Jones Lang LaSalle Income Property Trust, Inc. (Form: 10-Q, Received: 11/07/2013 16:06:09)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013



¨	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: 0-51948

_________________________________

Jones Lang LaSalle Income Property Trust, Inc.

(Exact name of registrant as specified in its charter)

_________________________________



Maryland		20-1432284
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

200 East Randolph Drive, Chicago IL, 60601

(Address of principal executive offices, including Zip Code)

(312) 782-5800

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_________________________________

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 whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

The number of shares of the registrant’s Common Stock, $.01 par value, outstanding on November 7, 2013 were 12,307,250 shares of Class A Common Stock and 28,471,870 shares of Class M Common Stock.

Jones Lang LaSalle Income Property Trust, Inc.

INDEX



	PAGE NUMBER
Part I - FINANCIAL INFORMATION

Item 1. Financial Statements	3

Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012	3

Consolidated Statements of Operations and Comprehensive (Loss) Income for the three months and nine months ended September 30, 2013 and 2012 (unaudited)	4

Consolidated Statements of Equity for the nine months ended September 30, 2013 and 2012 (unaudited)	5

Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 (unaudited)	6

Notes to Consolidated Financial Statements (unaudited)	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3. Quantitative and Qualitative Disclosures About Market Risk	41

Item 4. Controls and Procedures	42

Part II - OTHER INFORMATION

Item 1. Legal Proceedings	42

Item 1A. Risk Factors	42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3. Defaults Upon Senior Securities	44

Item 4. Mine Safety Disclosures	44

Item 5. Other Information	44

Item 6. Exhibits	44

SIGNATURES	45

Item 1. Financial Statements.

Jones Lang LaSalle Income Property Trust, Inc.

CONSOLIDATED BALANCE SHEETS

$ in thousands, except per share amounts



	September 30, 2013			December 31, 2012
	(Unaudited)
ASSETS
Investments in real estate:
Land (including from VIEs of $32,593 and $32,593, respectively)	$	125,574		$	126,555
Buildings and equipment (including from VIEs of $231,687 and $232,423, respectively)	620,199			669,901
Less accumulated depreciation (including from VIEs of $(29,751) and $(28,027), respectively)	(66,114		)	(82,428		)
Net property and equipment	679,659			714,028
Investment in unconsolidated real estate affiliate	19,953			19,988
Assets held for sale	134,948			—
Net investments in real estate	834,560			734,016
Cash and cash equivalents (including from VIEs of $2,964 and $2,500, respectively)	14,004			36,986
Restricted cash (including from VIEs of $4,250 and $3,051, respectively)	5,738			15,880
Tenant accounts receivable, net (including from VIEs of $1,041 and $1,203, respectively)	2,256			1,825
Deferred expenses, net (including from VIEs of $680 and $783, respectively)	6,407			6,208
Acquired intangible assets, net (including from VIEs of $4,166 and $4,548, respectively)	33,361			41,125
Deferred rent receivable, net (including from VIEs of $940 and $1,074, respectively)	5,803			4,575
Prepaid expenses and other assets (including from VIEs of $468 and $364, respectively)	1,276			1,419
TOTAL ASSETS	$	903,405		$	842,034
LIABILITIES AND EQUITY
Mortgage notes and other debt payable, net (including from VIEs of $185,183 and $187,234, respectively)	$	391,125		$	492,985
Liabilities held for sale	93,240			—
Accounts payable and other accrued expenses (including from VIEs of $3,122 and $2,953, respectively)	13,463			15,615
Distributions payable	3,680			2,975
Accrued interest (including from VIEs of $876 and $909, respectively)	1,304			2,033
Accrued real estate taxes (including from VIEs of $1,988 and $638, respectively)	3,848			937
Advisor fees payable	418			324
Acquired intangible liabilities, net	5,169			10,080
TOTAL LIABILITIES	512,247			524,949
Commitments and contingencies
Equity:
Class E common stock: $0.01 par value; 200,000,000 shares authorized; 26,206,756 and 26,444,843 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively	262			264
Class A common stock: $0.01 par value; 400,000,000 shares authorized; 11,646,482 and 3,612,169 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively	116			36
Class M common stock: $0.01 par value; 400,000,000 shares authorized; 2,075,093 and 104,282 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively	21			1
Additional paid-in capital (net of offering costs of $7,358 and $3,219 as of September 30, 2013 and December 31, 2012, respectively)	608,175			512,383
Accumulated other comprehensive income	220			542
Distributions to stockholders	(101,072		)	(90,691		)
Accumulated deficit	(129,157		)	(115,851		)
Total Jones Lang LaSalle Income Property Trust, Inc. stockholders’ equity	378,565			306,684
Noncontrolling interests	12,593			10,401
Total equity	391,158			317,085
TOTAL LIABILITIES AND EQUITY	$	903,405		$	842,034

The abbreviation “VIEs” above means Variable Interest Entities.

See notes to consolidated financial statements.

Jones Lang LaSalle Income Property Trust, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

$ in thousands, except per share amounts

(Unaudited)



	Three months ended September 30, 2013			Three months ended September 30, 2012			Nine months ended September 30, 2013			Nine months ended September 30, 2012
Revenues:
Minimum rents	$	16,946		$	11,221		$	49,556		$	36,541
Tenant recoveries and other rental income	2,211			1,855			6,283			5,938
Total revenues	19,157			13,076			55,839			42,479
Operating expenses:
Real estate taxes	1,893			1,645			5,993			5,112
Property operating	6,327			5,328			16,060			13,734
Provision for (net recovery of) doubtful accounts	104			(13		)	232			32
Advisor fees	1,248			556			3,355			1,858
Company level expenses	605			472			1,604			1,811
General and administrative	477			174			1,082			641
Depreciation and amortization	5,694			3,448			16,184			10,375
Total operating expenses	16,348			11,610			44,510			33,563
Operating income	2,809			1,466			11,329			8,916
Other income and (expenses):
Interest expense	(4,892		)	(5,140		)	(15,068		)	(15,684		)
Debt modification expense	—			—			(182		)	—
Equity in income (loss) of unconsolidated affiliates	35			46			(57		)	(194		)
Gain on extinguishment of debt	1,149			—			1,149			—
Total other income and (expenses)	(3,708		)	(5,094		)	(14,158		)	(15,878		)
Loss from continuing operations	(899		)	(3,628		)	(2,829		)	(6,962		)
Discontinued operations:
(Loss) income from discontinuing operations	(10,521		)	45			(10,772		)	(2,488		)
Loss on sale of discontinued operations	—			—			—			(117		)
Gain on transfer of property and extinguishment of debt	—			2,902			—			14,693
Total (loss) income from discontinued operations	(10,521		)	2,947			(10,772		)	12,088
Net (loss) income	(11,420		)	(681		)	(13,601		)	5,126
Less: Net loss attributable to the noncontrolling interests	361			324			295			187
Net (loss) income attributable to Jones Lang LaSalle Income Property Trust, Inc.	(11,059		)	(357		)	(13,306		)	5,313
Net (loss) income from continuing operations attributable to Jones Lang LaSalle Income Property Trust, Inc. per share-basic and diluted	$	(0.01	)	$	(0.12	)	$	(0.07	)	$	(0.27	)
Total (loss) income from discontinued operations per share-basic and diluted	$	(0.27	)	$	0.11		$	(0.31	)	$	0.49
Net (loss) income attributable to Jones Lang LaSalle Income Property Trust, Inc. per share-basic and diluted	$	(0.28	)	$	(0.01	)	$	(0.38	)	$	0.22
Weighted average common stock outstanding-basic and diluted	38,860,238			26,680,357			35,270,437			24,905,727
Other comprehensive income (loss):
Foreign currency translation adjustment	207			362			(322		)	339
Total other comprehensive income (loss)	207			362			(322		)	339
Net comprehensive (loss) income	$	(10,852	)	$	5		$	(13,628	)	$	5,652

See notes to consolidated financial statements.

Jones Lang LaSalle Income Property Trust, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

$ in thousands, except per share amounts

(Unaudited)



	Common Stock Class E					Common Stock Class A				Common Stock Class M				Additional Paid In Capital			Accumulated Other Comprehensive Income (loss)			Distributions to Stockholders			Accumulated Deficit			Noncontrolling Interests			Total Equity
	Shares		Amount			Shares		Amount		Shares		Amount		Additional Paid In Capital			Accumulated Other Comprehensive Income (loss)			Distributions to Stockholders			Accumulated Deficit			Noncontrolling Interests			Total Equity
Balance, January 1, 2013	26,444,843		$	264		3,612,169		$	36	104,282		$	1	$	512,383		$	542		$	(90,691	)	$	(115,851	)	$	10,401		$	317,085
Issuance of common stock	—		—			8,060,361		80		1,967,249		20		102,486			—			—			—			—			102,586
Repurchase of shares	(238,087	)	(2		)	(26,048	)	—		(438	)	—		(2,596		)	—			—			—			—			(2,598		)
Offering costs	—		—			—		—		—		—		(4,139		)	—			—			—			—			(4,139		)
Stock based compensation	—		—			—		—		4,000		—		41			—			—			—			—			41
Net loss	—		—			—		—		—		—		—			—			—			(13,306		)	(295		)	(13,601		)
Other comprehensive loss	—		—			—		—		—		—		—			(322		)	—			—			—			(322		)
Contribution from noncontrolling interests	—		—			—		—		—		—		—			—			—			—			2,910			2,910
Cash distributed to noncontrolling interests	—		—			—		—		—		—		—			—			—			—			(423		)	(423		)
Distributions declared ($0.30) per share	—		—			—		—		—		—		—			—			(10,381		)	—			—			(10,381		)
Balance, September 30, 2013	26,206,756		$	262		11,646,482		$	116	2,075,093		$	21	$	608,175		$	220		$	(101,072	)	$	(129,157	)	$	12,593		$	391,158

	Common Stock Class E					Common Stock Class A				Common Stock Class M				Additional Paid In Capital			Accumulated Other Comprehensive Income (loss)			Distributions to Stockholders			Accumulated Deficit			Noncontrolling Interests			Total Equity
	Shares		Amount			Shares		Amount		Shares		Amount		Additional Paid In Capital			Accumulated Other Comprehensive Income (loss)			Distributions to Stockholders			Accumulated Deficit			Noncontrolling Interests			Total Equity
Balance, January 1, 2012	23,995,352		$	41		—		—		—		—		$	453,861		$	322		$	(80,636	)	$	(153,327	)	$	10,818		$	231,079
Contributions	5,202,569		9			—		—		—		—		50,784			—			—			—			—			50,793
Repurchase of shares	(2,746,857	)	(5		)	—		—		—		—		(26,817		)	—			—			—			—			(26,822		)
Net income (loss)	—		—			—		—		—		—		—			—			—			5,313			(187		)	5,126
Other comprehensive income	—		—			—		—		—		—		—			339			—			—			—			339
Cash contributed from noncontrolling interests	—		—			—		—		—		—		—			—			—			—			431			431
Cash distributed to noncontrolling interests	—		—			—		—		—		—		—			—			—			—			(674		)	(674		)
Distributions declared ($0.28517) per share	—		—			—		—		—		—		—			—			(7,079		)	—			—			(7,079		)
Balance, September 30, 2012	26,451,064		$	45		—		—		—		—		$	477,828		$	661		$	(87,715	)	$	(148,014	)	$	10,388		$	253,193

See notes to consolidated financial statements.

Jones Lang LaSalle Income Property Trust, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

$ in thousands, except per share amounts

(Unaudited)



	Nine months ended September 30, 2013			Nine months ended September 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(13,601	)	$	5,126
Adjustments to reconcile (loss) income to net cash provided by operating activities:
Depreciation (including discontinued operations)	12,892			12,012
Amortization of in-place lease intangible assets (including discontinued operations)	12,079			3,416
Amortization of net above-and below-market in-place leases (including discontinued operations)	(4,569		)	(560		)
Amortization of financing fees (including discontinued operations)	602			840
Amortization of debt premium and discount (including discontinued operations)	(601		)	(161		)
Amortization of lease commissions (including discontinued operations)	724			670
Loss on sale of discontinued operations	—			117
Gain on transfer of property and extinguishment of debt (including discontinued operations)	(1,149		)	(14,693		)
Net (recovery of) provision for doubtful accounts (including discontinued operations)	(54		)	189
Straight line rent (including discontinued operations)	(2,915		)	(219		)
Impairment of real estate (including discontinued operations)	10,182			913
Equity in loss of unconsolidated affiliates	35			194
Net changes in assets and liabilities:
Tenant accounts receivable	(592		)	391
Prepaid expenses and other assets	51			(124		)
Advisor fees payable	94			240
Accounts payable and other accrued expenses	2,904			6,792
Net cash provided by operating activities	16,082			15,143
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate investment	(103,295		)	—
Proceeds from sale of real estate investments, net	—			5,120
Capital improvements and lease commissions	(15,953		)	(6,111		)
Loan escrows	3,556			(5,444		)
Net cash used in investing activities	(115,692		)	(6,435		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock	101,261			50,000
Repurchase of shares	(2,598		)	(25,471		)
Offering costs	(2,781		)	—
Distributions to stockholders	(8,465		)	(3,772		)
Distributions paid to noncontrolling interests	(423		)	(674		)
Contributions received from noncontrolling interests	602			431
Draws on credit facility	26,000			—
Payment on credit facility	(16,000		)	—
Proceeds from mortgage notes	55,000			—
Debt issuance costs	(1,016		)	—
Principal payments on mortgage notes and other debt payable	(74,927		)	(16,417		)
Net cash provided by financing activities	76,653			4,097
Net (decrease) increase in cash and cash equivalents	(22,957		)	12,805
Effect of exchange rates	(25		)	26
Cash and cash equivalents at the beginning of the period	36,986			28,033
Cash and cash equivalents at the end of the period	$	14,004		$	40,864
Supplemental disclosure of cash flow information:
Interest paid	$	19,425		$	25,926




Non-cash activities:
Write-offs of receivables	$	391	$	504
Write-offs of retired assets	11,092		6,558
Change in liability for capital expenditures	762		112
Liabilities assumed at acquisition	1,090		—
Stock issued through dividend reinvestment plan	1,211		793
Stock based compensation	41		—
Change in issuance of common stock receivable	155		—
Change in accrued offering costs	1,358		—
Distribution payable	3,680		2,514
Contribution from noncontrolling interests	2,308		—
Transfers of property in extinguishment of debt settlement	—		101,800

See notes to consolidated financial statements.

Jones Lang LaSalle Income Property Trust, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ in thousands, except per share amounts

NOTE 1—ORGANIZATION

General

Except where the context suggests otherwise, the terms “we,” “us,” “our” and the “Company” refer to Jones Lang LaSalle Income Property Trust, Inc. The terms “Advisor” and “LaSalle” refer to LaSalle Investment Management, Inc.

Jones Lang LaSalle Income Property Trust, Inc. is an externally managed, non-listed, daily valued perpetual-life real estate investment trust ("REIT") that owns and manages a diversified portfolio of apartment, industrial, office and retail properties located primarily in the United States. We expect over time that our real estate portfolio will be further diversified on a global basis through the acquisition of additional properties outside of the United States and will be complemented by investments in real estate-related debt and equity securities. We were incorporated on May 28, 2004 under the laws of the State of Maryland. We believe that we have operated in such a manner to qualify to be taxed as a REIT for federal income tax purposes commencing with the taxable year ended December 31, 2004, when we first elected REIT status. As of September 30, 2013 , we owned (i) interests in a total of 35 consolidated properties located in ten states and one in Canada and (ii) an interest in one unconsolidated property located in the United States.

From our inception to October 1, 2012, we raised proceeds through private offerings of shares of our undesignated common stock. On October 1, 2012, the Securities and Exchange Commission (the “SEC”) declared effective our Registration Statement on Form S-11 (Commission File No. 333-177963) (the "Registration Statement") with respect to our continuous public offering of up to $3,000,000 in any combination of Class A and Class M shares of common stock (the "Offering"). In order to facilitate the Offering, on September 27, 2012, with the approval of our stockholders, we amended and restated our charter to, among other things, (i) designate our outstanding common stock as Class E common stock, (ii) create two new classes of common stock, Class A and Class M, and (iii) make certain additional changes requested by state securities administrators. We also amended and restated our bylaws on September 27, 2012 in connection with the Registration Statement being declared effective by the SEC. Additionally, on October 1, 2012, we effected a stock dividend for all Class E shares at a ratio of 4.786 -to- 1 in order to achieve a net asset value ("NAV") per share for each of the Class A, Class M and Class E shares of $10.00 as of the date we commenced the Offering. Affiliates of our Sponsor, Jones Lang LaSalle Incorporated ("Jones Lang LaSalle" or our "Sponsor"), have invested an aggregate of $60,200 through purchases of shares of our Class E common stock. As of September 30, 2013 , 26,206,756 shares of Class E common stock, 11,646,482 shares of Class A common stock and 2,075,093 shares of Class M common stock were outstanding and held by a total of 2,990 stockholders.

Prior to November 14, 2011, the Company (previously named Excelsior LaSalle Property Fund, Inc.) was managed by Bank of America Capital Advisors LLC (the “Former Manager”), a registered investment adviser with the SEC, that had the day-to-day responsibility for our management and administration pursuant to a management agreement between the Company and the Former Manager (the “Management Agreement”). On November 14, 2011, the Former Manager assigned its right, duties and obligations as manager of the Company under the Management Agreement to LaSalle and since that date, the Former Manager has had no responsibility for the management of the Company.

LaSalle acts as our advisor pursuant to the amended and restated advisory agreement between the Company and LaSalle, which became effective on October 1, 2012 (the “Advisory Agreement”). Our Advisor, a registered investment adviser with the SEC, has broad discretion with respect to our investment decisions and is responsible for selecting our investments and for managing our investment portfolio pursuant to the terms of the Advisory Agreement. LaSalle is a wholly owned, but operationally independent subsidiary of Jones Lang LaSalle, a New York Stock Exchange-listed global real estate services and investment management firm. We have no employees as all operations are managed by our Advisor. We have executive officers, but they are employees of and compensated by our Advisor.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and include the accounts of our wholly-owned subsidiaries, consolidated variable interest entities ("VIE") and the unconsolidated investments in real estate affiliates accounted for under the equity method of accounting. We consider the authoritative guidance of accounting for

investments in common stock, investments in real estate ventures, investors accounting for an investee when the investor has the majority of the voting interest but the minority partners have certain approval or veto rights, determining whether a general partner or general partners as a group controls a limited partnership or similar entity when the limited partners have certain rights, and the consolidation of VIEs in which we own less than a 100% interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Parenthetical disclosures are shown on our Consolidated Balance Sheets regarding the amounts of VIE assets and liabilities that are consolidated. Our VIEs include entities owning The District at Howell Mill, Cabana Beach San Marcos, Cabana Beach Gainesville, Campus Lodge of Athens, Campus Lodge Columbia, The Edge at Lafayette and Campus Lodge Tampa as we maintain control over significant decisions, which began at the time of acquisition of the properties. The creditors of our VIEs do not have general recourse to us.

Noncontrolling interests represent the minority members’ proportionate share of the equity in our VIEs. At acquisition, the assets, liabilities and non-controlling interests were measured and recorded at the estimated fair value. Noncontrolling interests will increase for the minority members’ share of net income of these entities and contributions and decrease for the minority members’ share of net loss and distributions. As of September 30, 2013 , noncontrolling interests represented the minority members’ proportionate share of the equity of the entities listed above as VIEs.

The accompanying unaudited interim financial statements have been prepared in accordance with the accounting policies described in the financial statements and related notes included in the Company’s Form 10-K filed with the SEC on March 7, 2013 (our “2012 Form 10-K”) and should be read in conjunction with such financial statements and related notes. The following notes to these interim financial statements highlight changes to the notes included in the December 31, 2012 audited financial statements included in our 2012 Form 10-K and present interim disclosures as required by the SEC.

The interim financial data as of September 30, 2013 and for the three and nine months ended September 30, 2013 and 2012 is unaudited. In the opinion of the Company, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is provided against the portion of accounts receivable and deferred rent receivable that is estimated to be uncollectible. Such allowance is reviewed periodically based upon our recovery experience. At September 30, 2013 and December 31, 2012 , our allowance for doubtful accounts was $125 and $570 , respectively.

Deferred Expenses

Deferred expenses consist of debt issuance costs and lease commissions. Debt issuance costs are capitalized and amortized over the terms of the respective agreements as a component of interest expense. Lease commissions are capitalized and amortized over the term of the related lease as a component of depreciation and amortization expense. Accumulated amortization of deferred expenses at September 30, 2013 and December 31, 2012 was $4,094 and $4,013 , respectively.

Acquisitions

We have allocated the purchase price of our acquisitions to acquired intangible assets, which include acquired in-place lease intangibles, acquired above-market in-place lease intangibles and acquired ground lease intangibles, which are reported net of accumulated amortization of $23,884 and $26,515 at September 30, 2013 and December 31, 2012 , respectively, on the accompanying Consolidated Balance Sheets. The acquired intangible liabilities represent acquired below-market in-place leases, which are reported net of accumulated amortization of $2,414 and $5,465 at September 30, 2013 and December 31, 2012 , respectively, on the accompanying Consolidated Balance Sheets.

Fair Value Disclosure

The authoritative guidance requires the disclosure of the fair value of our financial instruments for which it is practicable to estimate that value. The guidance does not apply to all balance sheet items. Market information as available or present value techniques have been utilized to estimate the amounts required to be disclosed. Since such amounts are estimates, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument. We have estimated the fair value of our mortgage notes and other debt payable reflected in the accompanying Consolidated Balance Sheets at amounts that are based upon an interpretation of available market information and valuation methodologies (including discounted cash flow analysis with regard to fixed rate debt) for similar loans made to borrowers with similar credit ratings and for the same maturities. The fair value of our mortgage notes and other debt payable, including our line of credit which was entered into at market rates on June 25, 2013, using level two inputs was approximately $3,177 higher and $17,136

higher than the aggregate carrying amounts at September 30, 2013 and December 31, 2012 , respectively. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition of our mortgage notes payable.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. For example, significant estimates and assumptions have been made with respect to useful lives of assets, recoverable amounts of receivables, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Actual results could differ from those estimates.

NOTE 3—PROPERTY

The primary reason we make acquisitions of real estate investments in the apartment, industrial, office and retail property sectors is to invest capital contributed by stockholders in a diversified portfolio of real estate assets. The consolidated properties we acquired during 2013 and our gross acquisition price of each are as follows:



Property	Sector	Square Feet	Location	Ownership %		Acquisition Date	Gross Acquisition Price
Joliet Distribution Center	Industrial	442,000	Joliet, IL	100	%	June 26, 2013	$	21,000
Suwanee Distribution Center	Industrial	559,000	Suwanee, GA	100	%	June 28, 2013	37,943
Grand Lakes Marketplace	Retail	131,000	Katy, TX	90	%	September 17, 2013	42,975

We allocated the purchase price of our 2013 acquisitions in accordance with authoritative guidance as follows:



	2013 Acquisitions
Land	$	14,169
Building and equipment	78,130
In-place lease intangible	14,320
Above-market lease intangible	103
Below-market lease intangible	(29		)
	$	106,693
Weighted average amortization period for intangible assets and liabilities	2 - 11.5 years

Proforma Information

If these acquisitions had occurred on January 1, 2012, the Company's consolidated revenues and net loss for the nine months ended September 30, 2013 would have been $ 60,081 and $ 12,643 , respectively and the Company's consolidated revenues and net income for the nine months ended September 30, 2012 would have been $ 43,272 and $ 5,163 , respectively. Net loss per share for the nine months ended September 30, 2013 would have been $ 0.36 and net income per share for the nine months ended September 30, 2012 would have been $ 0.21 . Basic per share amounts are based on the weighted average of shares outstanding of 35,270,437 and 24,905,727 for the nine months ended September 30, 2013 and 2012, respectively.

Impairment of Investments in Real Estate

In accordance with authoritative guidance for impairment of long-lived assets we recorded the following impairments of investments in real estate during the nine months ended September 30, 2013 and 2012:

For the period ended September 30, 2013

On August 23, 2013, Canyon Plaza, a 199,000 square foot office property located in San Diego, CA, was classified as held for sale and evaluated for impairment as of that date. We determined the carrying value of the investment exceeded the sale price less cost to sell. As such, we recognized an impairment charge of $ 10,182 .

For the period ended September 30, 2012

On March 16, 2012, Georgia Door Sales Distribution Center, a 254,000 square foot industrial property located in Austell, GA, was classified as held for sale and evaluated for impairment as of that date. We determined the carrying value of the investment exceeded the fair value less cost to sell. As such, we recognized an impairment charge of $ 913 .

The valuation of these assets is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each asset as well as the income capitalization approach considering prevailing market capitalization and discount rates. We review each investment based on the highest and best use of the investment and market participation assumptions. The significant assumptions include the capitalization rate used in the income capitalization valuation and projected property net operating income and net cash flows. Additionally, the valuation considered bid and ask prices for similar properties. We have determined that the significant inputs used to value the impaired assets fall within Level 3 except for the impairment of Canyon Plaza which based on a sale price falls within Level 1.

Discontinued Operations

The following table summarizes the (loss) income from discontinued operations for Georgia Door Sales Distribution Center, Metropolitan Park North, Marketplace at Northglenn, Canyon Plaza and 13 of our 15 properties in the Dignity Health Office Portfolio which include 300 Old River Road, 500 Old River Road, 500 West Thomas Road, 1500 South Central Avenue, 18350 Roscoe Boulevard, 18460 Roscoe Boulevard, 18546 Roscoe Boulevard, 4545 East Chandler, 485 South Dobson, 1501 North Gilbert, 116 South Palisade, 525 East Plaza, and 10440 East Riggs (collectively the "Dignity Health Disposition Portfolio") for the three and nine months ended September 30, 2013 and 2012:



	Three months ended September 30, 2013			Three months ended September 30, 2012			Nine months ended September 30, 2013			Nine months ended September 30, 2012
Total revenue	$	4,220		$	5,193		$	19,129		$	19,978
Real estate taxes	(462		)	(509		)	(1,369		)	(2,222		)
Property operating	(1,782		)	(1,464		)	(4,739		)	(4,634		)
(Provision for) net recovery of doubtful accounts	(11		)	(19		)	286			(157		)
General and administrative	(141		)	(30		)	(333		)	(208		)
Net provision for impairment	(10,182		)	—			(10,182		)	(913		)
Depreciation and amortization	(812		)	(1,555		)	(9,511		)	(5,722		)
Interest expense	(1,351		)	(1,571		)	(4,053		)	(8,610		)
(Loss) income from discontinued operations	$	(10,521	)	$	45		$	(10,772	)	$	(2,488	)

On August 23, 2013, we entered into an agreement to sell Canyon Plaza and reclassified the property as held for sale. On August 30, 2013, we entered into an agreement to sell the Dignity Health Disposition Portfolio and reclassified the properties as held for sale.

Our investment in real estate and other assets held for sale are as follows:



	September 30, 2013
Land	$	11,465
Building and equipment, net	103,623
Acquired intangible assets, net	9,739
Other assets, net	10,121
Total assets	$	134,948

Liabilities held for sale are as follows:



	September 30, 2013
Mortgage notes payable, net	$	89,223
Other liabilities, net	4,017
Total liabilities	$	93,240

NOTE 4—UNCONSOLIDATED REAL ESTATE AFFILIATES

We own a 46.5% interest in Legacy Village. On December 4, 2012, we acquired the remaining 20% interest in 111 Sutter Street. We had previously owned a majority, but non-controlling, interest in 111 Sutter Street from March 29, 2005 through December 4, 2012. The following table summarizes financial information for our unconsolidated real estate affiliate:

Summarized Combined Balance Sheets - Unconsolidated Real Estate Affiliate



	September 30, 2013		December 31, 2012
Total assets	$	101,102	$	104,882
Total liabilities	$	87,517	$	91,176
Members’ equity	13,585		13,706
Total liabilities and members' equity	$	101,102	$	104,882

Company Investment in Unconsolidated Real Estate Affiliate



	September 30, 2013			December 31, 2012
Members’ equity	$	13,585		$	13,706
Less: other members’ equity	(8,377		)	(8,442		)
Basis differential in investment in unconsolidated real estate affiliate, net (1)	14,745			14,724
Investments in unconsolidated real estate affiliates	$	19,953		$	19,988

(1)

The basis differential in investment in the equity of the unconsolidated real estate affiliate is attributable to a difference in the fair value of Legacy Village over its historical cost at acquisition plus our own acquisition costs for Legacy Village. We amortize the basis differential over the lives of the related assets and liabilities that make up the fair value difference, primarily buildings and improvements. In some instances, the useful lives of these assets and liabilities differ from the useful lives being used to amortize the assets and liabilities by the other members. The basis differential allocated to land is not subject to amortization.

Summarized Combined Statements of Operations - Unconsolidated Real Estate Affiliates



	Three months ended September 30, 2013		Three months ended September 30, 2012		Nine months ended September 30, 2013			Nine months ended September 30, 2012
Total revenues	$	4,595	$	6,763	$	13,649		$	19,821
Total operating expenses	3,262		4,579		10,152			13,633
Operating income	1,333		2,184		3,497			6,188
Total other expenses	1,194		2,015		3,617			6,085
Net income (loss)	$	139	$	169	$	(120	)	$	103

Company Equity in Income of Unconsolidated Real Estate Affiliates



	Three months ended September 30, 2013			Three months ended September 30, 2012			Nine months ended September 30, 2013			Nine months ended September 30, 2012
Net income (loss) of unconsolidated real estate affiliates	$	139		$	169		$	(120	)	$	103
Other members’ share of net (income) loss	(75		)	(133		)	65			(311		)
Adjustments and other expenses	(6		)	13			21			23
Other expense from unconsolidated real estate affiliates	(23		)	(3		)	(23		)	(9		)
Company equity in income (loss) of unconsolidated real estate affiliates	$	35		$	46		$	(57	)	$	(194	)

NOTE 5—MORTGAGE NOTES AND OTHER DEBT PAYABLE

Mortgage notes and other debt payable have various maturities through 2027 and consist of the following:



Mortgage notes and other debt payable	Maturity/Extinguishment Date	Interest Rate	Amount payable as of
Mortgage notes and other debt payable	Maturity/Extinguishment Date	Interest Rate	September 30, 2013		December 31, 2012
Mortgage notes payable (1) (2) (3) (4) (5) (6)	July 2013 - March 2027	2.93% - 6.14%	$	469,170	$	479,206
Line of credit	June 2015	2.18%	10,000		—
Other debt payable (7)	January 2013	4.75%	—		12,000
Mortgage notes and other debt payable			479,170		491,206
Net debt premium on assumed debt			1,178		1,779
Mortgage notes and other debt payable, net			$	480,348	$	492,985


(1)	On June 20, 2013, we entered into a $12,000 mortgage note payable secured by 4001 North Norfleet Road. The note matures February 1, 2017 and has a floating interest rate equal to LIBOR plus 2.75% ( 2.93% at September 30, 2013).


(2)	On July 1, 2013, we retired the mortgage note payable on 36 Research Park Drive. The outstanding balance on the mortgage note payable, including accrued interest, was $ 10,649 . We negotiated a discounted payoff in the amount of $9,500 resulting in a $ 1,149 gain on extinguishment of debt.


(3)	On September 3, 2013, we retired Pool 1 of the mortgage notes payable on the Dignity Health Office Portfolio in advance of the November 1, 2013 maturity date. The outstanding balance of the mortgage note payable, including accrued interest, was approximately $ 13,712 , which was funded in part from a draw on our revolving line of credit.


(4)	On September 12, 2013, we entered into a $ 19,100 mortgage note payable secured by Suwanee Distribution Center. The note matures October 10, 2020 and has a fixed interest rate equal to 3.66% .


(5)	On September 17, 2013, we entered into a $ 23,900 mortgage note payable secured by Grand Lakes Marketplace. The note matures October 10, 2023 and has a fixed interest rate equal to 4.20% .


(6)	Includes mortgage notes payable in the amount of $ 89,223 that has been reclassified to liabilities held for sale as of September 30, 2013.


(7)	The seller of 111 Sutter Street provided short-term financing at closing at the prime rate ( 3.25% at December 31, 2012) plus 150 basis points. In January 2013, we retired that $12,000 note payable.

Aggregate future principal payments of mortgage notes payable as of September 30, 2013 are as follows:



Year	Amount (1)
2013	$	31,003
2014	138,867
2015	24,462
2016	33,540
2017	113,206
Thereafter	128,092
Total	$	469,170


(1)	Includes principal payments related to mortgage notes payable that have been reclassified to liabilities held for sale as of September 30, 2013 in the amounts of $ 30,103 , $ 31,184 , $ 520 , $ 549 and $ 26,867 for years 2013, 2014, 2015, 2016 and 2017, respectively.

Line of Credit

On June 25, 2013, we entered into a $40,000 revolving line of credit agreement with Bank of America, N.A. to cover short-term capital needs for new property acquisitions and working capital. The line of credit has a two-year term and bears interest based on LIBOR plus a spread ranging from 1.50% to 2.75% depending on the Company's leverage ratio ( 2.00% spread at September 30, 2013). We may not draw funds on our line of credit if we experience a material adverse effect, which is defined to include, among other things, (a) a material adverse effect upon the operations, business, assets, liabilities, or financial condition of the Company, taken as a whole; (b) a material impairment of the rights and remedies of lender under any loan document or the ability of any loan party to perform its obligations under any loan document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any loan party of any loan document to which it is a party. As of September 30, 2013 , no material adverse effects had occurred. Our line of credit does require us to meet certain

customary debt covenants which include a maximum leverage ratio, a minimum debt service coverage ratio as well as maintaining minimum amounts of equity and liquidity.

At September 30, 2013 , we were in compliance with all debt covenants.

NOTE 6—COMMON STOCK

We have three classes of common stock outstanding as of September 30, 2013 . Our previously existing class of undesignated common stock was designated as Class E common stock on September 27, 2012. The outstanding shares of Class E common stock converted to Class M common stock on October 1, 2013. We will not issue any additional shares of Class E common stock. Shares of Class A and M common stock are currently being sold under our continuous public Offering. The fees payable to our dealer manager with respect to each outstanding share of each class, as a percentage of NAV, are as follows:



	Selling Commission	Dealer Manager Fee	Distribution Fee
Class A Shares	up to 3.5%	0.55%	0.50%
Class M Shares	None	0.55%	None
Class E Shares	None	None	None

The selling commission, dealer manager fee and distribution fee are offering costs and are recorded as a reduction of capital in excess of par value.

Stock Issuances

The stock issuances for our three classes of shares for the nine months ended September 30, 2013 and for the year ended December 31, 2012 were as follows:



	Nine months ended			Year ended
	September 30, 2013			December 31, 2012
	# of shares	Amount		# of shares	Amount
Class A Shares	8,060,361	$	82,555	3,612,169	$	37,035
Class M Shares	1,971,249	20,072		104,282	1,057
Class E Shares (1)	—	—		5,202,625	50,794
Total		$	102,627		$	88,886

(1) On August 8, 2012 , we sold 5,120,355 shares of our undesignated common stock to an affiliate of our Sponsor at our June 30, 2012 net asset value of $9.76 per share. The undesignated shares of our common stock were designated as Class E shares on September 27, 2012.

Stock Dividend

On October 1, 2012, we declared a stock dividend with respect to all Class E shares at a ratio of 4.786 -to-1. The effects of the stock dividend, which was effected as a stock split, have been applied retroactively to all share and per share amounts for all periods presented.

Share Repurchase Plan

On October 1, 2012, we adopted a new share repurchase plan whereby on a daily basis stockholders may request we repurchase all or a portion of their shares of Class A and Class M common stock at that day's NAV per share. The share repurchase plan is subject to a one-year holding period, with certain exceptions, and limited to 5% of NAV per quarter with certain limitations based on the size of the capital raise in our Offering. Class E shares are not eligible to participate in the share repurchase plan. For the nine months ended September 30, 2013 , we repurchased 26,048 and 438 shares of Class A and Class M common stock, respectively, that were issued through our distribution reinvestment plan.

During the three months ended September 30, 2013, we repurchased 238,087 shares of Class E common stock in a private negotiated transaction outside the share repurchase plan described above for $2,328 or $ 9.78 per share. The repurchases were made at an approximate 5% discount to our then current daily NAV.

Distribution Reinvestment Plan

From January 1, 2012 through September 30, 2012, we issued 82,270 shares of common stock for approximately $793 pursuant to our dividend reinvestment plan that was in effect prior to the commencement of the Offering. On October 1, 2012,

we terminated our existing dividend reinvestment plan and adopted a new distribution reinvestment plan whereby Class A and Class M shares may elect to have their cash distributions reinvested in additional shares of our common stock at the NAV per share on the distribution date. Class E shares are not eligible to participate in the new distribution reinvestment plan. For the nine months ended September 30, 2013 , we issued 97,142 and 22,172 shares of Class A and Class M common stock, respectively, for $ 1,211 under the distribution reinvestment plan.

Earnings Per Share (“EPS”)

Basic per share amounts are based on the weighted average of shares outstanding of 38,860,238 and 35,270,437 for the three and nine months ended September 30, 2013 and 26,680,357 and 24,905,727 for the three and nine months ended September 30, 2012 , respectively. We have no dilutive or potentially dilutive securities. The computations of basic and diluted EPS were adjusted retroactively for all periods presented to reflect the stock dividend that occurred on October 1, 2012.

Organization and Offering Costs

Organization and offering costs include, but are not limited to, legal, accounting and printing fees and personnel costs of our Advisor (including reimbursement of personnel costs for our executive officers) attributable to our organization, preparation of the registration statement, registration and qualification of our common stock for sale with the SEC and in the various states and filing fees incurred by our Advisor. LaSalle agreed to fund our organization and offering expenses through October 1, 2012, which is the date the SEC declared our registration statement effective, following which time we commenced reimbursing LaSalle over 36 months for organization and offering costs incurred prior to the commencement date. Following the Offering commencement date, we began paying directly or reimbursing LaSalle if it pays on our behalf any organization and offering costs incurred during the Offering period (other than selling commissions, the dealer manager fee and distribution fees) as and when incurred. After the termination of the Offering, our Advisor has agreed to reimburse us to the extent that the organization and offering costs that we incur exceed 15% of our gross proceeds from the Offering. Organization costs are expensed, whereas offering costs are recorded as a reduction of capital in excess of par value. As of September 30, 2013 and December 31, 2012, LaSalle had paid $3,805 and $ 2,719 , respectively, of organization and offering costs on our behalf which we had not reimbursed. These costs are included in Accounts payable and other accrued expenses.

NOTE 7—RELATED PARTY TRANSACTIONS

Effective as of October 1, 2012, we entered into a First Amended and Restated Advisory Agreement with LaSalle, pursuant to which we pay a fixed advisory fee of 1.25% of our NAV calculated daily. The Advisory Agreement allows for a performance fee to be earned for each share class based on the total return of that share class during the calendar year. The performance fee is calculated as 10% of the return in excess of 7% per annum. On August 6, 2013, the Advisory Agreement was renewed for another year commencing on October 1, 2103.

Prior to October 1, 2012, under the terms of the Management and Advisory Agreements, we paid each of the Former Manager and Advisor an annual fixed fee equal to 0.75% of NAV, calculated quarterly. Effective January 1, 2010, the Former Manager's fixed fee was reduced from 0.75% of NAV to 0.10% of NAV. Beginning on November 14, 2011, when the Former Manager assigned the Management Agreement to the Advisor, we began paying the Former Manager's fixed fee to the Advisor. As a result, we began paying the Advisor total aggregate compensation of 0.85% of NAV for management and advisory services provided to the Company. Additionally, under the terms of the Management and Advisory Agreements, we paid the Former Manager and our Advisor an aggregate annual variable fee equal to 7.50% of the Variable Fee Base Amount, as defined in the Advisory Agreement, calculated quarterly. The Former Manager was allocated an increasing proportion of the variable fee to the extent the Company's NAV increased, up to a maximum of 1.87% of the 7.50% fee paid. Effective January 1, 2010, the Former Manager waived its participation in the variable fee and the Advisor waived its participation in the variable fee per the terms of the Management Agreement.

The fixed advisory fee for the three and nine months ended September 30, 2013 was $1,248 and $3,355 , respectively. The fixed management and advisory fees for the three and nine months ended September 30, 2012 were $554 and $1,525 , respectively. The fixed advisory fees payable at September 30, 2013 and December 31, 2012 was $418 and $324 , respectively. The variable fee for the three and nine months ended September 30, 2012 was $2 and $333 , respectively. No variable fee expense were included in Advisor fees payable at December 31, 2012. No performance fee was earned for the three and nine months ended September 30, 2013 .

We pay Jones Lang LaSalle Americas, Inc. (“JLL Americas”), an affiliate of the Advisor, for property management and leasing services performed at various properties we own, on terms no less favorable than we could receive from other third party service providers. For the three and nine months ended September 30, 2013 , we paid JLL Americas $58 and $163 , respectively. For the three and nine months ended September 30, 2012 , we paid JLL Americas $46 and $136 , respectively.

During the nine months ended September 30, 2013 , we paid JLL Americas $ 196 in loan placement fees related to the mortgage note payable on 4001 North Norfleet, Suwanee Distribution Center and our revolving line of credit.

LaSalle Investment Management Distributors, LLC, an affiliate of our Advisor, is the dealer manager (the “Dealer Manager”) for our Offering. For the three and nine months ended September 30, 2013 , we paid the Dealer Manager selling commissions, dealer manager fees and distribution fees totaling $508 and $ 1,360 , respectively. A majority of the selling commissions, dealer manager fees and distribution fees are reallowed to participating broker-dealers.

As of September 30, 2013 , we owed $ 3,805 for organization and offering costs paid by LaSalle (see Note 6-Common Stock). These costs are included in Accounts payable and other accrued expenses at September 30, 2013 .

NOTE 8—COMMITMENTS AND CONTINGENCIES

The Dignity Health Office Portfolio mortgage note payable require that we deposit an annual amount of $699 , up to a cumulative maximum of $1,505 , into an escrow account to fund future tenant improvements and leasing commissions. The amount of the escrows are capped individually pursuant to each loan agreement. At September 30, 2013 , we had approximately $ 1,108 deposited in this escrow, and we expect to fund $166 during the remainder of 2013 . Additionally, we are required to deposit approximately $114 per year into an escrow account to fund capital expenditures. At September 30, 2013 , our capital account escrow account balance was $ 153 . These escrow accounts allow us to withdraw funds as we incur costs related to tenant improvements, leasing commissions and capital expenditures. Additionally, on a monthly basis, we are required to fund an escrow account for the future payment of real estate taxes and insurance costs in an amount equal to 1/12th of the estimated real estate taxes and insurance premium. At September 30, 2013 , our real estate tax and insurance escrow balance was $ 881 . We expect to fund the loan escrows from property operations.

As part of the lease with our single tenant at the 4001 North Norfleet Road property, the tenant has a right to expand the current building by up to 286,000 square feet. If the tenant exercises this right, we will be obligated to construct this expansion space. The tenant has to provide notice of its desire to expand prior to February 28, 2016 (the end of the ninth year of the lease), or if the lease is extended, until any time prior to the end of the fourth year of any extension. As of September 30, 2013 , we had not received an expansion notice from the tenant.

NOTE 9—SEGMENT REPORTING

We have four operating segments: apartment, industrial, office and retail properties. Consistent with how we review and manage our properties, the financial information summarized below is presented by operating segment and reconciled to income (loss) from continuing operations as of and for the three and nine months ended September 30, 2013 and 2012 .



	Apartment		Industrial		Office		Retail		Total
Assets as of September 30, 2013	$	232,170	$	102,467	$	269,687	$	137,322	$	741,646
Assets as of December 31, 2012	$	232,387	$	43,867	$	429,407	$	91,222	$	796,883

Three Months Ending September 30, 2013
Revenues:
Minimum rents	$	7,326	$	1,891	$	6,120	$	1,609	$	16,946
Tenant recoveries and other rental income	490		335		993		393		2,211
Total revenues	$	7,816	$	2,226	$	7,113	$	2,002	$	19,157
Operating expenses:
Real estate taxes	$	841	$	294	$	724	$	34	$	1,893
Property operating	4,307		94		1,549		377		6,327
Provision for doubtful accounts	103		—		—		1		104
Total segment operating expenses	$	5,251	$	388	$	2,273	$	412	$	8,324
Operating income - Segments	$	2,565	$	1,838	$	4,840	$	1,590	$	10,833

Capital expenditures by segment	$	1,504	$	21	$	1,118	$	—	$	2,643

Reconciliation to income from continuing operations
Operating income - Segments									$	10,833
Advisor fees									1,248
Company level expenses									605
General and administrative									477
Depreciation and amortization									5,694
Operating income									$	2,809
Other income and (expenses):
Interest expense									$	(4,892	)
Equity in income of unconsolidated affiliates									35
Gain on extinguishment of debt									1,149
Total other income and (expenses)									(3,708		)
Loss from continuing operations									$	(899	)

Reconciliation to total consolidated assets as of September 30, 2013
Assets per reportable segments									$	741,646
Corporate level assets									26,811
Assets held for sale									134,948
Total consolidated assets									$	903,405

Reconciliation to total consolidated assets as of December 31, 2012
Assets per reportable segments									$	796,883
Corporate level assets									45,151
Total consolidated assets									$	842,034



	Apartment		Industrial		Office			Retail			Total
Three Months Ended September 30, 2012
Revenues:
Minimum rents	$	7,258	$	1,033	$	1,449		$	1,481		$	11,221
Tenant recoveries and other rental income	514		149		643			549			1,855
Total revenues	$	7,772	$	1,182	$	2,092		$	2,030		$	13,076
Operating expenses:
Real estate taxes	$	782	$	195	$	495		$	173		$	1,645
Property operating	4,224		31		690			383			5,328
Provision for (recovery of) doubtful accounts	31		—		(12		)	(32		)	(13		)
Total segment operating expenses	$	5,037	$	226	$	1,173		$	524		$	6,960
Operating income - Segments	$	2,735	$	956	$	919		$	1,506		$	6,116

Capital expenditures by segment	$	946	$	135	$	394		$	1,075		$	2,550

Reconciliation to income from continuing operations
Operating income - Segments											$	6,116
Advisor fees											556
Company level expenses											472
General and administrative											174
Depreciation and amortization											3,448
Operating income											$	1,466
Other income and (expenses):
Interest expense											$	(5,140	)
Equity in income of unconsolidated affiliates											46
Total other income and (expenses)											$	(5,094	)
Loss from continuing operations											$	(3,628	)



	Apartment		Industrial		Office			Retail		Total
Nine Months Ending September 30, 2013
Revenues:
Minimum rents	$	23,175	$	3,975	$	17,763		$	4,643	$	49,556
Tenant recoveries and other rental income	1,301		722		2,742			1,518		6,283
Total revenues	$	24,476	$	4,697	$	20,505		$	6,161	$	55,839
Operating expenses:
Real estate taxes	$	2,525	$	621	$	2,185		$	662	$	5,993
Property operating	10,722		151		4,230			957		16,060
Provision for (recovery of) doubtful accounts	200		—		(4		)	36		232
Total segment operating expenses	$	13,447	$	772	$	6,411		$	1,655	$	22,285
Operating income - Segments	$	11,029	$	3,925	$	14,094		$	4,506	$	33,554

Capital expenditures by segment	$	2,463	$	62	$	10,748		$	74	$	13,347

Reconciliation to income from continuing operations
Operating income - Segments										$	33,554
Advisor fees										3,355
Company level expenses										1,604
General and administrative										1,082
Depreciation and amortization										16,184
Operating income										$	11,329
Other income and (expenses):
Interest expense										$	(15,068	)
Debt modification expenses										(182		)
Equity in loss of unconsolidated affiliates										(57		)
Gain on extinguishment of debt										1,149
Total other income and (expenses)										$	(14,158	)
Loss from continuing operations										$	(2,829	)



	Apartment		Industrial		Office			Retail			Total
Nine Months Ended September 30, 2012
Revenues:
Minimum rents	$	23,016	$	3,107	$	5,943		$	4,475		$	36,541
Tenant recoveries and other rental income	1,363		630		2,366			1,579			5,938
Total revenues	$	24,379	$	3,737	$	8,309		$	6,054		$	42,479
Operating expenses:
Real estate taxes	$	2,314	$	584	$	1,459		$	755		$	5,112
Property operating	10,459		87		2,194			994			13,734
Provision for doubtful accounts	54		—		(13		)	(9		)	32
Total segment operating expenses	$	12,827	$	671	$	3,640		$	1,740		$	18,878
Operating income - Segments	$	11,552	$	3,066	$	4,669		$	4,314		$	23,601

Capital expenditures by segment	$	1,732	$	92	$	2,037		$	287		$	4,148

Reconciliation to income from continuing operations
Operating income - Segments											$	23,601
Advisor fees											1,858
Company level expenses											1,811
General and administrative											641
Depreciation and amortization											10,375
Operating income											$	8,916
Other income and (expenses):
Interest expense											$	(15,684	)
Equity in loss of unconsolidated affiliates											(194		)
Total other income and (expenses)											$	(15,878	)
Loss from continuing operations											$	(6,962	)

NOTE 10—DISTRIBUTIONS PAYABLE

On August 6, 2013 , our board of directors approved a gross dividend for the third quarter of 2013 of $ 0.10 per share to stockholders of record as of September 27, 2013 . The dividend was paid on November 1, 2013 . Class E stockholders received $ 0.10 per share. Class A and Class M stockholders received $ 0.10 per share, less applicable class-specific fees.

NOTE 11—SUBSEQUENT EVENTS

On October 1, 2013, all shares of our Class E stock converted to Class M stock. Holders of Class E stock received approximately 1.001 shares of Class M stock for each share of Class E stock owned.

On October 24, 2013, we completed the sale of the Dignity Health Disposition Portfolio for $ 111,260 . In conjunction with the sale, we prepaid the three remaining mortgage loan pools associated with the properties for approximately $ 60,950 including accrued interested. We estimate a gain on sale of approximately $ 14,000 .

On October 29, 2013, we sold our 46.5% membership interest in Legacy Village to our joint venture partners for $ 27,350 . We estimate a gain on the sale of approximately $ 7,000 .

On November 4, 2013 , our board of directors approved a gross dividend for the fourth quarter of 2013 of $ 0.11 per share to stockholders of record as of December 30, 2013 , payable on February 7, 2014 . Class A and Class M stockholders will receive $ 0.11 per share, less applicable class-specific fees.

* * * * * *



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

$ in thousands, except per share amounts

Cautionary Note Regarding Forward-Looking Statements

This Quarterly report on Form 10-Q may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), regarding, among other things, our plans, strategies and prospects, both business and financial. Forward-looking statements include, but are not limited to, statements that represent our beliefs concerning future operations, strategies, financial results or other developments. Forward-looking statements can be identified by the use of forward-looking terminology such as, but not limited to, “may,” “should,” “expect,” “anticipate,” “estimate,” “would be,” “believe,” or “continue” or the negative or other variations of comparable terminology. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the SEC. Except as required by law, we do not undertake to update or revise any forward-looking statements contained in this Form 10-Q. Important factors that could cause actual results to differ materially from the forward-looking statements are disclosed in “Item 1A. Risk Factors,” “Item 1. Business” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Company’s 2012 Form 10-K and our periodic reports filed with the SEC.

Management Overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to the consolidated financial statements appearing elsewhere in this Form 10-Q. All references to numbered Notes are to specific notes to our Consolidated Financial Statements beginning on page 8 of this Form 10-Q, and the descriptions referred to are incorporated into the applicable portion of this section by reference. References to “base rent” in this Form 10-Q refer to cash payments made under the relevant lease(s), excluding real estate taxes and certain property operating expenses that are paid by us and are recoverable under the relevant lease(s) and exclude adjustments for straight-line rent revenue and above- and below-market lease amortization.

The discussions surrounding our Consolidated Properties refer to our wholly or majority owned and controlled properties, which as of September 30, 2013 , were comprised of:

Apartment


•	Station Nine Apartments,


•	Cabana Beach San Marcos,


•	Cabana Beach Gainesville,


•	Campus Lodge of Athens,


•	Campus Lodge Columbia,


•	The Edge at Lafayette and


•	Campus Lodge Tampa.

Industrial


•	105 Kendall Park Lane,


•	4001 North Norfleet Road,


•	Joliet Distribution Center and


•	Suwanee Distribution Center.

Office


•	Monument IV at Worldgate,


•	111 Sutter Street,


•	the Dignity Health Office Portfolio,


•	4 Research Park Drive,


•	36 Research Park Drive,


•	Canyon Plaza and


•	Railway Street Corporate Centre.

Retail


•	Stirling Slidell Shopping Centre,


•	The District at Howell Mill and


•	Grand Lakes Marketplace.

Our Unconsolidated Property, owned through a joint venture arrangement as of September 30, 2013 , refers to Legacy Village. Because management’s operating strategies are generally the same whether the properties are consolidated or unconsolidated, we believe that financial information and operating statistics with respect to all properties, both consolidated and unconsolidated, provide important insights into our operating results, including the relative size and significance of these elements to our overall operations. Collectively, we refer to our Consolidated and Unconsolidated Properties as our “Company Portfolio.”

Our primary business is the ownership and management of a diversified portfolio of apartment, industrial, office and retail properties primarily located in the United States. It is expected that over time our real estate portfolio will be further diversified on a global basis and will be complemented by investments in real estate-related assets.

We are managed by our Advisor, LaSalle Investment Management, Inc., a subsidiary of our Sponsor, Jones Lang LaSalle Incorporated (NYSE: JLL), a leading global real estate services and investment management firm. We hire property management and leasing companies to provide on-site, day-to-day management and leasing services for our properties. When selecting a property management or leasing company for one of our properties, we look for service providers that have a strong local market or industry presence, create portfolio efficiencies, have the ability to develop new business for us and will provide a strong internal control environment that will comply with our Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) internal control requirements. We currently use a mix of property management and leasing service providers that include large national real estate service firms, including our Sponsor, and smaller local firms.

We seek to minimize risk and maintain stability of income and principal value through broad diversification across property sectors and geographic markets and by balancing tenant lease expirations and debt maturities across the Company Portfolio. Our diversification goals also take into account investing in sectors or regions we believe will create returns consistent with our investment objectives. Under normal conditions, we intend to pursue investments principally in well-located, well-leased properties within the apartment, industrial, office and retail sectors. We expect to actively manage the mix of properties and markets over time in response to changing operating fundamentals within each property sector and to changing economies and real estate markets in the geographic areas considered for investment. When consistent with our investment objectives, we also seek to maximize the tax efficiency of our investments through like-kind exchanges and other tax planning strategies.

The following tables summarize our diversification by property sector and geographic region based upon the fair value of our Consolidated and Unconsolidated Properties. These tables provide examples of how our Advisor evaluates the Company Portfolio when making investment decisions.

Property Sector Diversification

Estimated Percent of Fair Value as of September 30, 2013



	Consolidated Properties		Unconsolidated Property		Consolidated and Unconsolidated Properties
Apartment	24	%	—		22	%
Industrial	13	%	—		12	%
Office	49	%	—		45	%
Retail	14	%	100	%	21	%

Geographic Region Diversification

Estimated Percent of Fair Value as of September 30, 2013



	Consolidated Properties		Unconsolidated Property		Consolidated and Unconsolidated Properties
West	34	%	—		32	%
South	35	%	—		32	%
East	14	%	—		13	%
Midwest	12	%	100	%	18	%
International	5	%	—		5	%

Seasonality

For our six student-oriented apartments, the majority of our leases commence mid-August and terminate the last day of July. These dates generally coincide with the commencement of the universities’ fall academic term and the completion of the subsequent summer school session. In certain cases we enter into leases for less than the full academic year, including nine-month or shorter-term leases. As a result, cash flows may be reduced during the summer months at properties having lease terms shorter than 12 months. The annual releasing cycle results in significant turnover in the tenant population from year to year. Accordingly, certain property revenues and operating expenses tend to be seasonal in nature, and therefore not incurred ratably over the course of the year. Prior to the commencement of each new lease period, mostly during the first two weeks of August, we prepare the units for new incoming tenants. Other than revenue generated by in-place leases for returning tenants, we do not generally recognize lease revenue during this period, referred to as the “Turn”, as we have no leases in place. In addition, during the Turn we incur significant expenses making our units ready for occupancy, which we recognize immediately. This lease Turn period results in seasonality impacts on our operating results during the second and third quarter of each year.

With the exception of our student-oriented apartments described above, our investments are not materially impacted by seasonality, despite certain of our retail tenants being impacted by seasonality. Percentage rents (rents computed as a percentage of tenant sales) that we earn from investments in retail properties may, in the future, be impacted by seasonality.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. For example, significant estimates and assumptions have been made with respect to the useful lives of assets, recoverable amounts of receivables and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Actual results could differ from those estimates.

Critical Accounting Policies

The MD&A is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making

judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no significant changes during the three and nine months ended September 30, 2013 to the items that we disclosed as our critical accounting policies and estimates under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2012 Form 10-K.

Consolidated Properties

Consolidated Properties owned at September 30, 2013 are as follows:



					Percentage Leased as of September 30, 2013
Property Name	Location	Acquisition Date	Ownership %	Net Rentable Square Feet	Percentage Leased as of September 30, 2013
Apartment Segment:
Station Nine Apartments	Durham, NC	April 16, 2007	100%	312,000	98%
Cabana Beach San Marcos (1)	San Marcos, TX	November 21, 2007	78	258,000	90
Cabana Beach Gainesville (1)	Gainesville, FL	November 21, 2007	78	598,000	92
Campus Lodge of Athens (1)	Athens, GA	November 21, 2007	78	229,000	99
Campus Lodge Columbia (1)	Columbia, MO	November 21, 2007	78	256,000	90
The Edge at Lafayette (1)	Lafayette, LA	January 15, 2008	78	207,000	95
Campus Lodge Tampa (1)	Tampa, FL	February 29, 2008	78	477,000	98
Industrial Segment:
105 Kendall Park Lane	Atlanta, GA	June 30, 2005	100	409,000	100
4001 North Norfleet Road	Kansas City, MO	February 27, 2007	100	702,000	100
Joliet Distribution Center	Joliet, IL	June 26, 2013	100	442,000	100
Suwanee Distribution Center	Suwanee, GA	June 28, 2013	100	559,000	100
Office Segment:
Monument IV at Worldgate	Herndon, VA	August 27, 2004	100	228,000	83
111 Sutter Street	San Francisco, CA	March 29, 2005	100	286,000	90
Dignity Health Office Portfolio (2)	CA and AZ	December 21, 2005	100	757,000	80
4 Research Park Drive	St. Charles, MO	June 13, 2007	100	60,000	100
36 Research Park Drive	St. Charles, MO	June 13, 2007	100	81,000	100
Canyon Plaza (3)	San Diego, CA	June 26, 2007	100	199,000	59
Railway Street Corporate Centre	Calgary, Canada	August 30, 2007	100	135,000	90
Retail Segment:
Stirling Slidell Shopping Centre	Slidell, LA	December 14, 2006	100	139,000	80
The District at Howell Mill (1)	Atlanta, GA	June 15, 2007	87.85	306,000	98
Grand Lakes Marketplace (1)	Katy, TX	September 17, 2013	90	131,000	100


(1)	We own an interest in the joint venture that owns a fee interest in this property.


(2)	On August 30, 2013, 13 of the 15 properties in this portfolio were designated as held-for-sale.


(3)	On August 23, 2013, this property was designated as held-for-sale.

Unconsolidated Property owned at September 30, 2013 was:

Property Name

Type

Location

Acquisition Date

Ownership

Net Rentable

Square Feet

Percentage

Leased as of

September 30, 2013

Legacy Village (1)

Retail

Lyndhurst, OH

August 25, 2004

46.5%

595,000

96%


(1)	On September 10, 2013, we entered into an agreement to sell our membership interest in Legacy Village to our joint venture partners.

Operating Statistics

We generally hold investments in properties with high occupancy rates leased to quality tenants under long-term, non-cancelable leases. We believe these leases are beneficial to achieving our investment objectives. The following table shows our operating statistics by property type for our Consolidated Properties as of September 30, 2013 :



	Number of Properties	Total Area (Sq Ft)	% of Total Area		Occupancy %		Average Minimum Base Rent per Occupied Sq Ft (1)
Apartment	7	2,337,000	34	%	94	%	$	15.12
Industrial	4	2,112,000	31		100		3.79
Office	21	1,749,000	26		82		23.37
Retail	3	576,000	9		94		16.10
Total	35	6,774,000	100	%	93	%	$	13.29


(1)	Amount calculated as in-place minimum base rent for all occupied space at September 30, 2013 and excludes any straight line rents, tenant recoveries and percentage rent revenues.

The following table shows our operating statistics for our Unconsolidated Property as of September 30, 2013 :



	Number of Properties	Total Area (Sq Ft)	% of Total Area	Occupancy %	Average Minimum Base Rent per Occupied Sq Ft (1)
Retail	1	595,000	100%	96%	$	20.34


(1)	Amount calculated as in-place minimum base rent for all occupied space at September 30, 2013 and excludes any straight line rents, tenant recoveries and percentage rent revenues.

As of September 30, 2013 , our average effective annual rent per square foot, calculated as average minimum base rent per occupied square foot less tenant concessions and allowances, was $14.12 for our Consolidated Properties and $20.32

for our Unconsolidated Property.

Recent Events and Outlook

General Company and Market Commentary

On October 1, 2012, the SEC declared effective our registration statement on Form S-11 (File No. 333-177963) with respect to our continuous public Offering of up to $3,000,000 in any combination of Class A and Class M shares of common stock, consisting of up to $2,700,000 of shares in our primary Offering and up to $300,000 of shares pursuant to our distribution reinvestment plan. We intend to offer shares of our common stock on a continuous basis for an indefinite period of time by filing a new registration statement before the end of each offering, subject to regulatory approval. The per share purchase price varies from day-to-day and, on each day, equals our NAV per share for each class of common stock, plus, for Class A shares only, applicable selling commissions. LaSalle Investment Management Distributors, LLC, our affiliate and the Dealer Manager of our Offering, has agreed to distribute shares of our common stock. We intend to use the net proceeds from the Offering, after we pay the fees and expenses attributable to the Offering and our operations, to (1) grow and further diversify our portfolio by making investments in accordance with our investment strategy and policies, (2) reduce borrowings and repay indebtedness incurred under various financing instruments and (3) fund repurchases of our shares under our share repurchase plan.

We have executed on a number of our key strategic initiatives during the nine months ended September 30, 2013, including:


•	executed a new three year lease at Monument IV at Worldgate with Fannie Mae;


•	retired the remaining balance on the $12,000 note payable related to the December 2012 acquisition of 111 Sutter Street in San Francisco, California;


•	extended the maturity date and reduced our interest rate on the existing $53,922 mortgage note payable for 111 Sutter Street;


•	retired the mortgage note payable on Monument IV at Worldgate, in the amount of $35,351 including accrued interest, in advance of its September 1, 2013 maturity date;


•	retired the mortgage note payable on 36 Research Park Drive for $9,500 at a $1,150 discount from par;


•	retired Pool 1 of the Dignity Health Office Portfolio mortgage notes payable for $13,712 including accrued interest, in advance of the November 1, 2013 maturity date;


•	purchased Joliet Distribution Center for $21,000;


•	purchased Suwanee Distribution Center for $38,000;


•	purchased a 90% interest in Grand Lakes Marketplace for $42,975; and


•	secured a $40,000 revolving working capital credit facility.

Through these specific and other important accomplishments we continued to reduce our Company leverage ratio, increased cash reserves and provided cash flow to our stockholders through quarterly dividend payments.

Our primary investment objectives are:


•	to generate an attractive level of current income for distribution to our stockholders;


•	to preserve and protect our stockholders' capital investments;


•	to achieve appreciation of our NAV over time; and


•	to enable stockholders to utilize real estate as an asset class in diversified, long-term investment portfolios.

The cornerstone of our investment strategy is to acquire and manage income-producing commercial real estate properties and real estate-related assets around the world. We believe this strategy enables us to provide our stockholders with a portfolio that is well-diversified across property type, geographic region and industry, both in the United States and internationally. It is our belief that adding international investments to our portfolio over time will serve as an effective tool to construct a well-diversified portfolio designed to provide our stockholders with stable distributions and attractive long-term risk-adjusted returns.

We believe that our broadly diversified portfolio benefits our stockholders by providing:


•	diversification of sources of income;


•	access to attractive real estate opportunities currently in the United States and, over time, around the world; and


•	exposure to a return profile that should have lower correlations with other investments.

Since real estate markets are often cyclical in nature, our strategy allows us to more effectively deploy capital into property types and geographic regions where the underlying investment fundamentals are relatively strong or strengthening and away from those property types and geographic regions where such fundamentals are relatively weak or weakening. We intend to meet our investment objectives by selecting investments across multiple property types and geographic regions to achieve portfolio stability, diversification, current income and favorable risk-adjusted returns. To a lesser degree, we also intend to invest in debt and equity interests backed principally by real estate, which we refer to collectively as “real estate-related assets.”

Our board of directors has adopted investment guidelines for our Advisor to implement and actively monitor in order to allow us to achieve and maintain diversification in our overall investment portfolio. Our board of directors formally reviews our investment guidelines on an annual basis and our investment portfolio on a quarterly basis or, in each case, more often as they deem appropriate. Our board of directors reviews the investment guidelines to ensure that the guidelines are being followed and are in the best interests of our stockholders.

After we have raised substantial proceeds in the Offering, and our total NAV has reached $800,000, which we refer to as our ramp-up period, we will seek to invest:


•	up to 80% of our assets in properties;


•	up to 25% of our assets in real estate-related assets; and


•	up to 15% of our assets in cash, cash equivalents and other short-term investments.

Notwithstanding the above, the actual percentage of our portfolio that is invested in each investment type may from time to time be outside these target levels due to numerous factors including, but not limited to, large inflows of capital over a short period of time, lack of attractive investment opportunities or increases in anticipated cash requirements for repurchase requests.

During the ramp-up period, we will balance the goals of diversifying our portfolio and reducing our leverage. Our strategy to reduce leverage may include working aggressively with existing lenders to allow us to negotiate more favorable loan terms.

During the ramp-up period, we intend to use lower leverage, or in some cases possibly no leverage, to finance our new acquisitions in order to reduce our overall Company leverage. Our Company leverage ratio (calculated as our share of total liabilities divided by our share of the fair value of total assets), was 56% as of September 30, 2013, down from 63% at December 31, 2012 as a result of debt extinguishments, increasing property values and raising new equity. After the ramp-up period, we expect to maintain a targeted Company leverage ratio of between 30% and 50%.

2013 Key Initiatives

During 2013, we intend to use capital raised from our Offering to make new acquisitions that will further our investment objectives and are in keeping with our investment strategy. Likely acquisition candidates may include well located, well leased industrial properties and grocery-anchored community oriented retail properties. We will look to acquire other property types when the opportunities and risk profile match our investment objectives and strategy. We also intend to use capital to repay or refinance loans in our existing portfolio in order to reduce our overall Company leverage and to take advantage of the current favorable interest rate environment.

In keeping with our strategy to repay or refinance our existing mortgage loans, we intend to retire loans when certain windows of prepayment allow us to pay them off without incurring prepayment penalties. We may also refinance properties with current rate mortgages at lower interest rates and loan to values. We also intend to use our revolving line of credit to allow us to more efficiently manage our cash flows.

We will also dispose of properties that no longer fit our investment strategy or if our outlook for the property, property type or geographic region changes . Early in the fourth quarter we sold 13 of the 15 Dignity Health Office Portfolio properties and Legacy Village. We also entered into an agreement to sell Canyon Plaza, which we expect will close during the fourth quarter of 2013. The sale of the Dignity Health Office Portfolio properties is prompted by our belief that the future direction of the healthcare industry is moving away from individual physician practices and more towards large physician practice groups. The majority of the space within the Dignity Health Office Portfolio is focused on smaller, individual physician practices. The sale of our 46.5% interest in Legacy Village, our lifestyle shopping center located in Lyndhurst, Ohio, is the result of our goal to focus our retail investments in grocery anchored community oriented retail properties along with our objective to generally own majority controlling ownership of our investments. The sale of Canyon Plaza, our office building located in San Diego, California, is driven by the property no longer being a core asset as a result of the low occupancy and significant capital required to return the building to full occupancy.

2013 Key Events and Accomplishments

During January 2013, we retired the $12,000 note payable related to our purchase of 111 Sutter Street.

On March 27, 2013, we entered into a loan modification agreement with the existing lender on the $53,922 mortgage for 111 Sutter Street. The loan modification extended the maturity date by eight years from July 2015 to April 2023, provides for interest-only payments for the first four years of the new term and reduces the fixed-rate interest from 5.58% to 4.50%. The loan modification is expected to save annually in excess of $550 in interest expense and defers in excess of $850 in annual principal amortization payments.

On April 30, 2013, we retired the mortgage note payable on Monument IV at Worldgate in advance of its September 1, 2013 maturity date. The outstanding balance, including accrued interest, was approximately $35,351 which was funded with cash on hand. The loan had a 5.29% interest rate and its prepayment will save in excess of $1,850 in annual interest expense. As a result, we own the property free and clear of mortgage debt. This loan prepayment was in keeping with our objectives to deleverage our portfolio and further decreased our Company leverage.

On June 20, 2013, we entered into a $12,000 mortgage note payable on 4001 North Norfleet Road. The loan matures on February 1, 2017 and bears floating rate interest at a rate equal to LIBOR plus 2.75%. Proceeds of the loan were used for the property acquisitions made in June 2013.

On June 25, 2013, we entered into a $40,000 revolving line of credit agreement with Bank of America, N.A. The line of credit has a two year term and bears interest based on LIBOR plus a spread ranging from 1.50% to 2.75% depending on the Company's consolidated leverage ratio. This line substantially increases our available working capital.

On June 26, 2013, we acquired Joliet Distribution Center, a 442,000 square foot industrial property located in Joliet, IL for approximately $21,000, using cash on hand. The property is 100% leased to two tenants with a weighted average remaining lease term of approximately six years.

On June 28, 2013, we acquired Suwanee Distribution Center, a 559,000 square foot industrial property located in suburban Atlanta, GA for approximately $38,000, using a $7,000 draw on our revolving line of credit and cash on hand. The property is 100% leased to Mitsubishi Electric & Electronics USA with a remaining lease term of 10 years.

On July 1, 2013, we retired the $10,650 mortgage note payable on 36 Research Park Drive. We negotiated a discounted payoff for the mortgage note in the amount of $9,500, using a $7,000 draw on our revolving line of credit and cash on hand. The loan had a 5.60% interest rate and its repayment saves in excess of $575 in annual interest expense. We now own the property free and clear of mortgage debt. This loan repayment was in keeping with our objective to further decrease our leverage.

On September 3, 2013, we retired Pool 1 of the Dignity Health Office Portfolio mortgage notes payable in advance of the November 1, 2013 maturity date. The notes had an interest rate of 5.75%. The outstanding balance of the mortgage notes payable, including accrued interest, was approximately $13,712, which was funded in part from a draw on our revolving line of credit.

On September 12, 2013, we entered into a $19,100 mortgage note payable secured by Suwanee Distribution Center. The note matures on October 10, 2020 and has a fixed interest rate equal to 3.66%.

On September 17, 2013, we acquired a 90% interest in a joint venture that owns Grand Lakes Marketplace, a 131,000 square foot retail property located in Katy, TX for approximately $42,975. This acquisition was financed with a $23,900 mortgage note payable secured by Grand Lakes Marketplace at an approximate 50% loan to purchase price. The mortgage note payable has a ten-year term, matures on October 10, 2023 and has a fixed interest rate of 4.20%.

On October 24, 2013, we completed the sale of the Dignity Health Disposition Portfolio for $111,260. In conjunction with the sale, we retired the three remaining mortgage loan pools associated with the properties for approximately $60,950 including accrued interested.

On October 29, 2013, we sold our 46.5% membership interest in Legacy Village to our joint venture partners for $27,350.

Results of Operations

General

Our revenues are primarily received from tenants in the form of fixed minimum base rents and recoveries of operating expenses. Our expenses primarily relate to the costs of operating and financing the properties. Our share of the net income or net loss from Unconsolidated Properties is included in the equity in loss of unconsolidated affiliates. We believe the following analysis of reportable segments provides important information about the operating results of our real estate investments, such as trends in total revenues or operating expenses that may not be as apparent in a period-over-period comparison of the entire Company. We group our investments in real estate assets from continuing operations into four reportable operating segments based on the type of property, which are apartment, industrial, office and retail. Operations from corporate level items and real estates assets held for sale are excluded from reportable segments.

Revenues and operating expenses related to Georgia Door Sales Distribution Center, Metropolitan Park North, Marketplace at Northglenn, Canyon Plaza and the Dignity Health Disposition Portfolio are shown as discontinued operations for the three and nine months ended September 30, 2013 and 2012 . Properties acquired during any of the periods presented are presented within the recent acquisitions line until the property has been owned for all periods presented. The properties currently presented within the recent acquisitions line include 111 Sutter Street, Joliet Distribution Center, Suwanee Distribution Center and Grand Lakes Marketplace. Consolidated properties owned for the nine months ended September 30, 2013 and 2012 are referred to as our comparable properties.

Results of Operations for the Three Months Ended September 30, 2013 and 2012

Revenues

The following chart sets forth revenues from continuing operations, by reportable segment, for the three months ended September 30, 2013 and 2012 :



	Three months ended September 30, 2013		Three months ended September 30, 2012		$ Change			% Change
Revenues:
Minimum rents
Apartment	$	7,326	$	7,258	$	68		0.9	%
Industrial	1,033		1,033		—			—
Office	3,496		1,449		2,047			141.3
Retail	1,496		1,481		15			1.0
Comparable properties total	$	13,351	$	11,221	$	2,130		19.0	%
Recent acquisitions	3,595		—		3,595			100.0
Total	$	16,946	$	11,221	$	5,725		51.0	%

Tenant recoveries and other rental income
Apartment	$	490	$	514	$	(24	)	(4.7	)%
Industrial	115		149		(34		)	(22.8	)
Office	839		643		196			30.5
Retail	373		549		(176		)	(32.1	)
Comparable properties total	$	1,817	$	1,855	$	(38	)	(2.0	)%
Recent acquisitions	394		—		394			100.0
Total	$	2,211	$	1,855	$	356		19.2	%
Total revenues	$	19,157	$	13,076	$	6,081		46.5	%

Minimum rents at comparable properties increased by $2,130 for the three months ended September 30, 2013 as compared to the same period in 2012 . The increase is primarily due to increased rents of $1,874 at Monument IV at Worldgate related to the commencement of the Amazon Corporate LLC and Fannie Mae leases. Additionally, there was an increase of

$127 at Railway Street Corporate Center due to increased occupancy during the three months ended September 30, 2013 as compared to the same period in 2012 .

Tenant recoveries relate mainly to real estate taxes and certain property operating expenses that are paid by us and are recoverable under the various tenants’ leases. Tenant recoveries and other rental income at comparable properties decreased by $38 for the three months ended September 30, 2013 as compared to the same period in 2012 . The decrease is primarily related to lower recoveries of $118 at The District at Howell Mill due to lower real estate taxes as a result of a reassessment during the three months ended September 30, 2013 as compared to the same period in 2012 . This decrease was partially offset by higher recoveries of $114 at Monument IV at Worldgate related to the commencement of the Amazon Corporate LLC and Fannie Mae leases. Additionally, there was an increase of $96 at Railway Street Corporate Center due to increased occupancy during the three months ended September 30, 2013 as compared to the same period in 2012 .

Operating Expenses

The following chart sets forth real estate taxes, property operating expenses and provisions for (recovery of) doubtful accounts from continuing operations, by reportable segment, for the three months ended September 30, 2013 and 2012 :



	Three months ended September 30, 2013		Three months ended September 30, 2012			$ Change			% Change
Operating expenses:
Real estate taxes
Apartment	$	841	$	782		$	59		7.5	%
Industrial	139		195			(56		)	(28.7	)
Office	476		495			(19		)	(3.8	)
Retail	14		173			(159		)	(91.9	)
Comparable properties total	$	1,470	$	1,645		$	(175	)	(10.6	)%
Recent acquisitions	423		—			423			100.0
Total	$	1,893	$	1,645		$	248		15.1	%

Property operating
Apartment	$	4,307	$	4,224		$	83		2.0	%
Industrial	29		31			(2		)	(6.5	)
Office	856		690			166			24.1
Retail	335		383			(48		)	(12.5	)
Comparable properties total	$	5,527	$	5,328		$	199		3.7	%
Recent acquisitions	800		—			800			100.0
Total	$	6,327	$	5,328		$	999		18.8	%

Net provision for (recovery of) doubtful accounts
Apartment	$	103	$	31		$	72		232.3	%
Office	—		(12		)	12			(100.0	)
Retail	1		(32		)	33			(103.1	)
Total	$	104	$	(13	)	$	117		(900.0	)%
Total operating expenses	$	8,324	$	6,960		$	1,364		19.6	%

Real estate taxes at comparable properties decreased by $175 for the three months ended September 30, 2013 as compared to the same period in 2012 . The decrease was primarily due to a decrease of $159 at the District at Howell Mill as a result of a tax reassessment in the three months ended September 30, 2013 .

related to the commencement of the Amazon Corporate LLC and Fannie Mae leases and increased Turn costs of $26 at our apartment properties.

Net provision for (recovery of) doubtful accounts relates to receivables deemed potentially uncollectible due to the age of the receivable or the status of the tenant. Provision for doubtful accounts increased by $117 for the three months ended September 30, 2013 as compared to the same period of 2012, primarily related to $72 of higher bad debts during the Turn at our apartment properties. Additionally, there was an increase at The District at Howell Mill related to the collection of previously reserved accounts of $33 that occurred during the three months ended September 30, 2012 .

The following chart sets forth expenses not directly related to the operations of the reportable segments for the three months ended September 30, 2013 and 2012 :



	Three months ended September 30, 2013			Three months ended September 30, 2012			$ Change			% Change

Advisor fees	$	1,248		$	556		$	692		124.5	%
Company level expenses	605			472			133			28.2
General and administrative	477			174			303			174.1
Depreciation and amortization	5,694			3,448			2,246			65.1
Interest expense	4,892			5,140			(248		)	(4.8	)
Equity in income of unconsolidated affiliates	(35		)	(46		)	11			(23.9	)
Gain on extinguishment of debt	(1,149		)	—			(1,149		)	100.0
Loss (income) from discontinued operations	10,521			(45		)	10,566			(23,480	)
Gain on transfer of property and extinguishment of debt	—			(2,902		)	2,902			(100.0	)
Total expenses	$	22,253		$	6,797		$	15,456		227.4	%

Advisor fees relate to the fixed and variable management and advisory fees earned by the Former Manager and the Advisor during 2012 and fixed advisor fees earned by the Advisor during 2013. Fixed fees increase or decrease based on changes in the NAV which will be primarily impacted by changes in capital raised and the value of our properties. Variable fees earned during 2012 were calculated as a formula of cash flow generated from owning and operating the real estate investments and fluctuated as cash flows fluctuated. The increase in advisor fees of $692 for the three months ended September 30, 2013 as compared to the same period of 2012 is primarily related to the increase in NAV over the prior year.

Our Company level expenses relate mainly to our compliance and administration related costs. Company level expenses increased $133 for the three months ended September 30, 2013 as compared to the same period in 2012 primarily due to an increase in appraisal fees and corporate legal fees.

General and administrative expenses relate mainly to property expenses unrelated to the operations of the property. General and administrative expenses increased $303 for the three months ended September 30, 2013 as compared to the same period in 2012. The increase is primarily related to an increase of $202 of acquisition expenses as well as an increase of $83 related to higher property level legal fees incurred during the three months ended September 30, 2013 .

Depreciation and amortization expense is impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. The increase of $2,246 in depreciation and amortization expense for the three months ended September 30, 2013 as compared to the period ended September 30, 2012 is primarily related to an increase of $1,452 that we recorded at 111 Sutter Street as a result of the consolidation of the property on December 4, 2012. The increase also related to an increase of $557 related to our recent acquisitions of Suwanee Distribution Center, Joliet Distribution Center and Grand Lakes Marketplace. Additionally, there was an increase of $204 at Monument IV at Worldgate related to the amortization of the leasing commissions and tenant improvements related to the Amazon Corporate LLC lease during the three months ended September 30, 2013 .

Interest expense decreased by $248 for the three months ended September 30, 2013 as compared to the period ended September 30, 2012 . The decreases in interest expense were related to the debt retirements at 36 Research Park Drive, Monument IV at Worldgate, 4001 North Norfleet, and 105 Kendall Park Lane. These decreases were partially offset by an increase at 111 Sutter Street due to the debt assumed at the property upon consolidation on December 4, 2012.

Equity in income of unconsolidated affiliates represents our share of net income from our investments in Unconsolidated Properties. The decrease of $11 for the three months ended September 30, 2013 as compared to the same period of 2012 is due to slightly higher operating expenses.

Gain on extinguishment of debt of $1,149 is related to the early debt retirement at 36 Research Park Drive during the three months ended September 30, 2013 .

Loss (income) from discontinued operations is related to the Dignity Health Disposition Portfolio and Canyon Plaza being designated as held for sale. The increase of $10,566 is primarily related to the provision for impairment recorded at Canyon Plaza in the amount of $10,182 during the three months ended September 30, 2013 .

Gain on transfer of property and extinguishment of debt of $2,902 during the three months ended September 30, 2012 is related to the gain on the transfer of ownership of Marketplace at Northglenn on July, 11, 2012.

Results of Operations for the Nine Months Ended September 30, 2013 and 2012

Revenues

The following chart sets forth revenues from continuing operations, by reportable segment, for the nine months ended September 30, 2013 and 2012 :



	Nine months ended September 30, 2013		Nine months ended September 30, 2012		$ Change			% Change
Revenues:
Minimum rents
Apartment	$	23,175	$	23,016	$	159		0.7	%
Industrial	3,099		3,107		(8		)	(0.3	)
Office	9,176		5,943		3,233			54.4
Retail	4,530		4,475		55			1.2
Comparable properties total	$	39,980	$	36,541	$	3,439		9.4	%
Recent acquisitions	9,576		—		9,576			100.0
Total	$	49,556	$	36,541	$	13,015		35.6	%

Tenant recoveries and other rental income
Apartment	$	1,301	$	1,363	$	(62	)	(4.5	)%
Industrial	502		630		(128		)	(20.3	)
Office	2,221		2,366		(145		)	(6.1	)
Retail	1,498		1,579		(81		)	(5.1	)
Comparable properties total	$	5,522	$	5,938	$	(416	)	(7.0	)%
Recent acquisitions	761		—		761			100.0
Total	$	6,283	$	5,938	$	345		5.8	%
Total revenues	$	55,839	$	42,479	$	13,360		31.5	%

Minimum rents at comparable properties increased by $3,439 for the nine months ended September 30, 2013 as compared to the same period in 2012 . The increase is primarily due to increased rents of $3,104 at Monument IV at Worldgate related to the commencement of the Amazon Corporate LLC and Fannie Mae leases.

Tenant recoveries relate mainly to real estate taxes and certain property operating expenses that are paid by us and are recoverable under the various tenants’ leases. There was a decrease of $416 at our comparable properties primarily due to a decrease of $187 at Monument IV at Worldgate related to Fannie Mae's signing a new lease in 2013 for less square footage. Additionally, there were decreases of $123 and $112 at The District at Howell Mill and 4001 North Norfleet Road related to favorable tax reassessments that occurred during the nine months ended September 30, 2013 .

Operating Expenses



	Nine months ended September 30, 2013			Nine months ended September 30, 2012			$ Change			% Change
Operating expenses:
Real estate taxes
Apartment	$	2,525		$	2,314		$	211		9.1	%
Industrial	461			584			(123		)	(21.1	)
Office	1,542			1,459			83			5.7
Retail	642			755			(113		)	(15.0	)
Comparable properties total	$	5,170		$	5,112		$	58		1.1	%
Recent acquisitions	823			$	—		823			100.0
Total	$	5,993		$	5,112		$	881		17.2	%

Property operating
Apartment	$	10,722		$	10,459		$	263		2.5	%
Industrial	85			87			(2		)	(2.3	)
Office	2,177			2,194			(17		)	(0.8	)
Retail	915			994			(79		)	(7.9	)
Comparable properties total	$	13,899		$	13,734		$	165		1.2	%
Recent acquisitions	2,161			$	—		2,161			100.0
Total	$	16,060		$	13,734		$	2,326		16.9	%

Net provision for (recovery of) doubtful accounts
Apartment	$	200		$	54		$	146		270.4	%
Office	(4		)	(13		)	9			(69.2	)
Retail	36			(9		)	45			(500.0	)
Total	$	232		$	32		$	200		625.0	%
Total operating expenses	$	22,285		$	18,878		$	3,407		18.0	%

Real estate taxes at comparable properties increased by $58 for the nine months ended September 30, 2013 as compared to the same period in 2012 primarily due to an increase of $211 at our apartment properties and an increase of $88 at Railway Street Corporate Center, due to reassessments in the nine months ended September 30, 2013 . These increases were partially offsets by decreases of $114 and $106 at The District at Howell Mill and 4001 North Norfleet Road, respectively, due to lower reassessments that occurred in the nine months ended September 30, 2013 .

Property operating expenses consist of the costs of ownership and operation of the real estate investments, many of which are recoverable under net leases. Examples of property operating expenses include insurance, utilities and repair and maintenance expenses. Property operating expenses at comparable properties increased $165 for the nine months ended September 30, 2013 as compared to the same period of 2012. The increase is primarily related to higher Turn costs and utilities totaling $262 at our apartment properties and an increase of $184 related to the commencement of the Amazon Corporate LLC and Fannie Mae leases. These increases were partially offset by decreases of $95 and $94 at Railway Street Corporate Center and The District at Howell Mill due to lower utility and repairs and maintenance expenses in the nine months ended September 30, 2013 as compared to the same period of 2012.

Net provision for (recovery of) doubtful accounts relates to receivables deemed potentially uncollectible due to the age of the receivable or the status of the tenant. Provision for doubtful accounts increased by $200 for the nine months ended September 30, 2013 as compared to the period ended September 30, 2012 , primarily related to $147 of higher bad debts during the Turn at our apartment properties. Additionally, there was an increase at The District at Howell Mill related to the collection of previously reserved accounts of $33 during the nine months ended September 30, 2012 .

The following chart sets forth expenses not directly related to the operations of the reportable segments for the nine months ended September 30, 2013 and 2012 :



	Nine months ended September 30, 2013			Nine months ended September 30, 2012			$ Change			% Change
Advisor fees	$	3,355		$	1,858		$	1,497		80.6	%
Company level expenses	1,604			1,811			(207		)	(11.4	)
General and administrative	1,082			641			441			68.8
Depreciation and amortization	16,184			10,375			5,809			56.0
Interest expense	15,068			15,684			(616		)	(3.9	)
Debt modification expenses	182			—			182			100.0
Equity in loss of unconsolidated affiliates	57			194			(137		)	(70.6	)
Gain on extinguishment of debt	(1,149		)	—			(1,149		)	100.0
Loss from discontinuing operations	10,772			2,488			8,284			333.0
Loss on sale of discontinued operations	—			117			(117		)	(100.0	)
Gain on transfer of property and extinguishment of debt	—			(14,693		)	14,693			(100.0	)
Total expenses	$	47,155		$	18,475		$	28,680		155.2	%

Advisor fees relate to the fixed and variable management and advisory fees earned by the Former Manager and the Advisor during 2012 and fixed advisor fees earned by the Advisor during 2013. Fixed fees increase or decrease based on changes in the NAV which will be primarily impacted by changes in capital raised and the value of our properties. Variable fees earned during 2012 were calculated as a formula of cash flow generated from owning and operating the real estate investments and fluctuated as cash flows fluctuated. The increase in advisor fees of $1,497 for the nine months ended September 30, 2013 as compared to the same period of 2012 is primarily related to the increase in NAV over the prior year.

Our Company level expenses relate mainly to our compliance and administration related costs. Company level expenses decreased $207 for the nine months ended September 30, 2013 as compared to the same period in 2012 primarily due to a decrease in investor service fees and corporate legal fees.

General and administrative expenses relate mainly to property expenses unrelated to the operations of the property. General and administrative expenses increased $441 for the nine months ended September 30, 2013 as compared to the same period in 2012. The increase is primarily related to an increase of $261 of acquisition expenses during the nine months ended September 30, 2013 . Additionally, we incurred increased expenses of $196 at 111 Sutter Street due to the property being consolidated on December 4, 2012.

Depreciation and amortization expense is impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. The increase of $5,809 in depreciation and amortization expense for the nine months ended September 30, 2013 as compared to the same period in 2012 is primarily related to an increase of $4,923 at 111 Sutter Street as a result of the consolidation of the property on December 4, 2012. The increase also related to an increase of $557 related to our recent acquisitions of Suwanee Distribution Center, Joliet Distribution Center and Grand Lakes Marketplace. Additionally, there was an increase of $231 at Monument IV at Worldgate due to the amortization of the leasing commissions and tenant improvements related to the Amazon Corporate LLC lease during the three months ended September 30, 2013 .

Interest expense decreased by $616 for the nine months ended September 30, 2013 as compared to the same period ended September 30, 2012 . The decrease in interest expense is due to the debt retirements at 36 Research Park Drive, Monument IV at Worldgate, 4001 North Norfleet and 105 Kendall Park Lane. These decreases were partially offset by an increase at 111 Sutter Street due to the debt assumed at the property upon consolidated on December 4, 2012 and the addition of new mortgage notes on Suwanee Distribution Center and Grand Lakes Marketplace in the nine months ended September 30, 2013 as compared to the same period in 2012.

Debt modification expenses in 2013 are due to expenses incurred for the loan modification at 111 Sutter Street on March 27, 2013.

Equity in loss of unconsolidated affiliates represents our share of net loss from our investments in Unconsolidated Properties. The loss decreased by $137 for the nine months ended September 30, 2013 as compared to the same period in 2012 primarily related to 111 Sutter Street being consolidated as of December 4, 2012.

Gain on extinguishment of debt is related to the debt retirement at 36 Research Park Drive during the nine months ended September 30, 2013 .

Loss from discontinued operations for the nine months ended September 30, 2013 relate to the Dignity Health Disposition Portfolio and Canyon Plaza. The loss for the nine months ended September 30, 2012 is related to the properties currently held for sale as well as the dispositions of Georgia Door Sales Distribution Center, Metropolitan Park North and Marketplace at Northglenn that occurred during 2012. Loss from discontinuing operations increased by $8,284 in the nine months ended September 30, 2013 primarily due to the $10,182 provision for impairment on Canyon Plaza as a result of the property being placed as held for sale during the nine months ended September 30, 2013 .

Loss on sale of discontinued operations is related to the disposition of Georgia Door Sales Distribution Center during 2012.

Gain on transfer of property and extinguishment of debt of $14,693 during the nine months ended September 30, 2012 is related to the gain of $11,791 recorded for the transfer of ownership of Metropolitan Park North on March 23, 2012 and to the gain of $2,902 for the transfer of ownership of Marketplace at Northglenn on July 11, 2012.

Funds From Operations

Consistent with real estate industry and investment community preferences, we consider funds from operations, or FFO, as a supplemental measure of the operating performance for a real estate investment trust and a complement to GAAP measures because it facilitates an understanding of the operating performance of our properties. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net (loss) income attributable to the Company (computed in accordance with GAAP), excluding gains or losses from cumulative effects of accounting changes, extraordinary items, impairment write-downs of depreciable real estate and sales of properties, plus real estate related depreciation and amortization and after adjustments for these items related to noncontrolling interests and unconsolidated affiliates.

FFO does not give effect to real estate depreciation and amortization because these amounts are computed to allocate the cost of a property over its useful life. Because values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO provides investors with a clearer view of our operating performance.

In order to provide a better understanding of the relationship between FFO and GAAP net income, the most directly comparable GAAP financial reporting measure, we have provided a reconciliation of GAAP net income (loss) attributable to Jones Lang LaSalle Income Property Trust, Inc., to FFO. FFO does not represent cash flow from operating activities in accordance with GAAP, should not be considered as an alternative to GAAP net income and is not necessarily indicative of cash available to fund cash needs.



	Three months ended September 30, 2013			Three months ended September 30, 2012			Nine months ended September 30, 2013			Nine months ended September 30, 2012
Net (loss) income attributable to Jones Lang LaSalle Income Property Trust, Inc.	$	(11,059	)	$	(357	)	$	(13,306	)	$	5,313
Plus: Real estate depreciation and amortization	5,694			3,448			16,184			10,375
Loss from sale of real estate	—			—			—			117
Real estate depreciation and amortization from discontinued operations	812			1,555			9,511			5,722
Real estate depreciation and amortization attributable to noncontrolling interests	(331		)	(329		)	(963		)	(983		)
Share of real estate depreciation and amortization from unconsolidated real estate affiliates	532			906			1,562			2,699
Gain on transfer of property	—			6			—			(6,012		)
Impairment of real estate held for sale	10,182			—			10,182			913
Funds from operations attributable to Jones Lang LaSalle Income Property Trust, Inc.	$	5,830		$	5,229		$	23,170		$	18,144
Weighted average shares outstanding, basic and diluted (1)	38,860,238			26,680,357			35,270,437			24,905,727
Funds from operations per share, basic and diluted (1)	$	0.15		$	0.20		$	0.66		$	0.73


(1)	On October 1, 2012, we declared a stock dividend with respect to all Class E shares at a ratio of 4.786-to-1. The effects of the stock dividend have been applied retroactively to all share and per share amounts for all periods presented.

Below is additional information related to certain items that significantly impact the comparability of our FFO or significant non-cash items:



	Three months ended September 30, 2013		Three months ended September 30, 2012		Nine months ended September 30, 2013		Nine months ended September 30, 2012
Straight-line rental income	(751	)	291		(2,754	)	20
Amortization of above- and below-market leases	(266	)	(222	)	(4,569	)	(547	)
Amortization of net premium (discount) on assumed debt	(136	)	(59	)	(620	)	(179	)
Gain on debt modification or extinguishment	(1,149	)	(2,908	)	(967	)	(8,681	)
Acquisition expenses	220		—		311		—

NAV per Share

Prior to October 1, 2012, we established our NAV per share on a quarterly basis for the purposes of establishing the price of shares sold in our private offerings and the repurchase price for shares purchased in our share repurchase program. We determined our NAV as of the end of each of the first three quarters of a fiscal year within 45 calendar days following the end of such quarter, and our fourth quarter NAV after the completion of our year-end audit. We calculated our quarterly NAV as of the determination date as follows: (i) the aggregate value of (A) our interests in real estate investments, plus (B) all our other assets, minus (ii) the aggregate fair value of our indebtedness and other outstanding obligations.

Beginning on October 1, 2012, our Advisor calculates our NAV for each class of our common stock (Class A, Class E and Class M) after the end of each business day that the New York Stock Exchange is open for unrestricted trading. The valuation guidelines we have adopted for purposes of the daily determination of NAV per share differ from the valuation methodologies we employed in connection with our historical quarterly NAV per share calculations in certain respects. For example, for purposes of calculating our historical quarterly NAV per share, our mortgage debt payable was recorded at fair value on a quarterly basis. This method resulted in an asset or liability, depending on current lending rates for similar mortgages to those we held. Our new valuation guidelines provide that, for purposes of calculating NAV per share on a daily basis, mortgage debt payable will be valued at the outstanding loan balance. We disclosed our NAV per share policy under “Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,” in our 2012 Form 10-K.

NAV as of September 30, 2013

The NAV per share for our Class A, Class M and Class E shares as of September 30, 2013 was $10.16, $10.17 and $10.18, respectively. The increase in NAV of all share classes from December 31, 2012, is primarily related to a net increase of 0.25% in the value of our properties. The increase in property value resulted in an increase in NAV of $0.04 per share. Property operations for the third quarter of 2013 had an insignificant impact on NAV as dividends declared offset property operations for the quarter. Our Class A and M NAV are reduced by normal and recurring class-specific fees and offering and organization costs.

The following table provides a breakdown of the major components of our NAV per share as of September 30, 2013 and December 31, 2012 :



	September 30, 2013									December 31, 2012
Component of NAV	Class A Shares			Class M Shares			Class E Shares			Class A Shares			Class M Shares			Class E Shares
Real estate investments (1)	$	21.86		$	21.88		$	21.92		$	25.07		$	25.09		$	25.10
Debt	(11.96		)	(11.97		)	(11.99		)	(16.37		)	(16.39		)	(16.40		)
Other assets and liabilities, net	0.26			0.26			0.25			1.42			1.43			1.44
Estimated enterprise value premium	None Assumed			None Assumed			None Assumed			None Assumed			None Assumed			None Assumed
NAV per share	$	10.16		$	10.17		$	10.18		$	10.12		$	10.13		$	10.14
Number of outstanding shares	11,646,482			2,075,093			26,206,756			3,612,169			104,282			26,444,843


(1)	The value of our real estate investments was less than the historical cost by approximately 12.1% and 14.2% as of September 30, 2013 and December 31, 2012 , respectively.

The following are key assumptions (shown on a weighted-average basis) that are used in the discounted cash flow models to estimate the value of our real estate investments as of September 30, 2013 :



	Apartment		Industrial		Office		Retail		Total Company
Exit capitalization rate	6.96	%	7.25	%	7.23	%	7.44	%	7.20	%
Discount rate/internal rate of return (IRR)	8.24	%	8.49	%	8.45	%	7.92	%	8.31	%
Annual market rent growth rate	2.84	%	2.89	%	3.30	%	3.12	%	3.13	%
Holding period (years)	10.00		10.00		10.00		10.00		10.00

The following are key assumptions (shown on a weighted-average basis) that are used in the discounted cash flow models to estimate the value of our real estate investments as of December 31, 2012 :



	Apartment		Industrial		Office		Retail		Total Company
Exit capitalization rate	7.05	%	7.83	%	7.30	%	7.43	%	7.30	%
Discount rate/internal rate of return (IRR)	8.24	%	8.50	%	8.48	%	7.90	%	8.27	%
Annual market rent growth rate	2.83	%	2.59	%	3.32	%	3.08	%	3.09	%
Holding period (years)	10.00		10.00		10.00		10.00		10.00

While we believe our assumptions are reasonable, a change in these assumptions would impact the calculation of the value of our real estate assets. For example, assuming all other factors remain unchanged, an increase in the weighted-average discount rate/internal rate of return (IRR) used as of September 30, 2013 of 0.25% would yield a decrease in our total real estate asset value of 1.62% and our NAV per each share class would have been $9.81, $9.82 and $9.83 for Class A, Class M and Class E, respectively. An increase in the weighted-average discount rate/internal rate of return (IRR) used as of December 31, 2012 of 0.25% would yield a decrease in our total real estate asset value of 1.80% and our NAV per each share class would have been $9.68, $9.70 and $9.71 for Class A, Class M, and Class E, respectively.

Limitations and Risks

As with any valuation methodology, our methodology is based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different NAV per share. Accordingly, with respect to our NAV per share, we can provide no assurance that:


•	a stockholder would be able to realize this NAV per share upon attempting to resell his or her shares;


•	we would be able to achieve, for our stockholders, the NAV per share, upon a listing of our shares of common stock on a national securities exchange, selling our real estate portfolio, or merging with another company; or


•	the NAV per share, or the methodologies relied upon to estimate the NAV per share, will be found by any regulatory authority to comply with any regulatory requirements.

Furthermore, the NAV per share was calculated as of a particular point in time. The NAV per share will fluctuate over time in response to, among other things, changes in real estate market fundamentals, capital markets activities, and attributes specific to the properties and leases within our portfolio.

Liquidity and Capital Resources

Our primary uses and sources of cash are as follows:



Uses		Sources

Short-term liquidity and capital needs such as:
• Interest payments on debt • Distributions to stockholders • Fees payable to the Advisor • Minor improvements made to individual properties that are not recoverable through expense recoveries or common area maintenance charges to tenants • General and administrative costs • Costs associated with our continuous public offering • Other Company level expenses • Lender escrow accounts for real estate taxes, insurance, and capital expenditures • Fees payable to our Dealer Manager		• Operating cash flow, including the receipt of distributions of our share of cash flow produced by our unconsolidated real estate affiliates • Proceeds from secured loans collateralized by individual properties • Proceeds from our revolving line of credit • Sales of our shares • Sales of real estate investments • Draws from lender escrow accounts

Longer-term liquidity and capital needs such as:
• Acquisitions of new real estate investments • Expansion of existing properties • Tenant improvements and leasing commissions • Debt repayment requirements, including both principal and interest • Repurchases of our shares pursuant to our Share Repurchase Plan

The sources and uses of cash for the nine months ended September 30, 2013 and 2012 were as follows:



	Nine months ended September 30, 2013			Nine months ended September 30, 2012			$ Change
Net cash provided by operating activities	$	16,082		$	15,143		$	939
Net cash used in investing activities	(115,692		)	(6,435		)	(109,257		)
Net cash provided by (used in) financing activities	76,653			4,097			72,556

Cash provided by operating activities increased by $939 for the nine months ended September 30, 2013 , as compared to the same period in 2012. An increase of $5,781 in cash from operating activities is primarily related to consolidation of 111 Sutter Street on December 4, 2012 and the lease termination fee received from Conexant Systems, Inc. Also impacting our cash provided by operating activities are changes in our working capital, which include tenant accounts receivable, prepaid expenses and other assets, Advisor fee payable and accounts payable and other accrued expenses. These changes in our working capital caused a decrease to cash provided by operating activities of $4,842 between the nine months ended September 30, 2013 and the same period in 2012 , primarily related to lower accrued real estate taxes and accrued interest.

Cash used in investing activities increased by $109,257 for the nine months ended September 30, 2013 , as compared to the same period in 2012. The increase was primarily related to the acquisition of three properties totaling $103,295 between the nine months ended September 30, 2013 and the same period in 2012 .

Cash provided by financing activities increased by $72,556 for the nine months ended September 30, 2013 as compared to the same period in 2012. The increase is primarily related to the issuance of common stock of $101,261 in 2013 as compared to $50,000 in the same period during 2012. Additionally, net principal payments on mortgage loans and other debt

payable decreased by $6,490 primarily related to the retirement of various mortgage notes and other debt payable in excess of proceeds received from new mortgage notes and other debt payable. We expect to continue to raise capital from the Offering and will use portions of the capital raise to acquire new properties, retire debt and repurchase common stock.

Financing

We have relied primarily on fixed-rate financing, locking in what were favorable spreads between real estate income yields and mortgage interest rates and have tried to maintain a balanced schedule of debt maturities. The following consolidated debt table provides information on the outstanding principal balances and the weighted average interest rate at September 30, 2013 and December 31, 2012 for such debt. The unconsolidated debt table provides information on our pro rata share of debt associated with our unconsolidated joint ventures.

Consolidated Debt



	September 30, 2013				December 31, 2012
	Principal Balance		Weighted Average Interest Rate		Principal Balance		Weighted Average Interest Rate
Fixed	$	457,170	5.32	%	$	479,206	5.59	%
Variable	22,000		2.59		12,000		4.75
Total	$	479,170	5.20	%	$	491,206	5.57	%

Unconsolidated Debt



	September 30, 2013				December 31, 2012
	Pro-rata share of Principal Balance		Weighted Average Interest Rate		Pro-rata share of Principal Balance		Weighted Average Interest Rate
Fixed	$	38,569	5.63	%	$	39,724	5.63	%
Variable	—		—		—		—
Total	$	38,569	5.63	%	$	39,724	5.63	%

Contractual Cash Obligations and Commitments

The Dignity Health Office Portfolio mortgage debt requires that we deposit an annual amount of $699 , up to a cumulative maximum of $1,505 , into an escrow account to fund future tenant improvements and leasing commissions. The amount of the escrow funded by each of the 12 buildings in the portfolio is capped individually pursuant to each loan agreement. At September 30, 2013 , we had approximately $ 1,108 deposited in this escrow account, and we expect to fund $166 during the remainder of 2013 . Additionally, we are required to deposit approximately $114 per year into an escrow account to fund capital expenditures. At September 30, 2013 , our capital account escrow account balance was $ 153 . These escrow accounts allow us to withdraw funds as we incur costs related to tenant improvements, leasing commissions and capital expenditures. Additionally, on a monthly basis, we are required to fund an escrow account for the future payment of real estate taxes and insurance costs in an amount equal to 1/12 ^th of the estimated real estate taxes and insurance premium. At September 30, 2013 , our real estate tax and insurance escrow balance was $ 881 . We expect to fund the loan escrows from property operations.

As part of the lease with our single tenant at the 4001 North Norfleet Road property, we provided the tenant a right to expand the current building by up to 286,000 square feet of space. If the tenant exercises this right, we will be obligated to construct this expansion space. The tenant has the right to provide notice to us of its desire to expand at any time prior to February 28, 2016 (the end of the ninth year of the lease), or if the lease is extended, until any time prior to the end of the fourth year of any extension. As of September 30, 2013 , we had not received an expansion notice from the tenant.

Off Balance Sheet Arrangements

At September 30, 2013 and December 31, 2012, we had approximately $150 in outstanding letters of credit, none of which are reflected as liabilities on our balance sheet. We have no other off balance sheet arrangements.

Distributions to Stockholders

To remain qualified as a REIT for federal income tax purposes, we must distribute or pay tax on 100% of our capital gains and distribute at least 90% of ordinary taxable income to stockholders.

The following factors, among others, will affect operating cash flow and, accordingly, influence the decisions of our board of directors regarding distributions:


•	scheduled increases in base rents of existing leases;


•	changes in minimum base rents and/or overage rents attributable to replacement of existing leases with new or renewal leases;


•	changes in occupancy rates at existing properties and procurement of leases for newly acquired or developed properties;


•	necessary capital improvement expenditures or debt repayments at existing properties; and


•	our share of distributions of operating cash flow generated by the unconsolidated real estate affiliate, less management costs and debt service on additional loans that have been or will be incurred.

We anticipate that operating cash flow, cash on hand, proceeds from dispositions of real estate investments, or refinancings will provide adequate liquidity to conduct our operations, fund general and administrative expenses, fund operating costs and interest payments and allow distributions to our stockholders in accordance with the REIT qualification requirements of the Internal Revenue Code of 1986, as amended.



Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

We are subject to market risk associated with changes in interest rates in terms of the price of new fixed-rate debt for refinancing of existing debt. We manage our interest rate risk exposure by obtaining fixed-rate loans where possible. As of September 30, 2013 , we had consolidated debt of $ 479,170 , $22,000 of which was variable-rate debt. Including the $ 1,178 net premium on the assumption of debt, we had consolidated debt of $ 480,348 at September 30, 2013 . None of the variable-rate debt was subject to interest rate swap or cap agreements. A 25 basis point movement in the interest rate on the $ 22,000 of variable-rate debt would have resulted in an approximately $ 55 annualized increase or decrease in consolidated interest expense and cash flow from operating activities.

As of December 31, 2012 , we had consolidated debt of $ 491,206 , which included $12,000 of variable-rate debt. Including the $ 1,779 net premium on the assumption of debt, we had consolidated debt of $ 492,985 at December 31, 2012 . None of the variable-rate debt was subject to interest rate swap or cap agreements. A 25 basis point movement in the interest rate on the $12,000 of variable-rate debt would have resulted in an approximately $30 annualized increase or decrease in consolidated interest expense and cash flow from operating activities.

Our Unconsolidated Property is financed with fixed-rate debt; therefore, we are not subject to interest rate exposure at this property, except to the extent changes in interest rates impact the fair value of our fixed-rate financing as discussed below.

We are subject to interest rate risk with respect to our fixed-rate financing in that changes in interest rates will impact the fair value of our fixed-rate financing. To determine fair market value, the fixed-rate debt is discounted at a rate based on an estimate of current lending rates, assuming the debt is outstanding through maturity and considering the collateral. At September 30, 2013 , the fair value of our mortgage notes payable was estimated to be approximately $ 3,177 higher than the carrying value of $ 479,170 . If treasury rates were 25 basis points higher at September 30, 2013 , the fair value of our mortgage notes payable would have been approximately $ 913 lower than the carrying value.

At December 31, 2012 , the fair value of our mortgage notes payable was estimated to be approximately $ 17,136 higher than the carrying value of $ 491,206 . If treasury rates were 25 basis points higher at December 31, 2012 , the fair value of our mortgage notes payable would have been approximately $ 13,755 higher than the carrying value.

In August 2007, we purchased Railway Street Corporate Centre located in Calgary, Canada. For this investment, we use the Canadian dollar as the functional currency. When preparing consolidated financial statements, assets and liabilities of foreign entities are translated at the exchange rates at the balance sheet date, while income and expense items are translated at weighted average rates for the period. Foreign currency translation adjustments are recorded in accumulated other comprehensive income on the Consolidated Balance Sheet and foreign currency translation adjustment on the Consolidated Statement of Operations and Comprehensive (Loss) Income.

As a result of our Canadian investment, we are subject to market risk associated with changes in foreign currency exchange rates. These risks include the translation of local currency balances of our Canadian investment and transactions denominated in Canadian dollars. Our objective is to control our exposure to these risks through our normal operating activities. For the nine months ended September 30, 2013 and 2012, we recognized a foreign currency translation loss of $ 322 and a gain of $339, respectively. At September 30, 2013 , a 10% unfavorable exchange rate movement would have caused our $322 foreign currency translation loss to be increased by $880 resulting in a foreign currency translation loss of approximately $1,202 .



Item 4.	Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on management’s evaluation as of September 30, 2013 , our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION



Item 1.	Legal Proceedings.

We are involved in various claims and litigation matters arising in the ordinary course of business, some of which involve claims for damages. Many of these matters are covered by insurance, although they may nevertheless be subject to deductibles or retentions. Although the ultimate liability for these matters cannot be determined, based upon information currently available, we believe the ultimate resolution of such claims and litigation will not have a material adverse effect on our financial position, results of operations, or liquidity.



Item 1A.	Risk Factors.

Please also see risk factors applicable to the Company are described in Item 1A of our 2012 Form 10-K.

An investment in Class A or Class M shares will likely be impacted by class-specific expenses of future offerings.

Dealer manager fees and distribution fees are allocated on a class-specific basis, which means that the expenses are borne by all holders of the applicable class. For example, an investor who acquired Class M shares (formerly Class E shares) will be allocated a proportional share of the dealer manager fees we pay with respect to Class M shares sold in our ongoing public offering of Class A and Class M shares. Such Class M expenses are allocated among all Class M shares ratably, regardless of how each Class M stockholder acquired his or her shares. As a result, purchasers of Class A and Class M shares in our ongoing public offering will likely be impacted by class-specific expenses that we pay with respect to future offerings of Class A and Class M shares. Specifically, we intend to operate as a perpetual-life REIT with respect to Class A and Class M stockholders, which means that we intend to offer Class A and Class M shares continuously. In order to do so, we will be required to file a new registration statement to register additional Class A and Class M shares of common stock with the SEC prior to the end of each three-year period following the commencement of our ongoing public offering of Class A and Class M shares described in Rule 415 under the Securities Act. Dealer manager fees and distribution fees that are payable to our Dealer Manager on an ongoing basis with respect to shares sold in our ongoing public offering of Class A and Class M shares (i.e., pursuant to our current registration statement) will cease when total underwriting compensation in the offering equals 10% of the gross proceeds from the primary portion of the offering. However, we expect that dealer manager fees and distribution fees will be payable with respect to Class A and Class M shares sold in subsequent offerings, and that investors in our ongoing public offering of Class A and Class M shares will be allocated a proportional share of such class-specific expenses.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

Our share repurchase plan limits repurchases during any calendar quarter to shares with an aggregate value (based on the repurchase price per share on the day the repurchase is effected) of 5% of the combined NAV of all classes of shares as of the last day of the previous calendar quarter, which means that in any 12-month period, we limit repurchases to approximately 20% of our total NAV. If the quarterly volume limitation is reached on or before the third business day of a calendar quarter, repurchase requests during the next quarter will be satisfied on a stockholder by stockholder basis, which we refer to as a “per stockholder allocation,” instead of a first-come, first-served basis. Pursuant to the per stockholder allocation, each of our stockholders would be allowed to request repurchase at any time during such quarter of a total number of shares not to exceed five percent of the shares of common stock the stockholder held as of the end of the prior quarter. The per stockholder allocation requirement will remain in effect for each succeeding quarter for which the total repurchases for the immediately preceding quarter exceeded four percent of our NAV on the last business day of such preceding quarter. If total repurchases during a quarter for which the per stockholder allocation applies are equal to or less than four percent of our NAV on the last business day of such preceding quarter, then repurchases will again be first-come, first-served for the next succeeding quarter and each quarter thereafter.

Moreover, until our total NAV has reached $600,000, repurchases for shares of all classes in the aggregate may not exceed 25% of the gross proceeds received by us from the commencement of our offering through the last day of the prior calendar quarter.

During the three months ended September 30, 2013 , we repurchased 438 shares of Class M common stock under the share repurchase plan. We did not issue any securities during this period that were not registered under the Securities Act.



Period	Total Number of Shares Redeemed	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Pursuant to the Program (2)
July 1-July 31, 2013	—	—	—	—
August 1-August 30, 2013	438	$10.20	438	—
September 1-September 30, 2013 (3)	238,087	$9.78	—	—

(1) On October 1, 2012, we adopted the new share repurchase plan.

(2) Redemptions are limited as described above.


(3)	In September 2013, we repurchased 238,087 of our Class E Shares in a privately negotiated transaction at an approximate 5% discount to NAV.

On October 1, 2012, our registration statement on Form S-11 (File No. 333-177963), covering our Offering of up to $3,000,000 of shares of common stock, of which $2,700,000 of shares of common stock are being offered pursuant to our primary offering and $300,000 of shares of common stock are being offered pursuant to our distribution reinvestment plan, was declared effective under the Securities Act. We commenced the Offering on the same date. The per share price for each class equals the daily NAV per share for such class, plus, for Class A shares only, applicable selling commissions, with discounts available to certain categories of purchasers.

As of September 30, 2013 , we have sold the following common shares and raised the following proceeds in connection with the Offering:



	Shares	Proceeds
Primary Offering
Class A Shares	11,575,388	$	118,615
Class M Shares	2,008,359	20,442
Distribution Reinvestment Plan
Class A Shares	97,142	985
Class M Shares	22,172	226
Total	13,703,061	$	140,268

As of September 30, 2013 , we incurred the following costs in connection with the issuance and distribution of the registered securities:



Type of Cost		Amount
Offering costs to related parties ⁽¹⁾		$7,358


(1)	Comprised of $ 832 in selling commissions, $ 390 in dealer manager fees, $ 306 in distribution fees and $ 5,830 in other offering costs. Selling commissions, dealer manager fees and distribution fees of $1,018 have been reallowed to third parties.

From the commencement of the Offering through September 30, 2013 , the net proceeds to us from our Offering, after deducting the total expenses incurred described above, were $136,089 . From the commencement of the Offering through September 30, 2013 , net proceeds from our Offering have been allocated to reduce borrowings by $ 94,700 and to purchase interests in real estate of $ 41,389 .



Item 3.	Defaults Upon Senior Securities.

Not applicable.



Item 4.	Mine Safety Disclosures.

Not applicable.



Item 5.	Other Information.

None.



Item 6.	Exhibits.

The Exhibit Index that immediately follows the signature page to this Form 10-Q is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant, Jones Lang LaSalle Income Property Trust, Inc., has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



			JONES LANG LASALLE INCOME PROPERTY TRUST, INC.

Date:	November 7, 2013	By:	/s/ C. Allan Swaringen
			C. Allan Swaringen
			President, Chief Executive Officer

EXHIBIT INDEX



Exhibit No.		Description

10.6		Purchase and Sale Agreement for Dignity Health Office Portfolio, dated August 30, 2013, by and among ELPF Glendale 1500 South Central LLC, ELPF Northridge 18350 Roscoe LLC, ELPF Northridge 18546 Roscoe LLC, ELPF Northridge 18460 Roscoe LLC, ELPF Bakersfield 300 Old River LLC, ELPF Bakersfield 500 Old River LLC, ELPF Santa Maria 116 S. Palisades, LLC, ELPF Santa Maria 525 E. Plaza LLC, ELPF Chandler 485 South Dobson LLC, ELPF Gilbert 1501 North Gilbert LLC, ELPF Phoenix 4545 East Chandler LLC, ELPF Sun Lakes 10440 East Riggs LLC, ELPF Phoenix 500 West Thomas LLC and NexCore Development LLC.

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Schema Document

101.CAL		XBRL Calculation Linkbase Document

101.DEF		Definition Linkbase Document

101.LAB		XBRL Labels Linkbase Document

101.PRE		XBRL Presentation Linkbase Document

Exhibit 10.6

PURCHASE AND SALE AGREEMENT

THIS AGREEMENT is made as of August 30, 2013, by and between ELPF Glendale 1500 South Central LLC, ELPF Northridge 18350 Roscoe LLC, ELPF Northridge 18546 Roscoe LLC, ELPF Northridge 18460 Roscoe LLC, ELPF Bakersfield 300 Old River LLC, ELPF Bakersfield 500 Old River LLC, ELPF Santa Maria 116 S. Palisades, LLC, ELPF Santa Maria 525 E. Plaza LLC, ELPF Chandler 485 South Dobson LLC, ELPF Gilbert 1501 North Gilbert LLC, ELPF Phoenix 4545 East Chandler LLC, ELPF Sun Lakes 10440 East Riggs LLC, and ELPF Phoenix 500 West Thomas LLC, all Delaware limited liabilities companies (collectively, “Seller”), and NexCore Development LLC, a Delaware limited liability company (“Purchaser").

W I T N E S S E T H :

WHEREAS, Seller owns thirteen medical office buildings described in Exhibit A attached hereto, subject to various ground leases, containing approximately 657,811 rentable square feet (the “Medical Office Buildings”); and

WHEREAS, Seller desires to sell its interest in such property and Purchaser desires to purchase such interest from Seller on the terms and conditions set forth below;

NOW THEREFORE, in consideration of the premises and the respective undertakings of the parties hereinafter set forth, it is hereby agreed:

SECTION 1. DEFINITIONS.

Wherever used in this Agreement, the words and phrases set forth below shall have the meanings set forth below or in an Exhibit to this Agreement to which reference is made, unless the context clearly requires otherwise.

A. “ Ancillary Agreements ” shall mean the agreements to which Seller is a party relating to the Medical Office Buildings described on Exhibit A-2.

B. “ Broker ” shall mean CBRE, Inc.

C. “ Broker’s Web Site ” shall mean the web site maintained by the Broker for the transaction set forth herein to which Purchaser has been granted access

D. " Closing ” means the closing at which Seller conveys title to the Project to Purchaser and Purchaser pays Seller the purchase price described in Section 2 herein below.

E. " Closing Date ” means the date which is the latter of (i) fifteen (15) days after the Due Diligence Deadline (as defined below) or (ii) three (3) business days after all required consents under the Ground Leases for the transactions set forth herein have been obtained; provided, however, in no event shall the Closing Date be later than October 31, 2013. If Closing has not occurred by such date (other than by reason of the default of either party, in which case the terms of Section 13 shall apply),

then either party may terminate this Agreement by written notice to the other, in which case the Earnest Money shall be returned to Purchaser.

F. “ Condominium Declarations ” means the condominium declarations encumbering some of the Medical Office Buildings which are described on Exhibit A-3 attached hereto.

G. “ Contracts ” shall have the meaning set forth in Section 3(E) below.

H. “ Due Diligence Deadline ” means 5:00 p.m. Central Time on September 3, 2013.

I. “ Earnest Money ” shall have the meaning set forth in Section 2(A) below.

J. “ Ground Leases ” means the ground leases encumbering the Medical Office Buildings described on Exhibit A-1 attached hereto.

K. “ Ground Lessors ” means the lessors under the Ground Leases.

L. " Improvements ” means all buildings, structures, fixtures and other improvements now or hereafter included in the Medical Office Buildings (other than any trade fixtures owned by tenants).

M. “ Individual Property ” means Seller’s interest in any one of the thirteen projects that collectively comprise the Project.

N. “ Leasehold Estates ” means Seller’s interests in the Medical Office Buildings pursuant to the Ground Leases.

O. " Permitted Exceptions " means non-delinquent real property taxes on the Project, the rights of tenants under the Tenant Leases and any other matters set forth on the Title Commitment and Survey (both as defined in Section 7(A) below), which are not objected to by Purchaser within the time period set forth in Paragraph 7(A) below.

P. “ Purchase Price ” shall have the meaning set forth in Section 2(B) below.

Q. " Personal Property " means all tangible and intangible personal property now or hereafter owned by Seller and used in connection with the operation of the Project, including, without limitation, (i) all building and construction materials, equipment, appliances, fixtures and machinery, (ii) all transferable permits, licenses, certificates and approvals issued in connection with the Project, (iii) all plans and specifications, operating manuals, guaranties and warranties with respect to the Project, and (iv) Seller's rights, if any, to use the name of the Project.

R. " Project " means the Leasehold Estates, the Improvements, the Personal Property and Seller’s interests in the Ancillary Agreements.

S. “ Survey ” shall have the meaning set forth in Section 7(A) below.

T. “ Tenant Leases ” shall have the meaning set forth in Section 3(F) below.

U. “ Title Commitment ” shall have the meaning set forth in Section 7(A) below.

V. " Title Company ” means Chicago Title Insurance Company.

SECTION 2. EARNEST MONEY; AGREEMENT TO SELL AND PURCHASE.

A. Earnest Money.

Within two (2) business days after the execution of this Agreement, Purchaser shall deposit $2,280,000 (the "Earnest Money") with the Title Company; and, if Purchaser fails to deposit the Earnest Money with the Title Company when due hereunder, this Agreement shall be null and void. The Earnest Money shall be held by the Title Company in accordance with the terms hereof and invested in a money market account. If this Agreement is terminated prior to Closing due to Purchaser's default hereunder, the Earnest Money shall be paid to Seller as liquidated damages and as Seller's sole and exclusive remedy except as set forth in Section 13 below. If the Closing occurs hereunder, the Earnest Money shall be paid to Seller and credited against the Purchase Price. If the Closing does not occur hereunder for any reason other than Purchaser's default hereunder, the Earnest Money shall be refunded to Purchaser.

B. Purchase and Sale.

On the Closing Date Seller shall convey the Project to Purchaser on the terms and conditions set forth herein. On the Closing Date Purchaser shall accept title to the Project from Seller on the terms and conditions set forth herein and shall pay to Seller the purchase price (" Purchase Price ") of ONE HUNDRED THIRTEEN MILLION SIX HUNDRED EIGHTY THOUSAND AND 00/100 DOLLARS ($113,680,000.00), subject to prorations as set forth below, by wire transfer of immediately available funds. The Purchase Price shall be allocated among the Medical Office Buildings as set forth on Exhibit A attached hereto. Purchaser may allocate ten percent (10%) of the Purchase Price to business enterprise value/goodwill. Notwithstanding the foregoing, if the Ground Lessor exercises its right to purchase the Medical Office Building located at 300 Old River Road, Bakersfield, California, such property shall be excluded from purchase and sale hereunder and the Purchase Price shall be reduced by the amount allocated to such property on Exhibit A attached hereto; and, if the Ground Lessor exercises its right to purchase the Medical Office Building located at 500 Old River Road, Bakersfield, California, such property shall be excluded from purchase and sale hereunder and the Purchase Price shall be reduced by the amount allocated to such property on Exhibit A attached hereto


C.	Independent Contract Consideration.

Immediately after the deposit of the Earnest Money with the Title Company, the Title Company shall deliver ONE HUNDRED AND N0/100ths DOLLARS ($100.00) of the Earnest Money to Seller, which amount Seller and Purchaser agree has been bargained for as consideration for Seller's execution and delivery of this Agreement and Purchaser's right to inspect the Project pursuant hereto. Such sum is nonrefundable in all events .

SECTION 3. REPRESENTATIONS AND WARRANTIES BY SELLER.

Seller hereby represents and warrants to Purchaser as of the date hereof as follows:

A. Due Organization.

The entities comprising Seller are all limited liability companies, duly organized and validly existing under the laws of the State of Delaware; Seller has full power and authority, and is duly authorized, to execute, enter into, deliver and perform this Agreement and its obligations hereunder.

B. Power.

This Agreement and all other agreements, instruments and documents required to be executed or delivered by Seller pursuant hereto have been or (if and when executed) will be duly executed and delivered by Seller, and are or will be legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their terms. No consents and permissions are required to be obtained by Seller for the execution and performance of this Agreement and the other documents to be executed by Seller hereunder. The consummation of the transactions contemplated herein and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, any agreement or document to which Seller is a party or by which it is bound, or any order, rule or regulation of any court or of any federal or state regulatory body or any administrative agency or any other governmental body having jurisdiction over Seller or the Project.

C. No Proceedings.

Except as set forth in Exhibit B and except for matters covered by insurance, to Seller’s actual knowledge, Seller has not received any written notice that there is currently pending, and to Seller’s actual knowledge there is not threatened in writing, any action, suit or proceeding, including condemnation, eminent domain or similar proceedings, before any court or governmental agency or body against Seller or the Project which might have any material adverse result to the Project or Seller’s ability to convey the Project. Without limiting the generality of the foregoing, to Seller’s actual knowledge (i) Seller has received no written notice of any pending, and there is not threatened in writing, any zoning changes with respect to the Project, and Seller has not initiated any pending request or application for a zoning change with respect to the Project, and (ii) Seller has not received any written notices from any governmental entities of violations or alleged violations of any laws, rules, regulations or codes, including building codes, with respect to the Project which have not been corrected to the satisfaction of the governmental agency issuing such notices.

D. Ground Leases and Ancillary Agreements

Attached hereto as Exhibit A-1 is a list of all ground leases encumbering the Medical Office Buildings, and attached hereto as Exhibit A-2 are the ancillary agreements held by Seller in connection with the Ground Leases. The Ground Leases and Ancillary Agreements have not been modified or amended except as set forth on Exhibit A-2 attached hereto. Seller has either delivered to Purchaser or made available to Purchaser on the Broker’s Web Site true, correct and complete copies of the Ground Leases and Ancillary Agreements. To Seller’s actual knowledge, all of the Ground Leases and Ancillary Agreements are in full force and effect. Seller has neither given nor received any written notice alleging any default under any Ground Lease or Ancillary Agreement that has not been cured, and to Seller's actual knowledge, all of the Ground Leases and Ancillary Agreements are free from material default.

E. Condominium Declarations

Attached hereto as Exhibit A-3 is a list of all condominium declarations encumbering the Medical Office Buildings. To Seller’s actual knowledge, the Condominium Declarations have not been modified or amended except as set forth on Exhibit A-3 attached hereto and are in full force and effect. Seller has either delivered to Purchaser or made available to Purchaser on the Broker’s Web Site true, correct and complete copies of the Condominium Declarations. To Seller's actual knowledge, all of the Condominium Declarations are in full force and effect. To Seller’s actual knowledge, Seller has neither given nor received any written notice alleging any default under any Condominium Declarations that has not been cured, and to Seller's actual knowledge, all of the Condominium Declarations are free from material default.

F. Contracts.

Attached hereto as Exhibit C is a list of all contracts or agreements to which Seller is a party for the providing of services to the Project and the leasing of equipment for the Project (which contracts and agreements, together with the contracts and agreements entered into with respect to the Project after the date hereof pursuant to Section 5 below, are herein referred to collectively as the “ Contracts ”). Seller has delivered to Purchaser or made available to Purchaser on the Broker’s Web Site true, correct and complete copies of the Contracts. Except as set forth on such Exhibit, to Seller’s actual knowledge, all of the Contracts are in full force and effect and free from material default.

G. Tenant Leases.

Attached hereto as Exhibit D-1 is a list of all outstanding leases or agreements pursuant to which any person occupies, or has the right to occupy, space in the Project (which leases, agreements and other documents, together with the lease documents entered into with respect to the Project after the date hereof pursuant to Section 5 below, are herein referred to collectively as the " Tenant Leases "). Exhibit D-1 also includes a list of all security deposits currently being held by Seller in connection with the Tenant Leases, all of which have been paid by the tenants in cash. Seller has delivered to Purchaser or made available to Purchaser on the Broker’s Web site true, correct and complete copies of the Tenant Leases. Except as shown on Exhibit D-2, (i) to Seller’s actual knowledge all of the Tenant Leases are in full force and effect, (ii) Seller has not give any written notice alleging any default under any Tenant Leases that has not been cured, (iii) to Seller’s actual knowledge Seller has not received any written notice alleging any default under any Tenant Leases that has not been cured, and (iv) to Seller’s actual knowledge all of the Tenant Leases are free from material default other than as set forth in the accounts receivable reports previously delivered to Purchaser. Attached hereto as Exhibit D-3 is a list of all brokerage commissions or leasing fees due now or payable in the future in connection with the Tenant Leases and all tenant improvement allowances for the current terms of their Tenant Leases that have not been fully used by the applicable Tenant.

H. ERISA.

Seller is not and is not acting on behalf of an "employee benefit plan" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, a "plan" within the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended, or an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. § 2510.3-101 of any such employee benefit plan or plans.

I. OFAC.

Seller is currently in compliance with, and shall at all times during the term of this Agreement (including any extension thereof) remain in compliance with, the regulations of the Office of Foreign Asset Control of the Department of the Treasury (including those named on its Specially Designated Nationals and Blocked Persons List) and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto ("OFAC").

J. Purchase Options.

Other than the purchase options contained in the Ground Leases, (i) Seller has not granted any option or right of first refusal to purchase any Project, and (ii) To Seller’s actual knowledge, no predecessor to Seller has granted any option or right of first refusal to purchase any Project.

K. No Employees.

Seller has no employees.

L. Environmental.

Seller has provided to Purchaser true, correct and complete copies of all environmental reports relating to the Project that are in Seller’s possession or control.

M. Limitations on Representations and Warranties.

As used herein, the term "Seller's actual knowledge" means the conscious knowledge of Laurence C. Harris and G. Lucas Kimmel, the asset managers for the Project, after inquiry of the property manager with respect to the representations in Subsections 3(F) and (G), and such persons shall not have any personal liability or be obligated to perform any due diligence investigations in connection with making any representations or warranties herein. Except for the representations and warranties set forth in Subsections 3(A) and 3(B) above which shall survive the Closing indefinitely, all representations and warranties of Seller in this Agreement shall terminate 270 days after the Closing and Seller shall have no liability thereafter with respect to such representations and warranties except to the extent Purchaser has alleged a claim in writing against Seller during such 270 day period for breach of any representation or warranty and filed a lawsuit against Seller with respect thereto within 60 days after such 270 day period. If Purchaser is aware at Closing or receives any information prior to Closing which indicates that any of Seller's representations or warranties in this Agreement are not true as of the Closing and Purchaser elects nonetheless to proceed with the Closing, Purchaser shall be deemed to have waived any claim for breach of such representation or warranty. In addition, (i) Seller shall be relieved of any liability for the representations and warranties contained in Paragraph 3(D) with respect to any Ground Lease to the extent Purchaser has received an estoppel certificate covering the matters set forth in Paragraph 3(D) from the party who is the ground lessor under such Ground Lease; (ii) Seller shall be relieved of any liability for the representations and warranties contained in Paragraph 3(E) with respect to any Condominium Declarations to the extent Purchaser has received an estoppel certificate covering the matters set forth in Paragraph 3(E) from the applicable condominium association, and (iii) Seller shall be relieved of any liability for the representations and warranties contained in Paragraph 3(G) with

respect to any Tenant Lease to the extent Purchaser has received an estoppel certificate covering the matters set forth in Paragraph 3(G) from the party who is the tenant under such Tenant Lease.

N. Disclaimer.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS EXECUTED BY SELLER, PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE PROJECT, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY, (B) THE INCOME TO BE DERIVED FROM THE PROJECT, (C) THE SUITABILITY OF THE PROJECT FOR ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER OR ANY TENANT MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR BY THE PROJECT OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROJECT, (F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROJECT, (G) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROJECT, OR (H) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING THE EXISTENCE IN OR ON THE PROJECT OF HAZARDOUS MATERIALS OR (I) ANY OTHER MATTER WITH RESPECT TO THE PROJECT; AND PURCHASER HEREBY WAIVES ANY RIGHT TO MAKE ANY CLAIM BASED ON ANY OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, ANY RIGHT TO MAKE ANY CLAIM AGAINST SELLER BASED ON THE VIOLATION OF ANY ENVIRONMENTAL LAWS. ADDITIONALLY, NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF PURCHASER ACKNOWLEDGES THAT NO PERSON HAS MADE, ANY REPRESENTATION, AGREEMENT, STATEMENT, WARRANTY, GUARANTY OR PROMISE REGARDING THE PROJECT OR THE TRANSACTION CONTEMPLATED HEREIN; AND NO SUCH REPRESENTATION, WARRANTY, AGREEMENT, GUARANTY, STATEMENT OR PROMISE IF ANY, MADE BY ANY PERSON ACTING ON BEHALF OF SELLER SHALL BE VALID OR BINDING UPON SELLER UNLESS EXPRESSLY SET FORTH HEREIN OR IN ANY CLOSING DOCUMENTS EXECUTED BY SELLER. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROJECT, PURCHASER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROJECT AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, AND AGREES TO ACCEPT THE PROJECT AT THE CLOSING AND WAIVE ALL OBJECTIONS OR CLAIMS AGAINST SELLER (INCLUDING, BUT NOT LIMITED TO, ANY RIGHT OR CLAIM OF CONTRIBUTION) ARISING FROM OR RELATED TO THE PROJECT OR TO ANY HAZARDOUS MATERIALS ON THE PROJECT EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PROJECT WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY

INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY, TRUTHFULNESS OR COMPLETENESS OF SUCH INFORMATION EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENT, REPRESENTATION OR INFORMATION PERTAINING TO THE PROJECT, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, CONTRACTOR, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS EXECUTED BY SELLER. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY CLOSING DOCUMENTS EXECUTED BY SELLER, PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROJECT AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS. IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR NEGOTIATION TO REFLECT THAT ALL OF THE PROJECT IS SOLD BY SELLER AND PURCHASED BY PURCHASER SUBJECT TO THE FOREGOING. THE PROVISIONS OF THIS SUBSECTION SHALL SURVIVE THE CLOSING OR ANY TERMINATION HEREOF.

In connection with the releases set forth above, Purchaser, on behalf of itself, its successors, assigns and successors-in-interest and such other persons and entities, waives the benefit of California Civil Code Section 1542, which provides as follows:

"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."

Initials of Purchaser: Initials of Seller:

________________________ __________________________

SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.

Purchaser hereby represents and warrants to Seller as of the date hereof as follows:

A. Due Organization.

Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser has full power and authority, and is duly authorized, to execute, enter into, deliver and perform this Agreement and its obligations hereunder.

B. Power.

This Agreement and all other agreements, instruments and documents required to be executed or delivered by Purchaser pursuant hereto have been or (if and when executed) will be duly executed and delivered by Purchaser, and are or will be legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their terms. No consents and permissions are required to be obtained by Purchaser for the execution and performance of this Agreement and the other documents

to be executed by Purchaser hereunder. The consummation of the transactions contemplated herein and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, any agreement or document to which Purchaser is a party or by which it is bound, or any order, rule or regulation of any court or of any federal or state regulatory body or any administrative agency or any other governmental body having jurisdiction over Purchaser.

C. No Proceedings.

Purchaser has not received any written notice that there is currently pending any proceedings, legal, equitable or otherwise, against Purchaser which would affect its ability to perform its obligations hereunder.

D. ERISA.

Purchaser is not and is not acting on behalf of an "employee benefit plan" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, a "plan" within the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended, or an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. § 2510.3-101 of any such employee benefit plan or plans.

E. OFAC

Purchaser is currently in compliance with, and shall at all times during the term of this Agreement (including any extension thereof) remain in compliance with, the regulations of the OFAC.

F. Limitations on Representations and Warranties.

Except for the representations and warranties set forth in Subsections 4(A) and 4(B) above which shall survive the Closing indefinitely, all representations and warranties of Purchaser in this Agreement shall terminate 270 days after the Closing and Purchaser shall have no liability thereafter with respect to such representations and warranties except to the extent Seller has alleged a claim in writing against Purchaser during such 270 day period for breach of any representation or warranty and filed a lawsuit against Purchaser with respect thereto within 60 days after such 270 day period. If Seller is aware at Closing or receives any information prior to Closing which indicates that any of Purchaser's representations or warranties in this Agreement are not true as of the Closing and Seller elects nonetheless to proceed with the Closing, Seller shall be deemed to have waived any claim for breach of such representation or warranty.

SECTION 5. OPERATION OF THE PROJECT PRIOR TO CLOSING.

Seller agrees to do all of the following, from and after the date hereof and prior to the Closing:

(A) Operate and maintain the Project in the same manner as it is currently being operated and shall, subject to damage, destruction or loss to the Project in which event Purchaser shall have the rights set forth in Section 7(D) below, cause the Project to be, on the Closing Date, in the same condition as exists as of the date of this Agreement (normal wear and tear excepted).

(B) Maintain, or cause to be maintained, all existing insurance carried by Seller on the Improvements.

(C) Without the prior written consent of Purchaser (except in the case of emergencies and except for tenant improvements required or permitted under the Tenant Leases), not make, or obligate itself to make, any material alterations or modifications to the Project.

(D) Without the prior written consent of Purchaser, not amend or modify the Ground Leases, Ancillary Agreements or Condominium Documents.

(E) Without the prior written consent of Purchaser, not enter into any new agreements affecting the Project after the date that is three (3) business days prior to the Due Diligence Deadline which would survive the Closing, including any leases or contracts, and not make any modifications or amendments to any agreements affecting the Project after the date that is three (3) business days prior to the Due Diligence Deadline which would survive the Closing; provided, however, (i) Seller shall not be obligated to obtain Purchaser’s consent for any agreements or modifications which can be terminated on not more than 30 days’ notice without the payment of any premium or penalty, and (ii) without the prior written consent of Purchaser, Seller shall not make any modifications or amendments to any Tenant Leases (whether before or after the Due Diligence Deadline). Purchaser shall not unreasonably withhold its consent to any such agreements, modifications or amendments; and Purchaser shall be deemed to have given its consent thereto if Purchaser does not notify Seller of its disapproval within three (3) business days after receipt of a term sheet setting forth the material terms of the proposed agreement, modification or amendment. With respect to any leases, agreements or amendments executed by Seller before the Due Diligence Deadline, Seller shall deliver copies thereof to Purchaser no later than three (3) business days prior to the Due Diligence Deadline.

(F) Terminate effective as soon as reasonably possible on or after Closing any Contracts which Purchaser has prior to the Closing requested Seller in writing to terminate provided (i) such Contracts are terminable, (ii) Purchaser gives Seller written notice requesting such termination, and (iii) Purchaser pays any fees or penalties which are necessary to terminate such Contracts; provided, however, in no event shall Seller be obligated to deliver any termination notices until after the Due Diligence Deadline. Notwithstanding the foregoing, all property management and leasing agreements shall be terminated by Seller at Seller’s sole expense effective as of the Closing (without need of further request from Purchaser to do so).

(G) Cooperate with Purchaser in Purchaser's efforts to obtain Subordination, Non-Disturbance and Attornment Agreements from tenants designated by Purchaser.

SECTION 6. ACCESS TO THE PROJECT.

Heitman Capital Management LLC and NexCore Group LP and Seller have entered into an Access Agreement, dated July 23, 2013, for the Project (the “Access Agreement”). The obligations of such parties under the Access Agreement shall survive the execution of this Agreement and the Closing or termination of this Agreement.

SECTION 7. CONDITIONS TO CLOSING.

In addition to the conditions provided in other provisions of this Agreement, the parties' obligations to perform their undertakings provided in this Agreement, are each conditioned on the fulfillment of each of the following which is a condition to such party's obligation to perform hereunder (subject to such party's waiver in strict accordance with Section 9 below):

(A) Purchaser has ordered a survey of each Individual Property (each a "Survey") certified to Purchaser and the Title Company, and Seller has ordered a current title insurance commitment from the Title Company for each Individual Property (each a "Title Commitment"). Purchaser shall have until the Due Diligence Deadline to deliver written notice (“Purchaser’s Title Notice”) to Seller of any matters set forth in any Survey or Title Commitment which have been disapproved by Purchaser, and all matters set forth therein which have not been disapproved by Purchaser in Purchaser’s Title Notice shall be deemed "Permitted Exceptions." If Purchaser disapproves any such matters as set forth above, Seller shall have five (5) business days after the Due Diligence Deadline in which to send Purchaser written notice in its sole discretion (“Seller’s Title Notice”) notifying Purchaser that it has elected to cure (which may be by causing the matter to be insured over in a manner reasonably acceptable to Purchaser) on or prior to Closing any matters which Purchaser has disapproved; and Seller shall be deemed to have elected not to cure any other matters set forth in Purchaser’s Title Notice, provided, however, Seller shall in any event cause any mortgages or deeds of trust placed on the Project by Seller to be discharged and released on or prior to the Closing. Seller may extend the Closing Date for up to thirty (30) days in order to cure any title exceptions which Seller has elected or is obligated to cure hereunder. If Seller does not elect to correct (which may be by causing the matter to be insured over in a manner reasonably acceptable to Purchaser) any matters disapproved by Purchaser as set forth above, Purchaser shall have two (2) business days after receipt of Seller’s Title Notice (or two (2) business days after the end of the five (5) business day period for the sending of Seller’s Title Notice if Seller does not elect to send a Seller’s Title Notice) in which to elect either to waive its objection to such matters in which case such matters shall be deemed Permitted Exceptions or terminate this Agreement and obtain a refund of the Earnest Money; and Purchaser shall be deemed to have elected to waive its objection to such matters if Purchaser does not notify Seller of its election to terminate this Agreement within such two (2) business day period.

(B) As a condition of Purchaser's obligation to proceed with Closing (and not as a default), Purchaser shall be satisfied in its sole and absolute discretion with all aspects of the Project; provided, however, if Purchaser does not notify Seller by the Due Diligence Deadline that it is not so satisfied, this condition shall be deemed waived by Purchaser. If Purchaser does notify Seller by the Due Diligence Deadline that it is not satisfied with the Project, this Agreement shall terminate, except for those provisions which by their terms survive such termination; and the Earnest Money shall be refunded to Purchaser.

(C) As a condition to each party's obligation to perform hereunder, the due performance by the other of all undertakings and agreements to be performed by the other hereunder and the truth in all material respects of each representation and warranty as set forth herein made pursuant to this Agreement by the other at the Closing Date except for such changes as are permitted under the terms of this Agreement; provided, however, if either party cannot remake any of its

representations and warranties in all material respects as of Closing through no fault of its own (it being acknowledged that a party shall be deemed to be at fault if any of its representations and warranties are not true in all material respects as of the date hereof), the other party's sole remedies shall either be to terminate this Agreement or waive the condition that such representation or warranty be remade as of Closing.

(D) As a condition to Purchaser's obligation to perform hereunder (and not as a default), that there shall not have occurred between the date hereof and the Closing Date, inclusive, destruction of or damage or loss to the Project (whether or not covered by insurance proceeds) from any cause whatsoever the cost of which to repair exceeds (i) $3,000,000 in the aggregate, (ii) $300,000 in the case of the Individual Property known as “Sun Lakes” or (iii) 15% of the allocated Purchase Price in the case of any other Individual Property. Seller shall promptly notify Purchaser of such damage, and Purchaser shall have five (5) business days after receipt of such notice in which to elect to terminate this Agreement and receive a refund of the Earnest Money. If Purchaser does not elect to terminate this Agreement within such period or if the cost of repairing the damage to the Project is less than all of the thresholds set forth above, the parties shall proceed with the Closing in which case Seller shall assign to Purchaser any claims for proceeds from the insurance policies covering such destruction or damage and provide Purchaser with a credit at Closing in the amount of any deductible, and there shall be no other adjustment in the Purchase Price except for a credit for any uninsured loss to the extent provided for below and Seller shall have no obligation to repair such damage. If there is any damage to the Project which is uninsured and the amount of the uninsured loss is less than $3,000,000, then Seller shall provide Purchaser with a credit at Closing for the amount of the uninsured loss. If there is any damage to the Project which is uninsured and the amount of the uninsured loss is greater than $3,000,000, then Seller shall notify Purchaser in writing as to whether Seller will or will not provide Purchaser with a credit at Closing for the amount of the uninsured loss; and if Seller elects not to provide Purchaser with a credit at Closing for the amount of any uninsured loss, then Purchaser shall be entitled to terminate this Agreement.

(E) As a condition to Purchaser's obligation to perform hereunder (and not as a default), that there shall not have occurred at any time or times on or before the Closing Date any taking or threatened taking of the Project or any material part thereof by condemnation, eminent domain or similar proceedings; provided, however, Purchaser may elect to waive such condition in which case Seller shall assign to Purchaser at Closing all of Seller's right, title and interest in and to any proceeds resulting from any such proceeding. Any taking that materially adversely affects access or creates any legal non-compliance or causes any violation or creates any termination right under any Ground Lease, Tenant Lease or Ancillary Agreement shall be deemed material.

(F) As a condition to Seller’s and Purchaser’s obligations to perform hereunder (and not as a default) Seller shall have delivered to Purchaser written consents (the “ Ground Lessor Consents ”) from the Ground Lessors to the transactions set forth herein where required under the terms of their Ground Leases; and as a condition to Purchaser’s obligations to perform hereunder (and not as a default) Seller shall have delivered to Purchaser written acknowledgments (the " Ground Lessor Estoppel Certificates ") for each Ground Lease from the applicable Ground Lessor, dated as of a date not more than sixty (60) days prior to Closing, without material deviation from either the form attached hereto as Exhibit E-1 or the forms

required under the Ground Leases. Seller shall use reasonable efforts to obtain the Ground Lessor Consents and Ground Lessor Estoppel Certificates. If Seller is unable to obtain all of the Ground Lessor Consents, this Agreement shall terminate and the Earnest Money shall be refunded to Purchaser; and, if Seller is unable to obtain the Ground Lessor Estoppel Certificates required herein, Purchaser shall have the option as its sole and exclusive remedies of (i) terminating this Agreement and obtaining a refund of the Earnest Money or (ii) proceeding with the Closing and waiving the requirement that it receive any missing Ground Lessor Estoppel Certificates. If any of the Ground Lessor Consents and/or Ground Lessor Estoppel Certificates have not been received by the scheduled Closing Date, either party may elect to extend the Closing Date for up to ten (10) days to continue to attempt to obtain the missing Ground Lessor Consents and/or Ground Lessor Estoppel Certificates.

(G) Seller shall use reasonable efforts to obtain estoppel certificates from the other parties to the Ancillary Agreements, which estoppel certificates shall be in substantially the form of Exhibit E attached hereto and may be combined with the Ground Lessor Estoppel Certificates where applicable; provided, however, such estoppel certificates shall not be a condition of Closing hereunder, and Seller’s failure to obtain such estoppel certificates shall not relieve Purchaser of its obligations hereunder.

(H) As a condition to Purchaser’s obligations to perform hereunder (and not as a default) Seller shall have delivered to Purchaser written acknowledgments (the " Condominium Association Estoppel Certificates ") for each Condominium Declaration from the applicable condominium association, dated as of a date not more than sixty (60) days prior to Closing, without material deviation from either the form attached hereto as Exhibit E-2 or the forms required under the Condominium Declarations. Seller shall use reasonable efforts to obtain the Condominium Association Estoppel Certificates. If Seller is unable to obtain the Condominium Association Estoppel Certificates required herein, Purchaser shall have the option as its sole and exclusive remedies of (i) terminating this Agreement and obtaining a refund of the Earnest Money or (ii) proceeding with the Closing and waiving the requirement that it receive any missing Condominium Association Estoppel Certificates.

(I) As a condition to Purchaser’s obligations to perform hereunder (and not as a default) Seller shall have delivered to Purchaser written acknowledgments (the " Tenant Estoppel Certificates ") from the tenants under the following Tenant Leases, dated as of a date not more than sixty (60) days prior to Closing, without material deviation from either the form attached hereto as Exhibit F, the forms required under their leases or, in the case Dignity Health, its standard form, from at least 75% of the occupied square footage in the Project, including in all events Tenant Estoppel Certificates for all Tenant Leases of 4,000 square feet or more and for all Tenant Leases at the Project with Dignity Health, the Tenant Lease with Lakeside Medical Organization for space at 1500 S. Central, Glendale, California; the Tenant Leases with Kidney Center, Inc. and Healthcare Partners, LLC for space at 18546 Roscoe, Northridge, California; and the Tenant Lease with Facey Medical Group at 18460, Roscoe, Northridge, California (the “ Required Tenant Estoppel Certificates ”). Seller shall use reasonable efforts to obtain Tenant Estoppel Certificates from all of the tenants at the Project, but receipt of Tenant Estoppel Certificates shall not be a condition of Closing except for the Required Tenant Estoppel Certificates. If Seller is unable to obtain the Required Tenant Estoppel Certificates, Purchaser shall have the option as its sole and exclusive remedies of (i) terminating this Agreement and

obtaining a refund of the Earnest Money or (ii) proceeding with the Closing and waiving the requirement that it receive any missing Tenant Estoppel Certificates; provided, however, if the Required Tenant Estoppel Certificates have not been received by the scheduled Closing Date, either party may elect to extend the Closing Date for up to ten (10) days to continue to attempt to obtain the Required Tenant Estoppel Certificates.

SECTION 8. CLOSING.

A. Time.

The Closing hereunder shall occur on the Closing Date at the offices of the Title Company.

B. Actions.

At the Closing, Seller shall convey the Project to Purchaser; and Purchaser shall pay to Seller the Purchase Price, plus or minus prorations as set forth herein. The Closing shall occur through an escrow, the cost of which shall be shared equally between Purchaser and Seller. Seller shall convey, and Purchaser shall receive, full possession of the Project at Closing, subject only to (i) the Tenant Leases, (ii) Permitted Exceptions, (iii) real estate and personal property taxes not yet due and payable, and (iv) all federal, state and local laws, ordinances and regulations.

C. Deliveries.

(1) At the Closing, Purchaser shall receive each of the following, in form and substance reasonably satisfactory to Purchaser (it being agreed by Purchaser that the documents attached hereto as exhibits are satisfactory in form to Purchaser), all of which shall have been deposited by Seller in escrow with the Title Company at least one (1) business day prior to the Closing Date:

(a) Assignments of the Ground Leases and Ancillary Agreements in the form attached hereto as Exhibit G-1 for any portions of the Project located in California and Assignments of the Ground Leases and Ancillary Agreements in the form attached hereto as Exhibit G-2 for any portions of the Project located in Arizona (collectively, the “ Assignments of Ground Leases ”), each duly executed by Seller;

(b) a bill of sale and assignment for the Personal Property in the form of Exhibit H, executed by Seller;

(c) an assignment of the Contracts, in the form of Exhibit I attached hereto (the " Assignment of Contracts "), executed by Seller, assigning to Purchaser all of the Contracts except for those Contracts which have been terminated effective on or prior to the Closing in accordance with the terms hereof;

(d) an assignment of the Tenant Leases, in the form of Exhibit J hereto (the " Assignment of Tenant Leases "), executed by Seller;

(e) notices to each of the tenants under the Tenant Leases, notifying them of the sale of the Project and directing them to pay all future rent as Purchaser may direct; and notices to the other parties to any Contracts assigned to Purchaser hereunder, notifying them of the sale of the Project and directing them where to send future invoices for the Project.

(f) a closing statement setting forth all prorations and credits required hereunder;

(g) an affidavit from Seller that it is not a "foreign person" or subject to withholding requirements under the Foreign Investment in Real Property Tax Act of 1980, as amended, and a California Form RE-593, duly executed by Seller for the portions of the Project located in California;

(h) the original of all Tenant Leases, Contracts, licenses and permits, plans and specifications, operating manuals and guaranties and warranties with respect to the Project to the extent they are in the possession of Seller or its agents, provided, however, Seller shall have access to such items after Closing to the extent reasonably necessary for Seller to resolve any legal matters with respect to the Project relating to the period prior to the Closing;

(i) such evidence as Purchaser or the Title Company may reasonably require as to the due authorization, execution and delivery by Seller of this Agreement and the documents required to be executed by Seller hereunder;

(j) a certificate executed by Seller reaffirming that Seller’s representations and warranties set forth in this Agreement are true and correct in all material respects as of the Closing except as may be set forth in such certificate, provided such certificate shall be subject to the qualifications and limitations on Seller’s liabilities set forth in this Agreement;

(k) an Affidavit of Property Value for those portions of the Project located in Arizona;

(l) Special warranty deeds for all condominium units comprising any portion of the Project and for all Improvements; and

(m) any other required state, county or municipal transfer tax declarations, notices or filings, and any reasonable and customary documentation required by the Title Company in order for the Title Company to issue the Title Policy.

(2) At the Closing Seller shall have received each of the following, in form and substance reasonably satisfactory to Seller (it being agreed by Seller that the documents attached hereto as exhibits are satisfactory in form to Seller), all of which shall have been deposited by Purchaser in escrow with the Title Company at least one (1) business day prior to the Closing Date:

(a) payment of the Purchase Price, plus or minus prorations;

(b) copies of the Assignments of Ground Lease, executed by Purchaser;

(d) such evidence as Seller or the Title Company may reasonably require as to the due authorization, execution and delivery by Purchaser of this Agreement and the documents required to be executed by Purchaser hereunder;

(e) a certificate executed by Purchaser reaffirming that Purchaser’s representations and warranties set forth in this Agreement are true and correct in all material respects as of the Closing except as may be set forth in such certificate, provided such certificate shall be subject to the qualifications and limitations on Purchaser’s liabilities set forth in this Agreement;

(f) a preliminary change in ownership report as required under California law for those portions of the Project located in California;

(g) an Affidavit of Property Value for those portions of the Project located in Arizona; and

(h) any other required state, county or municipal transfer tax declarations, notices or filings, and any reasonable and customary documentation required by the Title Company in order for the Title Company to issue the Title Policy.

D. Prorations.

The Purchase Price for the Project shall be subject to prorations and credits as follows to be determined as of 12:01 A.M. on the Closing Date, the Closing Date being a day of income and expense to Purchaser, with all prorations being based on the actual number of days in the year; provided, however, unless Purchaser’s funds have been received by the Title Company and Purchaser shall have authorized their release (which authorization may be conditioned on Seller’s performance of all of Seller’s obligations and satisfaction of all conditions to closing that are to be satisfied by Seller) by 11:45 am Central Time on the Closing Date, the prorations shall be determined as of 12:01 a.m. on the first business day following the Closing Date:

1. Purchaser shall receive a credit at Closing for all rents, including estimated payments for operating expenses and real estate taxes, collected by Seller prior to the Closing and allocable to the period after Closing but not for any rent which has not been collected by Seller. No credit shall be given Seller for accrued and unpaid rent or any other non-current sums due from tenants until said sums are collected, and Seller shall retain the right to collect any such rent provided Seller does not sue any tenants or terminate any Tenant Leases. Purchaser shall use reasonable efforts after Closing to collect any rent under the Tenant Leases which has accrued as of the Closing; provided, however, Purchaser shall not be obligated to sue any tenants or exercise any legal remedies under the Tenant Leases. Any portion of any rents collected subsequent to the Closing Date and properly allocable to periods prior to the Closing Date shall

be paid, promptly after receipt, to Seller, but subject to all of the provisions of this Section; and any portion thereof properly allocable to periods on or subsequent to the Closing Date shall be paid to Purchaser. All payments collected from tenants after Closing shall be applied to the rent designated by the tenant making such payment. If such tenant does not designate the rent to which such payment shall be applied, such payment shall first be applied to the month in which the Closing occurs, then to any rent due to Purchaser for the period after Closing and finally to any rent due to Seller for the period prior to Closing; provided, however, notwithstanding the foregoing, if Seller collects any payments from tenants after the period ending 60 days after Closing through its own collection efforts, Seller may first apply such payments to rent due Seller for the period prior to Closing. Any refundable cash security deposits held by Seller at Closing shall be credited to Purchaser on the Closing Date.

2. The adjustment rent or escalation payments payable under the Tenant Leases for taxes and operating expenses shall be reprorated after their final determination based on Seller’s and Purchaser’s respective share of such taxes and operating expenses. Seller shall provide Purchaser with copies of its books and records relating to the payment of taxes and operating expenses and amounts collected from tenants relating thereto for the relevant periods occurring prior to Closing. As soon as reasonably possible after the end of the year in which the Closing occurs, Purchaser shall make a final calculation of the real estate taxes and operating expenses for the Project for such year as well as the adjustment rent or escalation payments payable under the Tenant Leases in connection therewith. Purchaser shall also calculate Purchaser’s and Seller’s share thereof as set forth in the preceding sentence, which calculation shall be submitted to Seller for its reasonable approval. If Seller has collected more in estimated payments from the tenants for operating expenses and taxes than it is entitled to retain after the final reconciliations are completed, Seller shall pay such excess to Purchaser for refund to the tenants; and, if Seller has collected less in estimated payments than it is entitled to receive after the final reconciliations are completed, Purchaser shall bill the tenants for such amount and shall remit such amounts to Seller upon receipt.

3. Except to the extent they are directly paid by the tenants, real estate and personal property taxes due and payable with respect to the Project in the year in which the Closing occurs (regardless of when such taxes are assessed or accrue), together with any costs incurred by Seller in protesting such taxes or the assessments on the Project, shall be prorated based on the portion of the year which has elapsed prior to the Closing Date. If the amount of any such taxes has not been determined as of Closing, such credit shall be based on the most recent ascertainable taxes and shall be reprorated upon issuance of the final tax bill. If the taxes can be paid on a discounted basis, the proration shall be done on the basis of the discounted amount payable at the earlier of the Closing Date or the date on which such taxes were paid. Seller shall also give Purchaser a credit for any special assessments against the Project which are due and payable prior to Closing, and Purchaser shall be responsible for all special assessments due and payable on or after the Closing.

4. If, after the Closing, Purchaser or Seller receives (in the form of a refund, credit, or otherwise) any amounts as a result of a real property tax contest, appeal, or protest (a " Protest "), such amounts will be applied as follows: first, to reimburse Purchaser or Seller, as applicable, for all costs incurred in connection with the Protest; second, to Purchaser for payment of refunds payable to past, present, or future tenants of the Project, in accordance with the terms of any

Tenant Leases; and third, to Seller to the extent that such Protest covers the period prior to the Closing Date and to Purchaser to the extent that such Protest covers the period from and after the Closing Date. Seller will not initiate any new Protest without the prior reasonable approval of Purchaser, and Seller will not unreasonably refuse to initiate a Protest prior to the Closing Date if Purchaser so requests in writing.

5. Rent payable under the Ground Leases and charges payable under the Ancillary Agreements.

6. Utilities and fuel payable by the owner of the Project, including, without limitation, steam, water, electricity, gas and oil, which are not directly paid by tenants, shall be prorated as of the Closing. Seller shall use reasonable efforts to cause the meters, if any, for utilities to be read the day on which the Closing Date occurs and to pay the bills rendered on the basis of such readings. If any such meter reading for any utility is not available, then adjustment therefor shall be made on the basis of the most recently issued bills therefor which are based on meter readings no earlier than thirty (30) days prior to the Closing Date; and such adjustment shall be reprorated when the next utility bills are received. Purchaser shall give Seller a credit at Closing for all deposits with utility companies serving the Project in which case Seller shall assign its rights to such deposits to Purchaser at the Closing; or, at Seller’s option, Seller shall be entitled to receive a refund of such deposits from the utility companies, and Purchaser shall post its own deposits.

7. Charges payable by the owner of the Project under the Contracts assigned to Purchaser pursuant to this Agreement.

8. At Closing Purchaser shall receive a credit against the Purchase price in the aggregate amount of $840,953 on account of various capital expense and ADA compliance issues with the Project, which credit shall be allocated to various Individual Properties as set forth on Exhibit L hereto.

At least three (3) days prior to Closing, Seller shall deliver to Purchaser a draft closing statement setting forth the prorations required hereunder. Within sixty (60) days after the Closing Date, Purchaser and Seller shall agree on a revised closing statement to the extent additional information is received after Closing with respect to the prorations described above; and within one hundred twenty (120) days after the end of the year in which the Closing has occurred, Purchaser and Seller shall agree on final prorations provided, however, Seller shall in any event be entitled to recover its share of any tax refunds or percentage rents as set forth herein paid after such final prorations. The party owing money to the other party based on any revisions to the prorations shall make such payment within ten (10) business days after agreement on such revisions.

E. Closing Costs.

Purchaser shall pay (1) the cost of ALTA or extended coverage in the Title Policy (defined below) and the cost of any endorsements, (2) the cost of the survey of the Project, (3) one-half of any escrow or closing charge by the Title Company, (4) the recording fees for the Assignments of Ground Lease and deeds, (5) any sales or similar taxes payable on the transfer of the Personal Property, and (6) its own due diligence and legal expenses. Seller shall pay (1) any transfer taxes or deed stamps payable in connection with the recording of Assignments of Ground Lease and deeds, (2) the title insurance

premium for the basic (e.g., CLTA) portion of the Title Policy, (3) one-half of any escrow or closing charge by the Title Company, (4) the recording fees for recording releases of any liens which Seller is obligated or agrees hereunder to discharge at Closing and (5) its own legal expenses.


F.	Leasing Expenses.

Except to the extent paid by Seller prior to the Closing, Seller shall give Purchaser a credit at Closing in the amounts identified as Seller’s responsibility in Exhibit K attached for outstanding leasing commissions, tenant improvement obligations and rent abatement in connection with the current terms of the Tenant Leases. Purchaser shall be responsible for, and shall indemnify and hold Seller harmless against, (i) any brokerage commissions, tenant improvement expenses, moving allowances and other leasing expenses for which and to the extent Purchaser is provided a credit by Seller, (ii) any leasing commissions, tenant improvement obligations and rent abatement identified on Exhibit K attached hereto as Purchaser’s responsibility, (iii) any leasing commissions, tenant improvement obligations and rent abatement owed in connection with new Tenant Leases entered into after the date hereof and prior to Closing with Purchaser’s approval or owed in connection with the exercise of any renewal or expansion options exercised under the Tenant Leases after the date hereof, and (iv) any commissions due Seller’s managing agent under its management agreement for leases or lease amendments executed with respect to the Project within ninety (90) days after the Closing provided the managing agent had substantive discussions with the tenant regarding such lease or lease amendment prior to Closing. Seller’s managing agent shall give Purchaser a list of such tenants at the Closing.

G. Title.

At the Closing, the Title Company shall issue to Purchaser an ALTA Policy of Title Insurance or the form of title insurance policy prescribed by State law (the "Title Policy") with Purchaser named as insured, dated as of the Closing Date, with a liability limit equal to the Purchase Price, insuring that title to the Leasehold Estates and the Improvements is vested in Purchaser, subject only to the Permitted Exceptions and Tenant Leases. If the Title Policy discloses any liens or encumbrances on the Project which are not Permitted Exceptions and which Seller voluntarily created after the date hereof, Purchaser may remove such liens at Closing by paying so much of the Purchase Price to the holders of the liens as is necessary to do so, with such amounts being credited against the Purchase Price. If the Title Policy discloses any other liens or encumbrances which are not Permitted Exceptions, Purchaser may elect either to waive its objection to such liens or encumbrances in which case they shall be deemed to be Permitted Exceptions or terminate this Agreement except those provisions which, by their terms, survive such termination.

H. Other Leasing Related Price Adjustments.

If the lease renewal with Facey Medical Group at 18460, Roscoe, Northridge, California (the "Facey Lease Renewal") is signed prior to Closing, then Seller shall provide Purchaser with a credit at Closing in the amount of any unpaid tenant improvement costs, leasing commissions and rent abatements relating to such lease renewal to the extent set forth in Exhibit K as set forth above. If the Facey Lease Renewal is not signed prior to Closing, then at Closing Exhibit K will be revised to remove the leasing costs associated with the Facey renewal and Seller shall deposit into an escrow at Closing an amount equal to three (3) years’ rent (both base rent and estimated pass-through costs) budgeted to be paid under the contemplated Facey Lease for the proposed renewal term as set forth on Exhibit M hereto. Such escrow shall provide that during any period between the expiration of the current term of the existing

lease to Facey Medical Group and the date when the Facey Lease Renewal is executed, on a monthly basis an amount equal to the rent that would have otherwise been due under the Facey Lease Renewal, as set forth on Exhibit M, shall be released to Purchaser except to the extent such rent is offset by rent collected from Facey. In addition, Purchaser shall be entitled to use the funds in such escrow to pay for leasing costs, including leasing commissions, tenant improvement costs and rent abatement, associated with the Facey renewal. Any funds remaining in the escrow after paying all of the foregoing shall be released to Seller. Purchaser shall provide Seller with a copy of the signed Facey Lease Renewal when executed and any leasing costs incurred in connection with the Facey Lease Renewal.

If the contemplated lease of suite 200 at 300 Old River Road in Bakersfield to Dignity Health (the "Dignity Lease") is signed prior to Closing, then Seller shall provide Purchaser with a credit at Closing in the amount of any unpaid tenant improvement costs, leasing commissions and rent abatements relating to the initial term of such lease. If the Dignity Lease is not signed prior to Closing, then at Closing Seller shall deposit $1,479,009 into an escrow at Closing. Such escrow shall provide that until such time as the Dignity Lease is signed $35,307 shall be released to Purchaser each month. At such time as the Dignity Lease is signed, there shall be released to Purchaser from such escrow an amount equal to the tenant improvement costs, leasing commissions and rent abatements for the Dignity Lease plus reasonable legal fees incurred by Purchaser in connection with the Dignity Lease, and the balance of the escrowed funds shall be released to Seller. Purchaser shall provide Seller with a copy of the signed Dignity Lease when executed, along with evidence of the tenant improvement costs, leasing commissions, rent abatements and legal fees. If the Dignity Lease is not executed within one year after Closing, all remaining escrowed funds will be released to Purchaser.

I. Sun Lakes ROFO.

Seller shall re-tender its first offer of purchase to the offeree (the "Sun Lakes Offeree") with respect to the Individual Property located at 10440 E. Riggs Road, Sun Lakes, Arizona (the "Sun Lakes Property") at its revised allocated Purchase Price. If on the Closing Date the relevant offer period has not expired without the Sun Lakes Offeree exercising its purchase right and the Sun Lakes Offeree has not waived its purchase right, then the parties shall deposit into an escrow all of the executed closing documents and the allocated Purchase Price for the Sun Lakes Property. If the Sun Lakes Offeree does not then exercise its purchase right within the offer period, the parties shall proceed to close the purchase and sale of the Sun Lakes property within three business days after the expiration of the offer period. If the Sun Lakes Offeree timely exercises its purchase option and closes on the purchase of the Sun Lakes Property, the Sun Lakes Property shall be excluded from purchase and sale hereunder and the Purchase Price shall be reduced by the amount allocated to the Sun Lakes Property and all deposits being held by the Title Company in connection with the Sun Lakes Property shall be returned to their respective depositors.

SECTION 9. WAIVER; SEVERABILITY.

Each party hereto may, at any time or times, at its election, waive any of the conditions to its obligations hereunder by a written waiver expressly detailing the extent of such waiver (and no other waiver or alleged waiver by such party shall be effective for any purpose). No such waiver shall reduce the rights or remedies of such party by reason of any breach by the other party or parties of any of its or their obligations hereunder. If any term, covenant, condition or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be held by a court of competent

jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants, conditions or provisions of this Agreement, or the application thereof to any person or circumstance, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.

SECTION 10. BROKERS.

Each party represents and warrants to the other that it has not engaged or dealt with any brokers or finders in connection with the transactions set forth herein except for the Broker, and each party shall indemnify and hold the other party harmless from any claim, liability, loss or damage resulting from the indemnifying party’s breach of the foregoing representation and warranty. Seller shall be obligated to pay any commissions or fees due the Broker.

SECTION 11. SURVIVAL; FURTHER INSTRUMENTS.

Except for provisions herein which reference any action to be taken after Closing or as otherwise expressly set forth herein, none of the terms and provisions herein shall survive the Closing. Each party will, whenever and as often as it shall be requested so to do by the other, cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be necessary or proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement and as are consistent with this Agreement.

SECTION 12. NO THIRD PARTY BENEFITS.

This Agreement is made for the sole benefit of Purchaser and Seller and their respective successors and assigns (subject to the limitation on assignment set forth below), and no other person or persons shall have any right or remedy or other legal interest of any kind under or by reason of this Agreement. Whether or not either party hereto elects to employ any or all of the rights, powers or remedies available to it hereunder, such party shall have no obligation or liability of any kind to any third party by reason of this Agreement or by reason of any of such party's actions or omissions pursuant hereto or otherwise in connection with this Agreement or the transactions contemplated hereby.

SECTION 13. REMEDIES.

(A) PROVIDED PURCHASER HAS NOT ELECTED TO TERMINATE THIS AGREEMENT PURSUANT TO ANY OF PURCHASER’S RIGHTS TO DO SO CONTAINED HEREIN, IF PURCHASER COMMITS A DEFAULT UNDER THIS AGREEMENT WHICH IS NOT CURED WITHIN FIVE BUSINESS DAYS AFTER NOTICE (PROVIDED PURCHASER SHALL NOT BE ENTITLED TO ANY SUCH NOTICE OR CURE PERIOD WITH RESPECT TO ITS OBLIGATIONS TO BE PERFORMED ON THE CLOSING DATE), THEN ESCROW AGENT MAY BE INSTRUCTED BY SELLER TO CANCEL THE ESCROW AND SELLER SHALL THEREUPON BE RELEASED FROM ITS OBLIGATIONS HEREUNDER. PURCHASER AND SELLER AGREE THAT BASED UPON THE CIRCUMSTANCES NOW EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO ESTABLISH SELLER’S DAMAGE BY REASON OF PURCHASER’S DEFAULT. ACCORDINGLY, PURCHASER AND SELLER AGREE THAT IT WOULD BE REASONABLE AT SUCH TIME TO AWARD SELLER “LIQUIDATED DAMAGES” EQUAL TO THE AMOUNT OF THE DEPOSIT PLACED INTO ESCROW BY PURCHASER PURSUANT TO SECTION 2(A) OF THIS AGREEMENT PLUS ANY

AND ALL ACCRUED INTEREST THEREON. SELLER AND PURCHASER ACKNOWLEDGE AND AGREE THAT THE FOREGOING AMOUNT IS REASONABLE AS LIQUIDATED DAMAGES AND SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY IN LIEU OF ANY OTHER RELIEF, RIGHT OR REMEDY, AT LAW OR IN EQUITY, TO WHICH SELLER MIGHT OTHERWISE BE ENTITLED BY REASON OF PURCHASER’S DEFAULT UNDER THIS AGREEMENT. ACCORDINGLY, SELLER MAY INSTRUCT THE ESCROW AGENT TO CANCEL THE ESCROW, WHEREUPON SELLER SHALL BE RELIEVED FROM ALL LIABILITY HEREUNDER, AND, PROMPTLY FOLLOWING ESCROW AGENT’S RECEIPT OF SUCH INSTRUCTION, ESCROW AGENT SHALL (i) CANCEL THE ESCROW, AND (ii) DISBURSE THE DEPOSIT AND ALL ACCRUED INTEREST THEREON TO SELLER (UNLESS SUCH TERMINATION OCCURS PRIOR TO THE DUE DILIGENCE DEADLINE, IN WHICH CASE THE DEPOSIT AND ALL ACCRUED INTEREST THEREON SHALL BE DISBURSED TO PURCHASER). NOTHING IN THIS SECTION 13(A) SHALL (i) PREVENT OR PRECLUDE ANY RECOVERY OF ATTORNEYS’ FEES OR OTHER COSTS INCURRED BY SELLER PURSUANT TO SECTION 15 HEREOF OR (ii) IMPAIR OR LIMIT THE EFFECTIVENESS OR ENFORCEABILITY OF THE INDEMNIFICATION OBLIGATIONS OF PURCHASER WHICH SURVIVE THE TERMINATION OF THIS AGREEMENT. SELLER AND PURCHASER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 13(A) AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. PURCHASER AGREES TO EXECUTE AND DELIVER SUCH ADDITIONAL INSTRUCTIONS TO ESCROW AGENT TO RELEASE THE DEPOSIT TO SELLER AS PROVIDED HEREIN.

_______________ _______________

Seller’s Initials Purchaser’s Initials

(B) If Seller shall default hereunder prior to Closing (it being understood that it is a default if any of Seller’s representations and warranties are materially untrue as of the date hereof or hereafter become materially untrue due to any act or omission of Seller), Purchaser shall be entitled as its sole remedies either to (i) terminate this Agreement and obtain a refund of the Earnest Money together with all interest accrued thereon, in which case Seller shall immediately reimburse Purchaser for its actual out-of-pocket expenses (including attorneys' fees) incurred in connection with this Agreement, the transactions contemplated hereby and all of Purchaser’s due diligence and other costs and expenses relating to the Project up to a maximum of $500,000, or (ii) sue for specific performance of this Agreement. Except as provided in the immediately preceding sentence, Purchaser waives any other rights or remedies at law or equity if Seller shall default hereunder prior to Closing. Seller shall have no liability after Closing for the breach of any representations, warranties or covenants set forth in this Agreement and any closing documents delivered pursuant hereto unless the losses suffered by Purchaser as a result of such breaches exceeds $60,000 in the aggregate (in which case Seller shall be liable for “first dollar” losses, with the $60,000 being a threshold and not a deductible), and in no event shall Seller’s liability after Closing under this Agreement and any closing documents delivered pursuant hereto as a result of such breaches exceed $2,000,000 in the aggregate. If Purchaser does not acquire all of the Individual Properties comprising the Project for any reason, each of the dollar amounts set forth in the preceding sentence shall be reduced such that it shall equal such dollar amount times a fraction, the numerator of which is the portion of the Purchase Price allocated to the Individual Properties acquired by Purchaser and the denominator of which is the Purchase Price for the entire Project. The terms of this Section shall survive Closing.

SECTION 14. NOTICES.

All notices and other communications which either party is required or desires to send to the other shall be in writing and shall be sent by (i) facsimile provided a copy thereof is also sent by one of the following means, (ii) hand delivery, (iii) registered or certified mail, postage prepaid, return receipt requested, or (iv) nationally-recognized overnight courier service. Notices and other communications shall be deemed to have been given on actual receipt. Notices shall be addressed as follows:

(a) To Seller:

c/o LaSalle Investment Management, Inc.

3344 Peachtree Road NE, Suite 1200

Atlanta, Georgia 30326

Attention: Laurence C. Harris

Telephone Number: (404) 995-2130

Facsimile Number: (312) 470-5304

and

c/o LaSalle Investment Management, Inc.

100 E. Pratt Street

Baltimore, MD 21202
Attention: G. Lucas Kimmel

Telephone Number: (410) 878-4877

Facsimile Number: (312) 288-4304

with a copy to:

Hagan & Vidovic LLP

200 East Randolph Drive, 43 ^rd Floor

Chicago, Illinois 60601

Attention: R.K. Hagan

Telephone Number (312) 228-2994

Facsimile Number: (312) 228-0982

(b) To Purchaser:

NexCore HHF Venture LLC

c/o Heitman Capital Management LLC

191 North Wacker, Suite 2500

Chicago, Illinois 60606

Attention: Howard Edelman

Telephone Number (312) 855-6547

Facsimile Number: (312) 541-6738

And:

NexCore HHF Venture LLC

c/o NexCore Group LP

1621 18th St., Suite 250

Denver, CO 80202

Attention: David London

Telephone Number (303) 382-0177

Facsimile Number: (303) 244-0720

with a copy to:

Dentons US LLP

233 South Wacker, Suite 7800

Chicago, Illinois 60606

Attention: Todd Stennes

Telephone Number (312) 876-3173

Facsimile Number: (312) 876-7934

or to such other person and/or address as shall be specified by either party in a notice given to the other pursuant to the provisions of this Section.

SECTION 15. ATTORNEYS' FEES.

In the event either party institutes legal proceedings to enforce its rights hereunder, the prevailing party in such litigation shall be paid all reasonable expenses of the litigation by the losing party, including its attorneys' fees.

SECTION 16. CONFIDENTIALITY.

Purchaser and Seller each agree that it will hold in strict confidence all documents and information concerning the other party and its business and properties. If the transaction contemplated hereby should not close, such confidence will be maintained for a period of one (1) year, and all such documents and information (in written form only, there being no requirement to return or destroy electronic mail messages or their attachments) will immediately thereafter be returned to the party originally furnishing the same. No press release or public disclosure, either written or oral, of the existence or terms of this Agreement will be made by either Purchaser or Seller without the written consent of the other party. The foregoing provision will not, however, be construed to prohibit either party from disclosing to its investors, lenders, consultants or partners such terms of this transaction as are customarily disclosed to them in connection with similar acquisitions; provided that such investors, lenders, consultants or partners are informed of the confidentiality provisions of this Section and provided such party shall be responsible for any breach of this Section by the parties to whom it makes such disclosures. The terms of this Section shall survive the Closing

SECTION 17. LIMITATION ON LIABILITY.

Subject to the Joinder of ELPF Acquisition #1 Partners LLC attached hereto, any obligation or liability of either of the parties hereunder shall be enforceable only against, and payable only out of,

the property of such party, and in no event shall any officer, director, shareholder, partner, beneficiary, agent, advisor or employee of either party be held to any personal liability whatsoever or be liable for any of the obligations of the parties hereunder.

SECTION 18. WAIVER OF CERTAIN DAMAGES.

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE AND RELEASE ANY RIGHT, POWER OR PRIVILEGE EITHER MAY HAVE TO CLAIM OR RECEIVE FROM THE OTHER PARTY ANY PUNITIVE, EXEMPLARY, STATUTORY OR TREBLE DAMAGES OR ANY INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY BREACH OF ITS OBLIGATIONS UNDER THIS AGREEMENT, ACKNOWLEDGING AND AGREEING THAT THE REMEDIES HEREIN PROVIDED, WILL IN ALL CIRCUMSTANCES BE ADEQUATE. THE FOREGOING WAIVER AND RELEASE SHALL APPLY IN ALL ACTIONS OR PROCEEDINGS BETWEEN THE PARTIES.

SECTION 19. WAIVER OF JURY TRIAL.

NO PARTY SHALL HAVE THE RIGHT TO SEEK A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND EACH WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE TERMS OF THIS AGREEMENT OR ANY CLOSING DOCUMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. ANY PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH PARTY HERETO.

SECTION 20. MISCELLANEOUS.

A. This Agreement (including all Exhibits hereto which are hereby incorporated by reference) contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements between the parties hereto respecting such matters. This Agreement shall be construed and enforced in accordance with the laws of the state of Illinois. Purchaser may not assign its rights under this Agreement without the prior written consent of Seller except to an entity controlled by Heitman Capital Management LLC or an affiliate thereof and/or Purchaser or an affiliate thereof (it being understood and approved that Purchaser intends to assign this Agreement to NexCore HFF Venture LLC in connection with a capital contribution to such entity); any assignee shall be deemed to have assumed all of the assignor’s obligations hereunder, and the assignor shall remain liable hereunder. Purchaser may partially assign this Agreement to multiple entities controlled by Purchaser or otherwise designate such entities to acquire title to individual properties comprising the Project. Purchaser shall notify Seller at least ten (10) days prior to the Closing of any assignment of this Agreement or designation of any such designees. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

B. Seller may assign this Agreement with respect to one or more of the Individual Properties to an intermediary in connection with any desired “1031 exchange” transaction. Seller shall not be relieved of its obligations under this Agreement in the event of such assignment. If Seller proceeds with such a “1031 exchange”, Purchaser shall cooperate with Seller and do all things reasonably required and requested by Seller (provided that such actions do not increase Purchaser’s obligations or liabilities under this Agreement) to effect and facilitate such an exchange. Seller shall and do hereby indemnify, defend and hold Purchaser harmless for, from and against all liabilities arising as a result of the exchange that would not have arisen had Seller not closed this transaction as part of a like-kind exchange. Anything in this clause (b) to the contrary notwithstanding: (i) Purchaser makes no representation or warranty to Sellers as to the effectiveness or tax impact of any proposed exchange; (ii) in no event shall Purchaser or any designee be required to take title to any exchange or replacement property; (iii) Seller shall provide Purchaser with copies of all documents that are to be executed by Purchaser in connection with such exchange transaction no less than five (5) Business Days prior to the Closing Date; (iv) in no event shall completion of any such exchange transaction be a cause or excuse for any delay in the Closing Date; (v) Purchaser shall not be required to incur any costs or expenses or incur any additional liabilities or obligations in order to accommodate any exchange requested by Seller or any exchange facilitator; and (vi) Seller agree to use a qualified intermediary to conduct the exchange.

C. Time is of the essence of this Agreement and each provision hereof. The provisions of this Agreement may not be amended, changed or modified orally, but only by an agreement in writing signed by the party against whom any amendment, change or modification is sought. Purchaser shall not record this Agreement, any memorandum of this Agreement, any assignment of this Agreement or any other document which would cause a cloud on the title to the Project. This Agreement may be executed in counterparts and by facsimile or other electronic signature, each of which shall be deemed to be an original and all of which shall be deemed to be one and the same instrument. The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof. The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto.

[Signatures on following page]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

ELPF Glendale 1500 South Central LLC, ELPF Northridge 18350 Roscoe LLC, ELPF Northridge 18546 Roscoe LLC, ELPF Northridge 18460 Roscoe LLC, ELPF Bakersfield 300 Old River LLC, ELPF Bakersfield 500 Old River LLC, ELPF Santa Maria 116 S. Palisades LLC, ELPF Santa Maria 525 E. Plaza LLC, ELPF Chandler 485 South Dobson LLC, ELPF Gilbert 1501 North Gilbert LLC, ELPF Phoenix 4545 East Chandler LLC, ELPF Sun Lakes 10440 East Riggs LLC, and ELPF Phoenix 500 West Thomas LLC, all Delaware limited liabilities companies

By: ELPF Acquisition #1 Partners LLC,

a Delaware limited liability company, their sole member

By:___________________________

Title:__________________________

NexCore Development LLC, a Delaware limited liability company

By______________________________

Title:____________________________

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, C. Allan Swaringen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Jones Lang LaSalle Income Property Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013

/s/ C. A LLAN S WARINGEN

C. Allan Swaringen

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory A. Falk, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Jones Lang LaSalle Income Property Trust, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013

/s/ G REGORY A. F ALK

Gregory A. Falk

Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jones Lang LaSalle Income Property Trust, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, C. Allan Swaringen, in my capacity as Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ C. A LLAN S WARINGEN

C. Allan Swaringen

President and Chief Executive Officer

November 7, 2013

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jones Lang LaSalle Income Property Trust, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory A. Falk, in my capacity as Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ G REGORY A. F ALK

Gregory A. Falk

Chief Financial Officer

November 7, 2013