,928		24,010		41,813		65,823		11,004			24,010		52,817		76,827		(12,444	)
Eastgate		1		—		1,445		13,352		14,797		(1,671	)⁽²⁾		1,445		11,681		13,126		(2,936	)		03/19/04	2002
Mid South Logistics Center		1		11,641		1,772		18,288		20,060		1,893			1,850		20,103		21,953		(5,242	)		06/29/04	2001
Rockdale Distribution Center		1		—		2,940		12,188		15,128		(537	)⁽²⁾		2,940		11,651		14,591		(2,378	)		12/28/05	2005
Logistics Way		1		—		621		17,763		18,384		37			621		17,800		18,421		(3,137	)		09/28/09	2007

TOTAL NASHVILLE MARKET		4		11,641		6,778		61,591		68,369		(278	)⁽²⁾		6,856		61,235		68,091		(13,693	)
Brunswick Avenue		1		—		3,665		16,380		20,045		1,517			3,665		17,897		21,562		(3,328	)		07/21/05	1986
Cottontail Lane ⁽⁶⁾		1		—		1,960		9,169		11,129		(2,226	)⁽²⁾		1,960		6,943		8,903		(2,257	)		07/21/05	1991
Campus Drive		1		—		1,366		4,841		6,207		1,167			1,366		6,008		7,374		(1,691	)		07/21/05	1975
Hanover Ave		1		—		4,940		8,026		12,966		767			4,940		8,793		13,733		(2,488	)		12/28/05	1988
Rockaway		3		—		5,881		12,521		18,402		1,543			5,881		14,064		19,945		(4,495	)		12/29/05	1974
Lake Drive		1		4,981		1,699		6,898		8,597		222			1,699		7,120		8,819		(1,432	)		05/25/06	1988
Market Street		2		—		2,298		7,311		9,609		(513	)⁽²⁾		2,298		6,798		9,096		(1,507	)		06/06/06	1990
Kennedy Drive		1		—		3,044		6,583		9,627		138			3,044		6,721		9,765		(634	)		04/14/10	2001
Railroad Avenue		1		—		6,494		10,996		17,490		448			6,494		11,444		17,938		(1,122	)		01/28/11	1964

TOTAL NEW JERSEY MARKET		12		4,981		31,347		82,725		114,072		3,063			31,347		85,788		117,135		(18,954	)

F-49

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition			Land		Building & Improvements ⁽¹⁾		Total Costs ⁽³⁾⁽⁵⁾		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
Eden Rock Industrial		1		—		998		2,566		3,564		131			998		2,697		3,695		(857	)		10/01/04	1973
Bayside Distribution Center		2		10,166		6,875		15,254		22,129		(503	)⁽²⁾		6,875		14,751		21,626		(4,321	)		11/03/04	1998-2000
California Logistics Centre		1		—		5,672		20,499		26,171		314			5,672		20,813		26,485		(6,413	)		04/21/06	2001
Cherry Street		3		—		12,584		24,582		37,166		1,593			12,584		26,175		38,759		(5,840	)		06/09/06	1960-1990
Pike Lane		3		—		2,880		8,328		11,208		(24	)⁽²⁾		2,880		8,304		11,184		(1,733	)		06/09/06	1982
South Vasco Road		1		—		2,572		14,809		17,381		(375	)⁽²⁾		2,572		14,434		17,006		(2,921	)		06/09/06	1999
McLaughlin Avenue		1		—		3,424		5,507		8,931		75			3,424		5,582		9,006		(1,461	)		06/09/06	1975
Park Lane		5		—		10,977		17,216		28,193		(874	)⁽²⁾		10,977		16,342		27,319		(4,619	)		06/09/06	1960-1966
Valley Drive		4		—		11,238		14,244		25,482		666			11,238		14,910		26,148		(4,478	)		06/09/06	1960-1971
Old Country Road		1		—		1,557		1,503		3,060		(20	)⁽²⁾		1,557		1,483		3,040		(467	)		06/09/06	1969
Cypress Lane		1		—		2,211		2,196		4,407		449			2,211		2,645		4,856		(942	)		06/09/06	1970
Fite Court		1		—		5,316		15,499		20,815		362			5,316		15,861		21,177		(2,675	)		12/28/06	2003
Rollins Road		1		19,962		17,800		17,621		35,421		—			17,659		17,762		35,421		(227	)		11/04/11	1997

TOTAL NORTHERN CALIFORNIA MARKET		25		30,128		84,104		159,824		243,928		1,794			83,963		161,759		245,722		(36,954	)
Cypress Park East		2		9,192		2,627		13,055		15,682		856			2,627		13,911		16,538		(2,760	)		10/22/04	2000
East Landstreet Road		3		—		2,251		11,979		14,230		136			2,251		12,115		14,366		(2,467	)		06/09/06	1997-2000
Boggy Creek Road		8		—		8,098		30,984		39,082		1,045			8,098		32,029		40,127		(5,663	)		06/09/06	1993-2007
ADC North Phase I		2		—		2,475		11,941		14,416		853			2,475		12,794		15,269		(944	)		12/19/06	2008-2009
American Way		1		—		3,603		8,667		12,270		1			3,603		8,668		12,271		(2,041	)		08/16/07	1997
Director's Row		1		—		524		2,519		3,043		33			524		2,552		3,076		(180	)		03/01/11	1994
GE Portfolio		3		—		4,715		12,513		17,228		71			4,715		12,584		17,299		(329	)		09/01/11	1975-1999

TOTAL ORLANDO MARKET		20		9,192		24,293		91,658		115,951		2,995			24,293		94,653		118,946		(14,384	)
North Industrial		2		5,002		4,566		15,899		20,465		1,868			4,566		17,767		22,333		(5,317	)		10/01/04	1995-1999
South Industrial I		2		4,173		2,876		14,120		16,996		(55	)⁽²⁾		2,829		14,112		16,941		(5,325	)		10/01/04	1987-1989
South Industrial II		1		—		1,235		4,902		6,137		(806	)⁽²⁾		1,235		4,096		5,331		(1,722	)		10/01/04	1990
West Southern Industrial		1		—		555		3,376		3,931		(383	)⁽²⁾		555		2,993		3,548		(649	)		10/01/04	1984
West Geneva Industrial		3		—		413		2,667		3,080		341			413		3,008		3,421		(882	)		10/01/04	1981
West 24th Industrial		2		—		870		4,575		5,445		750			870		5,325		6,195		(1,953	)		10/01/04	1979-1980
Sky Harbor Transit Center		1		—		2,534		7,597		10,131		(342	)⁽²⁾		2,534		7,255		9,789		(2,450	)		11/24/04	2002
Roosevelt Distribution Center		1		—		1,154		6,441		7,595		(19	)⁽²⁾		1,154		6,422		7,576		(1,269	)		05/19/06	1988
North 45th Street		1		—		3,149		5,051		8,200		8			3,149		5,059		8,208		(188	)		06/30/11	2001

TOTAL PHOENIX MARKET		14		9,175		17,352		64,628		81,980		1,362			17,305		66,037		83,342		(19,755	)
Business Park Dr ⁽⁶⁾		7		—		3,194		16,933		20,127		3,059			3,246		19,940		23,186		(5,277	)		12/07/06	1976-1979
Rittiman Plaza		3		—		1,930		9,996		11,926		295			1,930		10,291		12,221		(2,420	)		12/07/06	1977
Tejesco		3		—		1,225		6,669		7,894		1,551			1,259		8,186		9,445		(1,891	)		12/07/06	1977-1980

TOTAL SAN ANTONIO MARKET		13		—		6,349		33,598		39,947		4,905			6,435		38,417		44,852		(9,588	)

F-50

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition			Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition			Land		Building & Improvements ⁽¹⁾		Total Costs ⁽³⁾⁽⁵⁾		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
Industry Drive North		2		9,290		5,753		16,039		21,792		111			5,753		16,150		21,903		(4,300	)		07/21/05	1996
South 228th Street		1		—		3,025		13,694		16,719		395			3,025		14,089		17,114		(2,874	)		07/21/05	1996
64th Avenue South		1		5,179		3,345		9,335		12,680		202			3,345		9,537		12,882		(1,780	)		07/21/05	1996
South 192nd Street		1		—		1,286		3,433		4,719		60			1,286		3,493		4,779		(770	)		07/21/05	1986
Southwest 27th Street		1		7,005		4,583		8,353		12,936		27			4,583		8,380		12,963		(3,332	)		07/21/05	1995
South 212th Street		1		—		3,095		10,253		13,348		(385	)⁽²⁾		3,095		9,868		12,963		(2,044	)		08/01/05	1996
13610 52nd St ⁽⁶⁾		1		—		4,018		9,571		13,589		—			4,018		9,571		13,589		(474	)		12/01/10	2006
Southwest 27th Street-Alpak ⁽⁶⁾		1		—		4,313		4,687		9,000		—			4,313		4,687		9,000		(71	)		10/14/11	2003

TOTAL SEATTLE MARKET		9		21,474		29,418		75,365		104,783		410			29,418		75,775		105,193		(15,645	)
Rancho Technology Park		1		—		2,790		7,048		9,838		(653	)⁽²⁾		2,790		6,395		9,185		(1,417	)		10/16/03	2002
Foothill Business Center		3		—		13,315		9,112		22,427		(628	)⁽²⁾		13,315		8,484		21,799		(2,235	)		12/09/04	2000
East Slauson Avenue		3		9,432		5,499		14,775		20,274		3,098			5,499		17,873	$	23,372		(5,786	)		07/21/05	1962-1976
Airport Circle		1		—		3,098		8,368		11,466		1,199			3,098		9,567	$	12,665		(1,978	)		07/21/05	1992
Cota Street		1		—		2,802		7,624		10,426		66			2,802		7,690	$	10,492		(1,822	)		07/21/05	1987
Twin Oaks Valley Road		2		—		1,815		7,855		9,670		(17	)⁽²⁾		1,815		7,838	$	9,653		(1,583	)		07/21/05	1978-1988
Meyer Canyon		1		—		5,314		9,929		15,243		1,823			5,608		11,458	$	17,066		(2,091	)		06/30/06	2001
Mira Loma		1		—		7,919		6,668		14,587		—			7,919		6,669		14,588		(711	)		12/23/08	1997
Sycamore Canyon ⁽⁶⁾		2		—		6,356		36,088		42,444		1,346			6,356		37,435	$	43,791		(3,985	)		09/09/09	2007
Colombard Ct		1		2,030		1,264		3,237		4,501		(1	)⁽²⁾		1,264		3,236		4,500		(455	)		07/29/10	1990
E Airport Drive		1		—		905		2,744		3,649		—			905		2,744		3,649		(261	)		12/23/10	1990
Truck Courts ⁽⁶⁾		3		—		26,392		17,267		43,659		—			26,392		17,267		43,659		(846	)		12/29/10	1971-1988
Haven A		1		8,845		5,783		19,578		25,361		2			5,783		19,580		25,363		(2,116	)		12/31/10	2001
Haven G		1		—		479		1,131		1,610		3			479		1,134		1,613		(115	)		12/31/10	2003
6th and Rochester		1		3,630		3,111		6,428		9,539		(328	)⁽²⁾		3,088		6,123	$	9,211		(452	)		01/04/11	2001
Palmyrita		2		—		3,355		8,665		12,020		33			3,355		8,698	$	12,053		(949	)		01/11/11	2006
Central Avenue		1		—		3,898		4,642		8,540		1,650			3,898		6,292	$	10,190		(161	)		01/27/11	2011
Byron Road		1		—		2,042		2,715		4,757		754			2,042		3,469	$	5,511		(210	)		04/15/11	1972

F-51

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011


					Initial Cost to Company						Costs Capitalized Subsequent to Acquisition		Gross Amount Carried at 12/31/2011
Property	Number of Buildings		Encum- brances ⁽⁴⁾		Land		Building & Improvements ⁽¹⁾		Total Costs		Costs Capitalized Subsequent to Acquisition		Land		Building & Improvements ⁽¹⁾		Total Costs (3)(5)		Accumulated Depreciation⁽⁵⁾			Acquisition Date		Year Built
Desoto Place		1		3,407		2,255		4,339		6,594		3		2,255		4,342	$	6,597		(194	)		07/01/11	1982

TOTAL SOUTHERN CALIFORNIA MARKET		28		27,344		98,392		178,213		276,605		8,350		98,663		186,294	$	284,957		(27,367	)

SUB TOTAL CONSOLIDATED OPERATING PROPERTIES		408		311,281		598,621		2,375,525		2,974,146		126,024		603,340		2,496,832	$	3,100,172		(589,127	)
South Lombard Road ⁽⁹⁾		1		—										1,216		3,068		4,284		(187	)

Properties under redevelopment		1		—										1,216		3,068		4,284		(187	)
Proterra		—		—										—		38		38		—

Properties under development		—		—										2,694		6,869		9,563		—
DCT Port Union Building 1		—		—										1,965		1,532		3,497		—
DCT Port Union Building 3		—		—										1,310		2,068		3,378		—
8th & Vineyard Land		—		—										4,719		798		5,517		—
Pan America Land		—		—										3,211		445		3,656		—
Pan America Land Phase II		—		—										3,269		102		3,371		—
Slover Land		—		—										13,789		570		14,359		—
Dulles Land		—		—										2,355		—		2,355		—
ADC North Phase II Development		—		—										1,273		1,169		2,442		—
Stonefield Industrial Park-Lnd		—		—										4,959		3		4,962		—
Boone Industrial Park -Land		—		—										861		13		874		—
Airtex lnad		—		—										2,591		42		2,633		—

Properties in pre-development including land held		—		—										40,302		6,742		47,044		—

GRAND TOTAL CONSOLIDATED		409	$	311,281										647,552		2,513,510		3,161,063		(589,314	)

F-52

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION—(Continued)

December 31, 2011

(1)	Included in Building & Improvements are intangible lease assets.

(2)

Generally these reductions in basis include one or more of the following: i) payments received under master lease agreements and pursuant to GAAP, rental and expense recovery payments under master lease agreements are reflected as a reduction of the basis of the underlying property rather than revenues; ii) writeoffs of fixed asset balances due to early lease terminations by contracted customers; iii) writeoffs of fully amortized lease related intangible assets and improvements; iv) writeoffs of fully amortized tenant leasing costs; and v) other miscellaneous basis adjustments.

(3)	As of December 31, 2011, the aggregate cost for federal income tax purposes of investments in real estate was approximately $2.9 billion.

(4)	Reconciliation of total debt to consolidated balance sheet caption as of December 31, 2011:


Total per Schedule III	$	311,281
Unencumbered Mortgage Notes		3,911
Premiums, net of amortization		2,591

Total mortgage notes	$	317,783

(5)	A summary of activity for real estate and accumulated depreciation for the year ended December 31, 2011 is as follows:


Investments in properties:
Balance at beginning of year	$	3,037,436
Acquisition of properties		226,035
Improvements, including development properties		67,941
Divestiture of properties		(119,889	)
Improvements, Intangibles, Tenant Leasing Costs write offs		(42,149	)
Impairments		(8,207	)
Other adjustments		(104	)

Balance at end of year	$	3,161,063

Accumulated depreciation:
Balance at beginning of year	$	(528,705	)
Depreciation and amortization expense, including discontinued operations		(128,660	)
Divestiture of properties		25,902
Improvements, Intangibles, Tenant Leasing Costs write offs		42,149

Balance at end of year	$	(589,314	)

(6)

Occasionally our leases contain certain provisions giving the tenant rights to purchase the property, which can take the form of a fixed price purchase option, a fair market value option, a right of first refusal option or a right of first offer option. These buildings, or a building included in the business park are subject to such an agreement.

F-53

EXHIBIT INDEX


Exhibit Number		Description

2.1		Contribution Agreement by and among Dividend Capital Trust Inc., Dividend Capital Operating Partnership LP and Dividend Capital Advisors Group LLC, dated as of July 21, 2006 (incorporated by reference to Exhibit 2.1 to Form 8-K filed on July 27, 2006)

3.1		DCT Industrial Trust Inc. Third Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 19, 2006)

3.2		DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 19, 2006)

3.3		First Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 9, 2011)

3.4		Second Amendment to DCT Industrial Trust Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on October 27, 2011)

10.1		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 9, 2007)

10.2		Amended and Restated Limited Partnership Agreement of DCT Industrial Operating Partnership LP, dated October 10, 2006 (incorporated by reference to Exhibit 10.5 to Form 8-K filed on October 13, 2006)

10.3		Third Amendment to the Amended and Restated Limited Partnership Agreement of DCT Industrial Operating Partnership LP, dated May 3, 2007 (incorporated by reference to Exhibit 99.2 to Form S-3ASR Registration Statement, Commission File No. 333-145253)

10.4		Fourth Amendment to the Amended and Restated Limited Partnership Agreement of DCT Industrial Operating Partnership LP, dated December 1, 2008 (incorporated by reference to Exhibit 10.4 to Form 10-K filed on March 2, 2009)

10.5		Fifth Amendment to the Amended and Restated Limited Partnership Agreement of DCT Industrial Operating Partnership LP, dated May 6, 2010 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on August 5, 2010)

10.6		Second Amended and Restated DCT Industrial Trust Inc. 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to Form S-8 filed on May 10, 2010)

10.7		DCT Industrial Trust Inc. 2006 Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Form 8-K filed on October 13, 2006)

10.8		Revolving Credit Agreement, dated as of August 17, 2010, among DCT Industrial Operating Partnership LP and the lenders identified therein and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as Syndication Agent, and JPMorgan Chase Bank, N.A., PNC Bank National Association, U.S. Bank National Association and Regions Bank, as Documentation Agents and Deutsche Bank Trust Company Americas as Managing Agent (incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 20, 2010)

10.9		First Amendment to Revolving Credit Agreement, dated as of June 3, 2011 among DCT Industrial Operating Partnership LP, the lenders identified therein and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 3, 2011)

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10.10		Employment Agreement, dated as of October 9, 2009, between DCT Industrial Trust Inc. and Philip L. Hawkins (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 13, 2009)

10.11		Employment Agreement, dated as of October 9, 2009, between DCT Industrial Trust Inc. and Michael J. Ruen (incorporated by reference to Exhibit 10.4 to Form 8-K filed on October 13, 2009)

10.12		First Amendment to Employment Agreement, dated as of October 10, 2011, by and between DCT Industrial Trust Inc. and Michael J. Ruen (incorporated by reference to Exhibit 10.4 to Form 8-K filed on October 13, 2011)

10.13		Employment Agreement, dated as of March 31, 2010, by and between DCT Industrial Trust Inc. and Jeff Phelan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 31, 2010)

10.14		Change of Control Agreement, dated as of October 9, 2009, between DCT Industrial Trust Inc. and Teresa Corral (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on August 5, 2011)

10.15		Change of Control Agreement, dated as of May 9, 2011, between DCT Industrial Trust Inc. and John G. Spiegleman (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on August 5, 2011)

10.16		Letter Agreement, dated as of May 9, 2011, between DCT Industrial Trust Inc. and John G. Spiegleman (incorporated by reference to Exhibit 10.4 to Form 10-Q filed on August 5, 2011)

10.17		Change of Control Agreement, dated as of June 20, 2011, between DCT Industrial Trust Inc. and Charla Rios (incorporated by reference to Exhibit 10.5 to Form 10-Q filed on August 5, 2011)

10.18		Letter Agreement, dated as of June 20, 2011, between DCT Industrial Trust Inc. and Charla Rios (incorporated by reference to Exhibit 10.6 to Form 10-Q filed on August 5, 2011)

10.19		Employment Agreement, dated as of September 19, 2011, by and between DCT Industrial Trust Inc. and Matthew T. Murphy (incorporated by reference to Exhibit 10.1 to Form 8-K filed on September 20, 2011)

10.20		Resignation and Release Agreement, dated as of July 26, 2011, by and between DCT Industrial Trust Inc. and Daryl H. Mechem (incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 28, 2011)

10.22		DCT Industrial Trust Inc. Multi-Year Outperformance Program (incorporated by reference to Exhibit 10.1 to Form 8-K filed on January 12, 2010)

+21.1		List of Subsidiaries

+23.1		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm, dated February 29, 2012

+31.1		Rule 13a-14(a) Certification of Principal Executive Officer

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+ 31.2		Rule 13a-14(a) Certification of Principal Financial Officer

++32.1		Section 1350 Certification of Principal Executive Officer

++32.2		Section 1350 Certification of Principal Financial Officer

101		The following materials from DCT Industrial Trust Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Stockholders’ Equity, Comprehensive Income (Loss) and Noncontrolling Interests, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements.

+	Filed herewith.

++	Furnished herewith

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