The following discussion and tables should be read in conjunction with our consolidated financial statements and notes thereto included in this quarterly report and our Annual Report on Form 10-K for the year ended December 31, 2008.

OVERVIEW

We primarily own office and industrial buildings located throughout the United States. We also own approximately 17 million square feet of leased industrial and commercial lands located in Oahu, Hawaii.

Property Operations

As of September 30, 2009, 88.0% of our total square feet was leased, compared to 90.6% leased as of September 30, 2008. These results reflect a 2.9 percentage point decrease in occupancy at properties we owned continuously since January 1, 2008. Occupancy data for 2009 and 2008 is as follows (square feet in thousands):

                       All Properties (1)      Comparable Properties (2)
                      As of September 30,         As of September 30,
                       2009         2008          2009            2008
Total properties           515          533            452             452
Total square feet       66,055       66,087         58,747          58,747
Percent leased (3)        88.0 %       90.6 %         87.5 %          90.4 %

During the three months ended September 30, 2009, we signed lease renewals for 618,000 square feet and new leases for 518,000 square feet, at weighted average rental rates that were 3% below rents previously charged for the same space. Average lease terms for leases signed during the three months ended September 30, 2009 were 4.6 years. Commitments for tenant improvement and leasing costs for leases signed during the three months ended September 30, 2009 totaled $7.2 million, or $6.32 per square foot (approximately $1.37/sq. ft. per year of the lease term).

During the past twelve months, leasing market conditions in the majority of our markets have continued to weaken. The pace of new leasing activity and the leasing of currently vacant space within our portfolio has slowed and completion of newly constructed office properties in certain markets has continued, causing our occupancy to decline. Required landlord funded tenant build outs and leasing commissions payable to tenant brokers for new leases and lease renewals have increased in certain markets since the second half of 2008. These build out costs and leasing commissions are generally amortized as a reduction of our income during the terms of the affected leases. Also, some tenants and prospective tenants have demonstrated reluctance to enter lease renewals or new leases for extended terms. We believe that some decreases in occupancy and effective rents may further reduce the financial results at some of our currently owned properties. However, there are too many variables for us to reasonably project what the financial impact of market conditions will be on our results for future periods.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Approximately 14.7% of our leased square feet and 14.9% of our rents are included in leases scheduled to expire through December 31, 2010. Lease renewals and rental rates at which available space may be relet in the future will depend on prevailing market conditions at that time. Lease expirations by year, as of September 30, 2009, are as follows (square feet and dollars in thousands):

                                                                                               Cumulative
                                                                                    % of          % of
                                                 Cumulative      Annualized      Annualized    Annualized
                     Square          % of        % of Square       Rental          Rental        Rental
                      Feet        Square Feet       Feet           Income          Income        Income
Year              Expiring (1)     Expiring       Expiring      Expiring (2)      Expiring      Expiring
2009                     1,710            2.9 %          2.9 %  $      26,172           3.1 %         3.1 %
2010                     6,866           11.8 %         14.7 %        101,818          11.8 %        14.9 %
2011                     5,416            9.3 %         24.0 %         94,755          11.1 %        26.0 %
2012                     5,229            9.0 %         33.0 %         97,395          11.4 %        37.4 %
2013                     5,551            9.6 %         42.6 %        100,017          11.7 %        49.1 %
2014                     4,014            6.9 %         49.5 %         71,016           8.3 %        57.4 %
2015                     3,254            5.6 %         55.1 %         67,574           7.9 %        65.3 %
2016                     2,809            4.8 %         59.9 %         47,417           5.5 %        70.8 %
2017                     2,528            4.4 %         64.3 %         65,464           7.6 %        78.4 %
2018                     1,701            2.9 %         67.2 %         30,228           3.5 %        81.9 %
2019 and
thereafter              19,037           32.8 %        100.0 %        155,288          18.1 %       100.0 %
                        58,115          100.0 %                 $     857,144         100.0 %

Weighted
average
remaining
lease term (in
years):                    8.0                                            5.9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our principal source of funds for our operations is rents from tenants at our properties. Rents are generally received from our non-government tenants monthly in advance, and from our government tenants monthly in arrears. As of September 30, 2009, tenants responsible for 1% or more of our total rent were as follows (square feet in thousands):

                                    Square      % of Total         % of
Tenant                             Feet (1)   Square Feet (1)    Rent (2)      Expiration
 1.    U. S. Government (3)           1,847               3.2 %       5.4 %   2009 to 2024
 2.    PNC Financial Services
       Group                            672               1.2 %       1.9 %   2011 to 2021
 3.    John Wiley & Sons, Inc.          342               0.6 %       1.8 %       2017
 4.    GlaxoSmithKline plc              608               1.0 %       1.7 %       2013
 5.    Jones Day                        407               0.7 %       1.3 %    2012, 2019
 6.    Wells Fargo Bank                 386               0.7 %       1.2 %   2009 to 2017
 7.    Flextronics International
       Ltd.                             894               1.5 %       1.2 %       2014
 8.    Ballard Spahr Andrews &                                                2010, 2012,
       Ingersoll, LLP                   269               0.5 %       1.1 %       2015
 9.    ING                                                                    2009, 2011,
                                        410               0.7 %       1.1 %       2018
10.    JDA Software Group, Inc.         283               0.5 %       1.1 %       2012
11.    The Bank of New York                                                   2011, 2012,
       Mellon Corp.                     350               0.6 %       1.1 %    2015, 2020
    Total                             6,468              11.2 %      18.9 %

Investment Activities

During the nine months ended September 30, 2009, we acquired eight office properties with 1,823,000 square feet of space for $399.4 million, and one industrial property with 645,000 square feet of space for $34.0 million, excluding closing costs. At the time of acquisition, these properties were 97.9% leased and yielded approximately 10.2% of the aggregate gross purchase price, based on estimated annual net operating income, or NOI, which we define as property GAAP rental income less property operating expenses on the date of closing.

In May 2008, we entered into a series of agreements to sell 48 medical office, clinic and biotech laboratory buildings to SNH for an aggregate purchase price of approximately $565.0 million. As of September 30, 2009, we have sold 47 of these properties containing 2,161,000 square feet of space for $562.0 million, excluding closing costs, and recognized gains totaling approximately $216.3 million. One of the buildings originally included in these agreements with an allocated value of $3.0 million is no longer subject to an agreement for sale.

In June 2008, we also agreed to sell one additional property to a third party for $15.0 million, excluding closing costs. We expect the closing of this sale to occur in 2010. Our obligation to complete this sale is subject to various conditions typical of commercial real estate transactions. We can provide no assurance that we will sell the building or that the sale will be completed in 2010 or sooner.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

During the nine months ended September 30, 2009, we have invested $5.1 million in AIC, an insurance company that is owned by RMR and other companies to which RMR provides management services. We own 16.67% of the common shares of AIC which has a current carrying value of $5.0 million.

In March 2009, we purchased $8.0 million of marketable certificates which are backed by our mortgage notes payable due January 2011, for $6.8 million. We classify these certificates as investments held to maturity rather than available for sale or trading because we have the intent and ability to hold these certificates until maturity. These certificates are included in other assets in our condensed consolidated balance sheet as of September 30, 2009. These certificates had an estimated fair market value of $7.3 million as of September 30, 2009.

Financing Activities

During the nine months ended September 30, 2009, we repurchased 4,050,000 of our common shares for $14.5 million, including transaction costs, using cash on hand.

During the nine months ended September 30, 2009, we repurchased and retired $31.8 million of our floating rate senior notes due 2011 for $24.2 million, $49.3 million of our 6.95% senior notes due 2012 for $41.5 million, $9.0 million of our 6.50% senior notes due 2013 for $7.3 million, $5.3 million of our 5.75% senior notes due 2014 for $4.3 million, and $14.0 million of our 6.40% senior notes due 2015 for $11.0 million using cash on hand and borrowings under our revolving credit facility. In connection with these transactions, we recognized gains totaling $20.7 million, net of unamortized deferred financing fees and note discounts.

During April 2009, we transferred 29 properties with 3,304,000 square feet of space to our wholly owned subsidiary, GOV, a real estate investment trust that owns properties that are majority leased to government tenants. Also in April 2009, GOV entered into a new $250 million secured credit facility with a group of commercial banks. The $250 million proceeds of this credit facility were distributed to us and used to repay amounts outstanding under our revolving credit facility.

In June 2009, GOV completed an IPO of 11,500,000 GOV common shares (including exercise of an over-allotment option) and became a separate public company. Simultaneous with the closing of the GOV IPO, the $250 million secured credit facility was transferred to GOV and is no longer our obligation. At September 30, 2009, we owned 9,950,000, or 46.3%, of the common shares of beneficial interest of GOV with a carrying value of $156.1 million and a market value based on quoted market prices, of $238.9 million ($24.01 per share).

                             HRPT PROPERTIES TRUST



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)


RESULTS OF OPERATIONS



Three Months Ended September 30, 2009, Compared to Three Months Ended
September 30, 2008



                                                      Three Months Ended September 30,
                                                                                $            %
                                              2009             2008           Change       Change
                                             (in thousands, except per share data)

Rental income                             $     206,587    $     211,689    $   (5,102 )      (2.4 )%

Expenses:
Operating expenses                               88,304           89,074          (770 )      (0.9 )%
Depreciation and amortization                    48,165           46,584         1,581         3.4 %
General and administrative                        9,628            9,184           444         4.8 %
Acquisition costs                                 1,539                -         1,539       100.0 %
Total expenses                                  147,636          144,842         2,794         1.9 %

Operating income                                 58,951           66,847        (7,896 )     (11.8 )%

Interest income                                     331              485          (154 )     (31.8 )%
Interest expense                                (41,786 )        (45,154 )       3,368         7.5 %
Equity in earnings of equity
investments                                       2,957                -         2,957       100.0 %
Income from continuing operations
before income tax expense                        20,453           22,178        (1,725 )      (7.8 )%
Income tax expense                                 (176 )           (451 )         275        61.0 %
Income from continuing operations                20,277           21,727        (1,450 )      (6.7 )%
Discontinued operations:
Income from discontinued operations               1,816            6,339        (4,523 )     (71.4 )%
Gain on sale of properties                       50,106           57,658        (7,552 )     (13.1 )%
Net income                                       72,199           85,724       (13,525 )     (15.8 )%
Preferred distributions                         (12,667 )        (12,667 )           -           - %
Net income available for common
shareholders                              $      59,532    $      73,057    $  (13,525 )     (18.5 )%

Weighted average common shares
outstanding - basic                             223,730          227,251        (3,521 )      (1.6 )%

Weighted average common shares
outstanding - diluted                           252,923          256,444        (3,521 )      (1.4 )%

Earnings per common share:
Income from continuing operations
available for common shareholders -
basic and diluted                         $        0.03    $        0.04    $    (0.01 )     (25.0 )%
Income from discontinued operations -
basic and diluted                         $        0.23    $        0.28    $    (0.05 )     (17.9 )%
Net income available for common
shareholders - basic and diluted          $        0.27    $        0.32    $    (0.05 )     (15.6 )%

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Rental income. Rental income decreased for the three months ended September 30, 2009, compared to the same period in 2008, primarily due to 29 properties transferred to GOV, offset by increases in rental income primarily from our Oahu, HI and Other Markets segments, as described in the segment information footnote to our condensed consolidated financial statements. Rental income decreased in our Washington DC, Southern California and Other Markets segments by approximately $5.6 million, $1.5 million and $10.6 million, respectively, reflecting the transfer of properties to GOV. Rental income from our Oahu, HI segment increased $2.3 million, or 14%, primarily because of an increase in weighted average rental rates for new leases and lease renewals signed during 2008. The decrease in rental income in our Other Markets segment was offset by an increase from the acquisition of seven properties during 2009 and 50 properties during 2008. Rental income includes non-cash straight line rent adjustments totaling $5.5 million in 2009 and $6.8 million in 2008 and amortization of acquired real estate leases and obligations totaling ($3.3) million in 2009 and ($2.3) million in 2008. Rental income also includes lease termination fees totaling $559,000 in 2009 and $108,000 in 2008.

Total expenses. The increase in total expenses primarily reflects our acquisition of properties since July 1, 2008, offset by the transfer of 29 properties to GOV. The increase in depreciation and amortization expense also reflects building and tenant improvement costs incurred throughout our portfolio since July 1, 2008. The increase in general and administrative costs reflects timing of legal and other fees and expenses. Acquisition costs in 2009 also include certain costs related to property acquisitions that we now expense since our adoption of the Business Combinations Topic of the Codification in January 2009.

Interest expense. The decrease in interest expense in 2009 primarily reflects a decrease in interest rates on our floating rate debt and the repurchase and retirement of $109.5 million of our senior notes.

Equity in earnings of equity investments. Equity in earnings of equity investments represents our proportionate share of earnings (loss) from AIC and from GOV since its IPO in June 2009.

Income from continuing operations. The decrease in income from continuing operations is due primarily to a decrease in rents from 29 properties transferred to GOV and an increase in depreciation and amortization and acquisition costs, offset by income from acquisitions during 2009 and 2008, equity in earnings from GOV and a decrease in interest expense primarily from the decrease in interest rates and the repurchase of $109.5 million of our senior notes.

Income from discontinued operations. Income from discontinued operations reflects operating results from ten office properties sold in 2009, 37 office properties sold during 2008 and one property classified as held for sale as of September 30, 2009.

Gain on sale of properties. Net sales proceeds and gain from the sale of seven office properties in 2009 were $142.3 million and $50.1 million, respectively. Net sales proceeds and gain from the sale of 23 office properties in 2008 were $138.5 million and $57.7 million, respectively.

Net income and net income available for common shareholders. The decrease in net income and net income available for common shareholders is due primarily to the decrease in gain on sale of properties, the decrease in rents from properties sold during 2009 and 2008 and 29 properties transferred to GOV and an increase in depreciation and amortization and acquisition costs, offset by income from acquisitions in 2009 and 2008 and equity in earnings from GOV in 2009. Net income available for common shareholders is net income reduced by preferred distributions.

                             HRPT PROPERTIES TRUST



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)


RESULTS OF OPERATIONS



Nine Months Ended September 30, 2009, Compared to Nine Months Ended
September 30, 2008



                                                      Nine Months Ended September 30,
                                                                                 $           %
                                               2009              2008          Change      Change
                                             (in thousands, except per share data)

Rental income                             $      636,239    $      617,134    $ 19,105         3.1 %

Expenses:
Operating expenses                               266,729           254,038      12,691         5.0 %
Depreciation and amortization                    146,159           136,625       9,534         7.0 %
General and administrative                        28,907            27,037       1,870         6.9 %
Acquisition costs                                  2,287                 -       2,287       100.0 %
Total expenses                                   444,082           417,700      26,382         6.3 %

Operating income                                 192,157           199,434      (7,277 )      (3.6 )%

Interest income                                      839               903         (64 )      (7.1 )%
Interest expense                                (129,912 )        (134,577 )     4,665         3.5 %
Gain on early extinguishment of debt              20,686                 -      20,686       100.0 %
Equity in earnings of equity
investments                                        3,818                 -       3,818       100.0 %
Income from continuing operations
before income tax expense                         87,588            65,760      21,828        33.2 %
Income tax expense                                  (518 )            (611 )        93        15.2 %
Income from continuing operations                 87,070            65,149      21,921        33.6 %
Discontinued operations:
Income from discontinued operations                8,700            18,408      (9,708 )     (52.7 )%
Gain on sale of properties                        79,157            97,625     (18,468 )     (18.9 )%
Net income                                       174,927           181,182      (6,255 )      (3.5 )%
Preferred distributions                          (38,001 )         (38,001 )         -           - %
Net income available for common
shareholders                              $      136,926    $      143,181    $ (6,255 )      (4.4 )%

Weighted average common shares
outstanding - basic                              224,342           226,052      (1,710 )      (0.8 )%

Weighted average common shares
outstanding - diluted                            253,535           255,245      (1,710 )      (0.7 )%

Earnings per common share:
Income from continuing operations
available for common shareholders -
basic and diluted                         $         0.22    $         0.12    $   0.10        83.3 %
Income from discontinued operations -
basic and diluted                         $         0.39    $         0.51    $  (0.12 )     (23.5 )%
Net income available for common
shareholders - basic and diluted          $         0.61    $         0.63    $  (0.02 )      (3.2 )%

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Rental income. Rental income increased for the nine months ended September 30, 2009, compared to the same period in 2008, primarily due to increases in rental income from our Other Markets and Oahu, HI segments, offset by a decrease in rental income from the transfer of 29 properties to GOV, as described in the segment information footnote to our condensed consolidated financial statements. Rental income from our Other Markets segment increased $21.3 million, or 6%, primarily because of the acquisition of seven properties during 2009 and 50 properties during 2008. Rental income from our Oahu, HI segment increased $4.4 million, or 9%, primarily because of an increase in weighted average rental rates for new leases and lease renewals signed during 2008. Rental income from our Washington DC, Southern California and Other Markets segments decreased by $6.9 million, $1.9 million and $14.3 million, respectively, due to the transfer of 29 properties to GOV in June 2009. Rental income includes non-cash straight line rent adjustments totaling $6.6 million in 2009 and $11.7 million in 2008 and amortization of acquired real estate leases and obligations totaling ($8.1) million in 2009 and ($7.0) million in 2008. Rental income also includes lease termination fees totaling $1.1 million in 2009 and $2.3 million in 2008.

Total expenses. The increase in total expenses primarily reflects our acquisition of properties since January 1, 2008, offset by the transfer of 29 properties to GOV in June 2009. The increase in depreciation and amortization expense also reflects building and tenant improvement costs incurred throughout our portfolio since January 1, 2008. Acquisition costs in 2009 also include certain costs related to property acquisitions that we now expense since our adoption of the Business Combinations Topic of the Codification in January 2009.

Interest expense. The decrease in interest expense in 2009 primarily reflects a . . .