WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2005

or

Commission file number 1-12630

CENTERPOINT PROPERTIES TRUST

(Exact Name of Registrant as Specified in its Charter)

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o   Yes  ý  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  ý  Yes  o  No

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.  ý  Yes  o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  Large Accelerated Filer  o  Accelerated Filer  ý  Non-Accelerated Filer   o

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

As of June 30, 2005, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $1,986,075,776 (based on 46,952,146 shares held by non-affiliates and computed by reference to the reported closing price).  On March 8, 2006, the registrant was acquired by CalEast Solstice, LLC and the registrant’s common equity ceased trading.

The registrant had 48,556,347 of its common shares, $.001 par value per share, outstanding as of March 15, 2006.  As of March 8, 2006, all of the registrant’s common shares are held by a holding company.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

PART I

Item 1.            Business.

The Company

CenterPoint Properties Trust (“CenterPoint” or the “Company”), was the first major real estate investment trust (“REIT”) to focus on the industrial sector and focuses on such property primarily within greater Chicago. CenterPoint seeks to create share value through customer-driven management, investment, development, and redevelopment of warehouse, distribution, light manufacturing, air freight and rail-related facilities.  The Company also develops multi-facility industrial parks that are strategically located near highways, airports and railroads.  Central to all of its activities is the Company’s commitment to entrepreneurially serve customers’ changing space needs and to provide superior customer satisfaction.

CenterPoint, a Maryland business trust, began operations in 1984 as Capital and Regional Properties Corporation, the United States investment vehicle for Capital and Regional plc, a property company traded on the London Stock Exchange since 1986.  CenterPoint completed its U.S. initial public offering (“IPO”) in December 1993 after consolidating its operations with, and acquiring the properties controlled by, FCLS Investors Group, a Chicago-based industrial development company with 30 years of local experience.

On March 8, 2006, the Company was acquired by CalEast Solstice, LLC (“CalEast”).  CalEast is partnership between California Public Employees’ Retirement System (“CalPERS”) and LIC II Solstice Holdings, LLC, an affiliate of Jones Lang LaSalle Incorporated (“Jones Lang LaSalle”) (NYSE:JLL).  CalEast and its sister company, CalEast Industrial Investors, LLC (“CalEast Industrial”), are leading investors in logistics warehouse and related real estate whose members include CalPERS and an affiliate of LaSalle Investment Management, Inc. (“LaSalle”), the investment management business of Jones Lang LaSalle. CalEast Industrial owns and operates over 22 million square feet of industrial real estate, including warehouses, light assembly, air cargo and distribution centers throughout the United States, Canada and Mexico.  LaSalle serves as the managing member of CalEast and CalEast Industrial. Since 1999, CenterPoint and CalEast Industrial have partnered in a joint venture known as CenterPoint Venture LLC (“CenterPoint Venture”), which acquires, develops, manages and sells industrial property.  Effective March 12, 2006, the Company converted from a REIT for federal income tax purposes to a partnership for federal income tax purposes (the “Tax Conversion”).

While the Company believes it is the largest owner and operator of industrial property in the 1.4-billion- square-foot Chicago region, its portfolio represented just 3% of the market (based on square footage) as of December 31, 2005.  As a result, the Company believes substantial opportunities for future growth remain in this market.

Underpinning CenterPoint’s value is the strength of its internal resources. Key among these is management experience.  Enabled by strong ties to the real estate development community, an in-depth knowledge of the market sector and the ability to gauge and anticipate market trends, management can creatively and flexibly accommodate tenant requirements.

Business Objectives and Strategy for Growth

The Company’s fundamental business objective is to maximize total return to shareholders.  To maximize shareholder returns, the Company pursues four complementary strategies in portfolio operations, investments, dispositions, and finance:

1.              Portfolio Operation Strategy.

The Company is a full service, self-managed real estate company. Five regions, each serving a particular segment of metropolitan Chicago, are operated by teams consisting of a regional manager, one or more property managers, administrative assistants, maintenance, and accounting support personnel.  Property management staff are required to visit each tenant, on site, at least once every 90 days, and more frequently if warranted by tenant needs.

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The Company believes its market penetration, local expertise, tenant relationships and quality reputation within the Chicago region provide it with a competitive advantage.  Another competitive advantage is the Company’s integrated corporate, property management, accounting and control process and information systems, enabling the Company to monitor and project the financial performance of each asset.  The Company believes this long-term platform effectively supports its operating and financial objectives and will help drive continued growth.

The Company seeks to grow its results of operations by increasing revenues through lease renewals or replacements and by leasing vacant space at maximum achievable rents.  The Company seeks long-term retention of tenants, but will opportunistically engage in shorter leases when appropriate. The Company strives to tailor lease terms to maximize long-term total returns from each property investment.

To become the landlord of choice in the Chicago region, the Company strives to provide the highest possible service to its tenants by addressing their occupancy needs and evolving space requirements. Management believes tenant satisfaction, resulting from the Company’s “hands on” management approach, fuels rental revenues by increasing tenant retention, minimizing re-letting expense and facilitating rental increases. Management also believes that tenant satisfaction creates profitable expansion and build-to-suit opportunities from its tenants as well as business referrals.

The Company views tenant service as a key factor in its business and has established tenant satisfaction as one of its primary corporate goals.  To develop its tenant franchise, the Company provides a variety of tenant services: promptly and fairly attending to tenant building or billing concerns; obtaining the lowest possible utility, insurance and real estate tax charges; and responding rapidly to expansion or space reconfiguration requests.

The Company’s tenants benefit from the size and concentration of the Company’s real estate holdings in the Chicago region.  As the largest owner of warehouse and other industrial properties in this geographic market, the Company believes it can bulk-purchase goods and services, lowering the occupancy costs of its tenants.  Management believes that minimizing tenants’ occupancy costs builds tenant loyalty and provides the Company with a significant marketing advantage.

To motivate employees to provide the highest level of tenant service, the Company has established a pay-for-performance compensation plan under which the incentive pay of each participating employee depends in part on the results of an annual tenant satisfaction survey, independently administered by CEL & Associates and the Company’s non-employee trustees.  Employee incentive pay is also dependent on the results of an annual company-wide process audit (put into effect in 1997) pertaining to the implementation of internal processes and procedures, all of which the Company believes enhance tenant service.  CenterPoint believes targeted per share cash flow growth, another key metric in the Company’s incentive plan, is benefited by intensive tenant service.

In 2005, CenterPoint achieved a 94.2% tenant retention rate and “outstanding” tenant ratings in an independently administered tenant survey comparing the Company to other industrial property owners nationally.

2.              Investment Strategy.

The Company seeks to invest primarily in warehouse and other industrial properties that satisfy its yield, growth and return objectives.  These include properties with vacancy that can be leased at attractive rents, as well as properties offering expansion, development, redevelopment or resale opportunities.  CenterPoint believes each of its investments benefits from the Company’s large Chicago area franchise. CenterPoint also believes its concentrated activity provides a deeper potential customer base, a wider range of opportunities and better market information than its competitors.  As of December 31, 2005, the Company owned 201 warehouse and other industrial properties.

In addition to investments in individual buildings or development projects, the Company has undertaken business park development in locations within the greater Chicago region offering desirable amenities, including

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proximity to rail, road and air transportation, at competitive rents and occupancy costs.  The Company strictly monitors speculative investment, including the investment in land intended for development. As of December 31, 2005, the Company had accumulated control of a large land portfolio of approximately 3,009 acres upon which approximately 43 million square feet of warehouse and other industrial properties can be developed.  The Company believes the land portfolio will provide a competitive advantage in securing profitable development opportunities.

The Company’s largest industrial development is CenterPoint Intermodal Center (“CIC”) in Elwood, IL.  This 2,050-acre project is one of the nation’s largest public/private developments, anchored by a 621-acre Burlington Northern Santa Fe (“BNSF”) multi-modal rail facility.  The project is expected to consist of approximately 12.2 million square feet of warehouse, distribution and light manufacturing space, including one million square feet of cross dock facilities and other ancillary commercial development. Located only 40 miles southwest of Chicago, CIC is strategically positioned to take advantage of Chicago’s immense transportation infrastructure. As of December 31, 2005, approximately 66% of the park’s area has been leased, developed, sold or is currently under development.

Various other major parks under development include: O’Hare Express North, a 49-acre park ‘inside the fence’ at O’Hare International Airport; CenterPoint Intermodal Center – Rochelle, a 362-acre park in Rochelle, IL located within one mile of the 1,230-acre Union Pacific Global III Intermodal Facility; McCook Business Center, a 243-acre park located adjacent to CenterPoint’s first McCook industrial park, CenterPoint Business Center – McCook; DuPage Technology Park, an 800-acre site located just south of the DuPage airport, 413 acres of which can be developed; CenterPoint Business Center – Gurnee, a 134-acre business park located near Six Flags Great America Theme Park; and a 280-acre corporate campus occupied by Caterpillar Corporation in Joliet, IL, about half of which CenterPoint plans to redevelop.  A list of all CenterPoint parks is listed on the corporate website, www.CenterPoint-Prop.com.

Focus on Industrial Real Estate.  The Company focuses on warehouse and other industrial properties.  Management believes this property type offers consistently attractive returns and stable cash flow for the following reasons:

•                  Low Capital Requirements. The cost per square foot of developing warehouse and other industrial properties typically ranges between $45-50 per square foot, which is lower than the cost of developing other types of property.   Individual assets are typically $3 million to $6 million in value.  From the Company’s perspective, this results in lower capital commitments to any particular property, permitting greater diversification of the Company’s investment, and lowering risk as compared to investments in large retail or office properties. In addition, relative to other property types, industrial space requires fewer tenant improvements, minimizing the level of recurring capital expenditures necessary to sustain rental income.  The Company generally seeks to avoid investment in any tenant specific space improvements.

•                  High Level of Tenant Investment.  Unlike office, retail and multi-family buildings, most warehouse and other industrial buildings are occupied by a single tenant. Relocation tends to be costly for tenants of warehouse and other industrial properties because of high tenant investment in production set-up expenses, machinery and other site specific improvements (in many cases higher than the landlord’s investment).  Often, buildings are selected because their location is critical to the reduction of logistics-related expenses, making relocation unattractive. To avoid relocation expense, tenants typically lease space that exceeds their immediate needs or space in buildings that are readily expandable. Tenant retention and expansion therefore tend to be higher than for other property types.

•                  Favorable Lease Terms.  Warehouse and other industrial buildings are generally leased on a “triple net” basis, under which tenants are contractually obligated to pay directly or to reimburse the landlord for virtually all costs of occupancy, including property taxes, utilities, insurance and maintenance. In addition, the leases generally provide for rental growth through contractual rent increases, reducing exposure to inflation.

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•                  Supply Built on Demand.  The comparatively short development period for industrial buildings (typically six to nine months) relative to other property types results in generally less speculative building and, therefore, a supply of industrial property that more closely corresponds to tenant demand than in other categories of real estate. The Company believes this reduces vacancy levels and improves rental rate stability.

•                  Limited Competition.  Because of the relatively low total investment in individual warehouse and other industrial properties, the Company’s typical competitor for assets of this size is a sponsor of a single asset partnership with typically a higher cost of capital and less financial flexibility.  While individuals and institutions may target stabilized smaller assets, few investors have the management depth or experience to acquire and manage the redevelopment projects of the Company.

•                  Saleable Properties.  Once stabilized, industrial real estate (both single properties and properties packaged as portfolios) is sought by a wide variety of institutional and other investors because of the relative stability of its returns and the nominal average value of the asset type.  Consistent investment demand for industrial assets facilitates CenterPoint’s recycling strategy of using disposition proceeds combined with retained cash flow to substantially reduce the need for external funding for new investment.

Focus on the Chicago Region.  CenterPoint’s target market, greater Chicago, is comprised of the market area within a 150-mile radius of the City of Chicago, including Milwaukee, Wisconsin and South Bend, Indiana. This region offers significant opportunities for investment in, and ownership of, warehouse and other industrial property.  The Chicago region lies at the center of one of the nation’s principal population and production regions. With over 1.4 billion square-feet of industrial/warehouse space (according to market data published by Colliers, Bennett and Kahnweiler and The Polacheck Company in December of 2005) and 24 diverse submarkets (according to a ranking of markets published by CB Richard Ellis in December of 2005), the Chicago region has become the largest and most diverse industrial market in the nation.  Its regional advantages have led to significant business in Chicago making it second only to New York in the number of Fortune 500 companies. The Chicago region is the continent’s premier transportation hub, possessing market advantages critical to industrial property investment.

•                  Transportation Advantages.  The Midwest’s transportation network, a result of its central continental location, underpins its status as a manufacturing and distribution center.  Extensive transportation infrastructure integrates the Chicago region with the rest of the Midwest, as well as other important business and distribution centers, including Los Angeles and northern New Jersey.

Chicago is the third largest container hub in the world after Singapore and Hong Kong.  Because Chicago is a dominant continental rail, road, air and water hub, the region has experienced significant growth in freight demands due to burgeoning intermodal transportation (the movement of goods, usually containerized, by two or more modes of transportation).  Nearly three-quarters of the nation’s rail freight passes through Chicago, with intermodal traffic the fastest growing segment. Many railway yards have been converted to handle rapidly growing intermodal demand.

•              Business Diversity.  Regional business diversity, resulting from Chicago’s location, size and transportation advantages, provides opportunity to capitalize on different trends affecting real estate demand across all significant industry groups.  An assorted tenant base also lessens the Company’s cyclical risk, reducing its exposure to changes in the fortunes of any single type of business. A study issued June 9, 2003 by Moody’s Investors Service validated Chicago as the most diverse metropolitan statistical area (MSA) in the country.  The diversity of Chicago’s economy nearly mirrored that of the nation as a whole.  This diversity makes the region less susceptible to a slowdown in a particular industry.

Virtually all large national and international firms that distribute products in the United States are served by manufacturing or distribution facilities located in the greater Chicago area.  As in other large industrial metro areas, Chicago’s diversity has been increasing due to its transformation from a manufacturing to a service-based economy.  The diversification of the regional economy into services

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accelerated during the recent expansion as manufacturers continued to restructure operations to lower costs.  The business services industry has been one of the main drivers of the Chicago economy during the past decade.

The Company believes other factors support the long term health of Chicago’s industrial property market.  These include a skilled labor force, plentiful water resources, and the competitiveness of regional manufacturing and distribution. In addition, management believes a favorable political climate exists for attracting and retaining business.  The State of Illinois, the City of Chicago and other area municipalities have worked aggressively and creatively to promote area business development.  Zoning initiatives have produced planned manufacturing districts where city-provided tax increment financing (“TIF”) subsidies are available. These initiatives bolster area industry, enhancing the Company’s opportunities.

3.     Disposition Strategy.

To maximize per share cash flow growth and the return on invested capital, the Company seeks to fund a substantial percentage of its new investment with capital “recycled” from the disposition of owned assets.  Assets targeted for sale are those that offer the lowest prospective total cash returns relative to their market value.  The volume of annual dispositions is determined by the volume of new higher yielding investments available at an acceptable risk-adjusted positive spread above the yields on the assets disposed to fund them.   Buyers include users, investors (institutional, private and foreign), 1031 exchange buyers, single asset partnerships, governments and other developers.

Disposition activity is undertaken by the Company and its subsidiaries, including its taxable subsidiary, CenterPoint Realty Services, Inc. (“CRS”), and other affiliates, principally CenterPoint Venture (described in further detail below), as well as project-specific development partnerships. The Company and its affiliates earn fees or gains from the development or acquisition of assets for immediate sale to tenants, institutions and other buyers.  These opportunities result from the size of the Company’s existing portfolio and its market penetration.

Gains and related fees from the disposition activity of the Company and its affiliates have been, and are expected to be, a recurring source of revenue and cash flow, and a material contributor to the Company’s return on invested capital.

4.              Financial Strategy.

The Company actively seeks to minimize its capital costs to maximize share value. It believes it does so by primarily funding new investment with proceeds from the disposition of lower yielding assets.  Capital from sales, plus significant retained cash flow, account for the bulk of annual required funds.   This strategy enhances per share cash flow growth and returns by avoiding dilution. From time to time, the Company supplements internally generated funds with external capital that offers the potential to lower its overall capital costs.  The Company maintains $250 million in lines of credit and additional lines of credit available through its affiliates.  The Company supplements internally supplied capital with proceeds from debt and equity issuances.  The Company also seeks to utilize, where available, tax-exempt debt and TIF for its developments.

The Company periodically supplements its capital base through ventures with other investors or developers. These ventures are used to share capital requirements and risk and typically invest in assets held or developed for near term sale. The Company believes that its ventures have increased its investment and funding flexibility.

Investment in and Advances to Affiliates.  Through CRS, the Company owns 25% of CenterPoint Venture which is engaged to position, package and sell stabilized industrial property investment opportunities.  CalEast Industrial owns the remaining 75% of CenterPoint Venture.  CalEast Industrial is an affiliate of CalEast, the Company’s parent company.  The more than $400 million fund is capitalized with equity commitments of $200 million by CalEast and $67 million by CenterPoint and supported by a $150 million credit facility.  The Company receives a preferential 10% cumulative return on its equity capital, 50% of any excess distributable cash between a 10% and 12.5% return and 62.5% of any excess distributable cash above a 12.5% return. The

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Company also receives development, administrative and property management fees. As of December 31, 2005, CenterPoint Venture owned 6 warehouse and other industrial properties, totaling 1.0 million square feet.

At the end of 2004, the Company announced two new development joint ventures.  CenterPoint signed a joint venture agreement with UBS Real Estate to develop CenterPoint Intermodal Center – Rochelle. This joint venture, named Rochelle Development Joint Venture, will initially be capitalized with equity commitments of $60 million by UBS Real Estate and $15 million by CenterPoint, supported by a $30 million subscription facility led by Wachovia Securities.  Consistent with the Company’s capital recycling strategy, the venture expects to develop and sell completed leased buildings or to develop facilities to be owned by users. This venture will pay the Company development and other fees in addition to a promoted interest in profits, after invested equity achieves a hurdle return.

CenterPoint also formed CenterPoint WisPark Land Company LLC (“CenterPoint WisPark Venture”), a joint venture between CenterPoint Venture and WisPark LLC (the development subsidiary of Wisconsin Energy Corporation (NYSE: WEC)).  CenterPoint WisPark Venture was created to consolidate the parties’ fully improved land holdings in the I-94 corridor north of Chicago, which will initially include 512 developable acres. When fully developed, the land in CenterPoint WisPark Venture could accommodate up to eight million square feet. The new venture also has exclusive options to acquire other land parcels.

At closing, CenterPoint Venture assumed a 65% interest in CenterPoint WisPark Venture, an all equity venture.  CenterPoint Venture will provide construction capital for individual projects, expanding CenterPoint Venture’s ownership interest in each development, which is expected to average 90%.  CenterPoint and WisPark will jointly manage all development activity.  CenterPoint WisPark Venture will have an initial capitalization of $54 million.

The Company believes the venture with UBS represents an important new capital source for rail-related industrial park development.  Also, both new ventures, in which the Company earns returns disproportionate to its investment, allow the Company to husband capital for the highest-yielding opportunities. The Company believes this maximizes shareholder value.

In addition to the ventures described above, the Company periodically forms project-specific ventures to acquire or develop assets for sale.

Management Controls and Systems

Defined processes, integrated with comprehensive information systems and financial controls, support the Company’s business.  To facilitate its entrepreneurial business and limit operating risk, the Company has implemented comprehensive business and allied information and control systems, which it continually improves.  These include detailed operating, investment, and disposition processes, as well as integrated financial controls.  These controls were reviewed, revised (as necessary) and republished by the Company in 2003.  The Company believes that these systems provide significant benefits, including better tenant service, improved investment execution, and enhanced capital planning.

Transactions During 2005

During 2005, the Company accomplished the following:

2005 Acquisitions, Developments and Dispositions:

•                                          The Company acquired or completed development of 42 warehouse and other industrial properties and acquired six land parcels totaling 8.5 million square feet of buildings and approximately 292.0 acres of unimproved land, investing approximately $358.9 million.  In order to fund this and other investment activity, the Company disposed of 55 properties totaling 12.8 million square feet and seven land parcels of approximately 51.4 acres for approximately $570.9 million from the owned portfolio.

•                                          CenterPoint Venture acquired two warehouse properties and acquired one land parcel totaling 0.4 million square feet of buildings and approximately 2.9 acres of unimproved land, investing approximately

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$12.1 million.  CenterPoint Venture disposed of twelve properties totaling 1.1 million square feet and two land parcels of

approximately 20.6 acres for approximately $59.4 million.

2005 Developments in Progress:

•                                          At the end of 2005, the Company held five new warehouse and other industrial properties at various stages of development, totaling 4.0 million square feet, scheduled to be delivered in 2006.  Including assets delivered, the Company invested approximately $77.4 million in 2005 in owned developments.

2005 Financings:

•                                          On January 4, 2005, the Company marketed $23.3 million in tax-exempt bonds, issued by the City of Chicago, Illinois.  These adjustable rate revenue bonds are enhanced by a letter of credit.  These bonds were acquired by the Company at the time of the portfolio acquisition from Prime Group Realty Trust, completed in October 2004.  The bonds were not marketed by Prime Group Realty Trust prior to the acquisition.  The bonds bear interest at a weekly adjustable interest rate as determined by the remarketing agent (3.56% as of December 31, 2005) and terminate on June 1, 2022.

•                                          The Company paid off its outstanding $100.0 million aggregate principal amount of senior unsecured notes, which were bearing interest at a rate of 6.75%, on April 1, 2005, the maturity date of the notes.

•                                          In conjunction with a property sale on May 19, 2005, the Company paid off $19.5 million of mortgage notes payable that was previously assumed in 2005 with a property acquisition.

•                                          On June 30, 2005, the Company paid off a mortgage note payable related to a property in Oak Creek, Wisconsin.  The outstanding principal balance amounted to $1.8 million and was set to mature on August 1, 2005.

•                                          On August 23, 2005, the Company reduced its available line of credit facility from $350.0 million to $250.0 million due to the near term excess liquidity and to save on facility costs.

•                                          The Company reduced its non-recourse tax increment financing by $13.1 million upon the sale of three CIC properties.

Subsequent Transactions

As mentioned above, on March 8, 2006, the Company was acquired by CalEast.  CalEast purchased all of the outstanding common shares of the Company following the approval of a merger agreement by vote of the shareholders.

In connection with the merger, the Company requested its common shares and Series B Convertible Cumulative Redeemable Preferred Shares (the “Series B Preferred Shares”) be delisted from the New York Stock Exchange (“NYSE”).  The Company has received confirmation from the NYSE that the Company’s common shares and Series B Preferred Shares were delisted effective prior to the open of trading on March 9, 2006.

The Tax Conversion, which converted the Company from a REIT for federal income tax purposes to a partnership for federal income tax purposes, was effective on March 12, 2006.  A summary of certain United States federal income tax consequences to U.S. holders of CenterPoint Series D Flexible Cumulative Redeemable Preferred Shares (the “Series D Preferred Shares”) resulting from the Tax Conversion is provided in the Current Report on Form 8-K filed March 13, 2006.

All of the Company’s outstanding options and restricted shares were terminated in connection with the acquisition of the Company by CalEast for a cash payment equal to the difference between the $50 per share merger consideration and the exercise price for options and $50 per share for restricted shares.  The total consideration paid amounted to approximately $103.1 million.

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Also, the Company was under contract to sell 9 properties to CenterPoint James Fielding, LLC (“CNTJF”) at December 31, 2005.  On February 1, 2006, the Company closed on the sale of these properties to the venture for an aggregate sales price of $81.0 million.

Employees

At December 31, 2005, the Company had 109 full-time employees.  Of the full-time employees, 90 were involved with property management, development, operations, leasing and acquisition activities, and 19 were involved with general administration, financing activities, investor relations and human resources.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, a current or previous owner, developer or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, under or in its property.  The costs of removal or remediation of such substances can be substantial.  Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of such hazardous substances.  The presence of such substances may adversely affect the owner’s ability to sell such real estate or to borrow using such real estate as collateral.  The Company has not been notified by any governmental authority of any non-compliance, liability or other claim in connection with any of the properties owned or being acquired as of December 31, 2005, and the Company is not aware of any environmental condition with respect to any of its properties that it believes is likely to have a material adverse effect on the Company.  As part of due diligence during acquisition, the Company has subjected each of its properties to a Phase I environmental assessment (which does not involve invasive procedures such as soil sampling or ground water analysis) by independent consultants.  Some of these assessments have led to further investigation and sampling.  No assurance can be given, however, that these assessments and investigations reveal all potential environmental liabilities, or that no prior owner or operator created any material environmental condition not known to the Company or the independent consultants or that future uses or conditions (including, without limitation, customer actions or changes in applicable environmental laws and regulations) will not result in unreimbursed costs relating to environmental liabilities.  In addition to the properties described below, the Company has other properties with minor environmental exposure which in the aggregate are not material.  The Company maintains environmental insurance policies against environmental risks associated with its properties in amounts that vary by property between $10.0 million and $100.0 million.

(1)          900 Knell Road, Montgomery, Illinois. Soil and groundwater at this property were contaminated by the industrial operations of the former owner. Parties affiliated with the former owner are currently remediating the property, including entering the property into the Illinois Environmental Protection Agency (“IEPA”) Site Remediation Program (“SRP”) with the expectation of receiving one or more “no further remediation letter(s)” (“NFR”) within the next seven to ten years. This time period allows for several years of groundwater monitoring after the remediation is complete. The former owner and its affiliates are responsible for the contamination and its remediation, under both statute and contract.  Furthermore, in the event that the former owner and its affiliates do not fully satisfy their contractual obligations, the Company has received confirmation from its environmental insurance carrier that it will indemnify the Company for the covered damages after the Company satisfies its $0.1 million self-insured retention. Additionally, data from an environmental investigation conducted by the former owner has revealed the off-site presence of groundwater contamination comprised of similar constituents to the contamination on the property. To the extent that the off-site contamination is related to the on-site contamination, the Company has demanded that the former owner assume responsibility for the contamination and its remediation and notify the appropriate regulatory agencies of its presence. The former owner, qualified by a denial of liability, has agreed to resolve the off-site contamination through its efforts to obtain the NFR letter(s).

(2)          CenterPoint Intermodal Center (former Joliet Army Ammunition Plant, a.k.a Joliet Arsenal).  The Company is developing the CIC on a portion of the former Joliet Arsenal, which was listed as a federal Superfund Site in 1987.  Soil and groundwater at this property were contaminated by the industrial operations of the former owner, the United States Army, but all identified contamination was

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                        remediated before transfer to the Company.  The Company has nonetheless discovered two areas of contamination in the course of its development, which will be paid for by the former owner or by insurance policies purchased by the Company.  None of the estimated remediation costs of $2.0 - $5.0 million are expected to be borne by the Company.

(3)          McCook Industrial Center II (former McCook Metals, a.k.a. Reynolds Metals).  The Company is developing the McCook Industrial Center II on the former Reynolds Metals site in McCook, IL.  The property has been entered into the Illinois SRP by a prior owner.  The prior owner is, pursuant to a contractual obligation, taking the property through the SRP in order to obtain a NFR letter consistent with the Company’s development of the property.  The IEPA has approved the remedial action plan proposed by the former owner for the property.  As the development proceeds, the construction of the building pads and related infrastructure (e.g. parking lots), will constitute the “engineered barriers” and allow for the issuance thereafter of one or more NFR letter(s) for the property.  Environmental insurance has also been acquired as a contingency to any potential default on the part of the prior owner.

(4)       13535 Torrence Avenue, Chicago, Illinois.  The Company, through its subsidiary CenterPoint Chicago EnterPrise Center LLC, owns a property at 13535 Torrence Avenue, Chicago, Illinois.  On November 28, 2005, the Company learned of a sheen of oil on the adjacent river near a stormwater discharge pipe leading from the property.  As required by law, the Company notified the requisite local, state and federal emergency response authorities to the incident.  To date, no government agency has inquired or pursued enforcement against the Company regarding this incident.  Immediately after its discovery of the incident, the Company employed trained contractors to investigate and abate the conditions potentially related to the observed sheen on the river.  The Company is currently developing additional measures to permanently modify the storm sewers to prevent stormwater from passing through a nearby area of petroleum contamination and otherwise contribute contamination to the river.  The Company has entered this property into the Illinois SRP for the purpose of remediating the existing contamination and obtaining a NFR letter for the property.

Competition

Due to the size, strength and diversity of the Chicago market, CenterPoint faces competition for potential developments, acquisitions, dispositions and leases.  Generally speaking, CenterPoint faces any of one to eight different types of competitors in the market when seeking new or continued business: investors (institutional, private and foreign), 1031 exchange buyers, single asset partnerships, governments, REITs and users.  The degree and type of competition varies for individual transactions based on a variety of property specific factors that influence decisions.  These factors include, but are not limited to, the age and quality of the building, occupancy, location, tenant credit quality and the outlook for market rent.  Additionally, the political environment, local economy, tax laws, interest rates, access to capital and supply of new product can also determine the level of competition for transactions.

Website Access to Reports

The Company’s website address is www.CenterPoint-Prop.com.  The Company makes its periodic and current reports available on its website, free of charge, as soon as reasonably practical after such material is electronically filed with or furnished to the SEC.

Item 1A.         Risk Factors.

The Company is subject to risks due to the nature of its business.  The business of owning and investing in real estate is highly competitive. Several factors may adversely affect the economic performance and value or our properties and the Company.  These factors include, but are not limited to:

•                  Adverse changes in general or local economic conditions affecting real estate values, rental rates, interest rates, real estate tax rates and other operating expenses;

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•                  Competitive overbuilding and competition from other warehouse and industrial properties;

•                  Inability to keep high levels of occupancy;

•                  Inability to control variable operating costs;

•                  Tenant defaults;

•                  Unfavorable changes in governmental rules and fiscal policies (including rent control legislation);

•                  Ability to renew leases or relet space;

•                  Uninsured losses or liabilities, including acts of terrorism, acts of war and earthquakes;

•                  Ability to sell properties on terms as advantageous as past dispositions;

•                  Ability to acquire properties that return yields consistent with past acquisitions;

•                  Disruptions to our business and strain of management resources due to changes in our portfolio, operations in markets outside of our core market, or changes in management;

•                  Geographic concentration in the greater Chicago industrial market and concentration on warehouse or other industrial properties;

•                  Constraints on our business compelled by federal tax laws, which may, for example, cause us to forego otherwise attractive opportunities, liquidate otherwise attractive investments, or require us to make distributions that require borrowing;

•                  Penalties if we are unable to comply with federal tax laws;

•                  Ability to meet required payments of principal and interest, to refinance existing indebtness or to finance necessary capital expenditures for renovations and other improvements;

•                  Restrictive covenants in our credit facility;

•                  Risks specific to industrial property investments and development, including construction delays, cost overruns and receipt of governmental approvals;

•                  Costs associated with projects that are not pursued to completion;

•                  Changes or limitations in our ability to raise capital, which is dependent upon, among other things, our own financial structure and performance;

•                  The costs of compliance with or liabilities under environmental laws; and

•                  Dependence on key personnel, the loss of which could adversely affect our financial condition and cash flow and could be negatively perceived in the capital markets.

The most significant of these risks are described in greater detail below.

Real Estate Investment Risks

CenterPoint is subject to the general risks of investing in real estate. The business of owning and investing in real estate is highly competitive. Several factors may adversely affect the economic performance and value of our properties. These include:

•                  adverse changes in general or local economic conditions affecting real estate values, rental rates, interest rates, real estate tax rates and other operating expenses;

•                  competitive overbuilding;

•                  our inability to keep high levels of occupancy in our properties;

•                  our inability to control variable operating costs, including costs relating to maintenance and insurance with respect to our properties;

•                  tenant defaults; and

•                  potential liability under and unfavorable changes in governmental rules, regulations and fiscal policies (including rent control legislation, zoning, usage and tax laws and enforcement policies governing 1031 exchanges).

In addition, these same factors may affect our ability to sell our properties.

Acquiring, redeveloping and improving properties may involve unexpected costs. We acquire properties from time to time. The acquisition of properties involves risks, including the risk that the acquired property will not perform as anticipated, that the actual costs for rehabilitation, renovation and improvements identified in the

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pre-acquisition due diligence process exceed estimates, that the properties may operate at a cash deficit during the redevelopment and/or lease-up period and that a contractor will be unable to control costs or conform to the original plans and timetables. The contractor’s ability to control costs or conform to plans and timetables may be affected by strikes, weather, government regulations and other conditions beyond the contractor’s control. As a result, we may not realize the projected benefits from the acquisition, redevelopment and improvement of properties.

We may be unable to renew leases or relet space. When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Even if our tenants do renew or we are able to relet the space, the terms of renewal or reletting (including the cost of renovations, if necessary) may be less favorable than expiring lease terms. If we are unable to promptly renew our leases or relet space, or if the rental rates upon such renewal or reletting are significantly lower than current rates, then our profitability will be adversely affected.

Tenant defaults may adversely affect our distributable cash flow. Our results of operations and distributable cash flow would be adversely affected if tenants are unable to meet their obligations to us. In the event of default by tenants, we may experience delays and incur substantial costs in enforcing our rights as landlord. Upon a default, we may not be able to relet the space or to relet the space on terms that are as favorable to us as the defaulted lease, which could adversely affect our profitability.

We are not diversified geographically or by property type. Substantially all of our properties are located in the greater Chicago area, and substantially all of our properties are warehouse or other industrial properties. While we believe that our focus on this geographical area and property type is an advantage, adverse economic developments in the greater Chicago area may adversely affect our properties and, therefore, our profitability.

We face competition in our markets. Our properties are located in areas that have other warehouse and industrial properties which may be more attractive to potential tenants. Competition from other warehouse or industrial properties may adversely affect our ability to lease our properties and to increase the rentals charged on our leases. We also expect competition in the acquisition of existing properties and the development of new properties. This competition could increase prices for properties of the type that we would like to pursue. As a result, we may not be able, or have the opportunity, to make suitable investments on favorable terms in the future. This could adversely affect our profitability.

Real estate investments are not as liquid as other types of assets. The illiquid nature of real estate investments may limit our ability to react promptly to changes in economic or other conditions. In addition, significant expenditures associated with real estate investments, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investments. Thus, the illiquid nature of our real estate investments could adversely affect our profitability under certain economic conditions.

We may incur uninsured losses or liabilities. We carry comprehensive liability, fire, flood (where appropriate), extended coverage and rental loss insurance on all of our properties. There are, however, certain types of losses that are generally not insured, such as losses relating to earthquakes, riots, acts of war, acts of terrorism, losses caused by the presence of mold or losses relating to contract or lease claims. If an uninsured loss occurred or if a loss was incurred in excess of our insurance coverage limits, it could have a material adverse effect on our profitability.

Financing and Capital Risks

We are subject to debt financing risks. We regularly borrow money to finance our business. As a result, our business is subject to the risks normally associated with debt financing, including the risks that:

•                  we will be unable to meet required payments of principal and interest;

•                  we will not be able to refinance our existing indebtedness or, if we are able to refinance our existing indebtedness, the terms of such refinancing will not be as favorable as the original terms of such indebtedness; and

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•                  we will not be able to finance necessary capital expenditures for renovations and other improvements or, if financed, we will not be able to finance such capital expenditures on favorable terms.

If we have mortgaged a property to secure payment of indebtedness and we are unable to meet the mortgage payments, the lender may foreclose on the property and we will lose the income and asset value of such property.

We would be adversely affected by rising interest rates. Advances under our credit facility bear interest at variable rates based on LIBOR or prime. Increases in interest rates would increase our interest expense which could adversely affect our profitability and our ability to service our debt. In addition, increases in costs of financing may lessen the appeal of some development or acquisition opportunities to us.

The financial covenants in our credit facility may limit our flexibility and dividend growth. The terms of our credit facility entered into on June 30, 2003 require us to comply with a number of customary financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the credit facility even if we have satisfied our payment obligations.

We may not be able to access financial markets to obtain capital. In order to have qualified as a REIT for federal income tax purposes, we were required to distribute 90% of our taxable income to shareholders each year. As a result, we have relied on, and will continue to rely on, third party capital sources for many of our capital needs, including capital for acquisitions and development. The public debt and equity markets are among the sources on which we have relied and will continue to rely. We cannot guarantee that we will be able to access these markets, or any other source of capital. Our ability to access the public debt and equity markets depends on a variety of factors, including:

•                  general economic conditions affecting these markets;

•                  our own financial structure and performance; and

•                  the view of real estate companies in the market generally.

Environmental Risks

Ownership of properties involves environmental risks. Federal, state and local laws and regulations to protect the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at such property. The owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination. These laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination arising from that site. Recently, indoor air quality issues, including mold, have been highlighted in the media and the industry is seeing mold claims from lessees rising. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or abating mold conditions. However, due to the recent increase in mold claims and given that the law relating to mold is unsettled and subject to change, we could incur losses from claims relating to the presence of, or exposure to, mold or other microbial organisms, particularly if we are unable to maintain adequate insurance to cover such losses. We may also incur unexpected expenses relating to the abatement of mold on our properties.

Environmental laws also govern the presence, maintenance and removal of asbestos. Such laws require that owners or operators of buildings containing asbestos (1) properly manage and maintain the asbestos, (2) notify and train those who may come into contact with asbestos and (3) undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building. Such laws may impose fines and penalties on building owners or operators who fail to comply with these requirements. These laws may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers.

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Other Risks

We are dependent on key personnel. Our executive and other senior officers have a significant role in our success. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely affect our financial condition and cash flow. Further, such a loss could be negatively perceived in the capital markets.

Item 1B.         Unresolved Staff Comments.

The Company has no unresolved staff comments.

Item 2.            Properties.

The Company’s Warehouse and Other Industrial Properties

At December 31, 2005, the Company’s investment portfolio of operating warehouse and other industrial properties consisted of 201 properties, totaling approximately 31.9 million square feet, with a diverse base of approximately 301 tenants engaged in a wide variety of businesses.

The Company’s current properties are well located, with convenient access to area interstate highway, rail, and air transportation.  Most of the properties, both free standing and those located in CenterPoint business centers, are designed for warehousing and distribution.  The Company’s warehouse and other industrial buildings have an average project size of 158,715 square feet, and, on average, a tenant at warehouse and other industrial properties occupy 84,471 rentable square feet.  Although a number of the industrial properties are single-tenant facilities, most are designed to be divisible and to be leased by multiple tenants.  The Company seeks to own only properties that are well located and “generic,” i.e. suitable for use by firms in the wide range of industries operating in the area.

The leases for the warehouse and other industrial properties currently owned by the Company have terms between one and 13 years, with a weighted average remaining lease term, weighted on current rent, of approximately 4.5 years as of December 31, 2005.  In addition, rent from no single tenant comprised more than 2.0% of the Company’s total revenues as of December 31, 2005.

The Company’s distribution properties are designed for bulk storage of materials and manufactured goods and generally have interior heights of 22 feet or more and dock facilities for trucks as well as grade level loading for lighter vehicles and vans.  Many have direct access to rail.  Typically, the distribution buildings contain a minimal amount of office space.

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CenterPoint Porperties Trust

Warehouse and Other Industrial Property Summary

As of 12/31/2005

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