þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
MARYLAND (State or other jurisdiction of incorporation or organization) |
37-1470730 (I.R.S. Employer Identification No.) |
o Large Accelerated Filer | þ Accelerated Filer | o Non-Accelerated Filer | o Smaller Reporting Company |
2
June 30, 2011 | December 31, 2010 | |||||||
(unaudited) | ||||||||
Assets: |
||||||||
Rental property, net |
$ | 1,365,846 | $ | 1,217,897 | ||||
Cash and cash equivalents |
12,715 | 33,280 | ||||||
Escrows and reserves |
29,268 | 8,070 | ||||||
Accounts and other receivables, net of allowance
for doubtful accounts of $3,184 and $3,246,
respectively |
7,909 | 7,238 | ||||||
Accrued straight-line rents, net of allowance for
doubtful accounts of $325 and $849, respectively |
14,484 | 12,771 | ||||||
Notes receivable, net |
54,627 | 24,750 | ||||||
Investment in affiliates |
23,974 | 23,721 | ||||||
Deferred costs, net |
26,128 | 20,174 | ||||||
Prepaid expenses and other assets |
17,343 | 14,230 | ||||||
Intangible assets, net |
56,256 | 34,551 | ||||||
Total assets |
$ | 1,608,550 | $ | 1,396,682 | ||||
Liabilities: |
||||||||
Mortgage loans |
$ | 441,966 | $ | 319,096 | ||||
Exchangeable senior notes, net |
30,216 | 29,936 | ||||||
Senior notes |
75,000 | 75,000 | ||||||
Secured term loans |
100,000 | 110,000 | ||||||
Unsecured revolving credit facility |
164,000 | 191,000 | ||||||
Accounts payable and other liabilities |
36,221 | 16,827 | ||||||
Accrued interest |
2,598 | 2,170 | ||||||
Rents received in advance |
6,937 | 7,049 | ||||||
Tenant security deposits |
5,487 | 5,390 | ||||||
Deferred market rent, net |
5,298 | 6,032 | ||||||
Total liabilities |
867,723 | 762,500 | ||||||
Noncontrolling interests in the Operating Partnership |
36,375 | 16,122 | ||||||
Equity: |
||||||||
Series A Preferred Shares, $25 par value, 50,000
shares authorized: 4,600 and 0 shares issued and
outstanding, respectively |
115,000 | | ||||||
Common shares, $0.001 par value, 150,000 common
shares authorized: 50,056 and 49,922 shares issued
and outstanding, respectively |
50 | 50 | ||||||
Additional paid-in capital |
791,641 | 794,051 | ||||||
Noncontrolling interests in consolidated partnerships |
4,079 | 3,077 | ||||||
Accumulated other comprehensive loss |
(808 | ) | (545 | ) | ||||
Dividends in excess of accumulated earnings |
(205,510 | ) | (178,573 | ) | ||||
Total equity |
704,452 | 618,060 | ||||||
Total liabilities, noncontrolling interests and equity |
$ | 1,608,550 | $ | 1,396,682 | ||||
3
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Rental |
$ | 34,983 | $ | 26,606 | $ | 66,904 | $ | 53,145 | ||||||||
Tenant reimbursements and other |
7,837 | 5,961 | 15,783 | 13,612 | ||||||||||||
Total revenues |
42,820 | 32,567 | 82,687 | 66,757 | ||||||||||||
Operating expenses: |
||||||||||||||||
Property operating |
9,543 | 6,863 | 20,265 | 16,600 | ||||||||||||
Real estate taxes and insurance |
4,091 | 3,131 | 8,032 | 6,392 | ||||||||||||
General and administrative |
4,185 | 3,675 | 8,192 | 7,384 | ||||||||||||
Acquisition costs |
552 | 1,645 | 2,737 | 1,664 | ||||||||||||
Depreciation and amortization |
16,691 | 10,196 | 29,293 | 19,879 | ||||||||||||
Contingent consideration related to acquisition of
property |
| | | 710 | ||||||||||||
Total operating expenses |
35,062 | 25,510 | 68,519 | 52,629 | ||||||||||||
Operating income |
7,758 | 7,057 | 14,168 | 14,128 | ||||||||||||
Other expenses, net: |
||||||||||||||||
Interest expense |
10,473 | 8,052 | 19,100 | 16,903 | ||||||||||||
Interest and other income |
(1,410 | ) | (87 | ) | (2,235 | ) | (197 | ) | ||||||||
Equity in losses of affiliates |
| 20 | 32 | 59 | ||||||||||||
Gain on early retirement of debt |
| (164 | ) | | (164 | ) | ||||||||||
Total other expenses, net |
9,063 | 7,821 | 16,897 | 16,601 | ||||||||||||
Loss from continuing operations before income taxes |
(1,305 | ) | (764 | ) | (2,729 | ) | (2,473 | ) | ||||||||
Benefit from income taxes |
148 | | 461 | | ||||||||||||
Loss from continuing operations |
(1,157 | ) | (764 | ) | (2,268 | ) | (2,473 | ) | ||||||||
Discontinued operations: |
||||||||||||||||
(Loss) income from operations of disposed properties |
(45 | ) | 240 | (2,827 | ) | (258 | ) | |||||||||
Gain on sale of real estate properties |
1,954 | 557 | 1,954 | 557 | ||||||||||||
Income (loss) from discontinued operations |
1,909 | 797 | (873 | ) | 299 | |||||||||||
Net income (loss) |
752 | 33 | (3,141 | ) | (2,174 | ) | ||||||||||
Less: Net loss (income) attributable to noncontrolling
interests |
65 | (1 | ) | 203 | 48 | |||||||||||
Net income (loss) attributable to First Potomac Realty Trust |
817 | 32 | (2,938 | ) | (2,126 | ) | ||||||||||
Less: Dividends on preferred shares |
(2,228 | ) | | (4,010 | ) | | ||||||||||
Net (loss) income available to common shareholders |
$ | (1,411 | ) | $ | 32 | $ | (6,948 | ) | $ | (2,126 | ) | |||||
Basic and diluted earnings per share: |
||||||||||||||||
Loss from continuing operations |
$ | (0.07 | ) | $ | (0.02 | ) | $ | (0.13 | ) | $ | (0.08 | ) | ||||
Income (loss) from discontinued operations |
0.04 | 0.02 | (0.02 | ) | 0.01 | |||||||||||
Net loss |
$ | (0.03 | ) | $ | | $ | (0.15 | ) | $ | (0.07 | ) | |||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic and diluted |
49,283 | 36,511 | 49,259 | 33,552 |
4
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (3,141 | ) | $ | (2,174 | ) | ||
Adjustments to reconcile net loss to net cash provided by
operating activities: |
||||||||
Discontinued operations: |
||||||||
Gain on sale of real estate properties |
(1,954 | ) | (557 | ) | ||||
Depreciation and amortization |
520 | 231 | ||||||
Impairment of real estate assets |
2,711 | 565 | ||||||
Depreciation and amortization |
29,695 | 20,882 | ||||||
Stock based compensation |
1,387 | 2,056 | ||||||
Bad debt expense |
518 | 750 | ||||||
Benefit from income taxes |
(461 | ) | | |||||
Amortization of deferred market rent |
(502 | ) | (677 | ) | ||||
Amortization of financing costs and discounts |
1,076 | 348 | ||||||
Amortization of rent abatement |
1,384 | 1,242 | ||||||
Equity in losses of affiliates |
32 | 59 | ||||||
Distributions from investments in affiliates |
83 | 216 | ||||||
Contingent consideration related to acquisition of property |
| 710 | ||||||
Gain on early retirement of debt |
| (164 | ) | |||||
Changes in assets and liabilities: |
||||||||
Escrows and reserves |
(7,698 | ) | (1,872 | ) | ||||
Accounts and other receivables |
(1,056 | ) | (874 | ) | ||||
Accrued straight-line rents |
(3,208 | ) | (1,128 | ) | ||||
Prepaid expenses and other assets |
1,317 | 2,548 | ||||||
Tenant security deposits |
96 | (176 | ) | |||||
Accounts payable and accrued expenses |
2,809 | (269 | ) | |||||
Accrued interest |
427 | 119 | ||||||
Rents received in advance |
(102 | ) | 259 | |||||
Deferred costs |
(7,387 | ) | (4,146 | ) | ||||
Total adjustments |
19,687 | 20,122 | ||||||
Net cash provided by operating activities |
16,546 | 17,948 | ||||||
Cash flows from investing activities: |
||||||||
Purchase deposit on future acquisitions |
(20,319 | ) | (2,060 | ) | ||||
Change in escrow and reserves |
(2,249 | ) | | |||||
Investment in note receivable |
(29,181 | ) | | |||||
Proceeds from sales of real estate assets |
26,883 | 11,414 | ||||||
Acquisition of rental property and associated intangible assets |
(12,513 | ) | (81,491 | ) | ||||
Additions to rental property |
(16,552 | ) | (5,441 | ) | ||||
Acquisition of land parcel |
(7,500 | ) | | |||||
Additions to construction in progress |
(8,879 | ) | (724 | ) | ||||
Investment in unconsolidated joint ventures |
(260 | ) | | |||||
Deconsolidation of joint venture |
| (896 | ) | |||||
Net cash used in investing activities |
(70,570 | ) | (79,198 | ) | ||||
Cash flows from financing activities: |
||||||||
Financing costs |
(2,224 | ) | (1,220 | ) | ||||
Issuance of debt |
78,000 | 85,000 | ||||||
Issuance of common shares, net |
| 86,977 | ||||||
Issuance of preferred shares, net |
110,997 | | ||||||
Contributions from joint venture partner |
1,000 | | ||||||
Repayments of debt |
(130,826 | ) | (93,543 | ) | ||||
Dividends to common shareholders |
(19,989 | ) | (13,526 | ) | ||||
Dividends to preferred shareholders |
(2,896 | ) | | |||||
Distributions to noncontrolling interests |
(667 | ) | (293 | ) | ||||
Stock option exercises |
64 | 16 | ||||||
Net cash provided by financing activities |
33,459 | 63,411 | ||||||
Net (decrease) increase in cash and cash equivalents |
(20,565 | ) | 2,161 | |||||
Cash and cash equivalents, beginning of period |
33,280 | 9,320 | ||||||
Cash and cash equivalents, end of period |
$ | 12,715 | $ | 11,481 | ||||
5
2011 | 2010 | |||||||
Cash paid for interest, net |
$ | 17,530 | $ | 16,409 | ||||
Non-cash investing and financing activities: |
||||||||
Debt assumed in connection with acquisitions of
real estate |
139,373 | | ||||||
Contingent consideration recorded at acquisition |
9,356 | | ||||||
Conversion of Operating Partnership units into
common shares |
19 | | ||||||
Issuance of Operating Partnership units in
connection with acquisitions of real estate |
21,721 | |
6
7
Buildings
|
39 years | |
Building improvements
|
5 to 20 years | |
Furniture, fixtures and equipment
|
5 to 15 years | |
Tenant improvements
|
Shorter of the useful lives of the assets or the terms of the related leases |
8
9
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Numerator for basic and diluted earnings per share: |
||||||||||||||||
Loss from continuing operations |
$ | (1,157 | ) | $ | (764 | ) | $ | (2,268 | ) | $ | (2,473 | ) | ||||
Income (loss) from discontinued operations |
1,909 | 797 | (873 | ) | 299 | |||||||||||
Net income (loss) |
752 | 33 | (3,141 | ) | (2,174 | ) | ||||||||||
Less: Net loss from continuing operations
attributable to noncontrolling interests |
151 | 14 | 221 | 52 | ||||||||||||
Less: Net income from discontinued operations
attributable to noncontrolling interests |
(86 | ) | (15 | ) | (18 | ) | (4 | ) | ||||||||
Net income (loss) attributable to First
Potomac Realty Trust |
817 | 32 | (2,938 | ) | (2,126 | ) | ||||||||||
Less: Dividends on preferred shares |
(2,228 | ) | | (4,010 | ) | | ||||||||||
Net (loss) income available to common
shareholders |
(1,411 | ) | 32 | (6,948 | ) | (2,126 | ) | |||||||||
Less: Allocation to participating securities |
(155 | ) | (157 | ) | (292 | ) | (304 | ) | ||||||||
Net loss available to common shareholders |
$ | (1,566 | ) | $ | (125 | ) | $ | (7,240 | ) | $ | (2,430 | ) | ||||
Denominator for basic and diluted earnings per share: |
||||||||||||||||
Weighted average shares outstanding basic and
diluted |
49,283 | 36,511 | 49,259 | 33,552 | ||||||||||||
Basic and diluted earnings per share: |
||||||||||||||||
Loss from continuing operations |
$ | (0.07 | ) | $ | (0.02 | ) | $ | (0.13 | ) | $ | (0.08 | ) | ||||
Income (loss) from discontinued operations |
0.04 | 0.02 | (0.02 | ) | 0.01 | |||||||||||
Net loss |
$ | (0.03 | ) | $ | | $ | (0.15 | ) | $ | (0.07 | ) | |||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Stock option awards |
920 | 847 | 911 | 849 | ||||||||||||
Non-vested share awards |
388 | 310 | 415 | 336 | ||||||||||||
Conversion of Exchangeable Senior Notes(1) |
854 | 1,276 | 854 | 1,346 | ||||||||||||
Series A Preferred Shares(2) |
7,313 | | 7,284 | | ||||||||||||
9,475 | 2,433 | 9,464 | 2,531 | |||||||||||||
(1) | At June 30, 2011 and 2010, each $1,000 principal amount of the Exchangeable
Senior Notes was convertible into 28.039 shares. |
|
(2) | The Companys Series A Preferred Shares are contingently convertible into shares
of the Companys common stock upon certain changes of control of the Company. |
10
June 30, 2011 | December 31, 2010 | |||||||
Land |
$ | 336,854 | $ | 315,229 | ||||
Buildings and improvements |
1,028,414 | 930,077 | ||||||
Construction in process |
64,558 | 41,685 | ||||||
Tenant improvements |
103,435 | 92,002 | ||||||
Furniture, fixtures and equipment |
9,166 | 9,894 | ||||||
1,542,427 | 1,388,887 | |||||||
Less: accumulated depreciation |
(176,581 | ) | (170,990 | ) | ||||
$ | 1,365,846 | $ | 1,217,897 | |||||
Square Feet | Cost to Date of | Square Feet | Cost to Date of | |||||||||||||||||
Reporting | Developable | Under | Development | Under | Redevelopment | |||||||||||||||
Segment | Square Feet | Development | Activities | Redevelopment | Activities | |||||||||||||||
Maryland |
150 | | $ | | | $ | | |||||||||||||
Northern Virginia |
568 | | | 227 | 10,219 | |||||||||||||||
Southern Virginia |
841 | 166 | 415 | | | |||||||||||||||
Washington, D.C. |
30 | | | 135 | 726 | |||||||||||||||
1,589 | 166 | $ | 415 | 362 | $ | 10,945 | ||||||||||||||
11
Aggregate | Mortgage | |||||||||||||||||
Acquisition | Property | Square | Purchase | Debt | ||||||||||||||
Location | Date | Type | Feet | Price | Assumed(1) | |||||||||||||
One Fair Oaks |
Northern Virginia | 4/8/2011 | Office | 214,214 | $ | 58,036 | $ | 52,909 | ||||||||||
(1) | Reflects the fair value of the mortgage debt at the time of acquisition. |
Land |
$ | 5,688 | ||
Acquired tenant improvements |
2,309 | |||
Building and improvements |
43,176 | |||
In-place leases |
5,753 | |||
Acquired leasing commissions |
681 | |||
Above-market leases acquired |
429 | |||
Total assets acquired |
58,036 | |||
Debt assumed |
(52,909 | ) | ||
Net assets acquired |
$ | 5,127 | ||
12
June 30, 2011 | December 31, 2010 | |||||||
Assets: |
||||||||
Rental property, net |
$ | 103,638 | $ | 104,559 | ||||
Cash and cash equivalents |
3,125 | 1,706 | ||||||
Other assets |
9,895 | 11,442 | ||||||
Total assets |
116,658 | 117,707 | ||||||
Liabilities: |
||||||||
Mortgage loans(1) |
59,383 | 59,914 | ||||||
Other liabilities |
3,273 | 4,316 | ||||||
Total liabilities |
62,656 | 64,230 | ||||||
Net assets |
$ | 54,002 | $ | 53,477 | ||||
(1) | Of the total mortgage debt that encumbers the Companys unconsolidated
properties, $7.0 million is recourse to the Company. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Total revenues |
$ | 2,886 | $ | 1,183 | $ | 5,964 | $ | 2,301 | ||||||||
Total operating expenses |
(786 | ) | (299 | ) | (1,922 | ) | (650 | ) | ||||||||
Net operating income |
2,100 | 884 | 4,042 | 1,651 | ||||||||||||
Depreciation and amortization |
(1,259 | ) | (500 | ) | (2,561 | ) | (954 | ) | ||||||||
Other expenses, net |
(852 | ) | (465 | ) | (1,575 | ) | (932 | ) | ||||||||
Net loss |
$ | (11 | ) | $ | (81 | ) | $ | (94 | ) | $ | (235 | ) | ||||
Reporting | Disposition | Square | ||||||||
Segment | Date | Property Type | Feet | |||||||
Old Courthouse Square |
Maryland | 2/18/2011 | Retail | 201,208 | ||||||
7561 Lindbergh Drive |
Maryland | 6/16/2010 | Industrial Park | 36,000 | ||||||
Deer Park |
Maryland | 4/23/2010 | Business Park | 171,125 | ||||||
408,333 | ||||||||||
13
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 407 | $ | 1,008 | $ | 1,055 | $ | 2,189 | ||||||||
Net (loss) income, before gains or taxes |
(45 | ) | 240 | (2,827 | ) | (258 | ) | |||||||||
Gain on sale of real estate properties |
1,954 | 557 | 1,954 | 557 |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Mortgage loans, effective interest rates ranging from 4.40% to 7.29%, maturing at various dates through June 2021 |
$ | 441,966 | $ | 319,096 | ||||
Exchangeable senior notes, net of discounts, effective interest rate of 5.84%, maturing December 2011(1) |
30,216 | 29,936 | ||||||
Series A senior notes, effective interest rate of 6.41%, maturing June 2013 |
37,500 | 37,500 | ||||||
Series B senior notes, effective interest rate of 6.55%, maturing June 2016 |
37,500 | 37,500 | ||||||
Secured term loan, effective interest rate of LIBOR plus 3.50%, maturing January 2014(2) |
30,000 | 40,000 | ||||||
Secured term loan, effective interest rate of LIBOR plus 2.50%, maturing August 2011 |
20,000 | 20,000 | ||||||
Secured term loan, effective interest rate of LIBOR plus 3.50%, maturing August 2011(3) |
50,000 | 50,000 | ||||||
Unsecured revolving credit facility, effective interest rate of LIBOR plus 2.50%, maturing January 2015(3) |
164,000 | 191,000 | ||||||
$ | 811,182 | $ | 725,032 | |||||
(1) | The principal balance of the Exchangeable Senior Notes was $30.4
million at June 30, 2011 and December 31, 2010. |
|
(2) | On January 1, 2011, the loans applicable interest rate increased to LIBOR
plus 3.50% and will continue to increase by 100 basis points every year, to a maximum of 550
basis points. |
|
(3) | On July 18, 2011, the Company repaid its $50.0 million secured term loan
and paid down $117.0 million of the outstanding balance on its unsecured revolving credit
facility with proceeds from the issuance of a three-tranche $175 million unsecured term loan. |
14
Effective | ||||||||||||||||||||
Contractual | Interest | Maturity | June 30, | December 31, | ||||||||||||||||
Encumbered Property | Interest Rate | Rate | Date | 2011 | 2010 | |||||||||||||||
Indian Creek Court (1) |
7.80 | % | 5.90 | % | January 2011 | $ | | $ | 11,982 | |||||||||||
403/405 Glenn Drive (2) |
7.60 | % | 5.50 | % | July 2011 | 7,807 | 7,960 | |||||||||||||
4612 Navistar Drive (2) |
7.48 | % | 5.20 | % | July 2011 | 11,941 | 12,189 | |||||||||||||
Campus at Metro Park (3) |
7.11 | % | 5.25 | % | February 2012 | 22,134 | 22,556 | |||||||||||||
One Fair Oaks |
6.31 | % | 6.72 | % | June 2012 | 52,807 | | |||||||||||||
1434 Crossways Blvd Building II |
7.05 | % | 5.38 | % | August 2012 | 9,292 | 9,484 | |||||||||||||
Crossways Commerce Center |
6.70 | % | 6.70 | % | October 2012 | 23,951 | 24,179 | |||||||||||||
Newington Business Park Center |
6.70 | % | 6.70 | % | October 2012 | 15,108 | 15,252 | |||||||||||||
Prosperity Business Center |
6.25 | % | 5.75 | % | January 2013 | 3,446 | 3,502 | |||||||||||||
Aquia Commerce Center I(4) |
7.28 | % | 7.28 | % | February 2013 | | 353 | |||||||||||||
Cedar Hill |
6.00 | % | 6.58 | % | February 2013 | 16,046 | | |||||||||||||
Merrill Lynch Building |
6.00 | % | 7.29 | % | February 2013 | 13,704 | | |||||||||||||
1434 Crossways Blvd Building I |
6.25 | % | 5.38 | % | March 2013 | 8,084 | 8,225 | |||||||||||||
Linden Business Center |
6.01 | % | 5.58 | % | October 2013 | 7,000 | 7,080 | |||||||||||||
840 First Street, NE |
5.18 | % | 6.05 | % | October 2013 | 56,242 | | |||||||||||||
Owings Mills Business Center |
5.85 | % | 5.75 | % | March 2014 | 5,394 | 5,448 | |||||||||||||
Annapolis Commerce Park East |
5.74 | % | 6.25 | % | June 2014 | 8,426 | 8,491 | |||||||||||||
Cloverleaf Center |
6.75 | % | 6.75 | % | October 2014 | 17,056 | 17,204 | |||||||||||||
Plaza 500, Van Buren Business
Park, Rumsey Center, Snowden
Center, Greenbrier Technology
Center II, Norfolk Business Center,
Northridge I & II and 15395 John
Marshall Highway |
5.19 | % | 5.19 | % | August 2015 | 98,426 | 99,151 | |||||||||||||
Hanover Business Center: |
||||||||||||||||||||
Building D |
8.88 | % | 6.63 | % | August 2015 | 582 | 642 | |||||||||||||
Building C |
7.88 | % | 6.63 | % | December 2017 | 982 | 1,041 | |||||||||||||
Chesterfield Business Center: |
||||||||||||||||||||
Buildings C,D,G and H |
8.50 | % | 6.63 | % | August 2015 | 1,528 | 1,681 | |||||||||||||
Buildings A,B,E and F |
7.45 | % | 6.63 | % | June 2021 | 2,318 | 2,398 | |||||||||||||
7458 Candlewood Road Note 1 |
4.67 | % | 6.04 | % | January 2016 | 4,731 | 4,761 | |||||||||||||
7458 Candlewood Road Note 2 |
6.57 | % | 6.30 | % | January 2016 | 9,835 | 9,938 | |||||||||||||
Gateway Centre, Building I |
7.35 | % | 5.88 | % | November 2016 | 1,104 | 1,189 | |||||||||||||
500 First Street, NW |
5.72 | % | 5.79 | % | July 2020 | 38,539 | 38,793 | |||||||||||||
Battlefield Corporate Center |
4.26 | % | 4.40 | % | November 2020 | 4,219 | 4,289 | |||||||||||||
Airpark Business Center |
7.45 | % | 6.63 | % | June 2021 | 1,264 | 1,308 | |||||||||||||
Total Mortgage Debt |
5.95 | %(5) | $ | 441,966 | $ | 319,096 | ||||||||||||||
(1) | The loan was repaid in January 2011 with available cash. |
|
(2) | The loan was repaid in July 2011 with borrowings from the Companys
unsecured revolving credit facility. |
|
(3) | The maturity date presented for the loan represents the anticipated
repayment date of the loan, after which date the interest rate on the loan will increase to a
predetermined amount identified in the debt agreement. The effective interest rate was
calculated based on the anticipated period the debt is expected to be outstanding. |
|
(4) | The loan was repaid in April 2011 with available cash. |
|
(5) | Weighted average interest rate on total mortgage debt. |
15
16
| available interest rate hedging may not correspond directly with the interest rate risk
for which the Company seeks protection; |
| the duration of the hedge may not match the duration of the related liability; |
| the party owing money in the hedging transaction may default on its obligation to pay;
and |
| the credit quality of the party owing money on the hedge may be downgraded to such an
extent that it impairs the Companys ability to sell or assign its side of the hedging
transaction. |
17
Interest Rate | ||||||||||||||
Contractual | Fixed LIBOR | |||||||||||||
Transaction Date | Maturity Date | Amount | Component | Interest Rate | ||||||||||
Consolidated: |
July 2010(1) | January 2014 | $ | 50,000 | LIBOR | 1.474 | % | |||||||
Unconsolidated: |
September 2008 | September 2011 | 28,000 | (2) | LIBOR | 3.47 | % |
(1) | The interest rate swap agreement became effective on January 18, 2011. |
|
(2) | The Company remains liable, in the event of default by the joint venture, for
$7.0 million, or 25% of the total, which reflects its ownership percentage in the joint
venture. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) |
$ | 752 | $ | 33 | $ | (3,141 | ) | $ | (2,174 | ) | ||||||
Unrealized (loss) gain on derivative instruments |
(540 | ) | 595 | (283 | ) | 1,123 | ||||||||||
Total comprehensive income (loss) |
212 | 628 | (3,424 | ) | (1,051 | ) | ||||||||||
Comprehensive loss (income) attributable to
noncontrolling interests |
92 | (12 | ) | 222 | 24 | |||||||||||
Comprehensive income (loss) attributable to First
Potomac Realty Trust |
$ | 304 | $ | 616 | $ | (3,202 | ) | $ | (1,027 | ) | ||||||
Interest Rate | Fixed LIBOR | |||||||||
Maturity Date | Amount | Contractual Component | Interest Rate | |||||||
July 2016 |
$ | 35,000 | LIBOR | 1.754 | % | |||||
July 2016 |
25,000 | LIBOR | 1.7625 | % | ||||||
July 2017 |
30,000 | LIBOR | 2.093 | % | ||||||
July 2017 |
30,000 | LIBOR | 2.093 | % |
18
Balance at | ||||||||||||||||
June 30, | ||||||||||||||||
2011 | Level 1 | Level 2 | Level 3 | |||||||||||||
Recurring Measurements: |
||||||||||||||||
Derivative instrument-swap agreement |
$ | 788 | $ | | $ | 788 | $ | | ||||||||
Contingent consideration related to acquisition of: |
||||||||||||||||
Ashburn Center |
1,398 | | | 1,398 | ||||||||||||
840 First Street, NE |
9,356 | | | 9,356 | ||||||||||||
Balance at | ||||||||||||||||
December 31, | ||||||||||||||||
2010 | Level 1 | Level 2 | Level 3 | |||||||||||||
Non-recurring Measurement: |
||||||||||||||||
Impaired real estate asset |
$ | 10,950 | $ | | $ | 10,950 | $ | | ||||||||
Recurring Measurements: |
||||||||||||||||
Derivative instrument-swap agreement |
396 | | 396 | | ||||||||||||
Contingent consideration related to acquisition of: |
||||||||||||||||
Ashburn Center |
1,398 | | | 1,398 |
19
Six months ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
Balance at December 31, |
$ | 396 | $ | 1,741 | ||||
Deconsolidation (1) |
| (396 | ) | |||||
Unrealized loss (gain) |
392 | (1,089 | ) | |||||
Balance at June 30, |
$ | 788 | $ | 256 | ||||
(1) | On January 1, 2010, the Company deconsolidated RiversPark I and all its
assets and liabilities, including its interest rate derivative liability, were removed
from the Companys consolidated balance sheets. |
20
Six months ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
Balance at December 31, |
$ | 1,398 | $ | 688 | ||||
Increase in fair value |
| 710 | ||||||
Additions to contingent consideration obligation |
9,356 | | ||||||
Balance at June 30, |
$ | 10,754 | $ | 1,398 | ||||
21
June 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
Financial Assets: |
||||||||||||||||
Notes receivable(1) |
$ | 54,627 | $ | 55,000 | $ | 24,750 | $ | 24,750 | ||||||||
Financial Liabilities: |
||||||||||||||||
Mortgage debt |
$ | 441,966 | $ | 440,519 | $ | 319,096 | $ | 316,169 | ||||||||
Exchangeable senior notes(2) |
30,216 | 30,564 | 29,936 | 30,412 | ||||||||||||
Series A senior notes |
37,500 | 38,416 | 37,500 | 37,850 | ||||||||||||
Series B senior notes |
37,500 | 38,581 | 37,500 | 37,251 | ||||||||||||
Secured term loans |
100,000 | 100,031 | 110,000 | 109,976 | ||||||||||||
Unsecured revolving credit facility |
164,000 | 166,382 | 191,000 | 191,073 | ||||||||||||
Total |
$ | 811,182 | $ | 814,493 | $ | 725,032 | $ | 722,731 | ||||||||
(1) | The face value of the note receivable for 950 F Street, NW was $25.0 million
at June 30, 2011 and December 31, 2010. The face value of the note receivable for
Americas Square was $30.0 million at June 30, 2011. |
|
(2) | The face value of the notes was $30.4 million at June 30, 2011 and December 31,
2010. |
Non- | ||||||||||||||||
First | redeemable | Redeemable | ||||||||||||||
Potomac | noncontrolling | noncontrolling | ||||||||||||||
Realty Trust | interests | Total Equity | interests | |||||||||||||
Balance, December 31, 2010 |
$ | 614,983 | $ | 3,077 | $ | 618,060 | $ | 16,122 | ||||||||
Net loss |
(2,938 | ) | | (2,938 | ) | (203 | ) | |||||||||
Changes in ownership, net |
111,477 | 1,002 | 112,479 | 21,142 | ||||||||||||
Distributions to owners |
(22,885 | ) | | (22,885 | ) | (667 | ) | |||||||||
Other comprehensive loss |
(264 | ) | | (264 | ) | (19 | ) | |||||||||
Balance, June 30, 2011 |
$ | 700,373 | $ | 4,079 | $ | 704,452 | $ | 36,375 | ||||||||
22
Non- | ||||||||||||||||
First | redeemable | Redeemable | ||||||||||||||
Potomac | noncontrolling | noncontrolling | ||||||||||||||
Realty Trust | interests | Total Equity | interests | |||||||||||||
Balance, December 31, 2009 |
$ | 377,759 | $ | | $ | 377,759 | $ | 9,585 | ||||||||
Net loss |
(2,126 | ) | | (2,126 | ) | (48 | ) | |||||||||
Changes in ownership, net |
99,630 | | 99,630 | 1,257 | ||||||||||||
Distributions to owners |
(13,526 | ) | | (13,526 | ) | (293 | ) | |||||||||
Other comprehensive income |
1,099 | | 1,099 | 24 | ||||||||||||
Balance, June 30, 2010 |
$ | 462,836 | $ | | $ | 462,836 | $ | 10,525 | ||||||||
23
Weighted | ||||||||
Non-vested | Average Grant | |||||||
Shares | Date Fair Value | |||||||
Non-vested at March 31, 2011 |
782,433 | $ | 12.70 | |||||
Granted |
20,310 | 16.25 | ||||||
Vested |
(53,775 | ) | 14.58 | |||||
Non-vested at June 30, 2011 |
748,968 | 12.66 | ||||||
24
25
Three months ended June 30, 2011 | ||||||||||||||||||||
Maryland | Washington, D.C. | Northern Virginia | Southern Virginia | Consolidated | ||||||||||||||||
Number of buildings |
67 | 4 | 57 | 55 | 183 | |||||||||||||||
Square feet |
3,875,172 | 633,452 | 3,662,616 | 5,478,909 | 13,650,149 | |||||||||||||||
Total revenues |
$ | 12,403 | $ | 5,938 | $ | 12,272 | $ | 12,207 | $ | 42,820 | ||||||||||
Property operating expense |
(2,916 | ) | (1,147 | ) | (2,615 | ) | (2,865 | ) | (9,543 | ) | ||||||||||
Real estate taxes and insurance |
(1,232 | ) | (667 | ) | (1,212 | ) | (980 | ) | (4,091 | ) | ||||||||||
Total property operating income |
$ | 8,255 | $ | 4,124 | $ | 8,445 | $ | 8,362 | 29,186 | |||||||||||
Depreciation and amortization expense |
(16,691 | ) | ||||||||||||||||||
General and administrative |
(4,185 | ) | ||||||||||||||||||
Acquisition costs |
(552 | ) | ||||||||||||||||||
Other expenses, net |
(8,915 | ) | ||||||||||||||||||
Income from discontinued operations |
1,909 | |||||||||||||||||||
Net income |
$ | 752 | ||||||||||||||||||
Capital expenditures(1) |
$ | 6,002 | $ | 418 | $ | 7,604 | $ | 1,784 | $ | 16,321 | ||||||||||
Three Months Ended June 30, 2010 | ||||||||||||||||||||
Maryland | Washington, D.C.(2) | Northern Virginia | Southern Virginia | Consolidated | ||||||||||||||||
Number of buildings |
68 | 1 | 51 | 54 | 174 | |||||||||||||||
Square feet |
3,608,755 | 129,035 | 2,689,641 | 5,258,232 | 11,685,663 | |||||||||||||||
Total revenues |
$ | 10,736 | $ | 13 | $ | 9,880 | $ | 11,938 | $ | 32,567 | ||||||||||
Property operating expense |
(2,223 | ) | (1 | ) | (1,928 | ) | (2,711 | ) | (6,863 | ) | ||||||||||
Real estate taxes and insurance |
(1,008 | ) | (2 | ) | (1,086 | ) | (1,035 | ) | (3,131 | ) | ||||||||||
Total property operating income |
$ | 7,505 | $ | 10 | $ | 6,866 | $ | 8,192 | 22,573 | |||||||||||
Depreciation and amortization expense |
(10,196 | ) | ||||||||||||||||||
General and administrative |
(3,675 | ) | ||||||||||||||||||
Acquisition costs |
(1,645 | ) | ||||||||||||||||||
Other expenses, net |
(7,821 | ) | ||||||||||||||||||
Income from discontinued operations |
797 | |||||||||||||||||||
Net income |
$ | 33 | ||||||||||||||||||
Capital expenditures(1) |
$ | 598 | $ | | $ | 768 | $ | 1,848 | $ | 3,312 | ||||||||||
26
Six months ended June 30, 2011 | ||||||||||||||||||||
Maryland | Washington, D.C. | Northern Virginia | Southern Virginia | Consolidated | ||||||||||||||||
Total revenues |
$ | 25,603 | $ | 9,508 | $ | 22,800 | $ | 24,776 | $ | 82,687 | ||||||||||
Property operating expense |
(6,839 | ) | (1,867 | ) | (5,593 | ) | (5,966 | ) | (20,265 | ) | ||||||||||
Real estate taxes and insurance |
(2,394 | ) | (1,240 | ) | (2,400 | ) | (1,998 | ) | (8,032 | ) | ||||||||||
Total property operating income |
$ | 16,370 | $ | 6,401 | $ | 14,807 | $ | 16,812 | 54,390 | |||||||||||
Depreciation and amortization expense |
(29,293 | ) | ||||||||||||||||||
General and administrative |
(8,192 | ) | ||||||||||||||||||
Acquisition costs |
(2,737 | ) | ||||||||||||||||||
Other expenses, net |
(16,436 | ) | ||||||||||||||||||
Loss from discontinued operations |
(873 | ) | ||||||||||||||||||
Net loss |
$ | (3,141 | ) | |||||||||||||||||
Total assets(3) |
$ | 476,878 | $ | 269,393 | $ | 420,927 | $ | 344,694 | $ | 1,608,550 | ||||||||||
Capital expenditures(1) |
$ | 8,801 | $ | 678 | $ | 11,212 | $ | 3,539 | $ | 25,431 | ||||||||||
Six Months Ended June 30, 2010 | ||||||||||||||||||||
Maryland | Washington, D.C.(2) | Northern Virginia | Southern Virginia | Consolidated | ||||||||||||||||
Total revenues |
$ | 21,771 | $ | 13 | $ | 20,590 | $ | 24,383 | $ | 66,757 | ||||||||||
Property operating expense |
(5,577 | ) | (1 | ) | (5,029 | ) | (5,993 | ) | (16,600 | ) | ||||||||||
Real estate taxes and insurance |
(2,068 | ) | (2 | ) | (2,228 | ) | (2,094 | ) | (6,392 | ) | ||||||||||
Total property operating income |
$ | 14,126 | $ | 10 | $ | 13,333 | $ | 16,296 | 43,765 | |||||||||||
Depreciation and amortization expense |
(19,879 | ) | ||||||||||||||||||
General and administrative |
(7,384 | ) | ||||||||||||||||||
Acquisition costs |
(1,664 | ) | ||||||||||||||||||
Other expenses, net |
(17,311 | ) | ||||||||||||||||||
Income from discontinued operations |
299 | |||||||||||||||||||
Net loss |
$ | (2,174 | ) | |||||||||||||||||
Total assets(3) |
$ | 380,317 | $ | 68,450 | $ | 328,493 | $ | 325,936 | $ | 1,125,626 | ||||||||||
Capital expenditures(1) |
$ | 923 | $ | | $ | 1,695 | $ | 3,396 | $ | 6,165 | ||||||||||
(1) | Capital expenditures for corporate assets not allocated to any of our reportable
segments totaled $513 and $98 for the three months ended June 30, 2011 and 2010, respectively,
and $1,201 and $151 for the six months ended June 30, 2011 and 2010, respectively. |
|
(2) | The acquired its first property located in Washington, D.C. on June 30, 2010. |
|
(3) | Corporate assets not allocated to any of our reportable segments totaled $96,658 and
$22,430 at June 30, 2011 and 2010, respectively. |
27
ITEM 2: | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| maintain and increase occupancy rates and/or increase rental rates at its
properties; |
||
| sell assets to third parties at favorable prices or contribute properties to joint
ventures; and |
||
| continue to grow its portfolio through acquisition of new properties, potentially
through joint ventures. |
28
| Executed 740,000 square feet of leases; 232,000 square feet of which were new leases. |
| Expanded borrowing capacity of unsecured revolving credit facility from $225 to $255
million; |
| Acquired a property in the
Companys Northern Virginia reporting segment for an aggregate purchase price
of $58 million, which had an anticipated capitalization rate of 8.8%;
|
| Sold Aquia Commerce Center I & II for net proceeds of $11.3 million, which equated to
an 8.7% capitalization rate, and sold Gateway West for net proceeds of $4.8 million,
which equated to a 3.8% capitalization rate as the property was largely vacant at the
time of sale. The Company calculates the capitalization rates associated with its
disposed properties as the propertys annualized net operating income divided by the
selling cost of the property. |
29
Number | Annualized | Leased at | Occupied at | |||||||||||||||||||
of | Sub- | Square | Cash Basis | June 30, | June 30, | |||||||||||||||||
Property | Buildings | Market(1) | Feet | Rent(2) | 2011(3) | 2011(3) | ||||||||||||||||
Downtown DC-Office |
||||||||||||||||||||||
500 First Street, NW |
1 | Capitol Hill | 129,035 | $ | 4,387 | 100.0 | % | 100.0 | % | |||||||||||||
840 First Street, NE |
1 | NoMA | 244,298 | 7,717 | 100.0 | % | 100.0 | % | ||||||||||||||
1211 Connecticut Avenue, NW |
1 | CBD | 125,119 | 3,346 | 100.0 | % | 100.0 | % | ||||||||||||||
Total Consolidated |
3 | 498,452 | 15,450 | 100.0 | % | 100.0 | % | |||||||||||||||
Total Joint Ventures |
1 | 111,373 | 4,051 | 100.0 | % | 100.0 | % | |||||||||||||||
Total Redevelopment |
1 | 135,000 | | |||||||||||||||||||
Grand Total |
5 | 744,825 | $ | 19,501 | 100.0 | % | 100.0 | % | ||||||||||||||
(1) | CBD = Central Business District; NoMa = North of Massachusetts Avenue |
|
(2) | Annualized cash basis rent is reflected at a triple-net equivalent basis, which
removes operating expense reimbursements that are included, along with base rent, in the
contractual payments of the Companys full service leases. The operating expense
reimbursements primarily relate to real estate taxes and insurance expenses. |
|
(3) | Does not include space in development or redevelopment. |
30
Number | Leased at | Occupied at | ||||||||||||||||||||
of | Annualized Cash | June 30, | June 30, | |||||||||||||||||||
Property | Buildings | Location | Square Feet | Basis Rent(1) | 2011(2) | 2011(2) | ||||||||||||||||
SUBURBAN MD |
||||||||||||||||||||||
Business Park |
||||||||||||||||||||||
Airpark Place |
3 | Gaithersburg | 82,414 | $ | 603 | 55.20 | % | 55.20 | % | |||||||||||||
Ammendale Business Park(3) |
7 | Beltsville | 312,736 | 2,670 | 91.80 | % | 62.10 | % | ||||||||||||||
Gateway 270 West |
6 | Clarksburg | 255,491 | 2,966 | 85.50 | % | 85.50 | % | ||||||||||||||
Girard Business Park(4) |
7 | Gaithersburg | 298,195 | 2,870 | 87.30 | % | 65.80 | % | ||||||||||||||
Rumsey Center |
4 | Columbia | 134,431 | 1,245 | 75.20 | % | 71.60 | % | ||||||||||||||
Snowden Center |
5 | Columbia | 144,847 | 2,024 | 92.10 | % | 90.60 | % | ||||||||||||||
Total Business Park |
32 | 1,228,114 | 12,378 | 85.20 | % | 71.80 | % | |||||||||||||||
Office Park |
||||||||||||||||||||||
15 Wormans Mill Court |
1 | Frederick | 40,051 | 356 | 87.70 | % | 87.70 | % | ||||||||||||||
Annapolis Commerce Park |
2 | Annapolis | 101,898 | 2,268 | 98.80 | % | 98.80 | % | ||||||||||||||
Campus at Metro Park North |
4 | Rockville | 190,912 | 3,378 | 85.10 | % | 85.10 | % | ||||||||||||||
Cloverleaf |
4 | Germantown | 173,655 | 3,067 | 98.60 | % | 98.60 | % | ||||||||||||||
Total Office Park |
11 | 506,516 | 9,069 | 92.70 | % | 92.70 | % | |||||||||||||||
Office |
||||||||||||||||||||||
20270 Goldenrod Lane |
1 | Germantown | 23,518 | 75 | 25.90 | % | 25.90 | % | ||||||||||||||
Gateway Center |
2 | Gaithersburg | 44,150 | 674 | 96.00 | % | 96.00 | % | ||||||||||||||
Merrill Lynch Building |
1 | Columbia | 136,381 | 1,462 | 68.30 | % | 68.30 | % | ||||||||||||||
Patrick Center |
1 | Frederick | 66,420 | 1,014 | 75.40 | % | 75.40 | % | ||||||||||||||
Redland Corporate Center-Bldg 3 |
1 | Rockville | 139,120 | 3,364 | 100.00 | % | 100.00 | % | ||||||||||||||
West Park |
1 | Frederick | 28,620 | 293 | 75.20 | % | 75.20 | % | ||||||||||||||
Woodlands Business Center |
1 | Largo | 37,886 | 313 | 68.30 | % | 68.30 | % | ||||||||||||||
Total Office |
8 | 476,095 | 7,195 | 79.40 | % | 79.40 | % | |||||||||||||||
Industrial |
||||||||||||||||||||||
Frederick Industrial Park(5) |
3 | Frederick | 550,418 | 3,964 | 89.00 | % | 88.80 | % | ||||||||||||||
Glenn Dale Business Center |
1 | Glenn Dale | 315,962 | 1,657 | 92.10 | % | 92.10 | % | ||||||||||||||
Total Industrial |
4 | 866,380 | 5,621 | 90.10 | % | 90.00 | % | |||||||||||||||
Total Suburban Maryland |
55 | 3,077,105 | 34,263 | 86.90 | % | 81.50 | % | |||||||||||||||
BALTIMORE |
||||||||||||||||||||||
Business Park |
||||||||||||||||||||||
Owings Mills Business Park(6) |
6 | Owings Mills | 219,284 | 2,009 | 76.80 | % | 74.40 | % | ||||||||||||||
Triangle Business Center |
4 | Baltimore | 74,182 | 510 | 63.20 | % | 63.20 | % | ||||||||||||||
Total Industrial |
10 | 293,466 | 2,519 | 73.40 | % | 71.60 | % | |||||||||||||||
Industrial |
||||||||||||||||||||||
7458 Candlewood Road |
1 | Hanover | 295,673 | 762 | 39.40 | % | 39.40 | % | ||||||||||||||
Total Baltimore |
11 | 589,139 | 3,281 | 56.30 | % | 55.40 | % | |||||||||||||||
Stabilized Portfolio |
66 | 3,666,244 | 37,544 | 82.00 | % | 77.30 | % | |||||||||||||||
Lease Up Property |
||||||||||||||||||||||
Redland Corporate Center-Bldg 2 |
1 | Rockville | 208,928 | 2,540 | 53.20 | % | 0.60 | % | ||||||||||||||
Total Consolidated |
67 | 3,875,172 | 40,084 | 80.40 | % | 73.20 | % | |||||||||||||||
Total Joint Ventures |
2 | 428,427 | 4,047 | 71.40 | % | 68.70 | % | |||||||||||||||
Grand Total |
69 | 4,303,599 | $ | 44,131 | 79.50 | % | 72.80 | % | ||||||||||||||
(1) | Annualized cash basis rent is reflected at Triple-net equivalent, which removes items that are included, along with base rent, in the contractual payments of the lease. These items primarily relate to real estate taxes and insurance expenses |
|
(2) | Does not include space in development or redevelopment. |
|
(3) | Ammendale Business Park consists of the following properties: Ammendale Commerce Center and Indian Creek Court. |
|
(4) | Girard Business Park consists of the following properties: Girard Business Center and Girard Place. |
|
(5) | Frederick Industrial Park consists of the following properties: 4451 Georgia Pacific Boulevard, 4612 Navistar Drive, and 6900 English Muffin Way. |
|
(6) | Owings Mills Business Park consists of the following properties: Owings Mills Business Center and Owings Mills Commerce Center. |
31
Number | Leased at | Occupied at | ||||||||||||||||||||
of | Annualized Cash | June 30, | June 30, | |||||||||||||||||||
Property | Buildings | Location | Square Feet | Basis Rent(1) | 2011(2) | 2011(2) | ||||||||||||||||
Business Park |
||||||||||||||||||||||
Ashburn Center |
3 | Ashburn | 194,184 | $ | 1,727 | 100.0 | % | 100.0 | % | |||||||||||||
Gateway Centre |
3 | Manassas | 101,534 | 900 | 76.0 | % | 76.0 | % | ||||||||||||||
Linden Business Center |
3 | Manassas | 109,838 | 793 | 58.4 | % | 58.4 | % | ||||||||||||||
Prosperity Business Center |
1 | Merrifield | 71,312 | 756 | 84.9 | % | 84.9 | % | ||||||||||||||
Sterling Park Business Center(3) |
6 | Sterling | 406,763 | 3,611 | 82.6 | % | 76.0 | % | ||||||||||||||
Total Business Park |
16 | 883,631 | 7,787 | 82.8 | % | 79.8 | % | |||||||||||||||
Office Park |
||||||||||||||||||||||
Herndon Corporate Center |
4 | Herndon | 127,918 | 1,548 | 79.7 | % | 79.6 | % | ||||||||||||||
Lafayette Business Park(4) |
6 | Chantilly | 254,296 | 3,175 | 80.2 | % | 80.2 | % | ||||||||||||||
Reston Business Campus |
4 | Reston | 82,988 | 1,034 | 86.0 | % | 86.0 | % | ||||||||||||||
Van Buren Business Park |
5 | Herndon | 107,853 | 704 | 48.1 | % | 46.7 | % | ||||||||||||||
Windsor at Battlefield |
2 | Manassas | 154,989 | 1,983 | 100.0 | % | 100.0 | % | ||||||||||||||
Total Office Park |
21 | 728,044 | 8,444 | 80.2 | % | 80.0 | % | |||||||||||||||
Office |
||||||||||||||||||||||
Cedar Hill |
2 | Tysons Corner | 102,632 | 2,301 | 100.0 | % | 100.0 | % | ||||||||||||||
One Fair Oaks |
2 | Fairfax | 214,214 | 5,020 | 100.0 | % | 100.0 | % | ||||||||||||||
Total Office |
4 | 316,846 | 7,321 | 100.0 | % | 100.0 | % | |||||||||||||||
Industrial |
||||||||||||||||||||||
13129 Airpark Road |
1 | Culpeper | 149,888 | 622 | 75.9 | % | 75.9 | % | ||||||||||||||
15395 John Marshall Highway |
1 | Haymarket | 236,082 | 3,369 | 100.0 | % | 100.0 | % | ||||||||||||||
Interstate Plaza |
1 | Alexandria | 109,029 | 1,067 | 87.4 | % | 87.4 | % | ||||||||||||||
Newington Business Park Center |
7 | Lorton | 254,272 | 2,435 | 87.6 | % | 86.4 | % | ||||||||||||||
Plaza 500 |
2 | Alexandria | 504,089 | 5,826 | 91.7 | % | 91.7 | % | ||||||||||||||
Total Industrial |
12 | 1,253,360 | 13,319 | 90.2 | % | 89.9 | % | |||||||||||||||
Stabilized Portfolio |
53 | 3,181,881 | 36,871 | 86.8 | % | 85.9 | % | |||||||||||||||
Lease Up Property |
||||||||||||||||||||||
Atlantic Corporate Park |
2 | Sterling | 220,610 | 637 | 17.5 | % | 15.0 | % | ||||||||||||||
Total Consolidated |
55 | 3,402,491 | 37,508 | 82.3 | % | 81.3 | % | |||||||||||||||
Total Redevelopment |
3 | 260,125 | | |||||||||||||||||||
Grand Total |
58 | 3,662,616 | $ | 37,508 | 82.3 | % | 81.3 | % | ||||||||||||||
(1) | Annualized cash basis rent is reflected at a triple-net equivalent basis, which
removes operating expense reimbursements that are included, along with base rent, in the
contractual payments of the Companys full service leases. The operating expense reimbursements
primarily relate to real estate taxes and insurance expenses. |
|
(2) | Does not include space in development or redevelopment. |
|
(3) | Sterling Park Business Center consists of the following properties: 403/405 Glenn
Drive, Davis Drive, and Sterling Park Business Center. |
|
(4) | Lafayette Business Park consists of the following properties: Enterprise Center and Tech
Court. |
32
SOUTHERN VIRGINIA REGION |
Number | Leased at | Occupied at | ||||||||||||||||||||
of | Annualized Cash | June 30, | June 30, | |||||||||||||||||||
Property | Buildings | Location | Square Feet | Basis Rent(1) | 2011(2) | 2011(2) | ||||||||||||||||
RICHMOND |
||||||||||||||||||||||
Business Park |
||||||||||||||||||||||
Hanover Business Center |
11 | Richmond | 320,362 | $ | 1,667 | 80.2 | % | 80.2 | % | |||||||||||||
Virginia Center |
4 | Ashland | 182,944 | 712 | 66.1 | % | 66.1 | % | ||||||||||||||
Chesterfield Business
Center(3) |
3 | Richmond | 204,280 | 2,167 | 89.1 | % | 89.1 | % | ||||||||||||||
Park Central |
1 | Glen Allen | 118,145 | 1,942 | 85.2 | % | 85.2 | % | ||||||||||||||
Total Business Park |
19 | 825,731 | 6,488 | 80.0 | % | 80.0 | % | |||||||||||||||
Industrial |
||||||||||||||||||||||
Northridge I, II |
2 | Ashland | 140,185 | 876 | 100.0 | % | 100.0 | % | ||||||||||||||
Rivers Bend Center(4) |
6 | Chester | 795,037 | 4,424 | 94.2 | % | 94.2 | % | ||||||||||||||
Total Industrial |
8 | 935,222 | 5,300 | 95.1 | % | 95.1 | % | |||||||||||||||
Total Richmond |
27 | 1,760,953 | 11,788 | 88.0 | % | 88.0 | % | |||||||||||||||
NORFOLK |
||||||||||||||||||||||
Business Park |
||||||||||||||||||||||
Crossways Commerce
Center(5) |
9 | Chesapeake | 1,089,786 | 9,859 | 82.0 | % | 82.0 | % | ||||||||||||||
Greenbrier Business
Center(6) |
4 | Chesapeake | 411,657 | 4,155 | 80.2 | % | 80.2 | % | ||||||||||||||
1000 Lucas Way |
2 | Hampton | 182,323 | 1,383 | 96.3 | % | 96.3 | % | ||||||||||||||
Enterprise Parkway |
1 | Hampton | 363,892 | 1,804 | 60.1 | % | 60.1 | % | ||||||||||||||
Norfolk Commerce Park(7) |
3 | Norfolk | 261,989 | 2,600 | 81.2 | % | 75.3 | % | ||||||||||||||
Total Business Park |
19 | 2,309,647 | 19,801 | 79.3 | % | 78.6 | % | |||||||||||||||
Office Park |
||||||||||||||||||||||
Battlefield Corporate Center |
1 | Chesapeake | 96,720 | 750 | 100.0 | % | 100.0 | % | ||||||||||||||
Industrial |
||||||||||||||||||||||
1400 Cavalier Boulevard |
4 | Chesapeake | 394,308 | 1,557 | 88.6 | % | 88.6 | % | ||||||||||||||
Diamond Hill Distribution Center |
4 | Chesapeake | 712,683 | 2,830 | 82.0 | % | 82.0 | % | ||||||||||||||
Total Industrial |
8 | 1,106,991 | 4,387 | 84.4 | % | 84.4 | % | |||||||||||||||
Total Norfolk |
28 | 3,513,358 | 24,938 | 81.4 | % | 81.0 | % | |||||||||||||||
Total Consolidated |
55 | 5,274,311 | 36,726 | 83.6 | % | 83.3 | % | |||||||||||||||
Total Redevelopment |
1 | 38,988 | | |||||||||||||||||||
Grand Total |
56 | 5,313,299 | $ | 36,726 | 82.3 | % | 81.3 | % | ||||||||||||||
(1) | Annualized cash basis rent is reflected at a triple-net equivalent basis, which removes operating expense reimbursements that are included, along with base rent, in the contractual payments of the Companys full service leases.
The operating expense reimbursements primarily relate to real estate taxes and insurance expenses. |
|
(2) | Does not include space in development or redevelopment. |
|
(3) | Chesterfield Business Center consists of the following properties: Airpark Business Center, Chesterfield Business Center, and Pine Glen. |
|
(4) | Rivers Bend Center consists of the following properties: Rivers Bend Center and Rivers Bend Center II. |
|
(5) | Crossways Commerce Center consists of the following properties: Coast Guard Building, Crossways Commerce Center I, Crossways Commerce Center II, 1434 Crossways Boulevard, and 1408 Stephanie Way |
|
(6) | Greenbrier Business Center consists of the following properties: Greenbrier Technology Center I, Greenbrier Technology Center II, and Greenbrier Circle Corporate Center. |
|
(7) | Norfolk Commerce Park consists of the following properties: Norfolk Business Center, Norfolk Commerce Park II, and Gateway II. |
33
Square Feet | Cost to Date of | Square Feet | Cost to Date of | |||||||||||||||||
Reporting | Developable | Under | Development | Under | Redevelopment | |||||||||||||||
Segment | Square Feet | Development | Activities | Redevelopment | Activities | |||||||||||||||
Maryland |
150 | | $ | | | $ | | |||||||||||||
Northern Virginia |
568 | | | 227 | 10,219 | |||||||||||||||
Southern Virginia |
841 | 166 | 415 | | | |||||||||||||||
Washington, D.C. |
30 | | | 135 | 726 | |||||||||||||||
1,589 | 166 | $ | 415 | 362 | $ | 10,945 | ||||||||||||||
34
Percent of | ||||||||||||||||||||||||
Percent of | Total | |||||||||||||||||||||||
Number of | Total | Annualized | Annualized | |||||||||||||||||||||
Year of Lease | Leases | Square | Annualized Cash Basis | Cash Basis | Base Rent per | |||||||||||||||||||
Expiration | Expiring | Square Feet | Feet | Rent | Rent | Sq. Ft.(1) | ||||||||||||||||||
MTM(2) |
15 | 99,894 | 0.9 | % | $ | 1,077 | 0.7 | % | $ | 10.78 | ||||||||||||||
2011 |
90 | 783,479 | 7.2 | % | 9,438 | 6.5 | % | 12.05 | ||||||||||||||||
2012 |
119 | 913,819 | 8.4 | % | 12,213 | 8.4 | % | 13.36 | ||||||||||||||||
2013 |
134 | 1,881,865 | 17.4 | % | 26,373 | 18.1 | % | 14.01 | ||||||||||||||||
2014 |
126 | 1,432,883 | 13.2 | % | 17,088 | 11.7 | % | 11.93 | ||||||||||||||||
2015 |
76 | 864,156 | 8.0 | % | 10,901 | 7.5 | % | 12.61 | ||||||||||||||||
2016 |
66 | 1,616,698 | 14.9 | % | 25,754 | 17.6 | % | 15.93 | ||||||||||||||||
Thereafter |
142 | 3,235,989 | 29.9 | % | 43,149 | 29.6 | % | 13.33 | ||||||||||||||||
Total |
768 | 10,828,783 | 100.0 | % | $ | 145,993 | 100.0 | % | $ | 13.48 | ||||||||||||||
(1) | Annualized Cash Basis Rent is calculated as the contractual rent due under the
terms of the lease, without taking into consideration rent abatements, divided by the
square footage of the space. |
|
(2) | Reflects leases that are renewed on a month to month basis at June 30, 2011. |
35
Buildings
|
39 years | |
Building improvements
|
5 to 20 years | |
Furniture, fixtures and equipment
|
5 to 15 years | |
Tenant improvements
|
Shorter of the useful lives of the assets or the terms of the related leases | |
Lease related intangible assets
|
Term of related lease |
36
| the fair value of leases in-place on the date of acquisition is based on absorption
costs for the estimated lease-up period in which vacancy and foregone revenue are avoided
due to the presence of the acquired leases; |
| the fair value of above and below-market in-place leases based on the present value
(using a discount rate that reflects the risks associated with the acquired leases) of the
difference between the contractual rent amounts to be paid under the assumed lease and the
estimated market lease rates for the corresponding spaces over the remaining non-cancelable
terms of the related leases, which range from one to fifteen years; and |
| the fair value of intangible tenant or customer relationships. |
37
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Increase | Change | ||||||||||||||||||||||||
Rental |
$ | 34,983 | $ | 26,606 | $ | 66,904 | $ | 53,145 | $ | 8,377 | 31 | % | $ | 13,759 | 26 | % | ||||||||||||||||
Tenant reimbursements & other |
$ | 7,837 | $ | 5,961 | $ | 15,783 | $ | 13,612 | $ | 1,876 | 31 | % | $ | 2,171 | 16 | % |
38
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Increase | Change | ||||||||||||||||||||||||
Property operating |
$ | 9,543 | $ | 6,863 | $ | 20,265 | $ | 16,600 | $ | 2,680 | 39 | % | $ | 3,665 | 22 | % | ||||||||||||||||
Real estate taxes and insurance |
$ | 4,091 | $ | 3,131 | $ | 8,032 | $ | 6,392 | $ | 960 | 31 | % | $ | 1,640 | 26 | % |
39
Other Operating Expenses |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Increase | Change | ||||||||||||||||||||||||
$ | 4,185 | $ | 3,675 | $ | 8,192 | $ | 7,384 | $ | 510 | 14 | % | $ | 808 | 11 | % |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Decrease | Change | Increase | Change | ||||||||||||||||||||||||
$ | 552 | $ | 1,645 | $ | 2,737 | $ | 1,664 | $ | 1,093 | 66 | % | $ | 1,073 | 64 | % |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Increase | Change | ||||||||||||||||||||||||
$ | 16,691 | $ | 10,196 | $ | 29,293 | $ | 19,879 | $ | 6,495 | 64 | % | $ | 9,414 | 47 | % |
40
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Change | Change | Decrease | Change | ||||||||||||||||||||||||
$ | | $ | | $ | | $ | 710 | $ | | | $ | 710 | 100 | % |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Increase | Change | ||||||||||||||||||||||||
$ | 10,473 | $ | 8,052 | $ | 19,100 | $ | 16,903 | $ | 2,421 | 30 | % | $ | 2,197 | 13 | % |
41
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Increase | Change | ||||||||||||||||||||||||
$ | 1,410 | $ | 87 | $ | 2,235 | $ | 197 | $ | 1,323 | 1521 | % | $ | 2,038 | 1035 | % |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Decrease | Change | Decrease | Change | ||||||||||||||||||||||||
$ | | $ | 20 | $ | 32 | $ | 59 | $ | 20 | 100 | % | $ | 27 | 46 | % |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Decrease | Change | Decrease | Change | ||||||||||||||||||||||||
$ | | $ | 164 | $ | | $ | 164 | $ | 164 | 100 | % | $ | 164 | 100 | % |
42
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Increase | Change | ||||||||||||||||||||||||
$ | 148 | $ | | $ | 461 | $ | | $ | 148 | | $ | 461 | |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Increase | Change | Decrease | Change | ||||||||||||||||||||||||
$ | 1,909 | $ | 797 | $ | (873 | ) | $ | 299 | $ | 1,112 | 140 | % | $ | 1,172 | 392 | % |
Net loss (income) attributable to noncontrolling interests |
Three Months Ended | Six Months Ended | Three Months | Six Months | |||||||||||||||||||||||||||||
June 30, | June 30, | Percent | Percent | |||||||||||||||||||||||||||||
(amounts in thousands) | 2011 | 2010 | 2011 | 2010 | Decrease | Change | Increase | Change | ||||||||||||||||||||||||
$ | 65 | $ | (1 | ) | $ | 203 | $ | 48 | $ | 66 | 6600 | % | $ | 155 | 323 | % |
43
44
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | $ | % | June 30, | $ | % | |||||||||||||||||||||||||||
(dollars in thousands) | 2011 | 2010 | Change | Change | 2011 | 2010 | Change | Change | ||||||||||||||||||||||||
Number of buildings (1) |
166 | 166 | | | 166 | 166 | | | ||||||||||||||||||||||||
Same property revenue |
||||||||||||||||||||||||||||||||
Rental |
$ | 26,118 | $ | 26,499 | $ | (381 | ) | (1.4 | ) | $ | 52,647 | $ | 52,892 | $ | (245 | ) | (0.5 | ) | ||||||||||||||
Tenant reimbursements |
5,400 | 5,342 | 58 | 1.1 | 11,843 | 12,538 | (695 | ) | (5.5 | ) | ||||||||||||||||||||||
Total same property revenue |
31,518 | 31,841 | (323 | ) | (1.0 | ) | 64,490 | 65,430 | (940 | ) | (1.4 | ) | ||||||||||||||||||||
Same property operating expenses |
||||||||||||||||||||||||||||||||
Property |
6,258 | 6,404 | (146 | ) | (2.3 | ) | 14,627 | 15,825 | (1,198 | ) | (7.6 | ) | ||||||||||||||||||||
Real estate taxes and insurance |
2,881 | 3,113 | (232 | ) | (7.5 | ) | 5,867 | 6,350 | (483 | ) | (7.6 | ) | ||||||||||||||||||||
Total same property operating expenses |
9,139 | 9,517 | (378 | ) | (4.0 | ) | 20,494 | 22,175 | (1,681 | ) | (7.6 | ) | ||||||||||||||||||||
Same property net operating income |
$ | 22,379 | $ | 22,324 | $ | 55 | 0.2 | $ | 43,996 | $ | 43,255 | $ | 741 | 1.7 | ||||||||||||||||||
Reconciliation to net income |
||||||||||||||||||||||||||||||||
Same property net operating income |
$ | 22,379 | $ | 22,323 | $ | 43,996 | $ | 43,255 | ||||||||||||||||||||||||
Non-comparable net operating income (2) (3) |
6,955 | 250 | 10,855 | 510 | ||||||||||||||||||||||||||||
General and administrative expenses |
(4,185 | ) | (3,675 | ) | (8,192 | ) | (7,384 | ) | ||||||||||||||||||||||||
Acquisition costs |
(552 | ) | (1,645 | ) | (2,737 | ) | (1,664 | ) | ||||||||||||||||||||||||
Depreciation and amortization |
(16,691 | ) | (10,196 | ) | (29,293 | ) | (19,879 | ) | ||||||||||||||||||||||||
Contingent consideration related to acquisition of
property |
| | | (710 | ) | |||||||||||||||||||||||||||
Other expenses, net |
(9,063 | ) | (7,821 | ) | (16,897 | ) | (16,601 | ) | ||||||||||||||||||||||||
Discontinued operations (4) |
1,909 | 797 | (873 | ) | 299 | |||||||||||||||||||||||||||
Net income (loss) |
$ | 752 | $ | 33 | $ | (3,141 | ) | $ | (2,174 | ) | ||||||||||||||||||||||
Weighted Average | Weighted Average | |||||||||||||||||||||||||||||||
Occupancy | Occupancy | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
Same Properties |
82.9 | % | 84.1 | % | 83.4 | % | 84.6 | % |
(1) | Same property results reflect properties whose results can be viewed on a comparative basis for the periods
presented. Same property results exclude the results of the following non same-properties: RiversPark I and II, Three Flint Hill, 500 First
Street, NW, Battlefield Corporate Center, Redland Corporate Center, Atlantic Corporate Park, 1211 Connecticut Ave, NW, 440 First Street,
NW, 7458 Candlewood Road, 1750 H Street, NW, Aviation Business Park, Cedar Hill I & III, Merrill Lynch, 840 First Street, NE, One Fair
Oaks, Davis Drive and Sterling Park Building 7. |
|
(2) | Non-comparable net operating income has been adjusted to reflect a normalized management fee percentage in lieu of an
administrative overhead allocation for comparative purposes.
|
|
(3) | Discontinued operations represent the results of operations and subsequent dispositions of Aquia Commerce Center
I&II, Gateway West, Old Courthouse Square, Deer Park and 7561 Lindbergh Drive. |
45
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | $ | % | June 30, | $ | % | |||||||||||||||||||||||||||
(dollars in thousands) | 2011 | 2010 | Change | Change | 2011 | 2010 | Change | Change | ||||||||||||||||||||||||
Number of buildings (1) |
63 | 63 | | | 63 | 63 | | | ||||||||||||||||||||||||
Same property revenue |
||||||||||||||||||||||||||||||||
Rental |
$ | 8,325 | $ | 8,618 | $ | (293 | ) | (3.4 | ) | $ | 17,068 | 17,247 | $ | (179 | ) | (1.0 | ) | |||||||||||||||
Tenant reimbursements |
1,575 | 1,573 | 2 | 0.1 | 3,655 | 3,929 | (274 | ) | (7.0 | ) | ||||||||||||||||||||||
Total same property revenue |
9,900 | 10,191 | (291 | ) | (2.9 | ) | 20,723 | 21,176 | (453 | ) | (2.1 | ) | ||||||||||||||||||||
Same property operating expenses |
||||||||||||||||||||||||||||||||
Property |
1,832 | 2,112 | (280 | ) | (13.3 | ) | 4,749 | 5,385 | (636 | ) | (11.8 | ) | ||||||||||||||||||||
Real estate taxes and insurance |
990 | 1,007 | (17 | ) | (1.7 | ) | 1,950 | 2,066 | (116 | ) | (5.6 | ) | ||||||||||||||||||||
Total same property operating expenses |
2,822 | 3,119 | (297 | ) | (9.5 | ) | 6,699 | 7,451 | (752 | ) | (10.1 | ) | ||||||||||||||||||||
Same property net operating income |
$ | 7,078 | $ | 7,072 | $ | 6 | 0.1 | $ | 14,024 | $ | 13,725 | $ | 299 | 2.2 | ||||||||||||||||||
Reconciliation to total property operating income: |
||||||||||||||||||||||||||||||||
Same property net operating income |
$ | 7,078 | $ | 7,072 | $ | 14,024 | $ | 13,725 | ||||||||||||||||||||||||
Non-comparable net operating income(2) |
1,177 | 433 | 2,346 | 401 | ||||||||||||||||||||||||||||
Total property operating income |
$ | 8,255 | $ | 7,505 | $ | 16,370 | $ | 14,126 | ||||||||||||||||||||||||
Weighted Average | Weighted Average | |||||||||||||||||||||||||||||||
Occupancy | Occupancy | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
Same Properties |
80.6 | % | 82.8 | % | 80.8 | % | 82.5 | % | ||||||||||||||||||||||||
(1) | Same property results reflect properties whose results can be viewed
on a comparative basis for the periods presented. Same property results exclude
Redland Corporate Center, 7458 Candlewood Road and Merrill Lynch. |
|
(3) | Non-comparable net operating income has been adjusted to reflect a
normalized management fee percentage in lieu of an administrative
overhead allocation for comparative purposes. |
46
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | $ | % | June 30, | $ | % | |||||||||||||||||||||||||||
(dollars in thousands) | 2011 | 2010 | Change | Change | 2011 | 2010 | Change | Change | ||||||||||||||||||||||||
Number of buildings (1) |
49 | 49 | | | 49 | 49 | | | ||||||||||||||||||||||||
Same property revenue |
||||||||||||||||||||||||||||||||
Rental |
$ | 8,159 | $ | 8,094 | $ | 65 | 0.8 | $ | 16,228 | $ | 16,137 | $ | 91 | 0.6 | ||||||||||||||||||
Tenant reimbursements |
1,600 | 1,673 | (73 | ) | (4.4 | ) | 3,641 | 4,107 | (466 | ) | (11.3 | ) | ||||||||||||||||||||
Total same property revenue |
9,759 | 9,767 | (8 | ) | (0.1 | ) | 19,869 | 20,244 | (375 | ) | (1.9 | ) | ||||||||||||||||||||
Same property operating expenses |
||||||||||||||||||||||||||||||||
Property |
1,795 | 1,757 | 38 | 2.2 | 4,385 | 4,753 | (368 | ) | (7.7 | ) | ||||||||||||||||||||||
Real estate taxes and insurance |
943 | 1,075 | (132 | ) | (12.3 | ) | 1,988 | 2,197 | (209 | ) | (9.5 | ) | ||||||||||||||||||||
Total same property operating expenses |
2,738 | 2,832 | (94 | ) | (3.3 | ) | 6,373 | 6,950 | (577 | ) | (8.3 | ) | ||||||||||||||||||||
Same property net operating income |
$ | 7,021 | $ | 6,935 | $ | 86 | 1.2 | $ | 13,496 | $ | 13,294 | $ | 202 | 1.5 | ||||||||||||||||||
Reconciliation to total property operating income |
||||||||||||||||||||||||||||||||
Same property net operating income |
$ | 7,021 | $ | 6,935 | $ | 13,496 | $ | 13,294 | ||||||||||||||||||||||||
Non-comparable net operating income
(loss)(2) (3) |
1,424 | (69 | ) | 1,311 | 39 | |||||||||||||||||||||||||||
Total property operating income |
$ | 8,445 | $ | 6,866 | $ | 14,807 | $ | 13,333 | ||||||||||||||||||||||||
Weighted Average | Weighted Average | |||||||||||||||||||||||||||||||
Occupancy | Occupancy | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
Same Properties |
83.6 | % | 84.3 | % | 84.1 | % | 84.0 | % |
(1) | Same property results reflect properties whose results can be viewed on a
comparative basis for the periods presented. Same property results exclude the results of
Three Flint Hill, Atlantic Corporate Park, Cedar Hill, Davis Drive and Sterling Park-Building
7. |
|
(3) | Non-comparable net operating income has been adjusted to reflect a
normalized management fee percentage in lieu of an administrative
overhead allocation for comparative purposes. |
47
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | $ | % | June 30, | $ | % | |||||||||||||||||||||||||||
(dollars in thousands) | 2011 | 2010 | Change | Change | 2011 | 2010 | Change | Change | ||||||||||||||||||||||||
Number of buildings (1) |
54 | 54 | | | 54 | 54 | | | ||||||||||||||||||||||||
Same property revenue |
||||||||||||||||||||||||||||||||
Rental |
$ | 9,634 | $ | 9,787 | $ | 153 | (1.6 | ) | $ | 19,351 | $ | 19,508 | $ | (157 | ) | (0.8 | ) | |||||||||||||||
Tenant reimbursements |
2,225 | 2,096 | 129 | 6.2 | 4,547 | 4,502 | 45 | 1.0 | ||||||||||||||||||||||||
Total same property revenue |
11,859 | 11,883 | (24 | ) | (0.2 | ) | 23,898 | 24,010 | (112 | ) | (0.5 | ) | ||||||||||||||||||||
Same property operating expenses |
||||||||||||||||||||||||||||||||
Property |
2,631 | 2,535 | 96 | 3.8 | 5,493 | 5,687 | (194 | ) | (3.4 | ) | ||||||||||||||||||||||
Real estate taxes and insurance |
948 | 1,031 | (83 | ) | (8.1 | ) | 1,929 | 2,087 | (158 | ) | (7.6 | ) | ||||||||||||||||||||
Total same property operating expenses |
3,579 | 3,566 | 13 | 0.4 | 7,422 | 7,774 | (352 | ) | (4.5 | ) | ||||||||||||||||||||||
Same property net operating income |
$ | 8,280 | $ | 8,317 | $ | (37 | ) | (0.4 | ) | $ | 16,476 | $ | 16,236 | $ | 240 | 1.5 | ||||||||||||||||
Reconciliation to total property operating income |
||||||||||||||||||||||||||||||||
Same property net operating income |
$ | 8,280 | $ | 8,317 | $ | 16,476 | $ | 16,236 | ||||||||||||||||||||||||
Non-comparable net operating income
(loss) (2) |
82 | (125 | ) | 336 | 60 | |||||||||||||||||||||||||||
Total property operating income |
$ | 8,362 | $ | 8,192 | $ | 16,812 | $ | 16,296 | ||||||||||||||||||||||||
(1) Same property
results reflect properties whose results can be viewed on a
comparative basis for the periods presented. Same property results exclude the results of
Battlefield Corporate Center. |
||||||||||||||||||||||||||||||||
(3) Non-comparable
net operating income has been adjusted to reflect a
normalized management fee percentage in lieu of an administrative
overhead allocation for comparative purposes. |
||||||||||||||||||||||||||||||||
Weighted Average | Weighted Average | |||||||||||||||||||||||||||||||
Occupancy | Occupancy | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
Same Properties |
84.0 | % | 84.4 | % | 84.6 | % | 85.8 | % |
48
| In January 2011, the Company raised net proceeds of approximately $111 million
through the issuance of 4.6 million 7.75% Series A Preferred Shares. The Company used
$105.0 million of the proceeds to pay down a portion of its unsecured revolving credit
facility; |
| On June 16, 2011, the Company amended and restated its unsecured revolving credit
facility. Under the new agreement, the capacity on the Companys unsecured revolving
credit facility was expanded from $225 million to $255 million and the maturity date
was extended to January 2014 with a one-year extension at the Companys option, which
it intends to exercise. The interest rate on the unsecured revolving credit facility
decreased from a range of LIBOR plus 275 to 375 basis points to a range of LIBOR plus
200 to 300 basis points, depending on the Companys overall leverage; and |
| On July 18, 2011, the Company entered into a three-tranche $175.0 million unsecured
term loan. The unsecured term loans three tranches have maturity dates staggered in
one-year intervals. Tranche A has an outstanding balance of $60.0 million at an
interest rate of LIBOR plus 215 basis points and matures on July 18, 2016. Tranche B
has an outstanding balance of $60.0 million at an interest rate of LIBOR plus 225 basis
points and matures on July 18, 2017. Tranche C has an outstanding balance of $55.0
million at an interest rate of LIBOR plus 230 basis points and matures on July 18,
2018. The Company used the funds to pay down $117.0 million of the outstanding balance
on its unsecured revolving credit facility, to repay its $50.0 million senior secured
term loan and for other general corporate purposes. |
49
Unsecured | 2007 | 2008 | ||||||||||||||||||||||
Revolving | Secured | Secured | ||||||||||||||||||||||
Credit Facility | Covenant | Term Loan | Covenant | Term Loan | Covenant | |||||||||||||||||||
Unencumbered Pool Leverage(1) |
40.3 | % | ≤ 62.5 | % | | | | | ||||||||||||||||
Unencumbered Pool Debt Service Coverage Ratio(1), |
4.01x | ≥ 1.75x | | | | | ||||||||||||||||||
Maximum Consolidated Total Indebtedness |
50.2 | % | ≤ 62.5 | % | 53.7 | % | ≤ 62.5 | % | 51.3 | % | ≤ 60 | % | ||||||||||||
Minimum Tangible Net Worth |
$ | 849,365 | ≥ $690,290 | $ | 754,509 | ≥ $690,290 | $ | 833,310 | ≥ $690,290 | |||||||||||||||
Fixed Charge Coverage Ratio |
1.98x | ≥ 1.50x | 1.81x | ≥ 1.50x | 1.81x | ≥ 1.50x | ||||||||||||||||||
Maximum Secured Debt |
33.1 | % | ≤ 40 | % | 34.6 | % | ≤ 40 | % | 33.0 | % | ≤ 40 | % |
(1) | Covenant applies only to the Companys unsecured revolving credit facility. |
Senior Notes | Covenant | |||||||
Unencumbered Pool Leverage |
2.45x | ≥ 1.50x | ||||||
Unencumbered Pool Debt Service Coverage Ratio |
4.07x | ≥ 1.75x | ||||||
Maximum Consolidated Total Indebtedness |
52.5 | % | ≤ 65 | % | ||||
Minimum Tangible Net Worth |
$ | 792,716 | ≥ $690,290 | |||||
Fixed Charge Coverage Ratio |
1.81x | ≥ 1.50x | ||||||
Maximum Secured Debt |
33.8 | % | ≤ 40 | % |
50
Six Months Ended | ||||||||||||
June 30, | ||||||||||||
(amounts in thousands) | 2011 | 2010 | Change | |||||||||
Cash provided by operating activities |
$ | 16,546 | $ | 17,948 | $ | (1,402 | ) | |||||
Cash used in investing activities |
(70,570 | ) | (79,198 | ) | 8,628 | |||||||
Cash provided by financing activities |
33,459 | 63,411 | (29,952 | ) |
51
52
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net (loss) income available to common shareholders |
$ | (1,411 | ) | $ | 32 | $ | (6,948 | ) | $ | (2,126 | ) | |||||
Add: Depreciation and amortization: |
||||||||||||||||
Real estate assets |
16,691 | 10,196 | 29,293 | 19,879 | ||||||||||||
Discontinued operations |
222 | 361 | 520 | 815 | ||||||||||||
Unconsolidated joint ventures |
513 | 125 | 1,036 | 238 | ||||||||||||
Consolidated joint venture |
(21 | ) | | (40 | ) | | ||||||||||
Gain on sale of real estate properties |
(1,954 | ) | (557 | ) | (1,954 | ) | (557 | ) | ||||||||
Net (loss) income attributable to
noncontrolling interests in the Operating
Partnership |
(67 | ) | 1 | (203 | ) | (48 | ) | |||||||||
FFO available to common shareholders and unitholders |
$ | 13,973 | $ | 10,158 | $ | 21,704 | $ | 18,201 | ||||||||
Weighted average common shares and Operating
Partnership units outstanding diluted |
51,829 | 37,430 | 51,169 | 34,473 |
53
ITEM 3: | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK |
Interest Rate | Fixed LIBOR | |||||||||
Maturity Date | Amount | Contractual Component | Interest Rate | |||||||
July 2016 |
$ | 35,000 | LIBOR | 1.754 | % | |||||
July 2016 |
25,000 | LIBOR | 1.7625 | % | ||||||
July 2017 |
30,000 | LIBOR | 2.093 | % | ||||||
July 2017 |
30,000 | LIBOR | 2.093 | % |
54
ITEM 4: | CONTROLS AND PROCEDURES |
55
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Removed and Reserved |
Item 5. | Other Information |
Item 6. | Exhibits |
No. | Description | |||
3.1 | Amended and Restated Declaration of Trust of the Registrant (incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on
October 1, 2003). |
|||
3.2 | Articles Supplementary designating First Potomac Realty Trusts 7.750% Series A Cumulative Redeemable Perpetual
Preferred Shares, liquidation preference $25.00 per share, par value $0.001 per share (incorporated by
reference to Exhibit 3.2 to the Companys Form 8-A filed on January 18, 2011) |
|||
3.3 | Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrants
Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003). |
|||
4.1 | Amended and Restated Agreement of Limited Partnership of First Potomac Realty Investment, L.P. dated September
15, 2003 (incorporated by reference to Exhibit 3.3 to the Registrants Registration Statement on Form S-11
(Registration No. 333-107172), as filed with the SEC on October 1, 2003). |
|||
4.2 | Amendment No. 13 to Amended and Restated Limited Partnership Agreement of First Potomac Realty Investment
Limited Partnership (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed on January 19, 2011). |
56
No. | Description | |||
4.3 | Amendment No. 14 to Amended and Restated Limited Partnership Agreement of First Potomac Realty Investment
Limited Partnership (incorporated by reference to Exhibit 4.3 to the Registrants Quarterly Report on Form 10-Q
for the quarter ended March 31, 2011). |
|||
4.4 | Form of First Potomac Realty Investment Limited Partnership 6.41% Senior Notes, Series A, due 2013
(incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K as filed with the SEC
on June 23, 2006). |
|||
4.5 | Form of First Potomac Realty Investment Limited Partnership 6.55% Senior Notes, Series B, due 2016
(incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K as filed with the SEC
on June 23, 2006). |
|||
4.6 | Note Purchase Agreement by and among the Registrant, First Potomac Realty Investment Limited Partnership and
the several Purchasers listed on the signature pages thereto, dated as of June 22, 2006 (incorporated by
reference to Exhibit 4.3 to the Registrants Current Report on Form 8-K filed on June 23, 2006). |
|||
4.7 | First Amendment, Consent and Waiver dated as of November 5, 2010 to the Note Purchase Agreement dated as of
June 22, 2006, by and among the Registrant, First Potomac Realty Investment Limited Partnership and the several
Purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 4.6 to the Registrants
Annual Report on Form 10-K for the year ended December 31, 2010). |
|||
4.8 | Trust Guaranty, entered into by the Registrant, dated as of June 22, 2006 (incorporated by reference to Exhibit
4.4 to the Registrants Current Report on Form 8-K filed on June 23, 2006). |
|||
4.9 | Subsidiary Guaranty, dated as of June 22, 2006 (incorporated by reference to Exhibit 4.5 to the Registrants
Current Report on Form 8-K filed on June 23, 2006). |
|||
4.10 | Indenture, dated as of December 11, 2006, by and among First Potomac Realty Investment Limited Partnership, the
Registrant, as Guarantor, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registrants Current Report on Form 8-K filed on December 12, 2006). |
|||
4.11 | Form of First Potomac Realty Investment Limited Partnership 4.0% Exchangeable Senior Note due 2011
(incorporated by
reference to
Exhibit 4.2 to
the Registrants
Current Report
on Form 8-K
filed on
December 12,
2006). |
|||
10.1 | * | Amendment No. 2, dated October 27, 2010, to the Companys Second Amended and Restated Revolving Credit
Agreement, dated December 29, 2009, between the Operating Partnership, certain of the Operating
Partnerships subsidiaries and KeyBank N.A., Wells Fargo N.A., Wachovia Bank, N.A., Bank of Montreal, PNC
Bank, N.A. Chevy Chase Bank (a division of Capital One, N.A.), U.S. Bank, N.A. and TD Bank, N.A. |
||
10.2 | * | Amendment No. 3, dated October 27, 2010, by and among the Operating Partnership, certain of its
subsidiaries (as guarantors), KeyBank and Wells Fargo, to the Secured Term Loan Agreement, dated August
11, 2008, as amended to date, by and among the Operating Partnership, certain of its subsidiaries (as
guarantors) and the lending institutions which are parties thereto. |
||
10.3 | * | Amendment No. 4, dated October 27, 2010, by and among the Operating Partnership, certain of its
subsidiaries (as guarantors) and KeyBank, to the Secured Term Loan Agreement, dated August 7, 2007, as
amended to date, by and among the Operating Partnership, certain of its subsidiaries (as guarantors) and
the lending institutions which are parties thereto. |
||
10.4 | * | Secured term loan agreement, dated November 10, 2010, between the Operating Partnership and KeyBank N.A. |
||
10.5 | Amendment No. 1 to Secured Term Loan Agreement dated as of May 10, 2011 by and among First Potomac Realty
Investment Limited Partnership, KeyBank National Association (as a lender and as administrative agent) and
the other lenders that may become party thereto (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the SEC on May 13, 2011). |
|||
10.6 | Term Loan Agreement, dated as of July 18, 2011, by and among First Potomac Realty Investment Limited
Partnership and its subsidiaries listed on Schedule 1 thereto, KeyBank National Association, as a lender
and administrative agent, and the other lenders and agents party thereto (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the SEC on July 22, 2011). |
|||
31.1 | * | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
31.2 | * | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
32.1 | * | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of
that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) |
||
32.2 | * | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of
that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) |
57
101 | XBRL |
* | Filed herewith. |
58
FIRST POTOMAC REALTY TRUST | ||||
Date: August 9, 2011
|
/s/ Douglas J. Donatelli
|
|||
Chairman of the Board and Chief Executive Officer | ||||
Date: August 9, 2011
|
/s/ Barry H. Bass
|
|||
Executive Vice President and Chief Financial Officer |
59
No. | Description | |||
3.1 | Amended and Restated Declaration of Trust of the Registrant (incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on
October 1, 2003). |
|||
3.2 | Articles Supplementary designating First Potomac Realty Trusts 7.750% Series A Cumulative Redeemable Perpetual
Preferred Shares, liquidation preference $25.00 per share, par value $0.001 per share (incorporated by
reference to Exhibit 3.2 to the Companys Form 8-A filed on January 18, 2011) |
|||
3.3 | Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrants
Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003). |
|||
4.1 | Amended and Restated Agreement of Limited Partnership of First Potomac Realty Investment, L.P. dated September
15, 2003 (incorporated by reference to Exhibit 3.3 to the Registrants Registration Statement on Form S-11
(Registration No. 333-107172), as filed with the SEC on October 1, 2003). |
|||
4.2 | Amendment No. 13 to Amended and Restated Limited Partnership Agreement of First Potomac Realty Investment
Limited Partnership (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed on January 19, 2011). |
|||
4.3 | Amendment No. 14 to Amended and Restated Limited Partnership Agreement of First Potomac Realty Investment
Limited Partnership (incorporated by reference to Exhibit 4.3 to the Registrants Quarterly Report on Form 10-Q
for the quarter ended March 31, 2011). |
|||
4.4 | Form of First Potomac Realty Investment Limited Partnership 6.41% Senior Notes, Series A, due 2013
(incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K as filed with the SEC
on June 23, 2006). |
|||
4.5 | Form of First Potomac Realty Investment Limited Partnership 6.55% Senior Notes, Series B, due 2016
(incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K as filed with the SEC
on June 23, 2006). |
|||
4.6 | Note Purchase Agreement by and among the Registrant, First Potomac Realty Investment Limited Partnership and
the several Purchasers listed on the signature pages thereto, dated as of June 22, 2006 (incorporated by
reference to Exhibit 4.3 to the Registrants Current Report on Form 8-K filed on June 23, 2006). |
|||
4.7 | First Amendment, Consent and Waiver dated as of November 5, 2010 to the Note Purchase Agreement dated as of
June 22, 2006, by and among the Registrant, First Potomac Realty Investment Limited Partnership and the several
Purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 4.6 to the Registrants
Annual Report on Form 10-K for the year ended December 31, 2010). |
|||
4.8 | Trust Guaranty, entered into by the Registrant, dated as of June 22, 2006 (incorporated by reference to Exhibit
4.4 to the Registrants Current Report on Form 8-K filed on June 23, 2006). |
|||
4.9 | Subsidiary Guaranty, dated as of June 22, 2006 (incorporated by reference to Exhibit 4.5 to the Registrants
Current Report on Form 8-K filed on June 23, 2006). |
|||
4.10 | Indenture, dated as of December 11, 2006, by and among First Potomac Realty Investment Limited Partnership, the
Registrant, as Guarantor, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registrants Current Report on Form 8-K filed on December 12, 2006). |
|||
4.11 | Form of First
Potomac Realty
Investment
Limited
Partnership 4.0%
Exchangeable
Senior Note due
2011
(incorporated by
reference to
Exhibit 4.2 to
the Registrants
Current Report
on Form 8-K
filed on
December 12,
2006). |
|||
10.1 | * | Amendment No. 2, dated October 27, 2010, to the Companys Second Amended and Restated Revolving Credit
Agreement, dated December 29, 2009, between the Operating Partnership, certain of the Operating
Partnerships subsidiaries and KeyBank N.A., Wells Fargo N.A., Wachovia Bank, N.A., Bank of Montreal, PNC
Bank, N.A. Chevy Chase Bank (a division of Capital One, N.A.), U.S. Bank, N.A. and TD Bank, N.A. |
No. | Description | |||
10.2 | * | Amendment No. 3, dated October 27, 2010, by and among the Operating Partnership, certain of its
subsidiaries (as guarantors), KeyBank and Wells Fargo, to the Secured Term Loan Agreement, dated August
11, 2008, as amended to date, by and among the Operating Partnership, certain of its subsidiaries (as
guarantors) and the lending institutions which are parties thereto. |
||
10.3 | * | Amendment No. 4, dated October 27, 2010, by and among the Operating Partnership, certain of its
subsidiaries (as guarantors) and KeyBank, to the Secured Term Loan Agreement, dated August 7, 2007, as
amended to date, by and among the Operating Partnership, certain of its subsidiaries (as guarantors) and
the lending institutions which are parties thereto. |
||
10.4 | * | Secured term loan agreement, dated November 10, 2010, between the Operating Partnership and KeyBank N.A. |
||
10.5 | Amendment No. 1 to Secured Term Loan Agreement dated as of May 10, 2011 by and among First Potomac Realty
Investment Limited Partnership, KeyBank National Association (as a lender and as administrative agent) and
the other lenders that may become party thereto (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed with the SEC on May 13, 2011). |
|||
10.6 | Term Loan Agreement, dated as of July 18, 2011, by and among First Potomac Realty Investment Limited
Partnership and its subsidiaries listed on Schedule 1 thereto, KeyBank National Association, as a lender
and administrative agent, and the other lenders and agents party thereto (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the SEC on July 22, 2011). |
|||
31.1 | * | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
31.2 | * | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
32.1 | * | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of
that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) |
||
32.2 | * | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of
that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) |
101 | XBRL |
* | Filed herewith. |
Re: | Amendment No. 2 to Second Amended and Restated Revolving Credit Agreement |
2
3
4
5
Very truly yours, FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP |
||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
6
1400 CAVALIER, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
1441 CROSSWAYS BLVD., LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP ASHBURN, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
7
AIRPARK PLACE, LLC |
||||
By: | Airpark Place Holdings LLC | |||
Its Sole Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP AMMENDALE COMMERCE CENTER, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
AQUIA TWO, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
8
CROSSWAYS II LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FPR HOLDINGS LIMITED PARTNERSHIP |
||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP DAVIS DRIVE LOT 5, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
9
FP PROPERTIES, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP PROPERTIES II, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP DIAMOND HILL, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
10
FP CAMPOSTELLA ROAD, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
GATEWAY HAMPTON ROADS, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP GATEWAY 270, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
11
GATEWAY MANASSAS II, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP 2550 ELLSMERE AVENUE, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP GATEWAY WEST II, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
12
FP GOLDENROD LANE, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP GREENBRIER CIRCLE, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
GTC I SECOND LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
13
FP HANOVER AB, LLC |
||||
By: | FPR Holdings Limited Partnership | |||
Its Sole Member | ||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
HERNDON CORPORATE CENTER, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
LINDEN II, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
14
LUCAS WAY HAMPTON, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP PARK CENTRAL V, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP PATRICK CENTER, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
15
FP PINE GLEN, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
RESTON BUSINESS CAMPUS, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP RIVERS BEND, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
16
FP 500 & 600 HP WAY, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP 1408 STEPHANIE WAY, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP STERLING PARK I, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
17
FP STERLING PARK 6, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP STERLING PARK 7, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
18
FP STERLING PARK LAND, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
VIRGINIA CENTER, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP WEST PARK, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
19
FP CRONRIDGE DRIVE, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP GIRARD BUSINESS CENTER, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP GIRARD PLACE, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
20
TECHCOURT, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP PARK CENTRAL I, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer | |||
FP TRIANGLE, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
21
GUARANTOR: FIRST POTOMAC REALTY TRUST |
||||
By: | /s/ Barry H. Bass | |||
Barry H. Bass, Executive Vice President and | ||||
Chief Financial Officer |
22
KEYBANK NATIONAL ASSOCIATION, as a Lender, as Swingline Lender, and as Administrative Agent |
||||
By: | /s/ John C. Scott | |||
Name: | John C. Scott | |||
Title: | Vice President |
23
WELLS FARGO NATIONAL ASSOCIATION, as a Lender |
||||
By: | /s/ Richard J. Vanderhyde | |||
Name: | Richard J. Vanderhyde | |||
Title: | Vice President |
24
WACHOVIA BANK NATIONAL ASSOCIATION, as a Lender |
||||
By: | /s/ Richard J. Vanderhyde | |||
Name: | Richard J. Vanderhyde | |||
Title: | Vice President |
25
BANK OF MONTREAL, as a Lender |
||||
By: | /s/ Aaron Lanski | |||
Name: | Aaron Lanski | |||
Title: | Director |
26
PNC BANK, NATIONAL ASSOCIATION as Lender |
||||
By: | /s/ Benjamin Adams | |||
Name: | Benjamin Adams | |||
Title: | Vice President |
27
CAPITAL ONE, N.A., (Sucessor by merger to Chevy Chase Bank) as a Lender |
||||
By: | /s/ Frederick H. Denecke | |||
Name: | Frederick H. Denecke | |||
Title: | Vice President |
28
U.S. BANK NATIONAL ASSOCIATION as Lender |
||||
By: | ||||
Name: | ||||
Title: |
29
TD BANK, N.A. as Lender |
||||
By: | /s/ Mauricio Duran | |||
Name: | Mauricio Duran | |||
Title: | Vice President |
30
31
| Section 8.4(e) (accompanying financial statements) | ||
| Section 8.13(a) (in connection with Removal of Eligible Unencumbered Property) | ||
| Section 8.13(c) (in connection with the addition of Real Estate Asset to Unencumbered Pool) | ||
| Section 9.4(b) (in connection with Sales or Indebtedness Liens) | ||
| Section 14.1 (in connection with default cure) |
(a) | is a Permitted Property; |
(b) | is free and clear of any Lien, other than Liens specially permitted to exist pursuant to Section 9.2 of the Credit Agreement; |
(c) | is not the subject of a Disqualifying Environmental Event or Disqualifying Structural Event; and |
(d) | is wholly-owned in fee simple by the Borrower. |
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP, for itself and as agent for each other Borrower | ||||||||
By: | First Potomac Realty Trust, its sole general partner |
|||||||
By: | ||||||||
Barry Bass | ||||||||
Senior Vice President and | ||||||||
Chief Financial Officer |
2
3
4
5
Very truly yours, FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP |
||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
1
GUARANTOR: FIRST POTOMAC REALTY TRUST |
||||
By: | /s/ Barry H. Bass | |||
Barry H. Bass, Executive Vice President and |
||||
Chief Financial Officer |
SUBSIDIARY GUARANTORS: NORFOLK COMMERCE PARK, LLC |
||||
By: | /s/ Barry H. Bass | |||
Barry H. Bass | ||||
Executive Vice President and Chief Financial Officer |
||||
WINDSOR AT BATTLEFIELD, LLC |
||||
By: | /s/ Barry H. Bass | |||
Barry H. Bass | ||||
Executive Vice President and Chief Financial Officer |
KEYBANK NATIONAL ASSOCIATION, as a Lender and as Administrative Agent |
||||
By: | /s/ John C. Scott | |||
Name: | John C. Scott | |||
Title: | Vice President |
WELLS FARGO NATIONAL ASSOCIATION, as a Lender |
||||
By: | /s/ Richard J. Vanderhype | |||
Name: | Richard J. Vanderhype | |||
Title: | Vice President |
| Section 8.4(e) (in connection with delivery of quarterly or annual financial statements) | ||
| Section 9.4(b) (in connection with Sales or Indebtedness Liens) | ||
| Section 14.1 (in connection with default cure) |
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP, for itself and as agent for each Subsidiary Guarantor | ||||||||
By: | First Potomac Realty Trust, its sole general partner |
|||||||
By: | ||||||||
Barry Bass Senior Vice President and |
||||||||
Chief Financial Officer |
2
3
4
5
6
Very truly yours, FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP |
||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
GUARANTOR: FIRST POTOMAC REALTY TRUST |
||||
By: | /s/ Barry H. Bass | |||
Barry H. Bass, Executive Vice President and | ||||
Chief Financial Officer |
SUBSIDIARY GUARANTORS: FP AIRPARK AB, LLC |
||||
By: | FPR Holdings Limited Partnership | |||
Its Sole Member | ||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
1434 CROSSWAYS BOULEVARD I, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
1434 CROSSWAYS BOULEVARD II, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
FP CHESTERFIELD ABEF, LLC |
||||
By: | FPR Holdings Limited Partnership | |||
Its Sole Member | ||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
FP CHESTERFIELD CDGH, LLC |
||||
By: | FPR Holdings Limited Partnership | |||
Its Sole Member | ||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
403 & 405 GLENN DRIVE, LLC |
||||
By: | 403 & 405 Glenn Drive Manager, LLC | |||
Its Managing Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
FP HANOVER C, LLC |
||||
By: | FPR Holdings Limited Partnership | |||
Its Sole Member | ||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
FP HANOVER D, LLC |
||||
By: | FPR Holdings Limited Partnership | |||
Its Sole Member | ||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
FP PROSPERITY, LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
SNOWDEN FIRST LLC |
||||
By: | First Snowden LLC | |||
Its Sole Member | ||||
By: | Columbia Holding Associates LLC | |||
Its Sole Member | ||||
By: | Rumsey/Snowden Investment LLC | |||
Its Sole Member | ||||
By: | Rumsey/Snowden Holding LLC | |||
Its Sole Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
FPR HOLDINGS LIMITED PARTNERSHIP |
||||
By: | FPR General Partner, LLC | |||
Its General Partner | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
NEWINGTON TERMINAL LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
KRISTINA WAY INVESTMENTS LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
COLUMBIA HOLDING ASSOCIATES LLC |
||||
By: | Rumsey/Snowden Investment LLC | |||
Its Sole Member | ||||
By: | Rumsey/Snowden Holding LLC | |||
Its Sole Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
FIRST SNOWDEN LLC |
||||
By: | Columbia Holding Associates LLC | |||
Its Sole Member | ||||
By: | Rumsey/Snowden Investment LLC | |||
Its Sole Member | ||||
By: | Rumsey/Snowden Holding LLC | |||
Its Sole Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
GREENBRIER/NORFOLK HOLDING LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
GREENBRIER/NORFOLK INVESTMENT LLC |
||||
By: | Greenbrier/Norfolk Holding LLC | |||
Its Sole Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
RUMSEY/SNOWDEN HOLDING LLC |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
RUMSEY/SNOWDEN INVESTMENT LLC |
||||
By: | Rumsey/Snowden Holding LLC | |||
Its Sole Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
INTERSTATE PLAZA HOLDING, LLC, a Delaware limited liability company |
||||
By: | Interstate Plaza Operating LLC | |||
Its Sole Member | ||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
FP GATEWAY CENTER, LLC, a Maryland limited liability company |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
|||
GLENN DALE BUSINESS CENTER, LLC, a Maryland limited liability company |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
INTERSTATE PLAZA OPERATING, LLC, a Delaware limited liability company |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | /s/ Barry H. Bass | |||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
KEYBANK NATIONAL ASSOCIATION, individually and as Administrative Agent |
||||
By: | /s/ John C. Scott | |||
Name: | John C. Scott | |||
Title: | Vice President |
| Section 8.4(e) (accompanying financial statements) | ||
| Section 8.13(a) (in connection with removal of an Eligible Borrowing Base Property) | ||
| Section 8.13(c) (in connection with the addition of Real Estate Asset to Borrowing Base Pool) | ||
| Section 9.2(a) (in connection with granting a mortgage on an Eligible Borrowing Base Property or Real Estate Asset) | ||
| Section 9.4(b) (in connection with Sales or Indebtedness Liens) | ||
| Section 14.1 (in connection with default cure) |
(a) | is a Permitted Property; |
(b) | is not the subject of a Disqualifying Environmental Event or Disqualifying Structural Event; |
(c) | is owned in fee simple by the Borrower or a Subsidiary Guarantor; |
(d) | is not subject to any Liens (other than Permitted Liens) or any material title, survey or similar defect; |
(e) | if owned by any Subsidiary Guarantor, the Equity Interests of such Subsidiary Guarantor are not subject to any Lien in favor of any Person other than Agent and Lenders and are not subject to any negative pledge in favor of any Person other than Agent and Lenders; and |
(f) | is not subject to any material default or event of default under any Property Level Loan Documents. |
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP, for itself and as agent for each Subsidiary Guarantor | ||||||||
By: | First Potomac Realty Trust, its sole general partner |
|||||||
By: | ||||||||
Barry Bass | ||||||||
Senior Vice President and | ||||||||
Chief Financial Officer |
§1. DEFINITIONS AND RULES OF INTERPRETATION |
1 | |||
§1.1. Definitions |
1 | |||
§1.2. Rules of Interpretation |
23 | |||
§2. THE TERM LOAN |
23 | |||
§2.1. Commitment to Lend |
23 | |||
§2.2. The Term Notes |
24 | |||
§2.3. Interest on the Term Loan; Fees |
24 | |||
§2.4. Request for the Term Loan |
25 | |||
§2.5. Conversion Options |
25 | |||
§2.6. [Reserved] |
26 | |||
§2.7. [Reserved] |
26 | |||
§2.8. Increase in Total Commitment |
26 | |||
§2.9. Extension of Term Loan Maturity Date |
27 | |||
§3. REPAYMENT OF THE TERM LOAN |
27 | |||
§3.1. Maturity |
27 | |||
§3.2. Optional Repayments of the Term Loan |
27 | |||
§3.3. Mandatory Repayment of the Term Loan |
27 | |||
§4. CERTAIN GENERAL PROVISIONS |
28 | |||
§4.1. Funds for Payments |
28 | |||
§4.2. Computations |
28 | |||
§4.3. Inability to Determine Libor Rate |
29 | |||
§4.4. Illegality |
29 | |||
§4.5. Additional Costs, Etc. |
29 | |||
§4.6. Capital Adequacy |
31 | |||
§4.7. Certificate; Limitations |
31 | |||
§4.8. Indemnity |
31 | |||
§4.9. Interest on Overdue Amounts; Late Charge |
32 | |||
§5. COLLATERAL |
32 | |||
§5.1. Security Interests |
32 | |||
§6. RECOURSE OBLIGATIONS; JOINT AND SEVERAL LIABILITY |
32 |
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§7. REPRESENTATIONS AND WARRANTIES |
32 | |||
§7.1. Authority, Etc. |
33 | |||
§7.2. Governmental Approvals |
35 | |||
§7.3. Title to Properties; Leases |
35 | |||
§7.4. Financial Statements |
36 | |||
§7.5. No Material Changes, Etc. |
36 | |||
§7.6. Franchises, Patents, Copyrights, Etc. |
37 | |||
§7.7. Litigation |
37 | |||
§7.8. No Materially Adverse Contracts, Etc. |
37 | |||
§7.9. Compliance With Other Instruments, Laws, Etc. |
37 | |||
§7.10. Tax Status |
38 | |||
§7.11. No Event of Default |
38 | |||
§7.12. Investment Company Acts |
38 | |||
§7.13. Name; Jurisdiction of Organization; Absence of UCC Financing Statements, Etc. |
38 | |||
§7.14. Absence of Liens |
38 | |||
§7.15. Certain Transactions |
39 | |||
§7.16. Employee Benefit Plans; Multiemployer Plans; Guaranteed Pension Plans |
39 | |||
§7.17. Regulations U and X |
39 | |||
§7.18. Environmental Compliance |
39 | |||
§7.19. Subsidiaries |
41 | |||
§7.20. Loan Documents |
41 | |||
§7.21. REIT Status |
41 | |||
§7.22. Anti-Terrorism Regulations |
42 | |||
§8. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE TRUST |
42 | |||
§8.1. Punctual Payment |
43 | |||
§8.2. Maintenance of Office; Jurisdiction of Organization, Etc. |
43 | |||
§8.3. Records and Accounts |
43 | |||
§8.4. Financial Statements, Certificates and Information |
43 | |||
§8.5. Notices |
46 | |||
§8.6. Existence of Borrower; Maintenance of Properties |
48 | |||
§8.7. Existence of the Trust; Maintenance of REIT Status of the Trust; Maintenance of Properties |
48 | |||
§8.8. Insurance |
49 | |||
§8.9. Taxes |
49 | |||
§8.10. Inspection of Properties and Books |
50 | |||
§8.11. Compliance with Laws, Contracts, Licenses, and Permits |
51 | |||
§8.12. Use of Proceeds |
51 | |||
§8.13. Additional Borrower; Solvency of Borrower; Removal of Borrower; Addition of Real Estate
Asset to Borrowing Base Pool |
52 | |||
§8.14. Further Assurances; Release of Liens |
53 | |||
§8.15. Interest Rate Protection |
53 | |||
§8.16. Environmental Indemnification |
54 | |||
§8.17. Response Actions |
54 | |||
§8.18. Environmental Assessments |
54 | |||
§8.19. Employee Benefit Plans |
55 | |||
§8.20. No Amendments to Certain Documents |
55 |
-ii-
§9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE TRUST |
56 | |||
§9.1. Restrictions on Indebtedness |
56 | |||
§9.2. Restrictions on Liens, Etc. |
58 | |||
§9.3. Restrictions on Investments |
60 | |||
§9.4. Merger, Consolidation and Disposition of Assets; Assets of the Trust |
61 | |||
§9.5. Compliance with Environmental Laws |
62 | |||
§9.6. Distributions |
62 | |||
§9.7. Government Regulation |
63 | |||
§10. FINANCIAL COVENANTS; COVENANTS REGARDING ELIGIBLE UNENCUMERED PROPERTIES |
63 | |||
§10.1. Consolidated Total Leverage Ratio |
63 | |||
§10.2. Consolidated Debt Yield |
63 | |||
§10.3. Fixed Charge Coverage Ratio |
63 | |||
§10.4. Net Worth |
64 | |||
§10.5. Unencumbered Pool Leverage |
64 | |||
§10.6. Unencumbered Pool Debt Service Coverage Ratio |
64 | |||
§10.7. Occupancy |
64 | |||
§11. 950 F STREET INVESTMENT |
65 | |||
§12. CONDITIONS TO THE FIRST ADVANCE |
65 | |||
§12.1. Loan Documents |
65 | |||
§12.2. Certified Copies of Organization Documents |
66 | |||
§12.3. By-laws; Resolutions |
66 | |||
§12.4. Incumbency Certificate: Authorized Signers |
66 | |||
§12.5. Opinion of Counsel Concerning Organization and Loan Documents |
66 | |||
§12.6. Guarantees |
66 | |||
§12.7. Financial Analysis of Eligible Borrowing Base Properties; Diligence on Eligible Borrowing
Base Properties |
67 | |||
§12.8. Inspection of Eligible Borrowing Base Properties |
67 | |||
§12.9. Certifications from Government Officials; UCC-11 Reports |
67 | |||
§12.10. Proceedings and Documents |
67 | |||
§12.11. Fees |
67 | |||
§12.12. Closing Certificate |
67 | |||
§12.13. Other Matters |
68 | |||
§13. [RESERVED] |
68 | |||
§14. EVENTS OF DEFAULT; ACCELERATION; ETC. |
68 | |||
§14.1. Events of Default and Acceleration |
68 | |||
§14.3. Remedies |
72 |
-iii-
15. SECURITY INTEREST AND SET-OFF |
72 | |||
15.1. Security Interest |
72 | |||
15.2. Set-Off and Debit |
73 | |||
15.3. Right to Freeze |
74 | |||
15.4. Additional Rights |
74 | |||
§16. THE AGENT |
74 | |||
§16.1. Authorization |
74 | |||
§16.2. Employees and Agents |
74 | |||
§16.3. No Liability |
74 | |||
§16.4. No Representations |
75 | |||
§16.5. Payments |
75 | |||
§16.6. Holders of Notes |
76 | |||
§16.7. Indemnity |
76 | |||
§16.8. Agent as Lender |
77 | |||
§16.9. Notification of Defaults and Events of Default |
77 | |||
§16.10. Duties in Case of Enforcement |
77 | |||
§16.11. Successor Agent |
78 | |||
§16.12. Notices |
78 | |||
§17. EXPENSES |
78 | |||
§18. INDEMNIFICATION |
79 | |||
§19. SURVIVAL OF COVENANTS, ETC. |
80 | |||
§20. ASSIGNMENT; PARTICIPATIONS; ETC. |
81 | |||
§20.1. Conditions to Assignment by Lenders |
81 | |||
§20.2. Certain Representations and Warranties; Limitations; Covenants |
81 | |||
§20.3. Register |
82 | |||
§20.4. New Notes |
82 | |||
§20.5. Participations |
83 | |||
§20.6. Pledge by Lender |
83 | |||
§20.7. No Assignment by Borrower |
83 | |||
§20.8. Disclosure |
83 | |||
§20.9. Syndication |
83 | |||
§21. NOTICES, ETC. |
84 | |||
§22. FPLP AS AGENT FOR THE SUBSIDIARY GUARANTORS |
86 | |||
§23. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE |
86 | |||
§24. HEADINGS |
87 | |||
§25. COUNTERPARTS |
87 | |||
§26. ENTIRE AGREEMENT, ETC. |
87 | |||
§27. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS |
87 | |||
§28. CONSENTS, AMENDMENTS, WAIVERS, ETC. |
88 | |||
§29. SEVERABILITY |
89 | |||
§30. INTEREST RATE LIMITATION |
90 | |||
§31. USA PATRIOT ACT NOTIFICATION |
90 |
-iv-
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Schedule 1
|
Subsidiary Guarantors | |
Schedule 1A
|
Borrowing Base Pool | |
Schedule 2
|
Lenders Commitments | |
Schedule 3
|
950 F Street Investment | |
Schedule 7.1(b)
|
Capitalization | |
Schedule 7.3(a)
|
Liens to be Discharged | |
Schedule 7.3(c)
|
Partially-Owned Entities | |
Schedule 7.7
|
Litigation | |
Schedule 7.13
|
Legal Name; Jurisdiction | |
Schedule 7.15
|
Affiliate Transactions | |
Schedule 7.16
|
Employee Benefit Plans | |
Schedule 7.19
|
Subsidiaries | |
Schedule 9.1(g)
|
Contingent Liabilities | |
Schedule 9.6
|
Negative Pledge Agreements |
-vi
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(i) | the Borrower, any distribution of cash or other cash equivalent, directly or indirectly, to the partners or other equity holders of the Borrower; or any other distribution on or in respect of any Equity Interests of the Borrower; and |
(ii) | the Trust, the declaration or payment of any dividend on or in respect of any shares of any class of capital stock or other Equity Interests of the Trust, other than dividends payable solely in shares of common stock by the Trust; the purchase, redemption, or other retirement of any shares of any class of capital stock or other Equity Interests of the Trust, directly or indirectly through a Subsidiary of the Trust or otherwise; the return of capital by the Trust to its shareholders as such; or any other distribution on or in respect of any shares of any class of capital stock or other Equity Interests of the Trust. |
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KEYBANK NATIONAL ASSOCIATION, | ||||||
Individually and as Administrative Agent | ||||||
By: | /s/ John Scott | |||||
Title: Vice President |
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP | ||||||||
By: | First Potomac Realty Trust, | |||||||
its sole general partner | ||||||||
By: | /s/ Barry H. Bass | |||||||
and Executive Vice President |
$50,000,000 | Date: November 10, 2010 |
-1-
-2-
-3-
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP |
|||||
By: | First Potomac Realty Trust, | ||||
its sole general partner | |||||
By: | |||||
Barry H. Bass, Chief Financial Officer and | |||||
Executive Vice President |
1. | The Borrower hereby requests a Term Loan in the principal amount of $ . |
2. | The Type of Loan being requested in this Loan Request is: |
___ | Base Rate Loan | ||
___ | Libor Rate Loan |
3. | The Interest Period requested for the Loan requested in this Loan Request is: |
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP, for itself and as agent for each other Borrower |
||||
By: | First Potomac Realty Trust, | |||
its sole general partner | ||||
By: | ||||
Barry H. Bass, Chief Financial Officer and | ||||
Executive Vice President |
___ | Section 8.4(e) (accompanying financial statements) |
___ | Section 8.13(a) (in connection with addition of an Eligible Borrowing Base Property) |
___ | Section 9.1(i) (in connection with incurring unsecured Indebtedness) |
___ | Section 9.4(b) (in connection with Sales or Indebtedness Liens) |
___ | Section 14.1 (in connection with default cure) |
(a) | is a Permitted Property; |
(b) | is not the subject of a Disqualifying Environmental Event or Disqualifying Structural Event; |
(c) | is owned in fee simple by the Borrower or a Subsidiary Guarantor; |
(d) | is not subject to any Liens (other than Permitted Liens) or any material title, survey or similar defect; |
(e) | if owned by any Subsidiary Guarantor, the Equity Interests of such Subsidiary Guarantor are not subject to any Lien in favor of any Person other than Agent and Lenders and are not subject to any negative pledge in favor of any Person other than Agent and Lenders; and |
(f) | is not subject to any material default or event of default under any Property Level Loan Documents. |
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP, for itself and as agent for each Subsidiary Guarantor |
||||
By: | First Potomac Realty Trust, | |||
its sole general partner | ||||
By: | ||||
Barry Bass | ||||
Senior Vice President and Chief Financial Officer |
[INSERT ASSIGNOR] |
||||
By: | ||||
Title: |
[INSERT ASSIGNEE] |
||||
By: | ||||
Title: |
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP |
||||
By: | First Potomac Realty Trust, | |||
its sole general partner | ||||
By: | ||||
Barry Bass, Chief Financial Officer and | ||||
Executive Vice President |
KEYBANK NATIONAL ASSOCIATION, as Administrative Agent |
||||
By: | ||||
Name: | ||||
Title: |
1
2
[ADDITIONAL GUARANTOR] a Delaware limited liability company |
||||
By: | First Potomac Realty Investment Limited Partnership | |||
Its Sole Member | ||||
By: | First Potomac Realty Trust | |||
Its General Partner | ||||
By: | ||||
Name: | Barry H. Bass | |||
Title: | Executive Vice President and Chief Financial Officer |
Acknowledged and Agreed: FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP |
||||
By: | First Potomac Realty Trust, its | |||
sole general partner | ||||
By: | ||||
Barry H. Bass | ||||
Executive Vice President and Chief Financial Officer |
Acknowledged: KEYBANK NATIONAL ASSOCIATION, as Administrative Agent under the Loan Agreement |
||||
By: | ||||
Name: | ||||
Title: |
1. | FP Redland, LLC, a Delaware limited liability company |
2. | FP Redland GP, LLC, a Delaware limited liability company |
Ownership Entity | Building Name | Address | City | State | ||||
FP Redland
Technology Center, LP
|
Redlands II & III | 520 and 530 Gaither Road | Rockville | MD |
Commitment | ||||||||
Lender | Commitment | Percentage | ||||||
KeyBank National Association |
$ | 50,000,000 | 100.0 | % | ||||
127 Public Square Cleveland, OH 44114 |
||||||||
Total: |
$ | 50,000,000 | 100.0 | % | ||||
Restrictions | ||||||
Preferred Equity | or other | |||||
and any related | Agreements | |||||
Borrowers / Subsidiaries | Ownership Interest | documents | or Interests | |||
First Potomac
Realty Investment Limited Partnership |
First Potomac Realty Trust aggregate general partnership and limited partnership interests in excess of 95%; other limited partners listed on attached Exhibit A | None | None | |||
FP Redland, LLC
|
First Potomac Realty Investment Limited Partnership 100% limited liability company interest | None | None | |||
FP Redland GP, LLC
|
FP Redland, LLC 100% limited liability company interest | None | None | |||
FP Redland
Technology Center, LP |
FP Redland, LLC
90% limited
partnership
interest, 100%
preferred limited
partnership
interest Perseus Redland Investments LLC 10% limited partnership interest FP Redland GP, LLC general partnership interest; 0% economic interest |
Preferred limited partnership interests under that certain Amended and Restated Limited Partnership Agreement of FP Redland Technology Center, LP (the FP Redland Tech LP Agreement) | Article VIII of the FP Redland Tech LP Agreement | |||
USPF III Redland Associates LLC |
FP Redland Technology Center, LP 100% limited liability company interest | None | None |
1. | Indemnity Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated November 8, 2007, recorded in Libor 35080, folio 631; as assigned by Assignment recorded in Liber 38555, folio 73. |
2. | Assignment of Leases and Rents recorded at Liber 35080, folio 661. |
3. | Financing Statement recorded at Liber 35080, folio 677. |
4. | Eligible Borrowing Base Property is subject to Liens in favor of Corus Construction Venture, LLC: |
Eligible Borrowing | Filing | |||||||||||||||
Subsidiary | Base Property | Filing Date | File # | State | ||||||||||||
FP Redland Technology Center LP |
Redlands II & III | 11/20/2007 (amended on 6/1/2010) |
2007 4427950 (amended by 2010 1906290) |
DE | ||||||||||||
FP Redland Technology Center LP |
Redlands II & III | 2/11/2008 (amended on 6/1/2010) |
2008 0509693 (amended by 2010 1906324) |
DE |
5. | Eligible Borrowing Base Property is subject to Liens in favor of Capmark VII CRE Ltd.: |
Eligible Borrowing | Filing | |||||||||||||||
Subsidiary | Base Property | Filing Date | File # | State | ||||||||||||
FP Redland Technology Center LP |
Redlands II & III | 4/24/2007 (amended on 10/12/2007) |
2007 1538163 (amended by 2007 3846861) |
DE |
Taxpayer | ||||
Entity | Identification Number | |||
First Potomac Realty Investment Limited Partnership |
52-2057842 | |||
First Potomac Realty Trust |
37-1470730 | |||
FP Redland, LLC |
52-2057842 | |||
FP Redland GP, LLC |
52-2057842 | |||
FP Redland Technology Center LP |
20-8781872 | |||
USPF III Redland Associates LLC |
20-8845069 |
1. | I have reviewed this quarterly report on Form 10-Q of First Potomac Realty Trust; |
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 registrants 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 registrants 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 registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of trustees (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 registrants 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 registrants internal control over financial
reporting. |
Date: August 9, 2011
|
/s/ Douglas J. Donatelli
|
|||
Chairman of the Board and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of First Potomac Realty Trust; |
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 registrants 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 registrants 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 registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of trustees (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 registrants 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 registrants internal control over financial
reporting. |
Date: August 9, 2011
|
/s/ Barry H. Bass
|
|||
Executive Vice President, Chief Financial Officer |
Date: August 9, 2011
|
/s/ Douglas J. Donatelli
|
|||
Chairman of the Board and Chief Executive Officer |
Date: August 9, 2011
|
/s/ Barry H. Bass
|
|||
Executive Vice President, Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Assets: | Â | Â |
Allowance for doubtful accounts receivable | $ 3,184 | $ 3,246 |
Accrued straight line rents allowance for doubtful accounts | $ 325 | $ 849 |
Equity: | Â | Â |
Series A Preferred stock, par value | $ 25 | $ 25 |
Series A Preferred stock, shares authorized | 50,000 | 50,000 |
Series A Preferred stock, shares issued | 4,600 | 0 |
Series A Preferred stock, shares outstanding | 4,600 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000 | 150,000 |
Common stock, shares issued | 50,056 | 49,922 |
Common stock, shares outstanding | 50,056 | 49,922 |
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Document and Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Aug. 08, 2011
|
Jun. 30, 2010
|
|
Document and Entity Information [Abstract] | Â | Â | Â |
Entity Registrant Name | FIRST POTOMAC REALTY TRUST | Â | Â |
Entity Central Index Key | 0001254595 | Â | Â |
Document Type | 10-Q | Â | Â |
Document Period End Date | Jun. 30, 2011 | ||
Amendment Flag | false | Â | Â |
Document Fiscal Year Focus | 2011 | Â | Â |
Document Fiscal Period Focus | Q2 | Â | Â |
Current Fiscal Year End Date | --12-31 | Â | Â |
Entity Well-known Seasoned Issuer | Yes | Â | Â |
Entity Voluntary Filers | No | Â | Â |
Entity Current Reporting Status | Yes | Â | Â |
Entity Filer Category | Accelerated Filer | Â | Â |
Entity Public Float | Â | Â | $ 518,050,499 |
Entity Common Stock, Shares Outstanding | Â | 50,057,085 | Â |
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|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Debt [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt |
(7) Debt
The Company’s borrowings consisted of the following (amounts in thousands):
(a) Mortgage Loans
The following table provides a summary of the Company’s mortgage debt at June 30, 2011 and
December 31, 2010 (dollars in thousands):
On April 8, 2011, the Company acquired One Fair Oaks in Fairfax, Virginia. The acquisition
was funded by the assumption of a $52.4 million mortgage loan and available cash. The mortgage loan
has a fixed contractual interest rate of 6.31% and matures in June 2012.
(b) Unsecured Term Loan
On July 18, 2011, the Company entered into a three-tranche $175.0 million unsecured term loan.
The unsecured term loan’s three tranches have maturity dates staggered in one-year intervals.
Tranche A has an outstanding balance of $60.0
million at an interest rate of LIBOR plus 215 basis points and matures on July 18, 2016.
Tranche B has an outstanding balance of $60.0 million at an interest rate of LIBOR plus 225 basis
points and matures on July 18, 2017. Tranche C has an outstanding balance of $55.0 million at an
interest rate of LIBOR plus 230 basis points and matures on July 18, 2018. The term loan agreement
contains various restrictive covenants substantially similar to those contained in the Company’s
revolving credit facility, including with respect to liens, indebtedness, investments,
distributions, mergers and asset sales. In addition, the agreement requires that the Company
satisfy certain financial covenants that are also substantially similar to those contained in the
Company’s revolving credit facility. The agreement also includes customary events of default, the
occurrence of which, following any applicable cure period, would permit the lenders to, among other
things, declare the principal, accrued interest and other obligations of the Company under the
agreement to be immediately due and payable. The Company used the funds to pay down $117.0 million
of the outstanding balance on its unsecured revolving credit facility, to repay its $50.0 million
senior secured term loan and for other general corporate purposes.
(c) Unsecured Revolving Credit Facility
During the second quarter of 2011, the Company amended and restated its unsecured revolving
credit facility. Under the new agreement, the capacity on the Company’s unsecured revolving credit
facility was expanded from $225.0 million to $255.0 million and the maturity date was extended to
January 2014 with a one-year extension at the Company’s option, which it intends to exercise. The
interest rate on the unsecured revolving credit facility decreased from a range of LIBOR plus 275
to 375 basis points to a range of LIBOR plus 200 to 300 basis points, depending on the Company’s
overall leverage. At June 30, 2011, LIBOR was 0.19%. The Company’s ability to borrow under the
credit facility will be subject to its satisfaction of certain financial covenants and its ongoing
compliance with various restrictive covenants similar to those included in the prior credit
facility, including with respect to liens, indebtedness, investments, distributions, mergers and
asset sales. The credit facility includes customary events of default, the occurrence of which,
following any applicable cure period, would permit the lenders to, among other things, declare the
principal, accrued interest and other obligations of the Company under the credit facility to be
immediately due and payable.
During the second quarter of 2011, the Company borrowed $48.0 million on its unsecured
revolving credit facility to provide a subordinated loan to the owners of America’s Square and for
general corporate purposes. For the three and six months ended June 30, 2011, the Company’s
weighted average borrowings outstanding on its unsecured revolving credit facility was $151.1
million and $132.9 million, respectively, with a weighted average interest rate of 3.1% and 3.2%,
respectively, compared with $84.5 million and $117.9 million with a weighted average interest rate
of 3.6% and 3.8% for the three and six months ended June 30, 2010, respectively. At June 30, 2011,
outstanding borrowings under the unsecured revolving credit facility were $164.0 million. The
Company is required to pay an annual commitment fee of 0.25% based on the amount of unused capacity
under the unsecured revolving credit facility, which was $91.0 million at June 30, 2011.
(d) Debt Covenants
At June 30, 2011, the Company was in compliance with all of the financial and non-financial
covenants associated with its debt instruments with the exception of the mortgage loans explained
below.
Certain of the Company’s subsidiaries are borrowers on mortgage loans, the terms of which
prohibit certain direct or indirect transfers of ownership interests in the borrower subsidiary (a
“Prohibited Transfer”). Under the terms of the mortgage loan documents, a lender could assert that
a Prohibited Transfer includes the trading of the Company’s common shares on the NYSE, the issuance
of common shares by the Company, or the issuance of units of limited partnership interest in the
Operating Partnership. As of June 30, 2011, the Company believes that there were eight mortgage
loans with such Prohibited Transfer provisions, representing an aggregate principal amount
outstanding of approximately $77 million. Two of these mortgage loans were entered into prior to
the Company’s initial public offering (“IPO”) in 2003 and six were assumed subsequent to its IPO.
In July 2011, the Company repaid two mortgages totaling $19.7 million with Prohibited Transfer
provisions that were both assumed subsequent to its IPO. In each instance, the Company received the
consent of the mortgage lender to consummate its IPO (for the two pre-IPO loans) or to acquire the
property or the ownership interests of the borrower (for the post-IPO loans), including the
assumption by its subsidiary of the mortgage loan. Generally, the underlying mortgage documents,
previously applicable to a privately held owner, were not changed at the time of the IPO or the
later loan assumptions, although the Company believes that each of the lenders or servicers was
aware that the borrower’s ultimate parent was or would become a publicly traded company. Subsequent
to the IPO and the assumption of these additional mortgage loans, the Company has issued new common
shares and shares of the Company have been transferred on the New York Stock Exchange. Similarly,
the Operating Partnership has issued units of limited partnership interest. To date, no lender or
servicer has asserted that a Prohibited Transfer has occurred as a result of any such transfer of
shares or units of limited partnership interest. If a lender
were to be successful in any such action, the Company could be required to immediately repay
or refinance the amounts outstanding, or the lender may be able to foreclose on the property
securing the loan or take other adverse actions. In addition, in certain cases a Prohibited
Transfer could result in the loan becoming fully recourse to the Company or its Operating
Partnership. In addition, if a violation of a Prohibited Transfer provision were to occur that
would permit the Company’s mortgage lenders to accelerate the indebtedness owed to them, it could
result in an event of default under the Company’s Senior Unsecured Series A and Series B Notes, its
unsecured revolving credit facility, its senior secured term loan, its two Secured Term Loans and
its Exchangeable Senior Notes.
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Noncontrolling Interests in Partnerships
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6 Months Ended |
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Jun. 30, 2011
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|
Noncontrolling Interests in Partnerships [Abstract] | Â |
Noncontrolling Interests in Partnerships |
(12) Noncontrolling Interests in Partnerships
(a) Noncontrolling Interests in Operating Partnership
Noncontrolling interests relate to the interests in the Operating Partnership not owned by the
Company. Interests in the Operating Partnership are owned by limited partners who contributed
buildings and other assets to the Operating Partnership in exchange for Operating Partnership
units. Limited partners have the right to tender their units for redemption in exchange for, at the
Company’s option, common shares of the Company on a one-for-one basis or cash based on the fair
value of the Company’s common shares at the date of redemption. Unitholders receive a distribution
per unit equivalent to the dividend per common share.
Differences between amounts paid to redeem noncontrolling interests and their carrying values
are charged or credited to equity. As a result of the redemption feature of the Operating
Partnership units, the noncontrolling interests are recorded outside of permanent equity.
Noncontrolling interests are presented at the greater of their fair value or their cost basis,
which is comprised of their fair value at issuance, subsequently adjusted for the noncontrolling
interests’ share of net income, losses, distributions received, preferred dividends paid or
additional contributions. Based on the closing share price of the Company’s common stock at June
30, 2011, the cost to acquire, through cash purchase or issuance of the Company’s common shares,
all of the outstanding Operating Partnership units not owned by the Company would be approximately
$36.4 million, which exceeded the noncontrolling interests’ historical cost by $3.2 million.
At December 31, 2010, 958,473 Operating Partnership units, or 1.9%, were not owned by the
Company. During the six months ended June 30, 2011, the Company issued 1,418,715 Operating
Partnership units valued at $21.7 million to partially fund the acquisition of 840 First Street,
NE. There were also 1,300 Operating Partnership units redeemed for 1,300 common shares fair valued
at $19 thousand. As a result, 2,375,888 of the total outstanding Operating Partnership units, or
4.5%, were not owned by the Company at June 30, 2011. There were no Operating Partnership units
redeemed with available cash during the six months ended June 30, 2011.
(b) Noncontrolling Interests in Consolidated Partnerships
When the Company is deemed to have a controlling interest in a partially-owned entity, it will
consolidate all of the entity’s assets, liabilities and operating results within its consolidated
financial statements. The cash contributed to the consolidated entity by the third party, if any,
will be reflected in the permanent equity section of the Company’s consolidated balance sheets to
the extent they are not mandatorily redeemable. The amount will be recorded based on the third
party’s initial investment in the consolidated entity and will be adjusted to reflect the third
party’s share of earnings or losses in the consolidated entity and for any distributions received
or additional contributions made by the third party. The earnings or losses from the entity
attributable to the third party are recorded as a component of net loss (income) attributable to
noncontrolling interests.
On November 10, 2010, the Company acquired Redland Corporate Center II and III through a joint
venture with Perseus Realty, LLC (“Perseus”). As a result of the partnership structure, the Company
has a 97% economic interest in the joint venture and Perseus has the remaining 3% interest. As of
June 30, 2011, the Company recorded noncontrolling interests of $3.1 million, which reflects the
third party’s common equity interest in Redland Corporate Center II & III.
On January 25, 2011, the Company formed a joint venture with an affiliate of The Akridge
Company (“Akridge”) to acquire, for $39.6 million, a property located at 1200 17th Street, NW, in
Washington, DC, and to redevelop the property. The property currently consists of a land parcel
that contains an existing 85,000 square foot office building. The joint venture intends to demolish
the existing building and develop a new Class A office building expected to have approximately
170,000 square feet of gross leasable area. When the joint venture is fully capitalized, the
Company anticipates owning 95% of the joint venture (subject to adjustment depending on each
party’s capital contributions and subject to a promoted interest granted to Akridge after specified
returns are achieved by the Company). The Company’s total capital commitment to the joint venture
(including acquisition and development costs) is anticipated to be approximately $109 million, less
amounts funded through acquisition and construction financing. The acquisition of the property is
not expected to occur until late 2011 and is subject to various contingencies. Construction is
currently expected to commence in 2012 and is expected to be completed in late 2014. As of June
30, 2011, the Company recorded noncontrolling interests of $1.0 million, which reflects the third
party’s common equity interest in 1200 17th Street, NW.
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Earnings Per Share
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings Per Share [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
(3) Earnings Per Share
Basic earnings or loss per share (“EPS”) is calculated by dividing net income or loss
available to common shareholders by the weighted average common shares outstanding for the period.
Diluted EPS is computed after adjusting the basic EPS computation for the effect of dilutive common
equivalent shares outstanding during the period, which include stock options,
non-vested shares, preferred shares and Exchangeable Senior Notes. The Company applies the
two-class method for determining EPS as its outstanding unvested shares with non-forfeitable
dividend rights are considered participating securities. The Company’s excess of distributions over
earnings related to participating securities are shown as a reduction in total earnings
attributable to common shareholders in the Company’s computation of EPS.
The following table sets forth the computation of the Company’s basic and diluted earnings per
share (amounts in thousands, except per share amounts):
In accordance with accounting requirements regarding earnings per share, the Company did not
include the following potential common shares in its calculation of diluted earnings per share as
they would be anti-dilutive (amounts in thousands):
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Derivative Instruments and Comprehensive Income (Loss)
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Jun. 30, 2011
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Derivative Instruments and Comprehensive Income (Loss) [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Comprehensive Income (Loss) |
(9) Derivative Instruments and Comprehensive Income (Loss)
The Company is exposed to certain risks arising from business operations and economic factors.
The Company uses derivative financial instruments to manage exposures that arise from business
activities in which its future exposure to interest rate fluctuations is unknown. The objective in
the use of an interest rate derivative is to add stability to interest expenses and manage exposure
to interest rate changes. No hedging activity can completely insulate the Company from the risks
associated with changes in interest rates. Moreover, interest rate hedging could fail to protect
the Company or adversely affect it because, among other things:
The Company enters into interest rate swap agreements to hedge its exposure on its variable
rate debt against fluctuations in prevailing interest rates. The interest rate swap agreements fix
LIBOR to a specified interest rate, however, the swap agreements do not affect the contractual
spreads associated with each variable debt instrument’s applicable interest rate. The table below
summarizes the Company’s interest rate swap agreements as of June 30, 2011 (dollars in thousands):
The Company’s interest rate swap agreements are designated as effective cash flow hedges
and the Company records any unrealized gains associated with the change in fair value of the swap
agreements within equity and “Prepaid expenses and other assets” and any unrealized losses within
equity and “Accounts payable and other liabilities.” The Company records its proportionate share of
unrealized gains or losses on its cash flow hedges associated with its unconsolidated joint
ventures within equity and “Investment in affiliates.”
Total comprehensive income (loss) is summarized as follows (amounts in thousands):
During July 2011, the Company entered into four interest rate swap agreements that fixed
LIBOR on $120 million of its variable rate debt. The table below summarizes the Company’s four new
interest rate swap agreements, which were all effective on July 18, 2011 (dollars in thousands):
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Segment Information
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Segment Information [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
(14) Segment Information
The Company’s reportable segments consist of four distinct reporting and operational segments
within the greater Washington D.C, region in which it operates: Maryland, Washington, D.C.,
Northern Virginia and Southern Virginia. Prior to 2011, the Company had reported its properties
located in Washington, D.C. within its Northern Virginia reporting segment. However, due to the
Company’s growth within the Washington, D.C. region, it has altered its internal structure, which
includes changing the Company’s internal decision making process regarding its Washington, D.C.
properties. Therefore, the Company feels it is appropriate to separate the properties owned in
Washington, D.C. into its own reporting segment.
The Company evaluates the performance of its segments based on the operating results of the
properties located within each segment, which excludes large non-recurring gains and losses, gains
from sale of real estate assets, interest expense, general and administrative costs, acquisition
costs or any other indirect corporate expense to the segments. In addition, the segments do not
have significant non-cash items other than straight-line and deferred market rent amortization
reported in their operating results. There are no inter-segment sales or transfers recorded between
segments.
The results of operations for the Company’s four reportable segments are as follows (dollars
in thousands):
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Fair Value Measurements
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Jun. 30, 2011
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Fair Value Measurements [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
(10) Fair Value Measurements
The Company adopted accounting provisions that outline a valuation framework and create a fair
value hierarchy, which distinguishes between assumptions based on market data (observable inputs)
and a reporting entity’s own assumptions about market data (unobservable inputs). The new
disclosures increase the consistency and comparability of fair value measurements and the related
disclosures. Fair value is identified, under the standard, as the price that would be received to
sell an asset or paid to transfer a liability between willing third parties at the measurement date
(an exit price). In accordance with GAAP, certain assets and liabilities must be measured at fair
value, and the Company provides the necessary disclosures that are required for items measured at
fair value as outlined in the accounting requirements regarding fair value.
Financial assets and liabilities, as well as those non-financial assets and liabilities
requiring fair value measurement, are measured using inputs from three levels of the fair value
hierarchy.
The three levels are as follows:
Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Company has the ability to access at the measurement date. An active market is
defined as a market in which transactions for the assets or liabilities occur with sufficient
frequency and volume to provide pricing information on an ongoing basis.
Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets,
quoted prices for identical or similar assets or liabilities in markets that are not active
(markets with few transactions), inputs other than quoted prices that are observable for the asset
or liability (i.e., interest rates, yield curves, etc.), and inputs derived principally from or
corroborated by observable market data correlation or other means (market corroborated inputs).
Level 3 — Unobservable inputs, only used to the extent that observable inputs are not
available, reflect the Company’s assumptions about the pricing of an asset or liability.
In accordance with accounting provisions and the fair value hierarchy described above, the
following table shows the fair value of the Company’s consolidated assets and liabilities that are
measured on a non-recurring and recurring basis as of June 30, 2011 and December 31, 2010
(amounts in thousands):
There were no assets or liabilities measured on a non-recurring basis at June 30, 2011.
Interest Rate Derivatives
On January 18, 2011, the Company fixed LIBOR at 1.474% on $50.0 million of its variable rate
debt through an interest rate swap agreement that matures on January 15, 2014. The derivative is
fair valued based on prevailing market yield curve on the measurement date. Also, the Company
evaluates counter-party risk in calculating the fair value of the interest rate swap derivative
instrument. The Company’s interest rate swap derivative is an effective cash flow hedge and any
change in fair value is recorded in the Company’s equity section as “Accumulated Other
Comprehensive Loss.”
The Company uses a third party to assist with the valuation of its interest rate swap
agreements. The third party takes a daily “snapshot” of the market to obtain close of business
rates. The snapshot includes over 7,500 rates including LIBOR fixings, Eurodollar futures, swap
rates, exchange rates, treasuries, etc. This market data is obtained via direct feeds from
Bloomberg and Reuters and from Inter-Dealer Brokers. The selected rates are compared to their
historical values. Any rate that has changed by more than normal mean and related standard
deviation would be considered an outlier and flagged for further investigation. The rates are than
compiled through a valuation process that generates daily valuations, which are used to value the
Company’s interest rate swap agreements.
A summary of the Company’s interest rate derivatives liability is as follows (amounts in
thousands):
The Company recorded an unrealized loss of $0.4 million for the six months ended June 30, 2011
and a unrealized gain of $1.1 million for the six months ended June 30, 2010, related to its
derivative liability, which is included in “Accounts payable and other liabilities” in the
Company’s consolidated balance sheets.
Contingent Consideration
On March 25, 2011, the Company acquired 840 First Street, NE, in Washington, D.C. for an
aggregate purchase price of $90.0 million, with up to $10.0 million of additional consideration
payable upon the terms of a lease renewal by the building’s sole tenant or the re-tenanting of the
property. At acquisition, the Company was in active negotiations with the existing tenant to renew
its lease through August 2023. As a result, the Company recorded a contingent consideration
obligation of $9.4 million at acquisition. In July 2011, the building’s sole tenant renewed its
lease. Based on the probability of renewal and lease terms used in the original estimate of fair
value, the value of contingent consideration remained unchanged. The fair value of the contingent
consideration obligation was determined based on several probability weighted discounted cash flow
scenarios that projected stabilization being achieved at certain timeframes. The fair value was
based, in part, on significant inputs, which are not observable in the market, thus representing a
Level 3 measurement in accordance with the fair value hierarchy.
The Company has a contingent consideration obligation associated with the 2009 acquisition of
Ashburn Center. As part of the acquisition price of Ashburn Center, the Company entered into a fee
agreement with the seller under which the Company will be obligated to pay additional consideration
upon the property achieving stabilization per specified terms of the agreement. The Company
determines the fair value of the obligation through an income approach based on discounted cash
flows that project stabilization being achieved within a certain timeframe. The more significant
inputs associated with the fair value determination of the contingent consideration include
estimates of capitalization rates, discount rates and various assumptions regarding the property’s
operating performance and profitability.
The Company did not recognize any gain or loss associated with its contingent consideration
for the three and six months ended June 30, 2011. During the first quarter of 2010, the Company
fully leased the Ashburn Center, which resulted in an increase in its potential obligation, and
recorded a $0.7 million increase in its contingent consideration to reflect the increase in the
Company’s potential obligation with a corresponding entry to “Contingent Consideration Related to
Acquisition of Property” in its consolidated statements of operations. The Company has classified
its contingent consideration liabilities within “Accounts payable and other liabilities” and any
changes in its fair value subsequent to their acquisition date valuation are charged to earnings.
There was no significant change in the fair value of the contingent consideration during the
quarter ended June 30, 2010.
A summary of the Company’s consolidated contingent consideration obligations is as follows
(amounts in thousands):
Impairment of Real Estate Assets
The Company regularly reviews market conditions for possible impairment of a property’s
carrying value. When circumstances such as adverse market conditions, changes in management’s
intended holding period or potential sale to a third party indicate a possible impairment of a
property, an impairment analysis is performed.
For the three months ended June 30, 2011 and 2010, the Company did not record any impairment
on its real estate assets. During the first quarter of 2011 and 2010, the Company incurred
impairment charges of $2.7 million and $0.6 million, respectively, for properties that were
disposed of in the three months ended June 30, 2011 and 2010, respectively.
On December 29, 2010, the Company acquired 7458 Candlewood Road, which is located in the
Company’s Maryland reporting segment. Due to the bankruptcy of an acquired tenant, the Company
realized an impairment charge of $2.4 million to reflect the fair value of the intangible asset
associated with the tenant’s lease, which was determined to have no value. The non-recoverable
value of the intangible assets was based on, among other items, an analysis of current market
rates, the present value of future cash flows that were discounted using capitalization rates,
lease renewal probabilities, hypothetical leasing timeframes, historical leasing commissions,
expected value of tenant improvements and recently executed leases.
In September 2010, the Company adjusted its anticipated holding period for its Old Courthouse
Square property, which is located in the Company’s Maryland reporting segment. The Company entered
into a non-binding contract to sell the asset in October 2010. As a result, the Company realized a
$3.4 million impairment charge to reduce the property’s carrying value to reflect its fair value,
less any potential selling costs. The property was sold on February 18, 2011 for net proceeds of
$10.8 million. The Company determined the fair value of the property through an assessment of
market data in working with a real estate broker on the transaction and based on the execution of a
non-binding letter of intent. The fair value was further validated through an income approach based
on discounted cash flows that reflected a reduced holding period.
With the exception of its contingent consideration obligation, the Company did not re-measure
or complete any transactions involving non-financial assets or non-financial liabilities that are
measured on a recurring basis during the six months ended June 30, 2011. Also, no transfers into
and out of fair value measurements levels occurred during the six months ended June 30, 2011 or
2010.
Financial Instruments
The carrying amounts of cash equivalents, accounts and other receivables and accounts
payable, with the exception of any items listed above, approximate their fair values due to their
short-term maturities. The Company uses third parties with mezzanine lending expertise to value its
notes receivable based on comparable deals, market analysis and underlying asset operating results.
The Company calculates the fair value of its debt instruments by discounting future contractual
principal and interest payments using prevailing market rates for securities with similar terms and
characteristics at the balance sheet date. The carrying amount and estimated fair value of the
Company’s note receivables and debt instruments at June 30, 2011 and December 31, 2010 are as
follows (amounts in thousands):
|
Income Taxes
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6 Months Ended |
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Jun. 30, 2011
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|
Income Taxes [Abstract] | Â |
Income Taxes |
(8) Income Taxes
Beginning in the fourth quarter of 2010, the Company acquired properties located in Washington
D.C., which are subject to local franchise taxes. During the three and six months ended June 30,
2011, the Company recognized a benefit for income taxes of $0.1 million and $0.5 million,
respectively, related to franchise taxes levied by the city of Washington D.C. at an effective rate
of 9.975%. The Company acquired its first property in Washington, D.C. that was subject to
franchise tax in the fourth quarter of 2010 and was not subject to any franchise taxes during the
three and six months ended June 30, 2010.
The Company recognizes deferred tax assets only to the extent that it is more likely than not
that deferred tax assets will be realized based on consideration of available evidence, including
future reversals of existing taxable temporary differences, future projected taxable income and tax
planning strategies. The Company’s deferred tax assets and liabilities are primarily associated
with differences in the GAAP and tax basis of its real estate assets arising from acquisition
costs, intangible assets and deferred market rent assets and liabilities that are associated with
properties located in Washington D.C. and recorded in its consolidated balance sheets. As of June
30, 2011 and December 31, 2010, the Company recorded its deferred tax assets within “Prepaid
expenses and other assets” and recorded its deferred tax liabilities within “Accounts payable and
other liabilities” in the Company’s consolidated balance sheets.
The Company has not recorded a valuation allowance against its deferred tax assets as it
determined that is more likely than not that future operations will generate sufficient taxable
income to realize the deferred tax assets. The Company has not recognized any deferred tax assets
or liabilities as a result of uncertain tax positions and has no material net operating loss,
capital loss or alternative minimum tax carryovers. There was no (benefit) provision for income
taxes associated with the Company’s discontinued operations for any period presented.
As the Company believes it both qualifies as a REIT and will not be subject to federal income
tax, a reconciliation between the income tax provision calculated at the statutory federal income
tax rate and the actual income tax provision has not been provided.
|
Description of Business
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6 Months Ended |
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Jun. 30, 2011
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Description of Business [Abstract] | Â |
Description of Business |
(1) Description of Business
First Potomac Realty Trust (the “Company”) is a leader in the ownership, management,
development and redevelopment of office and industrial properties in the greater Washington, D.C.
region. The Company separates its properties into four distinct segments, which it refers to as the
Maryland, Washington, D.C., Northern Virginia and Southern Virginia reporting segments. The Company
strategically focuses on acquiring and redeveloping properties that it believes can benefit from
its intensive property management and seeks to reposition these properties to increase their
profitability and value. The Company’s portfolio contains a mix of single-tenant and multi-tenant
office and industrial properties as well as business parks. Office properties are single-story and
multi-story buildings that are used primarily for office use; business parks contain buildings with
office features combined with some industrial property space; and industrial properties generally
are used as warehouse, distribution or manufacturing facilities.
References in these unaudited condensed consolidated financial statements to “we,” “our” or
“First Potomac,” refer to the Company and its subsidiaries, on a consolidated basis, unless the
context indicates otherwise.
The Company conducts its business through First Potomac Realty Investment Limited Partnership,
the Company’s operating partnership (the “Operating Partnership”). The Company is the sole general
partner of, and, as of June 30, 2011, owned a 95.5% interest in, the Operating Partnership. The
remaining interests in the Operating Partnership, which are presented as noncontrolling interests
in the Operating Partnership in the accompanying unaudited condensed consolidated financial
statements, are limited partnership interests, some of which are owned by several of the Company’s
executive officers and trustees who contributed properties and other assets to the Company upon its
formation, and other unrelated parties.
At June 30, 2011, the Company wholly-owned or had a controlling interest in properties
totaling 13.7 million square feet and had a noncontrolling ownership interest in properties
totaling an additional 0.5 million square feet through four unconsolidated joint ventures. The
Company also owned land that can accommodate approximately 1.6 million square feet of additional
development. The Company derives substantially all of its revenue from leases of space within its
properties. As of June 30, 2011, the Company’s largest tenant was the U.S. Government, which along
with government contractors, accounted for over 20% of the Company’s total annualized rental
revenue. The U.S Government also accounted for approximately a third of the Company’s outstanding
accounts receivables at June 30, 2011. The majority of the accounts receivable related to the
government was due to the clarification of terms in a specific lease, which has been resolved, and
the Company expects to collect the outstanding balance on the specified lease in the third quarter.
The Company operates so as to qualify as a real estate investment trust (“REIT”) for federal income
tax purposes.
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Rental Property
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Jun. 30, 2011
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Rental Property [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rental Property |
(4) Rental Property
Rental property represents property, net of accumulated depreciation, and developable land
that are wholly owned or owned by an entity in which the Company has a controlling interest. All of
the Company’s rental properties are located within the greater Washington, D.C. region. Rental
property consists of the following (amounts in thousands):
(a) Development and Redevelopment Activity
The Company constructs office, business parks and/or industrial buildings on a build-to-suit
basis or with the intent to lease upon completion of construction. Also, the Company owns
developable land that can accommodate 1.6 million square feet of additional building space. Below
is a summary of the approximate building square footage that can be developed on the Company’s
developable land and the Company’s current development and redevelopment activity (amounts in
thousands):
The majority of the development and redevelopment costs incurred through the Company’s
ongoing projects have taken place at Three Flint Hill in the Company’s Northern Virginia region.
Three Flint Hill is a 174,000 square foot, eight-story Class A office building. The Company has
incurred approximately $9.9 million in redevelopment costs, which include architectural, and
engineering design fees and permit fees as well as demolition, glass, HVAC, electrical, plumbing,
and lobby finish work.
The Company anticipates the majority of the development and redevelopment efforts on these
projects will continue throughout 2011 and expected to be completed in 2012.
(b) Acquisitions
During the second quarter of 2011, the Company acquired the One Fair Oaks property, which is
included in its condensed consolidated financial statements from the date of acquisition (dollars
in thousands):
The fair values of the acquired assets and liabilities are as follows (amounts in
thousands):
The fair values for the assets and liabilities acquired in 2011 are preliminary as the Company
continues to finalize their acquisition date fair value determination.
The weighted average amortization period of the Company’s consolidated intangible assets,
which consist of in-place leases, acquired leasing commissions and above market leases, acquired in
the second quarter of 2011 is 5.5 years.
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Investment in Affiliates
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Jun. 30, 2011
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Investment in Affiliates [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Affiliates |
(5) Investment in Affiliates
The Company owns an interest in several properties for which it does not control the
activities that are most significant to the operations of the properties. As a result, the assets,
liabilities and operating results of these noncontrolled properties are not consolidated within the
Company’s consolidated financial statements. The Company’s investment in these properties is
recorded as “Investment in affiliates” in its consolidated balance sheets.
At January 1, 2010, the Company had a 25% noncontrolling interest in the two separate joint
ventures that owned RiversPark I and II. During the fourth quarter of 2010, the Company entered
into two separate joint ventures, in which it had a 50% noncontrolling interest, to own 1750 H
Street, NW and Aviation Business Park.
The net assets of the Company’s unconsolidated joint ventures consisted of the following
(amounts in thousands):
The following table summarizes the results of operations of the Company’s unconsolidated
joint ventures. The Company’s share of earnings or losses related to its unconsolidated joint
ventures is recorded in its consolidated statements of operations as “Equity in losses of
affiliates” (amounts in thousands):
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Share-Based Compensation
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Jun. 30, 2011
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Share-Based Compensation [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation |
(13) Share-Based Compensation
The Company measures the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. The expense associated with the share
based awards will be recognized over the period during which an employee is required to provide
services in exchange for the award — the requisite service period (usually the vesting period).
The fair value for all share-based payment transactions are recognized as a component of income
from continuing operations.
Option Exercises
The Company received approximately $46 thousand and $7 thousand from the exercise of stock
options during the three months ended June 30, 2011 and 2010, respectively, and $64 thousand and
$16 thousand for the six months ended June 30, 2011 and 2010, respectively. Shares issued as a
result of stock option exercises are funded through the issuance of new shares. The total intrinsic
value of options exercised during the three months ended June 30, 2011 and 2010 were $25 thousand
and $5 thousand, respectively, and $34 thousand and $9 thousand for the six months ended June 30,
2011 and 2010, respectively.
Non-vested share awards
On May 19, 2011, the Company issued a total of 20,310 restricted share awards to its
non-employee trustees, all of which will vest on the first anniversary of the award date. The
trustee shares were fair valued based on the share price of the underlying common shares on the
date of issuance.
The Company recognized compensation expense associated with its restricted share awards of
$0.6 million and $0.9 million for the three months ended June 30, 2011 and 2010, respectively, and
$1.2 million and $1.9 million for the six months ended June 30, 2011 and 2010, respectively.
Dividends on all restricted share awards are recorded as a reduction of equity. The Company applies
the two-class method for determining EPS as its outstanding unvested shares with non-forfeitable
dividend rights are considered participating securities. The Company’s excess of distributions over
earnings related to participating securities are shown as a reduction in net income available to
common shareholders in the Company’s computation of EPS.
A summary of the Company’s non-vested share awards as of June 30, 2011 is as follows:
A summary of non-vested share awards and activity for the period ended March 31, 2011 is
discussed in the Company’s first quarter 2011 Form 10-Q.
As of June 30, 2011, the Company had $4.7 million of unrecognized compensation cost related to
non-vested shares. The Company anticipates this cost will be recognized over a weighted-average
period of 3.3 years.
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Discontinued Operations
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Jun. 30, 2011
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Discontinued Operations [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations |
(6) Discontinued Operations
On May 27, 2011, the Company sold its Gateway West property for net proceeds of $4.8 million,
which equated to an approximate 4% capitalization rate. The property is a four-building, 111,481
square foot office park in Westminster, Maryland, which the Company acquired as part of a portfolio
acquisition in 2004. During the first quarter of 2011, the Company recorded a $2.7 million
impairment charge based on the difference between the contractual sales price less anticipated
selling costs and the carrying value of the property.
On June 22, 2011, the Company sold Aquia Commerce Center I & II, a two building, 64,488 square
foot property in Stafford, Virginia, for net proceeds of $11.3 million. The Company reported a gain
on the sale of $2.0 million.
The following table is a summary of property dispositions whose operating results, along with
Gateway West and Aquia Commerce Center I & II’s operating results, are reflected as discontinued
operations in the Company’s condensed consolidated statements of operations:
The Company has had, and will have, no continuing involvement with any of its disposed
properties subsequent to their disposal. The disposed properties were not subject to any income
taxes. The Company did not dispose of or enter into any binding agreements to sell any other
properties during the six months ended June 30, 2011 and 2010.
The following table summarizes the components of net income (loss) from discontinued
operations (amounts in thousands):
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Summary of Significant Accounting Policies
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Jun. 30, 2011
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Summary of Significant Accounting Policies [Abstract] | Â | |||||||||||||||
Summary of Significant Accounting Policies |
(2) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The unaudited condensed consolidated financial statements of the Company include the accounts
of the Company, the Operating Partnership, the subsidiaries of the Operating Partnership in which
it has a controlling interest and First Potomac Management LLC, a wholly-owned subsidiary that
manages the majority of the Company’s properties. All intercompany balances and transactions have
been eliminated in consolidation.
The Company has condensed or omitted certain information and footnote disclosures normally
included in financial statements presented in accordance with U.S. generally accepted accounting
principles (“GAAP”) in the accompanying unaudited condensed consolidated financial statements. The
Company believes the disclosures made are adequate to prevent the information presented from being
misleading. However, the unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto included in the Company’s
annual report on Form 10-K for the year ended December 31, 2010 and as updated from time to time in
other filings with the Securities and Exchange Commission.
In the Company’s opinion, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments, consisting of normal recurring adjustments and accruals
necessary to present fairly the Company’s financial position as of June 30, 2011, the results of
its operations for the three and six months ended June 30, 2011 and 2010 and its
cash flows for the six months ended June 30, 2011 and 2010. Interim results are not
necessarily indicative of full-year performance due, in part, to the timing of transactions and the
impact of acquisitions and dispositions throughout the year.
(b) Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP
requires management of the Company to make a number of estimates and assumptions relating to the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the period. Estimates include the amount of accounts receivable that may be
uncollectible; recoverability of notes receivable, future cash flows, discount and capitalization
rate assumptions used to fair value acquired properties and to test impairment of certain
long-lived assets and goodwill; market lease rates, lease-up periods, leasing and tenant
improvement costs used to fair value intangible assets acquired and probability weighted cash flow
analysis used to fair value contingent liabilities. Actual results could differ from those
estimates.
(c) Rental Property
Rental property is carried at initial cost less accumulated depreciation and, when
appropriate, impairment losses. Improvements and replacements are capitalized at cost when they
extend the useful life, increase capacity or improve the efficiency of the asset. Repairs and
maintenance are charged to expense when incurred. Depreciation and amortization are recorded on a
straight-line basis over the estimated useful lives of the assets. The estimated useful lives of
the Company’s assets, by class, are as follows:
The Company regularly reviews market conditions for possible impairment of a property’s
carrying value. When circumstances such as adverse market conditions, changes in management’s
intended holding period or potential sale to a third party indicate a possible impairment of the
fair value of a property, an impairment analysis is performed. The Company assesses potential
impairments based on an estimate of the future undiscounted cash flows (excluding interest charges)
expected to result from the property’s use and eventual disposition. This estimate is based on
projections of future revenues, expenses, capital improvement costs, expected holding periods and
capitalization rates. These cash flows consider factors such as expected market trends and leasing
prospects, as well as the effects of leasing demand, competition and other factors. If impairment
exists due to the inability to recover the carrying value of a real estate investment based on
forecasted undiscounted cash flows, an impairment loss is recorded to the extent that the carrying
value exceeds the estimated fair value of the property. The Company is required to make estimates
as to whether there are impairments in the carrying values of its investments in real estate.
Further, the Company will record an impairment loss if it expects to dispose of a property, in the
near term, at a price below carrying value. In such an event, the Company will record an impairment
loss based on the difference between a property’s carrying value and its projected sales price less
any estimated costs to sell.
The Company will classify a building as held-for-sale in the period in which it has made the
decision to dispose of the building, the Company’s Board of Trustees or a designated delegate has
approved the sale, a binding agreement to purchase the property has been signed under which the
buyer has committed a significant amount of nonrefundable cash and no significant financing
contingencies exist that could cause the transaction not to be completed in a timely manner. The
Company will classify any impairment loss, together with the building’s operating results, as
discontinued operations in its consolidated statements of operations for all periods presented and
classify the assets and related liabilities as held-for-sale in its consolidated balance sheets in
the period the sale criteria are met. Interest expense is reclassified to discontinued operations
only to the extent the held-for-sale property is secured by specific mortgage debt and the mortgage
debt will not be secured to another property owned by the Company after the disposition.
The Company recognizes the fair value, if sufficient information exists to reasonably estimate
the fair value, of any liability for conditional asset retirement obligations when incurred, which
is generally upon acquisition, construction, development or redevelopment and/or through the normal
operation of the asset.
The Company capitalizes interest costs incurred on qualifying expenditures for real estate
assets under development or redevelopment while being readied for their intended use in accordance
with accounting requirements regarding capitalization of interest. The Company will capitalize
interest when qualifying expenditures for the asset have been made, activities
necessary to get the asset ready for its intended use are in progress and interest costs are
being incurred. Capitalized interest also includes interest associated with expenditures incurred
to acquire developable land while development activities are in progress and the direct
compensation costs of the Company’s construction personnel who manage the development and
redevelopment projects, but only to the extent the employee’s time can be allocated to a project.
For the three and six months ended June 30, 2011, capitalized compensation costs were immaterial.
Capitalization of interest will end when the asset is substantially complete and ready for its
intended use, but no later than one year from completion of major construction activity, if the
property is not occupied. Capitalized interest is depreciated over the useful life of the
underlying assets, commencing when those assets are placed into service.
(d) Notes Receivable
The Company lends money to the owners of real estate properties, which are collateralized by a
direct or indirect interest in the real estate property. The Company records these investments as
“Notes receivable, net” in its consolidated balance sheets. The investments are recorded net of any
discount or issuance costs, which are amortized over the life of the respective note receivable
using the effective interest method. The Company records interest received from notes receivable
and amortization of any discount or issuance costs within “Interest and other income” in its
consolidated statements of operations.
In December 2010, the Company provided a $25.0 million subordinated loan to the owners of 950
F Street, NW, a 287,000 square-foot office building in Washington, D.C., which is secured by a
portion of the owners’ interest in the property. The loan has a fixed interest rate of 12.5% and
was initially recorded net of $0.3 million of issuance costs. The loan matures on April 1, 2017 and
is repayable in full on or after December 21, 2013. For the three and six months ended June 30,
2011, the Company recorded interest income associated with the loan of $0.8 million and $1.6
million, respectively.
In April 2011, the Company provided a $30.0 million subordinated loan to the owners of
America’s Square, a 461,000 square-foot office complex in Washington, D.C., which is secured by a
portion of the owners’ interest in the property. The loan has a fixed interest rate of 9.0% and was
initially recorded net of $0.1 million of issuance costs. The loan matures on May 1, 2016 and is
repayable in full on or after October 16, 2012, subject to yield maintenance. For the three and six
months ended June 30, 2011, the Company recorded interest income associated with the loan of $0.6
million.
The Company will establish a provision for anticipated credit losses associated with its notes
receivables and debt investments when it anticipates that it may be unable to collect any
contractually due amounts. This determination is based on upon such factors as delinquencies, loss
experience, collateral quality and current economic or borrower conditions. Estimated losses are
recorded as a charge to earnings to establish an allowance for credit losses that the Company
estimates to be adequate based on these factors. The Company has not recorded any losses
associated with its notes receivable during 2011 and 2010.
(e) Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
(f) Application of New Accounting Standards
In June 2011, new accounting guidance was issued regarding the presentation of other
comprehensive income that will eliminate the option of reporting other comprehensive income and its
components in the Company’s Statement of Equity. The amendment provides companies the option to
present components of net income and comprehensive income as either a single continuous statement
or as two separate but consecutive statements. The amendment does not change what items are
reported in other comprehensive income or the requirement to report reclassification of items from
other comprehensive income to net income. The required disclosures are effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December 15, 2011. Early
adoption is permitted. The Company does not believe the implementation of these disclosures will
have a material impact on its consolidated financial statements.
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Equity
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Equity [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity |
(11) Equity
On May 13, 2011, the Company paid a dividend of $0.20 per share to common shareholders of
record as of May 6, 2011 and paid a dividend of $0.484375 per share to preferred shareholders of
record as of May 6, 2011. On July 25, 2011, the Company declared a dividend of $0.20 per common
share, which is payable on August 12, 2011 to common shareholders of record as of August 5, 2011.
On July 25, 2011, the Company also declared a dividend of $0.484375 per share on its Series A
Preferred Shares, which is payable on August 15, 2011 to preferred shareholders of record as of
August 5, 2011. Dividends on all non-vested share awards are recorded as a reduction of
shareholders’ equity.
As a result of the redemption feature of the Operating Partnership units, the noncontrolling
interests are recorded outside of permanent equity. The Company’s allocation between noncontrolling
interests is as follows (amounts in thousands):
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Subsequent Events
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6 Months Ended |
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Jun. 30, 2011
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Subsequent Events [Abstract] | Â |
Subsequent Events |
(15) Subsequent Events
On July 19, 2011, the Company acquired Greenbrier Towers I & II in Chesapeake, Virginia for a
contractual price of $16.7 million. The property consists of two office buildings totaling 172,000
square feet and is 86% leased to over 40 tenants. The acquisition was funded with proceeds from the
sale of Aquia Commerce Center I & II and a draw on the Company’s line of credit.
On August 4, 2011, the Company formed a joint venture with Perseus Realty, LLC to acquire the
Greyhound Bus Terminal site at 1005 First Street, NE for $46.8 million, of which, $38.4 million was
paid at closing and the remaining $8.4 million will be paid in August 2013. The joint venture
intends on developing the 1.6 acre site that can accommodate development of up to approximately
712,000 square feet of office space. The site is currently occupied by the Greyhound Bus Terminal,
which will lease back the site under a ten-year lease agreement with a termination option after the
second lease year. Greyhound has already announced that it intends to relocate to nearby Union
Station. The Company estimates a 6.5% return from the lease-back while development is being planned. When the joint venture is fully capitalized, the
Company anticipates owning 97% of the joint venture.
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