10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2015.

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 1-31824

FIRST POTOMAC REALTY TRUST

(Exact name of registrant as specified in its charter)

MARYLAND	37-1470730
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7600 Wisconsin Avenue, 11th Floor, Bethesda, MD 20814

(Address of principal executive offices) (Zip Code)

(301) 986-9200

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  x    NO ¨

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

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller Reporting Company	¨

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

As of April 29, 2015, there were 58,726,808 common shares, par value $0.001 per share, outstanding.

FIRST POTOMAC REALTY TRUST

FORM 10-Q

INDEX

		Page
Part I:	Financial Information
Item 1.	Condensed Consolidated Financial Statements
	Consolidated balance sheets as of March 31, 2015 (unaudited) and December 31, 2014	4
	Consolidated statements of operations (unaudited) for the three months ended March 31, 2015 and 2014	5
	Consolidated statements of comprehensive loss (unaudited) for the three months ended March 31, 2015 and 2014	6
	Consolidated statements of cash flows (unaudited) for the three months ended March 31, 2015 and 2014	7
	Notes to condensed consolidated financial statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	54
Item 4.	Controls and Procedures	55
Part II:	Other Information
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
	Signatures	58

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SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

Certain factors that could cause actual results, performance or achievements to differ materially from the Company’s expectations include, among others, the following:

• changes in general or regional economic conditions;

• the Company’s ability to timely lease or re-lease space at current or anticipated rents;

• changes in interest rates;

• changes in operating costs;

• the Company’s ability to complete acquisitions and, if applicable, dispositions on acceptable terms;

• the Company’s ability to manage its current debt levels and repay or refinance its indebtedness upon maturity or other required payment dates;

• the Company’s ability to maintain financial covenant compliance under its debt agreements; the Company’s ability to maintain effective internal controls over financial reporting and disclosure controls and procedures;

• any impact of the informal inquiry initiated by the U.S. Securities and Exchange Commission (the “SEC”);

• the Company’s ability to obtain debt and/or financing on attractive terms, or at all; and

• other risks detailed under “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2014 and in the other documents the Company files with the SEC.

The risks set forth above are not exhaustive. Other sections of this report may include additional factors that could adversely affect the Company’s business and financial performance. Moreover, the Company operates in a very competitive and rapidly changing environment. Many of these factors are beyond the Company’s ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. We do not intend to, and expressly disclaim any duty to, update or revise the forward-looking statements in this discussion to reflect changes in underlying assumptions or factors, new information, future events, or otherwise, after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should not rely upon these forward-looking statements after the date of this report and should keep in mind that any forward-looking statement made in this discussion, or elsewhere, might not occur.

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FIRST POTOMAC REALTY TRUST

Consolidated Balance Sheets

(Amounts in thousands, except per share amounts)

	March 31, 2015			December 31, 2014
	(unaudited)
Assets:
Rental property, net	$	1,292,895		$	1,288,873
Assets held-for-sale	—			59,717
Cash and cash equivalents	14,686			13,323
Escrows and reserves	2,298			2,986
Accounts and other receivables, net of allowance for doubtful accounts of $1,386 and $1,207, respectively	10,290			10,587
Accrued straight-line rents, net of allowance for doubtful accounts of $133 and $104, respectively	36,761			34,226
Notes receivable, net	34,000			63,679
Investment in affiliates	47,658			47,482
Deferred costs, net	44,882			43,991
Prepaid expenses and other assets	8,049			7,712
Intangible assets, net	42,929			45,884
Total assets	$	1,534,448		$	1,618,460
Liabilities:
Mortgage and Construction loans	$	303,866		$	305,139
Unsecured term loan	300,000			300,000
Unsecured revolving credit facility	143,000			205,000
Liabilities held-for-sale	—			4,562
Accounts payable and other liabilities	37,107			41,113
Accrued interest	1,694			1,720
Rents received in advance	8,018			7,971
Tenant security deposits	6,136			5,891
Deferred market rent, net	2,667			2,827
Total liabilities	802,488			874,223
Noncontrolling interests in the Operating Partnership	32,198			33,332
Equity:
Preferred Shares, $0.001 par value, 50,000 shares authorized;
Series A Preferred Shares, $25 per share liquidation preference, 6,400 shares issued and outstanding	160,000			160,000
Common shares, $0.001 par value, 150,000 shares authorized; 58,727 and 58,815 shares issued and outstanding, respectively	59			59
Additional paid-in capital	914,447			913,282
Noncontrolling interests in a consolidated partnership	802			898
Accumulated other comprehensive loss	(4,298		)	(3,268		)
Dividends in excess of accumulated earnings	(371,248		)	(360,066		)
Total equity	699,762			710,905
Total liabilities, noncontrolling interests and equity	$	1,534,448		$	1,618,460

See accompanying notes to condensed consolidated financial statements.

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FIRST POTOMAC REALTY TRUST

Consolidated Statements of Operations

(unaudited)

(Amounts in thousands, except per share amounts)

	Three Months Ended   March 31,
	2015			2014
Revenues:
Rental	$	34,379		$	30,433
Tenant reimbursements and other	9,470			8,930
Total revenues	43,849			39,363
Operating expenses:
Property operating	13,113			12,038
Real estate taxes and insurance	5,042			4,132
General and administrative	5,526			5,196
Acquisition costs	—			68
Depreciation and amortization	16,335			14,310
Total operating expenses	40,016			35,744
Operating income	3,833			3,619
Other expenses (income)
Interest expense	6,908			5,737
Interest and other income	(3,828		)	(1,759		)
Equity in (earnings) losses of affiliates	(346		)	227
Total other expenses (income)	2,734			4,205
Income (loss) from continuing operations	1,099			(586		)
Discontinued operations:
Loss from operations	(975		)	(911		)
Loss on debt extinguishment	(489		)	—
Gain on sale of rental property	857			54
Loss from discontinued operations	(607		)	(857		)
Net income (loss)	492			(1,443		)
Less: Net loss attributable to noncontrolling interests	112			195
Net income (loss) attributable to First Potomac Realty Trust	604			(1,248		)
Less: Dividends on preferred shares	(3,100		)	(3,100		)
Net loss attributable to common shareholders	$	(2,496	)	$	(4,348	)
Basic and diluted earnings per common share:
Loss from continuing operations	$	(0.03	)	$	(0.07	)
Loss from discontinued operations	(0.01		)	(0.01		)
Net loss	$	(0.04	)	$	(0.08	)
Weighted average common shares outstanding:
Basic and diluted	58,225			58,097

See accompanying notes to condensed consolidated financial statements.

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FIRST POTOMAC REALTY TRUST

Consolidated Statements of Comprehensive Loss

(unaudited)

(Amounts in thousands)

	Three Months Ended   March 31,
	2015			2014
Net income (loss)	$	492		$	(1,443	)
Unrealized gain on derivative instruments	164			317
Unrealized loss on derivative instruments	(1,240		)	(142		)
Total comprehensive loss	(584		)	(1,268		)
Net loss attributable to noncontrolling interests	112			195
Net loss (gain) from derivative instruments attributable to noncontrolling interests	46			(7		)
Comprehensive loss attributable to First Potomac Realty Trust	$	(426	)	$	(1,080	)

See accompanying notes to condensed consolidated financial statements.

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FIRST POTOMAC REALTY TRUST Consolidated Statements of Cash Flows (Unaudited, amounts in thousands)
	Three Months Ended   March 31,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	492		$	(1,443	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Discontinued operations:
Gain on sale of rental property	(857		)	(54		)
Depreciation and amortization	1,222			1,249
Depreciation and amortization	16,603			14,572
Stock based compensation	700			823
Bad debt expense	302			111
Amortization of deferred market rent	30			(56		)
Amortization of financing costs and discounts	279			266
Equity in (earnings) losses of affiliates	(346		)	227
Distributions from investments in affiliates	171			106
Changes in assets and liabilities:
Escrows and reserves	688			4,010
Accounts and other receivables	(120		)	(2,623		)
Accrued straight-line rents	(1,737		)	(1,442		)
Prepaid expenses and other assets	(591		)	651
Tenant security deposits	(464		)	58
Accounts payable and accrued expenses	279			(2,189		)
Accrued interest	(26		)	(17		)
Rents received in advance	(291		)	(593		)
Deferred costs	(3,362		)	(2,210		)
Total adjustments	12,480			12,889
Net cash provided by operating activities	12,972			11,446
Cash flows from investing activities:
Investment in note receivable	—			(9,000		)
Purchase deposit on future acquisition	—			(2,000		)
Proceeds from sale of rental property	56,943			31,616
Principal payments from note receivable	29,720			52
Additions to rental property and furniture, fixtures and equipment	(15,881		)	(8,297		)
Additions to construction in progress	(3,361		)	(3,096		)
Net cash provided by investing activities	67,421			9,275
Cash flows from financing activities:
Financing costs	(8		)	(2		)
Issuance of debt	13,000			27,794
Repayments of debt	(79,648		)	(30,296		)
Dividends to common shareholders	(8,802		)	(8,789		)
Dividends to preferred shareholders	(3,100		)	(3,100		)
Contributions from consolidated joint venture partners	—			89
Distributions to consolidated joint venture partners	(96		)	—
Distributions to noncontrolling interests	(395		)	(394		)
Proceeds from stock option exercises	19			79
Net cash used in financing activities	(79,030		)	(14,619		)
Net increase in cash and cash equivalents	1,363			6,102
Cash and cash equivalents, beginning of period	13,323			8,740
Cash and cash equivalents, end of period	$	14,686		$	14,842

See accompanying notes to condensed consolidated financial statements.

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FIRST POTOMAC REALTY TRUST

Consolidated Statements of Cash Flows – Continued

(unaudited)

Supplemental disclosure of cash flow information for the three months ended March 31 is as follows (dollars in thousands):

	2015			2014
Cash paid for interest, net	$	6,553		$	5,373
Non-cash investing and financing activities:
Value of common shares retired to settle employee income tax obligations	437			383
Change in fair value of the outstanding common Operating Partnership units	(581		)	2,027
Issuance of common Operating Partnership units in connection with the acquisition of rental property	—			40
Changes in accruals:
Additions to rental property and furniture, fixtures and equipment	(3,083		)	371
Additions to development and redevelopment	514			(1,768		)

Cash paid for interest on indebtedness is net of capitalized interest of $0.4 million and $0.8 million for the three months ended March 31, 2015 and 2014, respectively.

Certain of our employees surrendered common shares owned by them valued at $0.4 million during both the three months ended March 31, 2015 and 2014, to satisfy their statutory minimum federal income tax obligations associated with the vesting of restricted common shares of beneficial interest.

Noncontrolling interests in First Potomac Realty Investment Limited Partnership, our operating partnership (the “Operating Partnership”) 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 or losses available to common shareholders, other comprehensive income or losses, distributions received or additional contributions. We account for issuances of common Operating Partnership units individually, which could result in some portion of our noncontrolling interests being carried at fair value with the remainder being carried at historical cost. At March 31, 2015 and 2014, we recorded adjustments of $4.2 million and $5.3 million, respectively, to present certain common Operating Partnership units at the greater of their carrying value or redemption value.

No common Operating Partnership units were issued during the first quarter of 2015. During the first quarter of 2014, we issued 3,125 common Operating Partnership units at a fair value of $40 thousand to the seller of 840 First Street, NE to satisfy our contingent consideration obligation related to the acquisition of the property.

During the three months ended March 31, 2015 and 2014, we accrued $8.2 million and $6.6 million, respectively, of capital expenditures related to rental property and furniture, fixtures and equipment in accounts payable. During the three months ended March 31, 2015 and 2014, we accrued $0.8 million and $1.9 million, respectively, of capital expenditures related to development and redevelopment in accounts payable.

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FIRST POTOMAC REALTY TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Description of Business

First Potomac Realty Trust (the “Company”) is a leader in the ownership, management, development and redevelopment of office and business park properties in the greater Washington, D.C. region. The Company strategically focuses on acquiring and redeveloping properties that it believes can benefit from its intensive property management, leasing expertise, market knowledge and established relationships, and seeks to reposition these properties to increase their profitability and value. The Company’s portfolio primarily contains a mix of single-tenant and multi-tenant office properties and business parks. Office properties are single-story and multi-story buildings that are primarily for office use; and business parks contain buildings with office features combined with some industrial property space. The Company separates its properties into four distinct reporting segments, which it refers to as the Washington, D.C., Maryland, Northern Virginia and Southern Virginia reporting segments.

References in these unaudited condensed consolidated financial statements to “we,” “our,” “us,” “the Company” or “First Potomac,” refer to the Company and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.

We conduct our business through First Potomac Realty Investment Limited Partnership, our operating partnership (the “Operating Partnership”). We are the sole general partner of, and, as of March 31, 2015, owned 100% of the preferred interest and 95.7% of the common interest in the Operating Partnership. The remaining common 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 two of our executive officers who contributed properties and other assets to us upon our formation, and the remainder of which are owned by other unrelated parties.

At March 31, 2015, we wholly owned or had a controlling interest in properties totaling 8.0 million square feet and had a noncontrolling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures. We also owned land that can support 1.3 million square feet of additional development. Our consolidated properties were 88.0% occupied by 500 tenants at March 31, 2015. We did not include square footage that was in development or redevelopment, which totaled 0.2 million square feet at March 31, 2015, in our occupancy calculation. We derive substantially all of our revenue from leases of space within our properties. As of March 31, 2015, our largest tenant was the U.S. Government, which accounted for 13.2% of our total annualized cash basis rent, and the U.S. Government combined with government contractors, accounted for 25.9% of our total annualized cash basis rent as of March 31, 2015. We operate so as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

(2) Summary of Significant Accounting Policies

(a) Principles of Consolidation

Our unaudited condensed consolidated financial statements include our accounts and the accounts of our Operating Partnership and the subsidiaries in which we or our Operating Partnership has a controlling interest, which includes First Potomac Management LLC, a wholly-owned subsidiary that manages the majority of our properties. All intercompany balances and transactions have been eliminated in consolidation.

We have condensed or omitted certain information and note 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. We believe 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 our annual report on Form 10-K for the year ended December 31, 2014 and as updated from time to time in other filings with the SEC.

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and accruals necessary to present fairly our financial position as of March 31, 2015 and the results of our operations, our comprehensive loss and our cash flows for the three months ended March 31, 2015 and 2014. 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 as well as the seasonality of certain operating expenses such as utilities expense and snow and ice removal costs.

9

(b) Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires our management team 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 unaudited condensed 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; derivative valuations; 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 initially recorded at fair value, if acquired in a business combination, or initial cost when constructed or acquired in an asset purchase. 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 our assets, by class, are as follows:

Buildings	39 years
Building improvements	5 to 20 years
Furniture, fixtures and equipment	5 to 15 years
Lease related intangible assets	The term of the related lease
Tenant improvements	Shorter of the useful life of the asset or the term of the related lease

We regularly review 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 carrying value of a property, an impairment analysis is performed. We assess 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 to maintain the operating capacity, 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. Further, we will record an impairment loss if we expect to dispose of a property, in the near term, at a price below carrying value. In such an event, we 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.

We will classify a building as held-for-sale in accordance with GAAP in the period in which we have made the decision to dispose of the building, our Board of Trustees or a designated delegate has approved the sale, there is a high likelihood a binding agreement to purchase the property will be signed under which the buyer will be required to commit 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. We will cease recording depreciation on a building once it has been classified as held-for-sale. In the second quarter of 2014, we prospectively adopted Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which impacts the presentation of operations and gains or losses from disposed properties and properties classified as held-for-sale. ASU 2014-08 states that a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations only if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations or financial results. The operations of all properties that were sold prior to the adoption of ASU 2014-08, two properties that were classified as held-for-sale in previously issued financial statements prior to our adoption of ASU 2014-08 (West Park and Patrick Center) and were subsequently sold, as well as the Richmond Portfolio (as defined below), are reflected within discontinued operations in our consolidated statements of operations for all periods presented.

If the building does not qualify as a discontinued operation under ASU 2014-08, we will classify the building's operating results, together with any impairment charges and any gains or losses on the sale of the building, in continuing operations for all

10

periods presented in our consolidated statements of operations. We will classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheet for the period the held-for-sale criteria were met.

If the building does qualify as a discontinued operation under ASU 2014-08, we will classify the building's operating results, together with any impairment charges and any gains or losses on the sale of the building, in discontinued operations in our consolidated statements of operations for all periods presented and classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheets for the periods presented. Interest expense is reclassified to discontinued operations only to the extent the disposed or held-for-sale property is secured by specific mortgage debt and the mortgage debt will not be assigned to another property owned by us after the disposition.

We recognize the fair value, if sufficient information exists to reasonably estimate the fair value, of any liability for conditional asset retirement obligations when assumed or incurred, which is generally upon acquisition, construction, development or redevelopment and/or through the normal operation of the asset.

We capitalize interest costs incurred on qualifying expenditures for real estate assets under development or redevelopment, which include our investments in assets owned through unconsolidated joint ventures that are under development or redevelopment, while being readied for their intended use in accordance with accounting requirements regarding capitalization of interest. We 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. We also capitalize direct compensation costs of our construction personnel who manage the development and redevelopment projects, but only to the extent the employee’s time can be allocated to a project. Any portion of construction management costs not directly attributable to a specific project are recognized as general and administrative expense in the period incurred. We do not capitalize any other general and administrative costs such as office supplies, office rent expense or an overhead allocation to our development or redevelopment projects. Capitalized compensation costs were immaterial for the three months ended March 31, 2015 and 2014. Capitalization of interest ends 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. We place redevelopment and development assets into service at this time and commence depreciation upon the substantial completion of tenant improvements and the recognition of revenue. Capitalized interest is depreciated over the useful life of the underlying assets, commencing when those assets are placed into service.

(d) Notes Receivable

We provide loans to the owners of real estate properties, which can be collateralized by interest in the real estate property. We record these loans as “Notes receivable, net” in our consolidated balance sheets. The loans 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. We record interest earned from notes receivable and amortization of any discount costs or issuance costs within “Interest and other income” in our consolidated statements of operations.

We will establish a provision for anticipated credit losses associated with our notes receivable when we anticipate that we may be unable to collect any contractually due amounts. This determination is based upon such factors as delinquencies, loss experience, collateral quality and current economic or borrower conditions. Our collectability of our notes receivable may be adversely impacted by the financial stability of the Washington, D.C. region and the ability of the underlying assets to keep current tenants or attract new tenants. Estimated losses are recorded as a charge to earnings to establish an allowance for credit losses that we estimate to be adequate based on these factors. Based on the review of the above criteria, we did not record an allowance for credit losses for our notes receivable during the three months ended March 31, 2015 and 2014.

(e) Application of New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance when it becomes effective on January 1, 2017. Early adoption is not permitted. ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method and are evaluating the impact that ASU 2014-09 will have on our consolidated financial statements or related disclosures.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”), which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial

11

statements are issued or are available to be issued. The guidance will become effective January 1, 2017. The adoption of ASU 2014-15 is not expected to have an impact on our consolidated financial statements or related disclosures.

In January 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ("ASU 2015-01"), which eliminates the concept of extraordinary items from GAAP and the requirement that an entity separately report extraordinary items in the income statement. ASU 2015-01 also requires that entities continue to evaluate whether items are unusual in nature or infrequent in occurrence for presentation and disclosure purposes. ASU 2015-01 applies to all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted and the guidance may be applied prospectively or retrospectively to all prior periods presented in the consolidated financial statements. The adoption of ASU 2015-01 is not expected to have a material impact on our consolidated financial statements or related disclosures.

In February 2015, the FASB issued Accounting Standards Update 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to the identification of variable interests (fees paid to a decision maker or service provider), the variable interest entity characteristics for a limited partnership or similar entity and the primary beneficiary determination. ASU 2015-02 is effective January 1, 2016. The adoption of ASU 2015-02 is not expected to have a material impact on our consolidated financial statements or related disclosures.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. ASU 2015-03 is effective for periods beginning after December 15, 2015 with early adoption permitted and will be applied on a retrospective basis. The guidance will be effective on January 1, 2016 and is not expected to have a material impact on our consolidated financial statements or related disclosures.

(f) Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation as a result of reclassifying the operating results of several properties as discontinued operations. For more information, see note 7, Dispositions.

(3) Earnings Per Common Share

Basic earnings or loss per common share (“EPS”) is calculated by dividing net income or loss attributable to common shareholders by the weighted average common shares outstanding for the periods presented. Diluted EPS is computed after adjusting the basic EPS computation for the effect of dilutive common equivalent shares outstanding during the periods presented, which include stock options, non-vested shares and preferred shares. We apply the two-class method for determining EPS as our outstanding unvested shares with non-forfeitable dividend rights are considered participating securities. Our excess of distributions over earnings related to participating securities is shown as a reduction in total earnings attributable to common shareholders in our computation of EPS.

The following table sets forth the computation of our basic and diluted earnings per common share (amounts in thousands, except per share amounts):

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	Three Months Ended March 31,
	2015			2014
Numerator for basic and diluted earnings per common share:
Income (loss) from continuing operations	$	1,099		$	(586	)
Loss from discontinued operations	(607		)	(857		)
Net income (loss)	492			(1,443		)
Less: Net loss from continuing operations attributable to noncontrolling interests	86			155
Less: Net loss from discontinued operations attributable to noncontrolling interests	26			40
Net income (loss) attributable to First Potomac Realty Trust	604			(1,248		)
Less: Dividends on preferred shares	(3,100		)	(3,100		)
Net loss attributable to common shareholders	(2,496		)	(4,348		)
Less: Allocation to participating securities	(73		)	(78		)
Net loss attributable to common shareholders	$	(2,569	)	$	(4,426	)
Denominator for basic and diluted earnings per common share:
Weighted average common shares outstanding - basic and diluted	58,225			58,097
Basic and diluted earnings per common share:
Loss from continuing operations	$	(0.03	)	$	(0.07	)
Loss from discontinued operations	(0.01		)	(0.01		)
Net loss	$	(0.04	)	$	(0.08	)

In accordance with GAAP regarding earnings per common share, we did not include the following potential weighted average common shares in our calculation of diluted earnings per common share as they are anti-dilutive for the periods presented (amounts in thousands):

	Three Months Ended   March 31,
	2015	2014
Stock option awards	1,083	1,206
Non-vested share awards	380	414
Series A Preferred Shares(1)	13,032	12,671
	14,495	14,291

⁽¹⁾  Our Series A Preferred Shares are only convertible into our common shares upon certain changes in control of our Company. The dilutive shares are calculated as the daily average of the face value of the Series A Preferred Shares divided by the outstanding common share price.

(4) Rental Property

Rental property represents buildings and related improvements, net of accumulated depreciation, and developable land that are wholly owned or owned by an entity in which we have a controlling interest. All of our rental properties are located within the greater Washington, D.C. region. Rental property consists of the following (dollars in thousands):

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	March 31, 2015			December 31, 2014(1)
Land and land improvements	$	325,228		$	325,214
Buildings and improvements	950,746			949,683
Construction in progress	73,444			69,181
Tenant improvements	170,443			159,867
Furniture, fixtures and equipment	402			427
	1,520,263			1,504,372
Less: accumulated depreciation	(227,368		)	(215,499		)
	$	1,292,895		$	1,288,873

⁽¹⁾ Excludes rental property totaling $57.7 million at December 31, 2014 related to the sale of the Richmond Portfolio (as defined in note 7, Dispositions), which was classified as held-for-sale at December 31, 2014 and was sold on March 19, 2015.

Development and Redevelopment Activity

We will place completed development and redevelopment assets in service upon the earlier of one year after major construction activity is deemed to be substantially complete or upon occupancy. We construct office buildings and/or business parks on a build-to-suit basis or with the intent to lease upon completion of construction. We own developable land that can accommodate 1.3 million square feet of additional building space, of which, 0.7 million is located in the Washington, D.C. reporting segment, 0.1 million in the Maryland reporting segment, 0.4 million in the Northern Virginia reporting segment and 0.1 million in the Southern Virginia reporting segment.

During the third quarter of 2014, we signed a lease for 167,000 square feet at a to-be-constructed building in our Northern Virginia reporting segment on vacant land that we have in our portfolio. We currently expect to complete construction of the new building in the fourth quarter of 2016. At March 31, 2015, our total investment in the development project was $10.2 million, which included the original cost basis of the applicable portion of the vacant land of $5.2 million. The majority of the costs incurred as of March 31, 2015 in excess of the original cost basis of the land relate to site preparation costs.

On August 4, 2011, we formed a joint venture, in which we have a 97% interest, with an affiliate of Perseus Realty, LLC to acquire Storey Park in our Washington, D.C. reporting segment. At the time, the site was leased to Greyhound Lines, Inc. (“Greyhound”), which subsequently relocated its operations. Greyhound’s lease expired on August 31, 2013, at which time the property was placed into development. The joint venture anticipates developing a mixed-use project on the 1.6 acre site, which can accommodate up to 712,000 square feet. At March 31, 2015, our total investment in the development project was $56.0 million, which included the original cost basis of the property of $43.3 million. The majority of the costs in excess of the original cost basis relate to capitalized architectural fees and site preparation costs. We are currently exploring our options related to this property; however, until a definitive plan for the property has been reached and we begin significant development activities, we cannot determine the total cost of the project or the anticipated completion date.

On December 28, 2010, we acquired 440 First Street, NW, a vacant eight-story office building in our Washington, D.C. reporting segment. In October 2013, we substantially completed the redevelopment of the 139,000 square foot property. At March 31, 2015, the property was 58.9% leased and 46.9% occupied. During the fourth quarter of 2014, all vacant space at the property was placed in service. At March 31, 2015, our total investment in the redevelopment project was $55.5 million, which included the original cost basis of the property of $23.6 million.

During the first quarter of 2015, we did not place in-service any completed development or redevelopment space. At March 31, 2015, we had no completed development or redevelopment space that have yet to be placed in service.

(5) Notes Receivable

Below is a summary of our notes receivable for our outstanding mezzanine loans (dollars in thousands):

	Balance at March 31, 2015
Property	Face Amount		Unamortized Origination Fees		Balance		Interest Rate
950 F Street, NW	$	34,000	$	—	$	34,000	9.75	%

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	Balance at December 31, 2014
Property	Face Amount		Unamortized Origination Fees			Balance		Interest Rate
950 F Street, NW	$	34,000	$	—		$	34,000	9.75	%
America’s Square	29,720		(41		)	29,679		9.0	%
	$	63,720	$	(41	)	$	63,679

On February 24, 2015, the owners of America’s Square, a 461,000 square foot office complex located in Washington, D.C., prepaid a mezzanine loan that had an outstanding balance of $29.7 million. We provided the owners of America’s Square a $30.0 million loan in April 2011, which was secured by a portion of the owner’s interest in the property. The loan had a fixed-interest rate of 9.0% and was scheduled to mature on May 1, 2016. We received a yield maintenance payment of $2.4 million with the repayment of the loan. The proceeds from the loan repayment, including the yield maintenance payment, were used to pay down a portion of the outstanding balance of our unsecured revolving credit facility.

In December 2010, we provided a $25.0 million mezzanine loan to the owners of 950 F Street, NW, a ten-story, 287,000 square-foot office/retail building located in Washington, D.C. that is secured by a portion of the owners’ interest in the property. The loan requires monthly interest-only payments with a constant interest rate over the life of the loan. On January 10, 2014, we amended the loan to increase the outstanding balance to $34.0 million and reduce the fixed interest rate from 12.5% to 9.75%. The amended mezzanine loan matures on April 1, 2017 and is repayable in full on or after December 21, 2015. The $9.0 million increase in the loan was provided by a draw under our unsecured revolving credit facility.

We recorded interest income related to our notes receivable of $1.2 million and $1.5 million for the three months ended March 31, 2015 and 2014, respectively, which is included within “Interest and other income” in our consolidated statements of operations.

We recorded income from the amortization of origination fees of $5 thousand and $11 thousand for the three months ended March 31, 2015 and 2014, respectively. During the first quarter of 2014, we wrote-off $0.1 million of unamortized fees related to the original 950 F Street, NW mezzanine loan. We recorded income from the yield maintenance payment of $2.4 million for the three months ended March 31, 2015. The yield maintenance payment and the amortization and write-off of unamortized fees are recorded within “Interest and other income” in our consolidated statements of operations.

(6) Investment in Affiliates

We own an interest in several joint ventures that own properties. We do not control the activities that are most significant to the joint ventures. As a result, the assets, the liabilities and the operating results of these noncontrolled joint ventures are not consolidated within our unaudited condensed consolidated financial statements. Our investments in these joint ventures are recorded as “Investment in affiliates” in our consolidated balance sheets. Our investment in affiliates consisted of the following (dollars in thousands):

	Reporting Segment	Ownership Interest		March 31, 2015		December 31, 2014
Prosperity Metro Plaza	Northern Virginia	51	%	$	24,846	$	24,651
1750 H Street, NW	Washington, D.C.	50	%	14,938		14,834
Aviation Business Park	Maryland	50	%	5,677		5,748
RiversPark I and II(1)	Maryland	25	%	2,197		2,249
				$	47,658	$	47,482

⁽¹⁾RiversPark I and RiversPark II are owned through two separate joint ventures.

On November 12, 2014, our 51% owned unconsolidated joint venture repaid a $48.3 million mortgage loan that encumbered Prosperity Metro Plaza, a two-building, 327,000 square-foot office building located in Merrifield, Virginia. Simultaneously with the repayment, the joint venture entered into a new $50.0 million mortgage loan that has a fixed-interest rate of 3.91%. The new loan requires interest only payments through December 2024, at which time the loan requires principal and interest payments through its maturity date. The loan has a maturity date of December 1, 2029 and is repayable in full without penalty on or after June 1, 2029.

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On September 26, 2014, our 25% owned unconsolidated joint venture amended a $28.0 million mortgage loan that encumbers Rivers Park I and II, a six-building, 308,000 square-foot business park located in Columbia, Maryland. The amended mortgage loan reduced the variable interest rate spread by 60 basis points and reduced the amount of outstanding principal recourse to us from 25% to 10%. The amended loan matures on September 26, 2017 and is repayable in full without penalty at any time during the term of the loan.

On July 10, 2014, our 50% owned unconsolidated joint venture repaid a $27.9 million mortgage loan that encumbered 1750 H Street, NW, a ten-story, 113,000 square-foot office building located in Washington, D.C. Simultaneously with the repayment, the joint venture entered into a new $32.0 million mortgage loan that has a fixed interest rate of 3.92%, a maturity date of August 1, 2024, and is repayable in full without penalty on or after August 1, 2021. The new loan requires monthly interest-only payments with a constant interest rate over the life of the loan.

The net assets of our unconsolidated joint ventures consisted of the following (dollars in thousands):

	March 31, 2015		December 31, 2014
Assets:
Rental property, net	$	193,201	$	193,533
Cash and cash equivalents	5,143		4,567
Other assets	16,514		16,748
Total assets	214,858		214,848
Liabilities:
Mortgage loans(1)	110,000		110,000
Other liabilities	6,729		7,256
Total liabilities	116,729		117,256
Net assets	$	98,129	$	97,592

⁽¹⁾  Of the total mortgage debt that encumbers our unconsolidated properties, $2.8 million is recourse to us. We believe the fair value of the potential liability to us under this guaranty is inconsequential as the likelihood of our need to perform under the debt agreement is remote.

Our share of earnings or losses related to our unconsolidated joint ventures is recorded in our consolidated statements of operations as “Equity in (earnings) losses of affiliates.”

The following table summarizes the results of operations of our unconsolidated joint ventures, which due to our varying ownership interests in the joint ventures and the varying operations of the joint ventures may or may not be reflective of the amounts recorded in our consolidated statements of operations (dollars in thousands):

	Three Months Ended   March 31,
	2015			2014
Total revenues	$	6,167		$	5,752
Total operating expenses	(2,156		)	(2,226		)
Net operating income	4,011			3,526
Depreciation and amortization	(2,249		)	(2,803		)
Interest expense, net	(973		)	(1,011		)
Net income (loss)	$	789		$	(288	)

We earn various fees from several of our joint ventures, which include management fees, leasing commissions and construction management fees. We recognize fees only to the extent of the third party ownership interest in our unconsolidated joint ventures. We recognized fees from our unconsolidated joint ventures of $0.1 million for both the three months ended March 31, 2015 and 2014, which are reflected within “Tenant reimbursements and other revenues” in our consolidated statements of operations.

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(7) Dispositions

During the second quarter of 2014, we prospectively adopted ASU 2014-08, which states that a component of an entity or a group of components of an entity is required to be reported in discontinued operations only if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. All other disposed properties will have their operating results reflected within continuing operations on our consolidated statements of operations for all periods presented.

(a) Disposed or Held-for-Sale Properties within Continuing Operations

The following table is a summary of completed property dispositions whose operating results are included in continuing operations in our consolidated statements of operations for the periods presented (dollars in thousands):

	Reporting Segment	Disposition Date	Property Type	Square Feet	Net Sale Proceeds
Owings Mills Business Park	Maryland	10/16/2014	Business Park	180,475	$	12,417
Corporate Campus at Ashburn Center	Northern Virginia	6/26/2014	Business Park	194,184	39,910

In accordance with ASU 2014-08, which we prospectively adopted during the second quarter of 2014, the operating results of Corporate Campus at Ashburn Center and Owings Mills Business Park are reflected in continuing operations in our consolidated statements of operations for the three months ended March 31, 2014. For the three months ended March 31, 2015, there were no operating results from disposed properties included in continuing operations. The following table summarizes the aggregate results of operations for the two properties that are included in continuing operations for the three months ended March 31, 2014 (dollars in thousands):

	2014
Revenues	$	1,465
Property operating expenses	(548		)
Depreciation and amortization	(366		)
Net income from continuing operations	$	551

(b) Discontinued Operations

On March 19, 2015, we sold our Richmond, Virginia portfolio, which included Chesterfield Business Center, Hanover Business Center, Park Central, Virginia Technology Center and a three-acre parcel of undeveloped land (the “Richmond Portfolio”) for net proceeds of $53.8 million. In the aggregate, the Richmond Portfolio was comprised of 19 buildings totaling 828,000 square feet. Net proceeds from the sale reflected the prepayment of $3.7 million of mortgage and other indebtedness secured by the properties, including $0.5 million of associated prepayment penalties. The majority of the remaining net proceeds from the sale were used to repay $48.0 million of the outstanding balance under our unsecured revolving credit facility. We recorded a gain on the sale of the portfolio of $0.9 million in the first quarter of 2015. During the first quarter of 2015, we accelerated the amortization of deferred rent abatements and straight-line rents, totaling $0.9 million, and leasing commissions, totaling $1.1 million, which were on the balance sheet of the Richmond Portfolio. The accelerated amortization resulted in an additional $2.0 million of expense during the first quarter of 2015.

As a result of this sale, we no longer own any properties in the Richmond, Virginia area and have made a strategic shift away from that market. In accordance with ASU 2014-08, the operating results (including the accelerated amortization of deferred rent abatements, straight-line rents and leasing commissions), the loss on debt extinguishment and the gain on sale of the Richmond Portfolio were reflected within discontinued operations for each of the periods presented. In addition to the Richmond Portfolio, all properties sold prior to our adoption of ASU 2014-08 or classified as held-for-sale in previously issued consolidated financial statements prior to our adoption of ASU 2014-08, are classified within discontinued operations.

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The following table is a summary of completed property dispositions whose operating results are reflected as discontinued operations in our consolidated statements of operations for the periods presented (dollars in thousands):

	Reporting Segment	Disposition Date	Property Type	Square Feet	Net Sale Proceeds
Richmond Portfolio	Southern Virginia	3/19/2015	Business Park	827,900	$	53,768
Patrick Center	Maryland	4/16/2014	Office	66,269	10,888
West Park	Maryland	4/2/2014	Office	28,333	2,871
Girard Business Center and Gateway Center	Maryland	1/29/2014	Business Park and  Office	341,973	31,616

We have had, and will have, no continuing involvement with any of our disposed properties subsequent to their disposal. The operations of the disposed properties were not subject to any income based taxes. We did not dispose of or enter into any binding agreements to sell any other properties during the three months ended March 31, 2015 and 2014.

The following table summarizes the results of operations of properties included in discontinued operations (dollars in thousands):

	Three Months Ended   March 31,
	2015			2014
Revenues	$	877		$	1,808
Loss from operations, before taxes(1)	(975		)	(911		)
Loss on debt extinguishment	(489		)	—
Gain on sale of rental property	857			54

⁽¹⁾  For the three months ended March 31, 2015, we accelerated $2.0 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of the Richmond Portfolio in March 2015. For the three months ended March 31, 2014, we accelerated $1.5 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of both Girard Business Center and Gateway Center in January 2014.

(8) Debt

Our borrowings consisted of the following (dollars in thousands):

	March 31,   2015		December 31, 2014(1)
Mortgage loans, effective interest rates ranging from 4.40% to 6.01%, maturing at various dates through June 2023(2)	$	303,866	$	308,637
Unsecured term loan, effective interest rates ranging from LIBOR plus 1.65% to LIBOR plus 2.05%, with staggered maturity dates ranging from October 2018 to October 2020(2)	300,000		300,000
Unsecured revolving credit facility, effective interest rate of LIBOR plus 1.70%, maturing October 2017(2)	143,000		205,000
	$	746,866	$	813,637

⁽¹⁾  Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014.

⁽²⁾  At March 31, 2015, LIBOR was 0.18%. All references to LIBOR in the condensed consolidated financial statements refer to one-month LIBOR.

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(a) Mortgage Loans

The following table provides a summary of our mortgage debt at March 31, 2015 and December 31, 2014 (dollars in thousands):

Encumbered Property	Contractual Interest Rate	Effective Interest Rate			Maturity Date	March 31,   2015			December 31, 2014
Jackson National Life Loan(1)	5.19%	5.19	%		August 2015	$	64,640		$	64,943
440 First Street, NW(2)	LIBOR + 2.50%	LIBOR + 2.50%			May 2016	32,216			32,216
Storey Park(2)	LIBOR + 2.50%	LIBOR + 2.50%			October 2016	22,000			22,000
Gateway Centre Manassas Building I	7.35%	5.88	%		November 2016	378			432
Hillside I and II	5.75%	4.62	%		December 2016	12,846			12,949
Redland Corporate Center Buildings II & III	4.20%	4.64	%		November 2017	65,503			65,816
840 First Street, NE	5.72%	6.01	%		July 2020	36,379			36,539
Battlefield Corporate Center	4.26%	4.40	%		November 2020	3,651			3,692
1211 Connecticut Avenue, NW	4.22%	4.47	%		July 2022	29,548			29,691
1401 K Street, NW	4.80%	4.93	%		June 2023	36,705			36,861
		4.75	%	(3)		303,866			305,139
Unamortized fair value adjustments						(320		)	(370		)
Principal balance						303,546			304,769
Richmond Portfolio(4)
Hanover Business Center Building D	8.88%	6.63	%		August 2015	—			104
Chesterfield Business Center Buildings C,D,G and H	8.50%	6.63	%		September 2015	—			302
Hanover Business Center Building C	7.88%	6.63	%		December 2017	—			505
Chesterfield Business Center Buildings A,B,E and F	7.45%	6.63	%		June 2021	—			1,674
Airpark Business Center	7.45%	6.63	%		June 2021	—			913
						—			3,498
Total unamortized fair value adjustments - Richmond						—			(73		)
Total principal balance - Richmond						$	—		$	3,425
Total principal balance						$	303,546		$	308,194

⁽¹⁾  At March 31, 2015, the loan was secured by the following properties: Plaza 500, Van Buren Office Park, Rumsey Center, Snowden Center, Greenbrier Technology Center II and Norfolk Business Center. The terms of the loan allow us to substitute collateral, as long as certain debt-service coverage and loan-to-value ratios are maintained, or to prepay a portion of the loan, with a prepayment penalty, subject to a debt-service yield.

⁽²⁾  At March 31, 2015, LIBOR was 0.18%.

⁽³⁾  Weighted average interest rate on total mortgage debt.

⁽⁴⁾  The mortgage loans and unamortized fair value adjustments that encumbered properties within the Richmond Portfolio were classified within “Liabilities held-for-sale” on our consolidated balance sheet at December 31, 2014. The loans were prepaid upon the sale of the Richmond Portfolio on March 19, 2015.

Land Loan

On October 16, 2014, our 97% owned consolidated joint venture that owns Storey Park repaid a $22.0 million loan that encumbered the Storey Park land and was subject to a 5.0% interest rate floor. Simultaneously with the repayment, the joint venture entered into a new $22.0 million land loan with a variable interest rate of LIBOR plus 2.50%. The new loan matures on October 16, 2016, with a one-year extension at our option, and is repayable in full without penalty at any time during the term of the loan. Per

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the terms of the loan agreement, $6.0 million of the outstanding principal balance and all of the outstanding accrued interest is recourse to us. As of March 31, 2015, we were in compliance with all the financial covenants of the Storey Park land loan.

Construction Loan

On June 5, 2013, we entered into a construction loan (the “Construction Loan”) that is collateralized by our 440 First Street, NW property, which underwent a major redevelopment that was substantially completed in October 2013. The Construction Loan has a borrowing capacity of up to $43.5 million, of which we initially borrowed $21.7 million in 2013 and borrowed an additional $10.5 million in 2014. The Construction Loan has a variable interest rate of LIBOR plus a spread of 2.5% and matures in May 2016, with two one-year extension options at our discretion. We can repay all or a portion of the Construction Loan, without penalty, at any time during the term of the loan. At March 31, 2015, per the terms of the loan agreement, 50% of the outstanding principal balance and all of the outstanding accrued interest were recourse to us. The percentage of outstanding principal balance that is recourse to us can be reduced upon the property achieving certain operating thresholds. As of March 31, 2015, we were in compliance with all the financial covenants of the Construction Loan.

(b) Unsecured Term Loan

The table below shows the outstanding balances and the interest rates of the three tranches of the $300.0 million unsecured term loan at March 31, 2015 (dollars in thousands):

	Maturity Date	Amount		Interest Rate(1)
Tranche A	October 2018	$	100,000	LIBOR, plus 165 basis points
Tranche B	October 2019	100,000		LIBOR, plus 180 basis points
Tranche C	October 2020	100,000		LIBOR, plus 205 basis points
		$	300,000

⁽¹⁾  At March 31, 2015, LIBOR was 0.18%. The interest rate spread is subject to change based on our maximum total indebtedness ratio. For more information, see note 8(e) Debt – Financial Covenants.

The term loan agreement contains various restrictive covenants substantially identical to those contained in our unsecured revolving credit facility, including with respect to liens, indebtedness, investments, distributions, mergers and asset sales. In addition, the agreement requires that we satisfy certain financial covenants that are also substantially identical to those contained in our unsecured 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 our Company under the agreement to be immediately due and payable. As of March 31, 2015, we were in compliance with all the financial covenants of the unsecured term loan.

(c) Unsecured Revolving Credit Facility

During the first quarter of 2015, we borrowed $13.0 million under the unsecured revolving credit facility which was used for general corporate purposes. During the first quarter of 2015, we repaid $75.0 million of the outstanding balance under the unsecured revolving credit facility with our portion of the proceeds from the prepayment of the America’s Square mezzanine loan and the sale of the Richmond Portfolio. For the three months ended March 31, 2015, our weighted average borrowings under the unsecured revolving credit facility were $193.5 million, with a weighted average interest rate of 1.9%, compared with weighted average borrowings of $97.1 million, with a weighted average interest rate of 1.7%, for the three months ended March 31, 2014. Our maximum outstanding borrowings were $218.0 million and $112.0 million for the three months ended March 31, 2015 and 2014, respectively. At March 31, 2015, outstanding borrowings under the unsecured revolving credit facility were $143.0 million with a weighted average interest rate of 1.9%. At March 31, 2015, LIBOR was 0.18% and the applicable spread on our unsecured revolving credit facility was 170 basis points. The available capacity under the unsecured revolving credit facility was $138.2 million as of the date of this filing. We are required to pay an annual commitment fee of 0.25% based on the amount of unused capacity under the unsecured revolving credit facility. As of March 31, 2015, we were in compliance with all the financial covenants of the unsecured revolving credit facility. For more information, see note 8(e) Debt – Financial Covenants.

(d) Interest Rate Swap Agreements

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At March 31, 2015, we had eleven interest rate swap agreements outstanding that collectively fixed LIBOR, at a weighted average interest rate of 1.5%, on $300.0 million of our variable rate debt. See note 9, Derivative Instruments, for more information about our interest rate swap agreements.

(e) Financial Covenants

Our outstanding corporate debt agreements contain specific financial covenants that may impact future financing decisions made by us or may be impacted by a decline in operations. These covenants relate to our allowable leverage, minimum tangible net worth, fixed charge coverage and other financial metrics. As of March 31, 2015, we were in compliance with the covenants of our unsecured term loan and unsecured revolving credit facility and any such financial covenants of our mortgage debt (including the Construction Loan and the Storey Park land loan).

Our continued ability to borrow under the unsecured revolving credit facility is subject to compliance with financial and operating covenants, and a failure to comply with any of these covenants could result in a default under the credit facility. These debt agreements also contain cross-default provisions that would be triggered if we were in default under other loans, including mortgage loans, in excess of certain amounts. In the event of a default, the lenders could accelerate the timing of payments under the debt obligations and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition, results of operations and ability to make distributions to our shareholders.

Our unsecured revolving credit facility and unsecured term loan are subject to interest rate spreads that float based on the quarterly measurement of our maximum consolidated total indebtedness to gross asset value ratio. Based on our leverage ratio at March 31, 2015, the applicable interest rate spreads on the unsecured revolving credit facility and the unsecured term loan will be unchanged.

(9) Derivative Instruments

We are exposed to certain risks arising from business operations and economic factors. We use derivative financial instruments to manage exposures that arise from business activities in which our 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. We do not use derivatives for trading or speculative purposes and we intend to enter into derivative agreements only with counterparties that we believe have a strong credit rating to mitigate the risk of counterparty default or insolvency. No hedging activity can completely insulate us from the risks associated with changes in interest rates. Moreover, interest rate hedging could fail to protect us or adversely affect us because, among other things:

• available interest rate hedging may not correspond directly with the interest rate risk for which we seek 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 our ability to sell or assign its side of the hedging transaction.

We enter into interest rate swap agreements to hedge our exposure on our 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.

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At March 31, 2015, we had eleven interest rate swap agreements outstanding that collectively fixed LIBOR, at a weighted average interest rate of 1.5%, on $300.0 million of our variable rate debt. Our interest rate swap agreements are summarized below (dollars in thousands):

Maturity Date	Notional Amount		Interest Rate Contractual Component	Fixed LIBOR Interest Rate
July 2016	$	35,000	LIBOR	1.754	%
July 2016	25,000		LIBOR	1.763	%
July 2017	30,000		LIBOR	2.093	%
July 2017	30,000		LIBOR	2.093	%
July 2017	25,000		LIBOR	1.129	%
July 2017	12,500		LIBOR	1.129	%
July 2017	50,000		LIBOR	0.955	%
July 2018	12,500		LIBOR	1.383	%
July 2018	30,000		LIBOR	1.660	%
July 2018	25,000		LIBOR	1.394	%
July 2018	25,000		LIBOR	1.135	%
Total/Weighted Average	$	300,000		1.505	%

Our interest rate swap agreements are designated as cash flow hedges and we record the effective portion of any unrealized gains associated with the change in fair value of the swap agreements within “Accumulated other comprehensive loss” and “Prepaid expenses and other assets” and the effective portion of any unrealized losses within “Accumulated other comprehensive loss” and “Accounts payable and other liabilities” on our consolidated balance sheets. We record our proportionate share of any unrealized gains or losses on our cash flow hedges associated with our unconsolidated joint ventures within “Accumulated other comprehensive loss” and “Investment in affiliates” on our consolidated balance sheets. We record any gains or losses incurred as a result of each interest rate swap agreement’s fixed rate deviating from our respective loan’s contractual rate within “Interest expense” in our consolidated statements of operations. We did not have any material ineffectiveness associated with our cash flow hedges during the three months ended March 31, 2015 and 2014.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to “Interest expense” on our consolidated statements of operations as interest payments are made on our variable-rate debt. We reclassified accumulated other comprehensive loss as an increase to interest expense of $1.0 million for both the three months ended March 31, 2015 and 2014. As of March 31, 2015, we estimated that $4.3 million of our accumulated other comprehensive loss will be reclassified as an increase to interest expense over the following twelve months.

(10) Fair Value Measurements

Our application of GAAP outlines a valuation framework and creates 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 required 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 we provide 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 we have 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.

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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 our 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 our consolidated assets and liabilities that are measured on a non-recurring and recurring basis as of March 31, 2015 and December 31, 2014 (dollars in thousands):

	Balance at    March 31, 2015		Level 1		Level 2		Level 3
Recurring Measurements:
Derivative instrument-swap liabilities	$	4,518	$	—	$	4,518	$	—
	Balance at    December 31, 2014		Level 1		Level 2		Level 3
Recurring Measurements:
Derivative instrument-swap assets	$	133	$	—	$	133	$	—
Derivative instrument-swap liabilities	3,569		—		3,569		—

We did not re-measure or complete any transactions involving non-financial assets or non-financial liabilities that are measured at fair value on a recurring basis during the three months ended March 31, 2015 and 2014. Also, no transfers into or out of fair value measurement levels for assets or liabilities that are measured on a recurring basis occurred during the three months ended March 31, 2015 and 2014.

Interest Rate Derivatives

At March 31, 2015, we had hedged $300.0 million of our variable rate debt through eleven interest rate swap agreements. See note 9, Derivative Instruments, for more information about our interest rate swap agreements.

The interest rate derivatives are fair valued based on prevailing market yield curves on the measurement date and also incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting any applicable credit enhancements, such as collateral postings, thresholds, mutual inputs and guarantees. We use a third party to assist in valuing our interest rate swap agreements. A daily “snapshot” of the market is taken 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 then compiled through a valuation process that generates daily valuations, which are used to value our interest rate swap agreements. Our interest rate swap derivatives are effective cash flow hedges and the effective portion of the change in fair value is recorded in the equity section of our consolidated balance sheets as “Accumulated other comprehensive loss.”

Financial Instruments

The carrying amounts of cash equivalents, accounts and other receivables, accounts payable and other liabilities, with the exception of any items listed above, approximate their fair values due to their short-term maturities. We determine the fair value of our notes receivable and 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. We deem the fair value measurement of our debt instruments as a Level 2 measurement as we use quoted interest rates for similar debt instruments to value our debt instruments. We also use quoted market interest rates for similar notes to value our notes receivable, which we consider a Level 2 measurement as we do not believe notes receivable trade in an active market.

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The carrying amount and estimated fair value of our notes receivable and debt instruments are as follows (amounts in thousands):

	March 31, 2015				December 31, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Notes receivable(1)	$	34,000	$	34,000	$	63,679	$	63,720
Financial Liabilities:
Mortgage debt(2)	$	303,866	$	299,042	$	308,637	$	292,882
Unsecured term loan	300,000		300,000		300,000		300,000
Unsecured revolving credit facility	143,000		143,000		205,000		205,000
Total	$	746,866	$	742,042	$	813,637	$	797,882

⁽¹⁾  The principal amount of our notes receivable was $34.0 million and $63.7 million at March 31, 2015 and December 31, 2014, respectively.On February 24, 2015, the owners of America’s Square, a 461,000 square foot office complex located in Washington, D.C., prepaid a mezzanine loan, which had an outstanding $29.7 million balance of the $30.0 million mezzanine loan that we provided them in April 2011.

⁽²⁾  Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014.

(11) Equity

On January 27, 2015, we declared a dividend of $0.15 per common share, equating to an annualized dividend of $0.60 per common share. The dividend was paid on February 17, 2015 to common shareholders of record as of February 10, 2015. We also declared a dividend of $0.484375 per share on our Series A Preferred Shares. The dividend was paid on February 17, 2015 to preferred shareholders of record as of February 10, 2015. Dividends on all non-vested share awards are recorded as a reduction of shareholders’ equity. For each dividend paid by us on our common and preferred shares, the Operating Partnership distributes an equivalent distribution on our common and preferred Operating Partnership units, respectively.

On April 28, 2015, we declared a dividend of $0.15 per common share, equating to an annualized dividend of $0.60 per common share. The dividend will be paid on May 15, 2015 to common shareholders of record as of May 8, 2015. We also declared a dividend of $0.484375 per share on our Series A Preferred Shares. The dividend will be paid on May 15, 2015 to preferred shareholders of record as of May 8, 2015.

Our unsecured revolving credit facility, unsecured term loan, the Construction Loan and the Storey Park land loan contain certain restrictions that include, among other things, requirements to maintain specified coverage ratios and other financial covenants, which may limit our ability to make distributions to our common and preferred shareholders. Further, distributions with respect to our common shares are subject to our ability to first satisfy our obligations to pay distributions to the holders of our Series A Preferred Shares.

As a result of the redemption feature of the Operating Partnership units, the noncontrolling interests associated with the Operating Partnership are recorded outside of permanent equity. Our equity and redeemable noncontrolling interests are as follows (dollars in thousands):

	First Potomac Realty Trust			Non-redeemable noncontrolling interests			Total Equity			Redeemable noncontrolling interests
Balance at December 31, 2014	$	710,007		$	898		$	710,905		$	33,332
Net income (loss)	604			—			604			(112		)
Changes in ownership, net	1,281			(96		)	1,185			(581		)
Distributions to owners	(11,902		)	—			(11,902		)	(395		)
Other comprehensive loss	(1,030		)	—			(1,030		)	(46		)
Balance at March 31, 2015	$	698,960		$	802		$	699,762		$	32,198

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	First Potomac Realty Trust			Non-redeemable noncontrolling interests		Total Equity			Redeemable noncontrolling interests
Balance at December 31, 2013	$	738,510		$	781	$	739,291		$	33,221
Net loss	(1,248		)	—		(1,248		)	(195		)
Changes in ownership, net	(1,502		)	89		(1,413		)	2,067
Distributions to owners	(11,889		)	—		(11,889		)	(393		)
Other comprehensive income	168			—		168			7
Balance at March 31, 2014	$	724,039		$	870	$	724,909		$	34,707

A summary of our accumulated other comprehensive loss is as follows (dollars in thousands):

	2015			2014
Beginning balance at January 1,	$	(3,268	)	$	(3,836	)
Net unrealized (loss) gain on derivative instruments	(1,076		)	175
Net loss (gain) attributable to noncontrolling interests	46			(7		)
Ending balance at March 31,	$	(4,298	)	$	(3,668	)

(12) Noncontrolling Interests

(a) Noncontrolling Interests in the Operating Partnership

Noncontrolling interests relate to the common interests in the Operating Partnership not owned by us. Interests in the Operating Partnership are owned by limited partners who contributed buildings and other assets to the Operating Partnership in exchange for common Operating Partnership units. Limited partners have the right to tender their units for redemption in exchange for, at our option, our common shares on a one-for-one basis or cash based on the fair value of our 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 or losses available to common shareholders, other comprehensive income or losses, distributions received or additional contributions. We account for issuances of common Operating Partnership units individually, which could result in some portion of our noncontrolling interests being carried at fair value with the remainder being carried at historical cost. Based on the closing price of our common shares at March 31, 2015, the cost to acquire, through cash purchase or issuance of our common shares, all of the outstanding common Operating Partnership units not owned by us would be approximately $31.3 million. At March 31, 2015 and December 31, 2014, we recorded adjustments of $4.2 million and $4.7 million, respectively, to present certain common Operating Partnership units at the greater of their carrying value or redemption value.

At March 31, 2015, 2,630,577 of the total common Operating Partnership units, or 4.3%, were not owned by us. There were no common Operating Partnership units redeemed for common shares or cash during the three months ended March 31, 2015. During the first quarter of 2014, we issued 3,125 common Operating Partnership units to the seller of 840 First Street, NE to satisfy a contingent consideration obligation.

(b) Noncontrolling Interests in a Consolidated Partnership

When we are deemed to have a controlling interest in a partially-owned entity, we will consolidate all of the entity’s assets, liabilities and operating results within our condensed consolidated financial statements. The net assets contributed to the consolidated entity by the third party, if any, will be reflected within permanent equity in our 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 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 attributable to noncontrolling interests” in our consolidated statements of operations.

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On August 4, 2011, we formed a joint venture, in which we have a 97% interest, with an affiliate of Perseus Realty, LLC to acquire Storey Park in our Washington, D.C. reporting segment. At the time, the site was leased to Greyhound, which subsequently relocated its operations. Greyhound’s lease expired on August 31, 2013, at which time the property was placed into development. The joint venture anticipates developing a mixed-use project on the 1.6 acre site, which can accommodate up to 712,000 square feet. At March 31, 2015, our total investment in the development project was $56.0 million, which included the original cost basis of the property of $43.3 million. The majority of the costs in excess of the original cost basis relate to capitalized architectural fees and site preparation costs. We are currently exploring our options related to this property; however, until a definitive plan for the property has been reached and we begin significant development activities, we cannot determine the total cost of the project or the anticipated completion date.

(13) Share-Based Payments

We record costs related to our share-based compensation based on the grant-date fair value calculated in accordance with GAAP. We recognize share-based compensation costs on a straight-line basis over the requisite service period for each award and these costs are recorded within “General and administrative expense” or “Property operating expense” in our consolidated statements of operations based on the employee’s job function.

Stock Options Summary

During the three months ended March 31, 2015, we issued 119,500 stock options to our non-officer employees. The stock options vest 25% on the first anniversary of the date of grant and 6.25% in each subsequent calendar quarter. The award described above has a 10-year contractual life. We recognized compensation expense associated with stock option awards of $118 thousand and $137 thousand during the three months ended March 31, 2015 and 2014, respectively.

A summary of our stock option activity during the three months ended March 31 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2014	1,051,359		$	15.33	6.3 years	$	181,352
Granted	119,500		12.48
Exercised	(2,000	)	9.30
Expired	(59,000	)	22.44
Forfeited	(49,771	)	14.48
Outstanding at March 31, 2015	1,060,088		$	14.67	6.8 years	$	107,523
Exercisable at March 31, 2015	516,839		$	15.52	5.8 years	$	87,260
Options expected to vest, subsequent to March 31, 2015	507,651		$	13.97	7.6 years	$	17,602

As of March 31, 2015, we had $1.4 million of unrecognized compensation cost, net of estimated forfeitures, related to stock option awards. We anticipate this cost will be recognized over a weighted-average period of approximately 4.0 years. We calculate the grant date fair value of option awards using a Black-Scholes option-pricing model. Expected volatility is based on an assessment of our realized volatility over the preceding period that is equivalent to the award’s expected life, which in our opinion, gives an accurate indication of future volatility. The expected term represents the period of time the options are anticipated to remain outstanding as well as our historical experience for groupings of employees that have similar behavior and are considered separately for valuation purposes. The risk-free rate is based on the U.S. Treasury rate at the time of grant for instruments of similar terms.

The weighted average assumptions used in the fair value determination of stock options granted to employees during the three months ended March 31, 2015 are summarized as follows:

Risk-free interest rate	1.61	%
Expected volatility	29.16	%
Expected dividend yield	4.79	%
Weighted average expected life of options	5 years

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The weighted average grant date fair value of the stock options issued during the three months ended March 31, 2015 was $1.96 per share.

Option Exercises

We received approximately $19 thousand and $79 thousand of proceeds from stock option exercises during the three months ended March 31, 2015 and 2014, respectively. Shares issued as a result of stock option exercises are provided by the issuance of new shares. The total intrinsic value of options exercised during the three months ended March 31, 2015 and 2014 was $5 thousand and $18 thousand, respectively.

Non-Vested Share Awards

We issue non-vested common share awards that either vest over a specific time period that is identified at the time of issuance or vest upon the achievement of specific performance goals that are identified at the time of issuance. We issue new common shares, subject to restrictions, upon each grant of non-vested common share awards. In February 2015, we granted a total of 121,380 non-vested common shares to our officers. The awards will vest ratably on the date of issuance over a three-year term.

We recognized $0.6 million and $0.7 million of compensation expense associated with our non-vested common share awards during the three months ended March 31, 2015 and 2014, respectively. Dividends on all non-vested common share awards are recorded as a reduction of equity. We apply the two-class method for determining EPS as our outstanding non-vested common shares with non-forfeitable dividend rights are considered participating securities. Our excess of dividends over earnings related to participating securities are shown as a reduction in net income or loss attributable to common shareholders in our computation of EPS.

A summary of our non-vested common share awards at March 31, 2015 is as follows:

	Non-vested Common Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2014	623,421		$	13.16
Granted	121,380		12.11
Vested	(106,300	)	13.97
Expired	(22,260	)	8.42
Forfeited	(154,626	)	13.42
Non-vested at March 31, 2015	461,615		$	12.83

We value our non-vested time-based share awards at the grant date fair value, which is the market price of our common shares. As of March 31, 2015, we had $4.0 million of unrecognized compensation cost related to non-vested common shares. We anticipate this cost will be recognized over a weighted-average period of 2.3 years.

(14) Segment Information

Our reportable segments consist of four distinct reporting and operational segments within the greater Washington, D.C. region in which we operate: Washington, D.C., Maryland, Northern Virginia and Southern Virginia. We evaluate the performance of our segments based on the operating results of the properties located within each segment, which excludes large non-recurring gains and losses, gains or losses from sale of rental property, 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 of our four reporting segments for the three months ended March 31, 2015 and 2014 are as follows (dollars in thousands):

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	Three Months Ended March 31, 2015
	Washington, D.C.			Maryland			Northern Virginia			Southern Virginia			Consolidated
Number of buildings(1)	6			38			49			19			112
Square feet(1)	916,686			1,999,300			3,021,299			2,024,003			7,961,288
Total revenues	$	11,032		$	11,705		$	14,114		$	6,998		$	43,849
Property operating expense	(3,139		)	(4,018		)	(4,064		)	(1,892		)	(13,113		)
Real estate taxes and insurance	(2,023		)	(891		)	(1,549		)	(579		)	(5,042		)
Total property operating income	$	5,870		$	6,796		$	8,501		$	4,527		25,694
Depreciation and amortization expense													(16,335		)
General and administrative													(5,526		)
Other expenses													(2,734		)
Loss from discontinued operations													(607		)
Net income													$	492
Total assets(2)(3)	$	503,651		$	358,772		$	444,596		$	167,979		$	1,534,448
Capital expenditures(4)	$	3,436		$	2,164		$	10,843		$	2,490		$	19,242
	Three Months Ended March 31, 2014
	Washington, D.C.			Maryland			Northern Virginia			Southern Virginia			Consolidated
Number of buildings(1)(5)	4			44			51			38			137
Square feet(1)(5)	522,560			2,274,813			3,086,550			2,851,465			8,735,388
Total revenues	$	6,940		$	11,645		$	13,666		$	7,112		$	39,363
Property operating expense	(1,987		)	(3,946		)	(3,976		)	(2,129		)	(12,038		)
Real estate taxes and insurance	(1,054		)	(1,004		)	(1,524		)	(550		)	(4,132		)
Total property operating income	$	3,899		$	6,695		$	8,166		$	4,433		23,193
Depreciation and amortization expense													(14,310		)
General and administrative													(5,196		)
Acquisition costs													(68		)
Other expenses													(4,205		)
Loss from discontinued operations													(857		)
Net loss													$	(1,443	)
Total assets(2)(3)	$	343,804		$	393,919		$	421,556		$	230,384		$	1,481,336
Capital expenditures(4)	$	6,481		$	2,390		$	822		$	1,423		$	11,393

⁽¹⁾  Excludes Storey Park from our Washington, D.C. reporting segment, which was placed in development in the third quarter of 2013.

⁽²⁾  Total assets include our investment in properties that are owned through joint ventures that are not consolidated within our condensed consolidated financial statements. For more information on our unconsolidated investments, including location within our reportable segments, see note 6, Investment in Affiliates.

⁽³⁾  Corporate assets not allocated to any of our reportable segments totaled $59,450 and $91,673 at March 31, 2015 and 2014, respectively.

⁽⁴⁾  Capital expenditures for corporate assets not allocated to any of our reportable segments totaled $309 and $277 for the three months ended March 31, 2015 and 2014, respectively.

⁽⁵⁾  Includes occupied space at 440 First Street, NW in our Washington, D.C. reporting segment, which was substantially completed in the third quarter of 2013. In October 2014, the property was placed in service.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The discussion and analysis is derived from the consolidated operating results and activities of First Potomac Realty Trust. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and included elsewhere in this Quarterly Report on Form 10-Q. See “Special Note About Forward-Looking Statements” above.

References in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” the “Company” or “First Potomac,” refer to First Potomac Realty Trust and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.

Overview

We are a leader in the ownership, management, development and redevelopment of office and business park properties in the greater Washington, D.C. region. We strategically focus on acquiring and redeveloping properties that we believe can benefit from our intensive property management, leasing expertise, market knowledge and established relationships, and seek to reposition these properties to increase their profitability and value. Our portfolio primarily contains a mix of single-tenant and multi-tenant office properties and business parks. Office properties are single-story and multi-story buildings that are primarily for office use; and business parks contain buildings with office features combined with some industrial property space. We separate our properties into four distinct reporting segments, which we refer to as the Washington, D.C., Maryland, Northern Virginia and Southern Virginia reporting segments.

We conduct our business through First Potomac Realty Investment Limited Partnership, our operating partnership (the “Operating Partnership”). We are the sole general partner of, and, as of March 31, 2015, owned 100% of the preferred interest and95.7% of the common interest in the Operating Partnership. The remaining common 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 two of our executive officers who contributed properties and other assets to us upon our formation, and the remainder of which are owned by other unrelated parties.

At March 31, 2015, we wholly owned or had a controlling interest in properties totaling 8.0 million square feet and had a noncontrolling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures. We also owned land that can support approximately 1.3 million square feet of additional development. Our consolidated properties were 88.0% occupied by 500 tenants at March 31, 2015. We did not include square footage that was in development or redevelopment, which totaled 0.2 million square feet at March 31, 2015, in our occupancy calculation. We derive substantially all of our revenue from leases of space within our properties. As of March 31, 2015, our largest tenant was the U.S. Government, which accounted for 13.2% of our total annualized cash basis rent, and the U.S. Government combined with government contractors, accounted for 25.9% of our total annualized cash basis rent as of March 31, 2015. We operate so as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

The primary source of our revenue is rent received from tenants under long-term (generally three to ten years) operating leases at our properties, including reimbursements from tenants for certain operating costs. Additionally, we may generate earnings from the sale of assets to third parties or contributed into joint ventures.

Our long-term growth will principally be driven by our ability to:

• maintain and increase occupancy rates and/or increase rental rates at our properties;

• continue to grow our portfolio through acquisitions of new properties, potentially through joint ventures;

• sell non-core assets to third parties, or contribute properties to joint ventures, at favorable prices;

• develop and redevelop existing assets; and

• execute initiatives designed to increase balance sheet capacity and expand the potential sources of capital.

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Executive Summary

For the three months ended March 31, 2015, we had net income of $0.5 million compared with a net loss of $1.4 million for the same period in 2014, which was primarily due to an increase in Same-Property net operating income and a $2.4 million yield maintenance payment received in the first quarter of 2015 associated with the prepayment of the America’s Square mezzanine loan.

Funds From Operations (“FFO”) increased for the three months ended March 31, 2015 compared with the same period in 2014 due to an increase in same-property net operating income, as well as an increase in overall net operating income, as the result of higher occupancy in our portfolio and the fact that we were a net acquirer of properties during 2014. The increase in FFO for the three months ended March 31, 2015 compared with the same period in 2014 was also attributable to a $2.4 million yield maintenance payment we received in the first quarter of 2015 associated with the prepayment of the America’s Square mezzanine loan.

FFO is a non-GAAP financial measure. For a description of FFO, including why we believe our presentation is useful and a reconciliation of FFO to net income attributable to First Potomac Realty Trust, see “Funds From Operations.”

Significant Activity

• Executed 328,000 square feet of leases, including 128,000 square feet of new leases;

• Increased leased percentage in consolidated portfolio to 91.8% from 88.9% at March 31, 2014; and

• Sold our Richmond, Virginia portfolio, which was comprised of 19 buildings totaling 828,000 square feet, for a contractual purchase price of $60.3 million.

Richmond Portfolio Sale

Consistent with our previously disclosed capital recycling strategy, on March 19, 2015, we sold our Richmond, Virginia Portfolio, which included Chesterfield Business Center, Hanover Business Center, Park Central, Virginia Technology Center and a three-acre parcel of undeveloped land for net proceeds of $53.8 million. In the aggregate, the Richmond Portfolio was comprised of 19 buildings totaling 828,000 square feet. Net proceeds from the sale reflected the prepayment of $3.7 million of mortgage and other indebtedness secured by the properties, including $0.5 million of associated prepayment penalties. The majority of the remaining net proceeds from the sale were used to repay $48.0 million of the outstanding balance under our unsecured revolving credit facility. We recorded a gain on the sale of the portfolio of $0.9 million in the first quarter of 2015. During the first quarter of 2015, we accelerated the amortization of deferred rent abatements and straight-line rents, totaling $0.9 million, and leasing commissions, totaling $1.1 million, which were on the balance sheet of the Richmond Portfolio. The accelerated amortization resulted in an additional $2.0 million of expense during the first quarter of 2015. As a result of this sale, we no longer own any properties in the Richmond, Virginia area and have made a strategic shift away from that market. In accordance with ASU 2014-08, the operating results (including the accelerated amortization of deferred rent abatements, straight-line rents and leasing commissions), the loss on debt extinguishment and the gain on sale of the Richmond Portfolio were reflected within discontinued operations for each of the periods presented in this Quarterly Report on Form 10-Q.

Informal SEC Inquiry

As previously disclosed in our Annual Reports on Form 10-K for the years ended December 31, 2014, 2013 and 2012, we were informed that the SEC initiated an informal inquiry relating to the matters that were the subject of the Audit Committee’s internal investigation regarding the material weakness previously identified in our Annual Report on Form 10-K for the year ended December 31, 2011. The SEC staff has informed us that this inquiry should not be construed as an indication by the SEC or its staff that any violations of law have occurred, nor considered a reflection upon any person, entity or security. We have been, and intend to continue, voluntarily cooperating fully with the SEC. The scope and outcome of this matter cannot be determined at this time.

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Properties:

The following sets forth certain information about our properties by segment as of March 31, 2015 (including properties in development and redevelopment, dollars in thousands):

WASHINGTON, D.C. REGION

Property	Buildings	Sub-Market(1)	Square Feet	Annualized Cash Basis Rent(2)		Leased at March 31, 2015		Occupied at March 31, 2015
Office
11 Dupont Circle, NW	1	CBD	153,018	$	5,395	100.0	%	100.0	%
440 First Street, NW(3)	1	Capitol Hill	138,554	2,548		58.9	%	46.9	%
500 First Street, NW	1	Capitol Hill	129,035	4,638		100.0	%	100.0	%
840 First Street, NE	1	NoMA	248,536	7,181		97.7	%	97.7	%
1211 Connecticut Avenue, NW	1	CBD	130,085	3,585		96.8	%	92.1	%
1401 K Street, NW	1	East End	117,458	3,267		82.8	%	78.2	%
Total/Weighted Average	6		916,686	26,614		90.5	%	87.5	%
Development
Storey Park(4)	—	NoMA	—	—
Unconsolidated Joint Venture
1750 H Street, NW	1	CBD	113,131	3,661		91.1	%	86.9	%
Region Total/Weighted Average	7		1,029,817	$	30,275	90.6	%	87.4	%

⁽¹⁾  CBD refers to Central Business District; NoMA refers to North of Massachusetts Avenue.

⁽²⁾  Annualized cash basis rent, which is calculated as the contractual rent due under the terms of the lease, without taking into account rent abatements, is reflected on a triple-net equivalent basis, by deducting operating expense reimbursements that are included, along with base rent, in the contractual payments of our full-service leases. The operating expense reimbursements primarily relate to real estate taxes and insurance expenses. Includes leased spaces that are not yet occupied.

⁽³⁾  In October 2013, we substantially completed the redevelopment of the property. During the fourth quarter of 2014, we placed all the vacant space into service.

⁽⁴⁾  The property was acquired through a consolidated joint venture in which we have a 97% controlling economic interest. The property was placed into development on September 1, 2013. The joint venture anticipates developing a mixed-used project on the 1.6 acre site, which can accommodate up to 712,000 square feet. We are currently exploring our options related to this property; however, until a definitive plan for the property has been reached and we begin significant development activities, we cannot determine the total cost of the project or the anticipated completion date.

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MARYLAND REGION

Property	Buildings	Location	Square Feet	Annualized Cash Basis Rent(1)		Leased at March 31, 2015		Occupied at March 31, 2015
Business Park
Ammendale Business Park(2)	7	Beltsville	312,846	$	4,211	100.0	%	100.0	%
Gateway 270 West	6	Clarksburg	253,916	2,974		87.5	%	73.3	%
Rumsey Center	4	Columbia	135,015	1,471		97.2	%	91.8	%
Snowden Center	5	Columbia	145,267	2,301		100.0	%	100.0	%
Total Business Park	22		847,044	10,957		95.8	%	90.7	%
Office
Annapolis Business Center	2	Annapolis	101,113	1,997		100.0	%	100.0	%
Metro Park North	4	Rockville	191,211	2,010		87.3	%	87.3	%
Cloverleaf Center	4	Germantown	173,721	838		73.0	%	73.0	%
Hillside I and II(3)	2	Columbia	64,195	2,801		84.0	%	67.0	%
TenThreeTwenty	1	Columbia	138,854	11,970		96.0	%	82.7	%
Redland Corporate Center	3	Rockville	483,162	2,015		100.0	%	100.0	%
Total Office	16		1,152,256	21,631		92.5	%	89.9	%
Total Consolidated	38		1,999,300	32,588		93.9	%	90.2	%
Unconsolidated Joint Ventures
Aviation Business Park	3	Glen Burnie	120,285	1,260		69.8	%	66.2	%
RiversPark I and II	6	Columbia	307,984	3,748		84.2	%	84.2	%
Total Joint Ventures	9		428,269	5,008		80.2	%	79.1	%
Region Total/Weighted Average	47		2,427,569	$	37,596	91.5	%	88.3	%

⁽¹⁾  Annualized cash basis rent, which is calculated as the contractual rent due under the terms of the lease, without taking into account rent abatements, is reflected on a triple-net equivalent basis, by deducting operating expense reimbursements that are included, along with base rent, in the contractual payments of our full-service leases. The operating expense reimbursements primarily relate to real estate taxes and insurance expenses. Includes leased spaces that are not yet occupied.

⁽²⁾  Ammendale Business Park consists of the following properties: Ammendale Commerce Center and Indian Creek Court.

⁽³⁾  Excludes 21,922 square feet of space that was placed into redevelopment during the first quarter of 2014.

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NORTHERN VIRGINIA REGION

Property	Buildings	Location	Square Feet	Annualized Cash Basis Rent(1)		Leased at March 31, 2015		Occupied at March 31, 2015
Business Park
Gateway Centre Manassas	3	Manassas	102,446	$	856	86.6	%	86.6	%
Linden Business Center	3	Manassas	109,809	1,001		91.6	%	91.6	%
Prosperity Business Center	1	Merrifield	71,373	856		100.0	%	100.0	%
Sterling Park Business Center(2)	7	Sterling	471,835	4,528		97.1	%	97.1	%
Total Business Park	14		755,463	7,241		95.1	%	95.1	%
Office
Atlantic Corporate Park(3)	2	Sterling	219,374	3,217		81.3	%	43.9	%
Cedar Hill	2	Tysons Corner	102,632	2,248		100.0	%	100.0	%
Enterprise Center	4	Chantilly	189,331	2,952		87.7	%	87.7	%
Herndon Corporate Center	4	Herndon	128,359	1,315		68.7	%	68.7	%
One Fair Oaks	1	Fairfax	214,214	5,460		100.0	%	100.0	%
Reston Business Campus	4	Reston	82,378	930		78.9	%	66.1	%
Three Flint Hill	1	Oakton	180,819	3,477		96.3	%	96.3	%
Van Buren Office Park	5	Herndon	106,683	1,008		77.4	%	66.8	%
1775 Wiehle Avenue	1	Reston	130,048	2,896		100.0	%	100.0	%
Windsor at Battlefield	2	Manassas	155,511	2,100		95.2	%	95.2	%
Total Office	26		1,509,349	25,603		89.4	%	82.5	%
Industrial
Newington Business Park Center	7	Lorton	255,567	2,313		82.2	%	82.2	%
Plaza 500	2	Alexandria	500,920	4,663		87.0	%	87.0	%
Total Industrial	9		756,487	6,976		85.4	%	85.4	%
Total Consolidated	49		3,021,299	39,820		89.8	%	86.4	%
Development
Northern Virginia land(4)	—		—	—
Unconsolidated Joint Venture
Prosperity Metro Plaza	2	Merrifield	326,573	7,302		97.8	%	90.3	%
Region Total/Weighted Average	51		3,347,872	$	47,122	90.6	%	86.8	%

⁽¹⁾  Annualized cash basis rent, which is calculated as the contractual rent due under the terms of the leases, without taking into account rent abatements, is reflected on a triple-net equivalent basis, by deducting operating expense reimbursements that are included, along with base rent, in the contractual payments of our full-service leases. The operating expense reimbursements primarily relate to real estate taxes and insurance expenses. Includes leased spaces that are not yet occupied.

⁽²⁾  Sterling Park Business Center consists of the following properties: 403/405 Glenn Drive, Davis Drive and Sterling Park Business Center.

⁽³⁾  In March 2014, we signed a lease for 82,000 square feet with a government tenant to occupy the majority of one building, which was vacant at acquisition. We currently expect the tenant to move into the space in the first half of 2015.

⁽⁴⁾  During the third quarter of 2014, we signed a lease for 167,000 square feet at a to-be-constructed building in Northern Virginia on vacant land that we have in our portfolio. We currently expect to complete construction of the new building in the fourth quarter of 2016. However, we can provide no assurance regarding the timing, costs or results of the project.

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SOUTHERN VIRGINIA REGION

Property	Buildings	Location	Square Feet	Annualized Cash Basis Rent(1)		Leased at March 31, 2015		Occupied at March 31, 2015
Business Park
Battlefield Corporate Center	1	Chesapeake	96,720	$	828	100.0	%	100.0	%
Crossways Commerce Center(2)	9	Chesapeake	1,082,748	11,583		96.1	%	92.0	%
Greenbrier Business Park(3)	4	Chesapeake	411,259	4,279		88.2	%	79.4	%
Norfolk Commerce Park(4)	3	Norfolk	262,010	2,649		96.4	%	94.0	%
Total Business Park	17		1,852,737	19,339		94.6	%	89.9	%
Office
Greenbrier Towers	2	Chesapeake	171,266	1,678		79.1	%	73.8	%
Region Total/Weighted Average	19		2,024,003	$	21,017	93.3	%	88.6	%

⁽¹⁾  Annualized cash basis rent, which is calculated as the contractual rent due under the terms of the leases, without taking into account rent abatements, is reflected on a triple-net equivalent basis, by deducting operating expense reimbursements that are included, along with base rent, in the contractual payments of our full-service leases. The operating expense reimbursements primarily relate to real estate taxes and insurance expenses. Includes leased spaces that are not yet occupied.

⁽²⁾  Crossways Commerce Center consists of the following properties: Coast Guard Building, Crossways Commerce Center I, Crossways Commerce Center II, Crossways Commerce Center IV and 1434 Crossways Boulevard.

⁽³⁾  Greenbrier Business Park consists of the following properties: Greenbrier Technology Center I, Greenbrier Technology Center II and Greenbrier Circle Corporate Center.

⁽⁴⁾  Norfolk Commerce Park consists of the following properties: Norfolk Business Center, Norfolk Commerce Park II and Gateway II.

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Development and Redevelopment Activity

We will place completed development and redevelopment assets in service upon the earlier of one year after major construction activity is deemed to be substantially complete or upon occupancy. We construct office buildings and/or business parks on a build-to-suit basis or with the intent to lease upon completion of construction. We own developable land that can accommodate 1.3 million square feet of additional building space, of which, 0.7 million is located in the Washington, D.C. reporting segment, 0.1 million in the Maryland reporting segment, 0.4 million in the Northern Virginia reporting segment and 0.1 million in the Southern Virginia reporting segment.

During the third quarter of 2014, we signed a lease for 167,000 square feet at a to-be-constructed building in our Northern Virginia reporting segment on vacant land that we have in our portfolio. We currently anticipate investing approximately $36 million to construct the new building, which excludes approximately $11 million of tenant improvements and approximately $2 million of combined leasing commissions and capitalized interest costs. We currently expect to complete construction of the new building in the fourth quarter of 2016. However, we can provide no assurance regarding the timing, cost or results of the project. At March 31, 2015, our total investment in the development project was $10.2 million, which included the original cost basis of the applicable portion of the vacant land of $5.2 million. The majority of the costs incurred as of March 31, 2015 in excess of the original cost basis of the land relate to site preparation costs.

On August 4, 2011, we formed a joint venture, in which we have a 97% interest, with an affiliate of Perseus Realty, LLC to acquire Storey Park in our Washington, D.C. reporting segment. At the time, the site was leased to Greyhound Lines, Inc. (“Greyhound”), which subsequently relocated its operations. Greyhound’s lease expired on August 31, 2013, at which time the property was placed into development. The joint venture anticipates developing a mixed-use project on the 1.6 acre site, which can accommodate up to 712,000 square feet. At March 31, 2015, our total investment in the development project was $56.0 million, which included the original cost basis of the property of $43.3 million. The majority of the costs in excess of the original cost basis relate to capitalized architectural fees and site preparation costs. We are currently exploring our options related to this property; however, until a definitive plan for the property has been reached and we begin significant development activities, we cannot determine the total cost of the project or the anticipated completion date.

On December 28, 2010, we acquired 440 First Street, NW, a vacant eight-story office building in our Washington, D.C. reporting segment. In October 2013, we substantially completed the redevelopment of the 139,000 square foot property. At March 31, 2015, the property was 58.9% leased and 46.9% occupied. During the fourth quarter of 2014, all vacant space at the property was placed in service. At March 31, 2015, our total investment in the redevelopment project was $55.5 million, which included the original cost basis of the property of $23.6 million.

During the first quarter of 2015, we did not place in-service any completed development or redevelopment space. At March 31, 2015, we had no completed development or redevelopment space that have yet to be placed in service.

Lease Expirations

Approximately 4.6% of our annualized cash basis rent, excluding month-to-month leases (which represent an immaterial percentage of our annualized cash basis rent), is scheduled to expire during the remainder of 2015. We expect replacement rents on leases expiring during the remainder of 2015 to decrease on a cash basis relative to the current rental rates being paid by tenants. Current tenants are not obligated to renew their leases upon the expiration of their terms. If non-renewals or terminations occur, we may not be able to locate qualified replacement tenants and, as a result, could lose a significant source of revenue while remaining responsible for the payment of our financial obligations. Moreover, the terms of a renewal or new lease, including the amount of rent, may be less favorable to us than the current lease terms, or we may be forced to provide tenant improvements at our expense or provide other concessions or additional services to maintain or attract tenants. We continually strive to increase our portfolio occupancy, and the amount of vacant space in our portfolio at any given time may impact our willingness to reduce rental rates or provide greater concessions to retain existing tenants and attract new tenants. We continually monitor our portfolio on a regional and per property basis to assess market trends, including vacancy, comparable deals and transactions, and other business and economic factors that may influence our leasing decisions. Prior to signing a lease with a tenant, we generally assess the prospective tenant’s credit quality through review of its financial statements and tax returns, and the result of that review is a factor in establishing the rent to be charged and/or level of security deposit required. Over the course of our leases, we monitor our tenants to stay aware of any material changes in credit quality. The metrics we use to evaluate a significant tenant’s liquidity and creditworthiness depend on facts and circumstances specific to that tenant and to the industry in which it operates and include the tenant’s credit history and economic conditions related to the tenant, its operations and the markets in which it operates.  These factors may change over time. In addition, our property management personnel have regular contact with tenants and tenant employees and, where the terms of the lease permit and we deem it prudent, we may request tenant financial information for periodic review, review publicly-available financial statements in the case of public company tenants and monitor news and rating

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agency reports regarding our tenants (or their parent companies) and their underlying businesses. In addition, we regularly analyze account receivable balances as part of the ongoing monitoring of the timeliness of rent collections from tenants.

During the first quarter of 2015, we had a tenant retention rate of 59%. After reflecting all the renewal leases on a triple-net basis to allow for comparability, the weighted average rental rate of our renewed leases in the first quarter of 2015 decreased 6.7%, compared with the expiring leases on a U.S. generally accepted accounting principles (“GAAP”) basis. During the first quarter of 2015, we executed new leases for 128,000 square feet, the majority of the new leases (based on square footage) contained rent escalations.

The following table sets forth tenant improvement and leasing commission costs on a rentable square foot basis for all new and renewal leases signed during the three months ended March 31, 2015:

	New	Renewal
Tenant improvements (per rentable square foot)	$26.08	$5.62
Leasing commissions (per rentable square foot)	$7.87	$2.14

The following table sets forth a summary schedule of the lease expirations at our consolidated properties for leases in place as of March 31, 2015 (dollars in thousands, except per square foot data):

Year of Lease Expiration(1)	Number of Leases Expiring	Leased Square Feet	% of Leased Square Feet		Annualized Cash Basis Rent(2)		% of Annualized Cash Basis Rent		Average Base Rent per Square Foot(2)(3)
MTM	2	2,287	0.0	%	$	24	0.0	%	$	10.63
2015	40	319,276	4.4	%	5,567		4.6	%	17.44
2016	69	572,931	7.8	%	11,355		9.5	%	19.82
2017	89	1,086,115	14.9	%	18,019		15.0	%	16.59
2018	81	893,618	12.2	%	13,013		10.8	%	14.56
2019	70	948,394	13.0	%	13,111		10.9	%	13.82
2020	64	1,137,855	15.6	%	16,497		13.7	%	14.50
2021	28	295,680	4.0	%	4,050		3.4	%	13.70
2022	27	336,132	4.6	%	4,918		4.1	%	14.63
2023	16	551,828	7.6	%	12,016		10.0	%	21.77
2024	23	589,210	8.1	%	10,237		8.5	%	17.37
Thereafter	42	575,070	7.8	%	11,228		9.5	%	19.52
Total / Weighted Average	551	7,308,396	100.0	%	$	120,035	100.0	%	$	16.42

⁽¹⁾  We classify leases that expired or were terminated on the last day of the quarter as leased square footage since the tenant is contractually entitled to the space.

⁽²⁾  Annualized Cash Basis Rent, which is calculated as the contractual rent due under the terms of the lease, without taking into account rent abatements, is reflected on a triple-net equivalent basis, by deducting operating expense reimbursements that are included, along with base rent, in the contractual payments of our full-service leases. The operating expense reimbursements primarily relate to real estate taxes and insurance expenses. Includes leased spaces that are not yet occupied.

⁽³⁾  Represents annualized cash basis rent at March 31, 2015, divided by the square footage of the expiring leases.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP that require us to make certain estimates and assumptions. Critical accounting policies and estimates are those that require subjective or complex judgments and are the policies and estimates that we deem most important to the portrayal of our financial condition, results of operations and cash flows. It is possible that the use of different reasonable estimates or assumptions in making these judgments could result in materially different amounts being reported in our consolidated financial statements. Our critical accounting policies and estimates relate to revenue recognition, including evaluation of the collectability of accounts and notes receivable, impairment of long-lived assets, purchase accounting for acquisitions of rental property, derivative instruments and share-based compensation.

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The following is a summary of certain aspects of these critical accounting policies and estimates.

Revenue Recognition

We generate substantially all of our revenue from leases on our properties. We recognize rental revenue on a straight-line basis over the terms of our leases, which includes fixed-rate renewal periods leased at below market rates at acquisition or inception. Accrued straight-line rents represent the difference between rental revenue recognized on a straight-line basis over the term of the respective lease agreements and the rental payments contractually due for leases that contain abatement or fixed periodic increases. We consider current information, credit quality, historical trends, economic conditions and other events regarding the tenants’ ability to pay their obligations in determining if amounts due from tenants, including accrued straight-line rents, are ultimately collectible. The uncollectible portion of the amounts due from tenants, including accrued straight-line rents, is charged to property operating expense in the period in which the determination is made.

Tenant leases generally contain provisions under which the tenants reimburse us for a portion of property operating expenses and real estate taxes incurred by us. Such reimbursements are recognized in the period in which the expenses are incurred. We record a provision for losses on estimated uncollectible accounts receivable based on our analysis of risk of loss on specific accounts. Lease termination fees are recognized on the date of termination when the related lease or portion thereof is cancelled, the collectability of the fee is reasonably assured and we have possession of the terminated space.

In May 2014, FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance when it becomes effective on January 1, 2017. Early adoption is not permitted. ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method and are evaluating the impact that ASU 2014-09 will have on our consolidated financial statements and related disclosures.

Accounts and Notes Receivable

We must make estimates of the collectability of our accounts and notes receivable related to minimum rent, deferred rent, tenant reimbursements, lease termination fees and interest and other income. We specifically analyze accounts receivable and historical bad debt experience, tenant concentrations, tenant creditworthiness and current economic trends when evaluating the adequacy of our allowance for doubtful accounts receivable. These estimates have a direct impact on our net income as a higher required allowance for doubtful accounts receivable will result in lower net income. The uncollectible portion of the amounts due from tenants, including straight-line rents, is charged to property operating expense in the period in which the determination is made. We consider similar criteria in assessing impairment associated with outstanding loans or notes receivable and whether any allowance for anticipated credit loss is appropriate.

Investments in Rental Property and Rental Property Entities

Rental property is initially recorded at fair value, if acquired in a business combination, or initial cost when constructed or acquired in an asset purchase. 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 our assets, by class, are as follows:

Buildings	39 years
Building improvements	5 to 20 years
Furniture, fixtures and equipment	5 to 15 years
Lease related intangible assets	The term of the related lease
Tenant improvements	Shorter of the useful life of the asset or the term of the related lease

We regularly review 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 carrying value of a property, an impairment analysis is performed. We assess 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 to maintain the operating capacity, expected holding periods and capitalization rates. These cash flows consider factors such as expected market

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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. Further, we will record an impairment loss if we expect to dispose of a property, in the near term, at a price below carrying value. In such an event, we 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.

We will classify a building as held-for-sale in accordance with GAAP in the period in which we have made the decision to dispose of the building, our Board of Trustees or a designated delegate has approved the sale, there is a high likelihood a binding agreement to purchase the property will be signed under which the buyer will be required to commit 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. We will cease recording depreciation on a building once it has been classified as held-for-sale. In the second quarter of 2014, we prospectively adopted ASU 2014-08, which impacts the presentation of operations and gains or losses from disposed properties and properties classified as held-for-sale.

If the building does not qualify as a discontinued operation under ASU 2014-08 we will classify the building’s operating results, together with any impairment charges and any gains or losses on the sale of the building, in continuing operations for all periods presented in our consolidated statements of operations. We will classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheet for the period the held-for-sale criteria were met.

If the building does qualify as a discontinued operation under ASU 2014-08, we will classify the building’s operating results, together with any impairment charges and any gains or losses on the sale of the building, in discontinued operations in our consolidated statements of operations for all periods presented and classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheets for the periods presented. Interest expense is reclassified to discontinued operations only to the extent the disposed or held-for-sale property is secured by specific mortgage debt and the mortgage debt will not be assigned to another property owned by us after the disposition.

We recognize the fair value, if sufficient information exists to reasonably estimate the fair value, of any liability for conditional asset retirement obligations when assumed or incurred, which is generally upon acquisition, construction, development or redevelopment and/or through the normal operation of the asset.

We capitalize interest costs incurred on qualifying expenditures for real estate assets under development or redevelopment, which include our investments in assets owned through unconsolidated joint ventures that are under development or redevelopment, while being readied for their intended use in accordance with accounting requirements regarding capitalization of interest. We 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. We also capitalize direct compensation costs of our construction personnel who manage the development and redevelopment projects, but only to the extent the employee’s time can be allocated to a project. Any portion of construction management costs not directly attributable to a specific project are recognized as general and administrative expense in the period incurred. We do not capitalize any other general and administrative costs such as office supplies, office rent expense or an overhead allocation to our development or redevelopment projects. Capitalized compensation costs were immaterial during the three months ended March 31, 2015 and 2014. Capitalization of interest ends 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. We place redevelopment and development assets into service at this time and commence depreciation upon the substantial completion of tenant improvements and the recognition of revenue. Capitalized interest is depreciated over the useful life of the underlying assets, commencing when those assets are placed into service.

Purchase Accounting

Acquisitions of rental property, including any associated intangible assets, are measured at fair value at the date of acquisition. Any liabilities assumed or incurred are recorded at their fair value at the time of acquisition. The fair value of the acquired property is allocated between land and building (on an as-if vacant basis) based on management’s estimate of the fair value of those components for each type of property and to tenant improvements based on the depreciated replacement cost of the tenant improvements, which approximates their fair value. The fair value of the in-place leases is recorded as follows:

• 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;

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• 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 fourteen years; and

• the fair value of intangible tenant or customer relationships.

Our determination of these fair values requires us to estimate market rents for each of the leases and make certain other assumptions. These estimates and assumptions affect the rental revenue, and depreciation and amortization expense recognized for these leases and associated intangible assets and liabilities.

Derivative Instruments

We are exposed to certain risks arising from business operations and economic factors. We use derivative financial instruments to manage exposures that arise from business activities in which our 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. We do not use derivatives for trading or speculative purposes and we intend to enter into derivative agreements only with counterparties that we believe have a strong credit rating to mitigate the risk of counterparty default or insolvency. No hedging activity can completely insulate us from the risks associated with changes in interest rates. Moreover, interest rate hedging could fail to protect us or adversely affect us because, among other things:

• available interest rate hedging may not correspond directly with the interest rate risk for which we seek 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 our ability to sell or assign its side of the hedging transaction.

We may designate a derivative as either a hedge of the cash flows from a debt instrument or anticipated transaction (cash flow hedge) or a hedge of the fair value of a debt instrument (fair value hedge). All derivatives are recognized as assets or liabilities at fair value. For effective hedging relationships, the effective portion of the change in the fair value of the assets or liabilities is recorded within equity (cash flow hedge) or through earnings (fair value hedge). Ineffective portions of derivative transactions will result in changes in fair value recognized in earnings. For a cash flow hedge, we record our proportionate share of unrealized gains or losses on our derivative instruments associated with our unconsolidated joint ventures within equity and “Investment in affiliates.” We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting any applicable credit enhancements, such as collateral postings, thresholds, mutual inputs and guarantees.

Share-Based Payments

We measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. For options awards, we use a Black-Scholes option-pricing model. Expected volatility is based on an assessment of our realized volatility over the preceding period that is equivalent to the award’s expected life. The expected term represents the period of time the options are anticipated to remain outstanding as well as our historical experience for groupings of employees that have similar behavior and considered separately for valuation purposes. For non-vested share awards that vest over a predetermined time period, we use the outstanding share price at the date of issuance to fair value the awards. For non-vested shares awards that vest based on performance conditions, we use a Monte Carlo simulation (risk-neutral approach) to determine the value and derived service period of each tranche. 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 or loss from continuing operations.

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Results of Operations

Comparison of the Three Months Ended March 31, 2015with the Three Months Ended March 31, 2014

The term “Comparable Portfolio” refers to all consolidated properties owned by us and in-service, with operating results reflected in our continuing operations, for the entirety of the periods presented.

The term “Non-Comparable Properties” refers to properties that we have acquired, sold, placed in-service, or placed in development or redevelopment during the years presented. The Non-Comparable Properties are comprised of the following properties:

• 11 Dupont Circle, NW, 1775 Wiehle Avenue and 1401 K Street, NW, which were all acquired subsequent to the first quarter of 2014 for an aggregate purchase price of $188.0 million. We did not acquire any properties in the first quarter of 2015. For the Results of Operations discussion below, these three properties will collectively be referred to as the “Acquired Properties”.

• Corporate Campus at Ashburn Center and Owings Mills Business Park, which were both sold subsequent to our adoption of ASU 2014-08 in the second quarter of 2014. In accordance with ASU 2014-08, the operating results of Corporate Campus at Ashburn Center and Owings Mills Business Park are reflected in continuing operations in our consolidated statements of operations for the three months ended March 31, 2014. For the Results of Operations discussion below, these two properties will collectively be referred to as the “Disposed Properties”.

• 440 First Street, NW, which was fully placed in service in October 2014. The redevelopment of 440 First Street, NW was substantially completed in October 2013.

• Storey Park, which has remained in development for the entirety of the periods presented.

The operating results for our Richmond Portfolio, which was sold during the first quarter of 2015, as well as the properties disposed of in 2014 (excluding Corporate Campus at Ashburn Center and Owings Mills Business Park, which have operating results reflected within continuing operations) are reflected as discontinued operations for the periods presented.

For discussion of the operating results of our reporting segments, the terms “Washington, D.C.”, “Maryland”, “Northern Virginia” and “Southern Virginia” will be used to describe the respective reporting segments.

Due to the timing of acquisitions and dispositions during the remainder of 2015, which may or may not occur, we cannot determine if property operating revenues or expenses will increase or decrease during 2015 compared with 2014.

In the tables below, the designation “NM” is used to refer to a percentage that is not meaningful.

Total Revenues

Total revenues are summarized as follows:

	Three Months Ended March 31,						Percent
(dollars in thousands)	2015		2014		Change		Change
Rental	$	34,379	$	30,433	$	3,946	13	%
Tenant reimbursements and other	$	9,470	$	8,930	$	540	6	%

Rental Revenue

Rental revenue is comprised of contractual rent, the impact of straight-line revenue and the amortization of deferred market rent assets and liabilities representing above and below market rate leases at acquisition. Rental revenue increased $3.9 million for the three months ended March 31, 2015 as the Non-Comparable Properties and the Comparable Portfolio contributed $3.5 million and $0.4 million, respectively, of additional rental revenue for the three months ended March 31, 2015. The increase in rental revenue for the Non-Comparable Properties was comprised of a $4.2 million increase from the Acquired Properties and a $0.4 million increase from 440 First Street, NW, which was partially offset by a $1.1 million decrease in rental revenue from the Disposed Properties. Rental revenue for the Comparable Portfolio increased for the three months ended March 31, 2015 compared

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with the same period in 2014 due to an increase in occupancy in the Comparable Portfolio. The weighted average occupancy of the Comparable Portfolio was 88.5% and 87.2% for the three months ended March 31, 2015 and 2014, respectively.

The increase in rental revenue for the three months ended March 31, 2015 compared with the same period in 2014 includes$3.6 million for Washington, D.C. and $0.5 million for Northern Virginia. Rental revenue decreased $0.1 million for both Maryland and Southern Virginia.

Tenant Reimbursements and Other Revenues

Tenant reimbursements and other revenues include operating and common area maintenance costs reimbursed by our tenants as well as other incidental revenues such as lease termination payments, parking revenue and joint venture and construction related management fees. Tenant reimbursements and other revenues increased $0.5 million for the three months ended March 31, 2015 compared with the same period in 2014 primarily due to the Comparable Portfolio, which contributed an additional $0.4 million in tenant reimbursements and other revenues due to recovering a higher percentage of operating expenses, particularly snow and ice removal costs, which was primarily a result of higher occupancy. The Non-Comparable Properties contributed an increase in tenant reimbursements and other revenues of $0.1 million for the three months ended March 31, 2015 compared with the same period in 2014. The increase in tenant reimbursement and other revenues from the Non-Comparable Properties was comprised of a $0.5 million increase from the Acquired Properties, which was partially offset by a $0.4 million decrease from the Disposed Properties.

The increase in tenant reimbursements and other revenues for the three months ended March 31, 2015 compared with the same period in 2014 includes $0.4 million for Washington, D.C. and $0.2 million for Maryland. Tenant reimbursements and other revenues slightly increased for Southern Virginia and decreased $0.1 million for Northern Virginia.

Total Expenses

Property Operating Expenses

Property operating expenses are summarized as follows:

	Three Months Ended March 31,						Percent
(dollars in thousands)	2015		2014		Change		Change
Property operating	$	13,113	$	12,038	$	1,075	9	%
Real estate taxes and insurance	$	5,042	$	4,132	$	910	22	%

Property operating expenses increased $1.1 million for the three months ended March 31, 2015 compared with the same period in 2014 due to the Non-Comparable Properties, which contributed $1.1 million of additional property operating expenses. The increase in property operating expenses from the Non-Comparable Properties was comprised of a $1.4 million increase from the Acquired Properties and a $0.1 million increase from 440 First Street, NW, which was offset by a $0.4 million decrease from the Disposed Properties. Property operating expenses for the Comparable Portfolio slightly decreased for the three months ended March 31, 2015 compared with the same period in 2014.

The increase in property operating expenses for the three months ended March 31, 2015 compared with the same period in 2014 includes $1.1 million for Washington, D.C. and $0.1 million for both Maryland and Northern Virginia. Property operating expenses for Southern Virginia decreased $0.2 million for the three months ended March 31, 2015 compared with the same period in 2014.

Real estate taxes and insurance expense increased $0.9 million for the three months ended March 31, 2015 compared with the same period in 2014 primarily due to the Non-Comparable Properties, which contributed $0.8 million of additional real estate taxes and insurance. The increase in real estate taxes and insurance from the Non-Comparable Properties was comprised of a $0.7 million increase from the Acquired Properties and a $0.3 million increase from 440 First Street, NW, which was partially offset by a $0.2 million decrease from the Disposed Properties. Real estate taxes and insurance expense for the Comparable Portfolio increased $0.1 million for the three months ended March 31, 2015 compared with the same period in 2014.

The increase in real estate taxes and insurance expense for the three months ended March 31, 2015 compared with the same period in 2014 includes $1.0 million for Washington, D.C and slight increases for both Northern Virginia and Southern Virginia. Property operating expenses for Maryland decreased $0.1 million for the three months ended March 31, 2015 compared with the same period in 2014.

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Other Operating Expenses

General and administrative expenses are summarized as follows:

	Three Months Ended March 31,						Percent
(dollars in thousands)	2015		2014		Change		Change
	$	5,526	$	5,196	$	330	6	%

General and administrative expenses increased $0.3 million for the three months ended March 31, 2015 compared with the same period in 2014 due to personnel separation costs of $0.4 million incurred during the three months ended March 31, 2015 as a result of moving to a more vertically integrated management structure. The increase in general and administrative expenses was partially offset by a decrease in non-cash, share-based compensation expense and placement fees as a result of fewer new hires for the three months ended March 31, 2015 compared with the same period in 2014. We currently anticipate that general and administrative expenses for the remainder of 2015 will be flat or slightly decrease compared with 2014. However, as discussed in “Item 1A—Risk Factors” in our Annual Report on Form 10-K, the informal inquiry initiated by the SEC could result in increased legal and/or accounting fees in 2015.

Acquisition costs are summarized as follows:

	Three Months Ended March 31,							Percent
(dollars in thousands)	2015		2014		Change			Change
	$	—	$	68	$	(68	)	(100	)%

We did not acquire any properties during the first quarter of 2015 or 2014. However, on April 8, 2014, we acquired 1401 K Street, NW, a twelve-story, 117,000 square foot office building in Washington D.C., for a contractual purchase price of $58.0 million, and recorded acquisition costs of $68 thousand associated with the acquisition during the first quarter of 2014.

Depreciation and amortization expense is summarized as follows:

	Three Months Ended March 31,						Percent
(dollars in thousands)	2015		2014		Change		Change
	$	16,335	$	14,310	$	2,025	14	%

Depreciation and amortization expense includes depreciation of rental property and the amortization of intangible assets and leasing commissions. Depreciation and amortization expense increased $2.0 million for the three months ended March 31, 2015 compared with the same period in 2014 primarily due to the Non-Comparable Properties, which contributed additional depreciation and amortization expense of $2.6 million. The increase in depreciation and amortization expense from the Non-Comparable Properties was comprised of a $2.4 million increase from the Acquired Properties and a $0.6 increase from 440 First Street, NW, which was partially offset by a $0.4 million decrease from the Disposed Properties. For the Comparable Portfolio, depreciation and amortization expense decreased $0.6 million for the three months ended March 31, 2015 compared with 2014 due to a decrease in leasing and tenant improvement costs placed in service. Due to the timing of acquisitions and dispositions in 2015, which may or may not occur for the remainder of 2015, we cannot determine if depreciation and amortization expense will continue to increase during 2015 compared with 2014.

Other Expenses (Income)

Interest expense is summarized as follows:

	Three Months Ended March 31,						Percent
(dollars in thousands)	2015		2014		Change		Change
	$	6,908	$	5,737	$	1,171	20	%

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Interest expense increased $1.2 million for the three months ended March 31, 2015 compared with the same period in 2014 due to higher average outstanding balances and higher weighted average interest rates on our unsecured revolving credit facility and unsecured term loan. For the three months ended March 31, 2015, our weighted average borrowings under both the unsecured revolving credit facility and the unsecured term loan totaled $493.5 million with a weighted average interest rate of 1.9%, compared with weighted average borrowings of $397.1 million with a weighted average interest rate of 1.8% for the three months ended March 31, 2014. The increase in interest expense was also attributed to a $0.4 million decrease in capitalized interest expense, which was due to placing 440 First Street, NW in service in the fourth quarter of 2014. We anticipate interest expense will continue to increase in 2015 compared with 2014 as a result of higher overall outstanding debt balances and lower capital interest expense.

Interest and other income are summarized as follows:

	Three Months Ended March 31,						Percent
(dollars in thousands)	2015		2014		Change		Change
	$	3,828	$	1,759	$	2,069	NM

In December 2010, we provided a $25.0 million mezzanine loan to the owners of 950 F Street, NW, a ten-story, 287,000 square-foot office/retail building located in Washington, D.C., which is secured by a portion of the owners’ interest in the property. On January 10, 2014, we amended and restated the loan to increase the outstanding balance to $34.0 million, and reduced the fixed interest rate from 12.5% to 9.75%. As part of amending the loan, we wrote-off $0.1 million of unamortized financing fees in the first quarter of 2014 related to the origination of the mezzanine loan. On February 24, 2015, the owners of America’s Square, a 461,000 square foot office complex located in Washington, D.C., prepaid a mezzanine loan that had an outstanding balance of $29.7 million. We provided the owners of America’s Square a $30.0 million loan in April 2011. We received a yield maintenance payment of $2.4 million with the prepayment of the loan, which is reflected within “Interest and other income” in our consolidated statements of operations.

We anticipate that interest and other income will remain relatively flat for the remainder of 2015 compared with 2014 as the yield maintenance payment of $2.4 million associated with the prepayment of the America's Square mezzanine loan in February 2015 will primarily offset the reduction in interest income as a result of the loan’s prepayment.

Equity in (earnings) losses of affiliates is summarized as follows:

	Three Months Ended March 31,								Percent
(dollars in thousands)	2015			2014		Change			Change
	$	(346	)	$	227	$	(573	)	NM

Equity in (earnings) losses of affiliates reflects our aggregate ownership interest in the operating results of the properties in which we do not have a controlling interest.

The increase in income from our unconsolidated joint ventures for the three months ended March 31, 2015 compared with the same period in 2014 was due to an increase in income from Prosperity Metro Plaza and 1750 H Street, NW, which was due to an increase in occupancy at both properties.

Loss from Discontinued Operations

Loss from discontinued operations is summarized as follows:

	Three Months Ended March 31,							Percent
(dollars in thousands)	2015		2014		Change			Change
	$	607	$	857	$	(250	)	(29	)%

Discontinued operations for the periods presented reflect the Richmond Portfolio, which was classified within discontinued operations after our adoption of ASU 2014-08, due to our strategic shift away from the Richmond, Virginia market, as well as disposed properties that were previously classified as discontinued operations in previously filed condensed consolidated financial statements prior to our adoption of ASU 2014-08. During the first quarter of 2015, we sold our Richmond, Virginia Portfolio,

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which included Chesterfield Business Center, Hanover Business Center, Park Central, Virginia Technology Center and a three-acre parcel of undeveloped land for net proceeds of $53.8 million. We recorded a gain on the sale of the portfolio of $0.9 million during the first quarter of 2015. During the first quarter of 2015, we accelerated the amortization of deferred rent abatements, straight-line rents and leasing commissions, which were recorded on the balance sheet of the Richmond Portfolio. The accelerated amortization resulted in an additional $2.0 million of expense during the three months ended March 31, 2015. As part of the sale of the Richmond Portfolio, we incurred $0.5 million of debt extinguishment charges related to debt that was encumbered by the sold properties.

During the first quarter of 2014, we sold a portfolio of properties that consisted of Girard Business Center and Gateway Center, which were both located in our Maryland reporting segment. We recorded a gain on the sale of the portfolio of $0.1 million during the first quarter of 2014. We have had, and will have, no continuing involvement with these properties subsequent to their disposal. For more information about our discontinued operations, see note 7 – Dispositions, in the notes to our condensed consolidated financial statements.

Net loss attributable to noncontrolling interests

Net loss attributable to noncontrolling interests is summarized as follows:

	Three Months Ended March 31,							Percent
(dollars in thousands)	2015		2014		Change			Change
	$	112	$	195	$	(83	)	(43	)%

Net loss attributable to noncontrolling interests reflects the ownership interests in our net income or loss, less amounts owed to our preferred shareholders, attributable to parties other than us. We had net losses attributable to common shareholders of $2.5 million and $4.3 million for the three months ended March 31, 2015 and 2014, respectively. The weighted average percentage of the common Operating Partnership units held by third parties was 4.3% for both the three months ended March 31, 2015 and 2014.

At March 31, 2015, we consolidated the operating results of one joint venture and recognized our joint venture partner’s percentage of gains or losses within net loss attributable to noncontrolling interests. The joint venture partners’ aggregate share of earnings in the operating results of our consolidated joint ventures was immaterial during both the three months ended March 31, 2015 and 2014.

Same Property Net Operating Income

Same Property Net Operating Income (“Same Property NOI”), defined as operating revenues (rental, tenant reimbursements and other revenues) less operating expenses (property operating expenses, real estate taxes and insurance) from the properties whose period-over-period operations can be viewed on a comparative basis (i.e., those consolidated properties owned and in-service for the entirety of the periods presented), is a primary performance measure we use to assess the results of operations at our properties. Same Property NOI is a non-GAAP measure. As an indication of our operating performance, Same Property NOI should not be considered an alternative to net income calculated in accordance with GAAP. A reconciliation of our Same Property NOI to net income from our consolidated statements of operations is presented below. The Same Property NOI results exclude corporate-level expenses, as well as certain transactions, such as the collection of termination fees, as these items vary significantly period-over-period and thus impact trends and comparability. Also, we eliminate depreciation and amortization expense, which are property level expenses, in computing Same Property NOI because these are non-cash expenses that are based on historical cost accounting assumptions and management believes these expenses do not offer the investor significant insight into the operations of the property. This presentation allows management and investors to distinguish whether growth or declines in net operating income are a result of increases or decreases in property operations or the acquisition of additional properties. While this presentation provides useful information to management and investors, the results below should be read in conjunction with the results from the consolidated statements of operations to provide a complete depiction of total Company performance.

Comparison of the Three Months Ended March 31, 2015 with the Three Months Ended March 31, 2014

The following table of selected operating data provides the basis for our discussion of Same Property NOI for the periods presented:

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CONSOLIDATED
	Three Months Ended   March 31,
(dollars in thousands)	2015			2014			$ Change		% Change
Number of buildings(1)	108			108			—		—
Same property revenues
Rental	$	29,524		$	29,082		$	442	1.5
Tenant reimbursements and other	8,734			8,307			427		5.1
Total same property revenues	38,258			37,389			869		2.3
Same property operating expenses
Property(2)	10,965			10,850			115		1.1
Real estate taxes and insurance	4,019			3,947			72		1.8
Total same property operating expenses	14,984			14,797			187		1.3
Same property net operating income	$	23,274		$	22,592		$	682	3.0
Reconciliation to net income (loss):
Same property net operating income	$	23,274		$	22,592
Non-comparable net operating income	2,420			601
General and administrative expenses	(5,526		)	(5,196		)
Depreciation and amortization	(16,335		)	(14,310		)
Other(3)	(2,734		)	(4,273		)
Discontinued operations	(607		)	(857		)
Net income (loss)	$	492		$	(1,443	)

	Weighted Average Occupancy For Three Months Ended March 31,
	2015		2014
Same Properties	88.4	%	87.2	%

⁽¹⁾  Same property comparisons are based upon those consolidated properties owned and in-service for the entirety of the periods presented. Same property results exclude the operating results of the following non-comparable properties: 440 First Street, NW, Storey Park, 1401 K Street, NW, 1775 Wiehle Avenue, and 11 Dupont Circle, NW.

⁽²⁾  Same property operating expenses have been adjusted to reflect a normalized management fee in lieu of an administrative overhead allocation for comparative purposes.

⁽³⁾  Combines acquisition costs and total other expenses (income) from our consolidated statements of operations.

Same Property NOI increased $0.7 million for the three months ended March 31, 2015 compared with the same period in 2014. Total same property revenues increased $0.9 million for the three months ended March 31, 2015 compared with the same period in 2014, primarily due to an increase in occupancy and recovering a higher percentage of recoverable expenses, particularly snow and ice removal costs, which were incurred in the first quarter of 2015. Total same property operating expenses increased $0.2 million for the three months ended March 31, 2015 compared with the same period in 2014 due to an increase in anticipated bad debt reserves and an increase in real estate taxes.

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Washington, D.C.
	Three Months Ended   March 31,
(dollars in thousands)	2015		2014			$ Change			% Change
Number of buildings(1)	3		3			—			—
Same property revenues
Rental	$	4,724	$	4,566		$	158		3.5
Tenant reimbursements and other	2,054		2,049			5			0.2
Total same property revenues	6,778		6,615			163			2.5
Same property operating expenses
Property(2)	1,717		1,570			147			9.4
Real estate taxes and insurance	1,126		1,024			102			10.0
Total same property operating expenses	2,843		2,594			249			9.6
Same property net operating income:	$	3,935	$	4,021		$	(86	)	(2.1	)
Reconciliation to total property operating income
Same property net operating income	$	3,935	$	4,021
Non-comparable net operating income (loss)	1,935		(122		)
Total property operating income	$	5,870	$	3,899

	Weighted Average Occupancy For Three Months Ended March 31,
	2015		2014
Same Properties	93.8	%	93.5	%

⁽¹⁾  Same property comparisons are based upon those consolidated properties owned and in-service for the entirety of the periods presented. Same property results exclude the operating results of the following non-comparable properties: 440 First Street, NW, Storey Park, 1401 K Street, NW and 11 Dupont Circle, NW.

⁽²⁾  Same property operating expenses have been adjusted to reflect a normalized management fee in lieu of an administrative overhead allocation for comparative purposes.

Same Property NOI for the Washington, D.C. properties decreased $0.1 million for the three months ended March 31, 2015 compared with the same period in 2014. For the three months ended March 31, 2015, total same property revenues increased $0.2 million compared with the same period in 2014 as a result of an increase in occupancy at 840 First Street, NE. Total same property operating expenses increased $0.3 million for the three months ended March 31, 2015 compared with 2014 due to an increase in real estate taxes, due to higher property assessments, and an increase in anticipated bad debt reserves.

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Maryland
	Three Months Ended   March 31,
(dollars in thousands)	2015			2014		$ Change			% Change
Number of buildings(1)	38			38		—			—
Same property revenues
Rental	$	9,124		$	8,886	$	238		2.7
Tenant reimbursements and other	2,478			2,181		297			13.6
Total same property revenues	11,602			11,067		535			4.8
Same property operating expenses
Property(2)	3,820			3,575		245			6.9
Real estate taxes and insurance	892			946		(54		)	(5.7	)
Total same property operating expenses	4,712			4,521		191			4.2
Same property net operating income	$	6,890		$	6,546	$	344		5.3
Reconciliation to total property operating income:
Same property net operating income	$	6,890		$	6,546
Non-comparable net operating (loss) income	(94		)	149
Total property operating income	$	6,796		$	6,695

	Weighted Average Occupancy For Three Months Ended March 31,
	2015		2014
Same Properties	90.4	%	86.3	%

⁽¹⁾  Same property comparisons are based upon those consolidated properties owned or in-service for the entirety of the periods presented.

⁽²⁾  Same property operating expenses have been adjusted to reflect a normalized management fee in lieu of an administrative overhead allocation for comparative purposes.

Same Property NOI for the Maryland properties increased $0.3 million for the three months ended March 31, 2015 compared with the same period in 2014. Total same property revenues increased $0.5 million for the three months ended March 31, 2015 compared with the same period in 2014 due to an increase in occupancy and recoveries for snow and ice removal costs. Total same property operating expenses increased $0.2 million for the three months ended March 31, 2015 compared with the same period in 2014 due to an increase in snow and ice removal costs and an increase in anticipated bad debt reserves.

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Northern Virginia
	Three Months Ended   March 31,
(dollars in thousands)	2015		2014		$ Change			% Change
Number of buildings(1)	48		48		—			—
Same property revenues
Rental	$	9,868	$	9,701	$	167		1.7
Tenant reimbursements and other	3,055		2,894		161			5.6
Total same property revenues	12,923		12,595		328			2.6
Same property operating expenses
Property(2)	3,659		3,706		(47		)	(1.3	)
Real estate taxes and insurance	1,427		1,431		(4		)	(0.3	)
Total same property operating expenses	5,086		5,137		(51		)	(1.0	)
Same property net operating income	$	7,837	$	7,458	$	379		5.1
Reconciliation to total property operating income:
Same property net operating income	$	7,837	$	7,458
Non-comparable net operating income	664		708
Total property operating income	$	8,501	$	8,166

	Weighted Average Occupancy For Three Months Ended March 31,
	2015		2014
Same Properties	86.2	%	85.0	%

⁽¹⁾  Same property comparisons are based upon those consolidated properties owned and in-service for the entirety of the periods presented. Same property results exclude the operating results of the following non-comparable properties: 1775 Wiehle Avenue.

⁽²⁾  Same property operating expenses have been adjusted to reflect a normalized management fee in lieu of an administrative overhead allocation for comparative purposes.

Same Property NOI for the Northern Virginia properties increased $0.4 million for the three months ended March 31, 2015 compared with the same period in 2014. Total same property revenues increased $0.3 million for the three months ended March 31, 2015 compared with 2014 due to an increase in occupancy. Total same property operating expenses decreased $0.1 million for the three months ended March 31, 2015 compared with 2014 due to lower snow and ice removal costs in the first quarter of 2015 compared with the same period in 2014.

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Southern Virginia
	Three Months Ended   March 31,
(dollars in thousands)	2015			2014			$ Change			% Change
Number of buildings(1)	19			19			—			—
Same property revenues
Rental	$	5,809		$	5,929		$	(120	)	(2.0	)
Tenant reimbursements and other	1,147			1,184			(37		)	(3.1	)
Total same property revenues	6,956			7,113			(157		)	(2.2	)
Same property operating expenses
Property(2)	1,770			1,999			(229		)	(11.5	)
Real estate taxes and insurance	575			547			28			5.1
Total same property operating expenses	2,345			2,546			(201		)	(7.9	)
Same property net operating income	$	4,611		$	4,567		$	44		1.0
Reconciliation to total property operating income:
Same property net operating income	$	4,611		$	4,567
Non-comparable net operating loss	(84		)	(134		)
Total property operating income	$	4,527		$	4,433

	Weighted Average Occupancy For Three Months Ended March 31,
	2015		2014
Same Properties	88.3	%	89.7	%

⁽¹⁾  Same property comparisons are based upon those consolidated properties owned and in-service for the entirety of the periods presented.

⁽²⁾  Same property operating expenses have been adjusted to reflect a normalized management fee in lieu of an administrative overhead allocation for comparative purposes.

Same Property NOI for the Southern Virginia properties slightly increased for the three months ended March 31, 2015 compared with 2014. Total same property revenues decreased $0.2 million for the three months ended March 31, 2015 compared with the same period in 2014 due to a decrease in occupancy. Total same property operating expenses decreased $0.2 million for the three months ended March 31, 2015 compared with the same period in 2014 due a decrease in anticipated bad debt reserves. Total same property operating expenses also decreased for the three months ended March 31, 2015 due to a decrease in snow and ice removal costs in the first quarter of 2015 compared with the same period in 2014.

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Liquidity and Capital Resources

Overview

We seek to maintain a flexible balance sheet, with an appropriate balance of cash, debt, equity and available funds under our unsecured revolving credit facility, to readily provide access to capital given the volatility of the market and to position us to take advantage of potential growth opportunities. Consistent with our previously disclosed capital recycling strategy, we sold the Richmond Portfolio in the first quarter of 2015 for net proceeds of $53.8 million. Net proceeds from the sale reflected the prepayment of $3.7 million of mortgage and other indebtedness secured by the properties, including $0.5 million of associated prepayment penalties. The majority of the remaining net proceeds from the sale were used to repay $48.0 million of the outstanding balance under our unsecured revolving credit facility.

We expect to meet short-term liquidity requirements generally through working capital, net cash provided by operations, and, if necessary, borrowings on our unsecured revolving credit facility. Our short-term obligations consist primarily of the lease for our corporate headquarters, normal recurring operating expenses, regular debt payments, recurring expenditures for corporate and administrative needs, non-recurring expenditures such as capital improvements, tenant improvements and redevelopments, leasing commissions and dividends to preferred and common shareholders.

At March 31, 2015, as well as the date of this filing, we had $143.0 million outstanding under our unsecured revolving credit facility. As of the date of this filing, we had $138.2 million of availability under our unsecured revolving credit facility. In the next 12 months, we have $64.2 million of consolidated debt maturing, all of which matures in August 2015.

Over the next twelve months, we believe that we will generate sufficient cash flow from operations and have access to the capital resources, through debt and equity markets, necessary to expand and develop our business, to fund our operating and administrative expenses, to continue to meet our debt service obligations and to pay distributions in accordance with REIT requirements. However, our cash flow from operations and ability to access the debt and equity markets could be adversely affected due to uncertain economic factors and volatility in the financial and credit markets. In particular, we cannot assure that our tenants will not default on their leases or fail to make full rental payments if their businesses are challenged due to, among other things, the economic conditions (particularly if the tenants are unable to secure financing to operate their businesses). This may be particularly true for our tenants that are smaller companies. Further, approximately 4.6% of our annualized cash basis rent (excluding month-to-month leases) is scheduled to expire during the next twelve months and, if we are unable to renew these leases or re-lease the space, our cash flow could be negatively impacted.

We also believe, based on our historical experience and forecasted operations, that we will have sufficient cash flow or access to capital to meet our obligations over the next five years. We intend to meet our long-term funding requirements for property acquisitions, development, redevelopment and other non-recurring capital improvements through net cash provided from operations, long-term secured and unsecured indebtedness, including borrowings under our unsecured revolving credit facility and unsecured term loan, proceeds from disposal of strategically identified assets (outright or through joint ventures) and the issuance of equity and debt securities. In the process of exploring different financing options, we actively monitor the impact that each potential financing decision will have on our financial covenants in order to avoid any issues of non-compliance with the terms of our existing financial covenants.

Our ability to raise funds through sales of debt and equity securities and access to other third party sources of capital in the future will be dependent on, among other things, general economic conditions, general market conditions for REITs, rental rates, occupancy levels, market perceptions and the trading price of our shares. We will continue to analyze which sources of capital are most advantageous to us at any particular point in time, but the capital markets may not be consistently available on terms we deem attractive, or at all.

Financial Covenants

Our outstanding corporate debt agreements contain specific financial covenants that may impact future financing decisions made by us or may be impacted by a decline in operations. As of March 31, 2015, we were in compliance with the covenants of our amended and restated unsecured term loan, amended and restated unsecured revolving credit facility, Construction Loan and Storey Park land loan.

Our continued ability to borrow under the amended and restated unsecured revolving credit facility is subject to compliance with financial and operating covenants, and a failure to comply with any of these covenants could result in a default under the credit facility. These debt agreements also contain cross-default provisions that would be triggered if we are in default under other loans, including mortgage loans, in excess of certain amounts. In the event of a default, the lenders could accelerate the timing of

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payments under the debt obligations and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition, results of operations and ability to make distributions to our shareholders.

Below is a summary of certain financial covenants associated with these debt agreements at March 31, 2015 (dollars in thousands):

Unsecured Revolving Credit Facility, Unsecured Term Loan, Construction Loan and Storey Park Land Loan

Covenants	Quarter Ended March 31, 2015	Covenant
Consolidated Total Leverage Ratio(1)	48.3%	≤ 60%
Tangible Net Worth(1)	$863,446	≥ $601,202
Fixed Charge Coverage Ratio(1)	2.18x	≥ 1.50x
Maximum Dividend Payout Ratio	67.3%	≤ 95%
Restricted Investments:
Joint Ventures	5.8%	≤ 15%
Real Estate Assets Under Development	0.8%	≤ 15%
Undeveloped Land	1.0%	≤ 5%
Structured Finance Investments	2.0%	≤ 5%
Total Restricted Investments	3.9%	≤ 25%
Restricted Indebtedness:
Maximum Secured Debt	21.1%	≤ 40%
Unencumbered Pool Leverage(1)	46.0%	≤ 60%
Unencumbered Pool Interest Coverage Ratio(1)	5.09x	≥ 1.75x

⁽¹⁾  These are the only covenants that apply to both our 440 First Street, NW construction loan and our Storey Park land loan, which are calculated in accordance with the amended and restated unsecured revolving credit facility.

Cash Flows

Due to the nature of our business, we rely on working capital and net cash provided by operations and, if necessary, borrowings under our unsecured revolving credit facility to fund our short-term liquidity needs. Net cash provided by operations is substantially dependent on the continued receipt of rental payments and other expenses reimbursed by our tenants. The ability of tenants to meet their obligations, including the payment of rent contractually owed to us, and our ability to lease space to new or replacement tenants on favorable terms, could affect our cash available for short-term liquidity needs. We intend to meet short and long term funding requirements for debt maturities, interest payments, dividend distributions and capital expenditures through cash flow provided by operations, long-term secured and unsecured indebtedness, including borrowings under our unsecured revolving credit facility, proceeds from asset disposals and the issuance of equity and debt securities. However, we may not be able to obtain capital from such sources on favorable terms, in the time period we desire, or at all. In addition, our continued ability to borrow under our existing debt instruments is subject to compliance with our financial and operating covenants and a failure to comply with such covenants could cause a default under the applicable debt agreement. In the event of a default, we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all.

We may also fund building acquisitions, development, redevelopment and other non-recurring capital improvements through additional borrowings, issuance of common Operating Partnership units or sales of assets, outright or through joint ventures.

Consolidated cash flow information is summarized as follows:

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	Three Months Ended March 31,
(dollars in thousands)	2015			2014			Change
Net cash provided by operating activities	$	12,972		$	11,446		$	1,526
Net cash provided by investing activities	67,421			9,275			58,146
Net cash used in financing activities	(79,030		)	(14,619		)	(64,411		)

Net cash provided by operating activities increased $1.5 million for the three months ended March 31, 2015 compared with the same period in 2014 primarily due to an increase in net operating income, which was due to the properties acquired during 2014 and to higher occupancy in our portfolio. Additionally, there was a decrease in accounts payable and accrued expenses for the three months ended March 31, 2015 compared with the same period in 2014. The increase in net cash provided by operating activities was partially offset by an increase in both prepaid expenses and other assets, and deferred costs for the three months ended March 31, 2015 compared with the same period in 2014.

Net cash provided by investing activities increased $58.1 million for the three months ended March 31, 2015 compared with the same period in 2014. During the three months ended March 31, 2015, we received aggregate net proceeds of $56.9 million from the sale of the Richmond Portfolio, which does not include cash used to prepay the mortgage debt associated with the Richmond Portfolio, compared with receiving aggregate net proceeds of $31.6 million from the sale of Girard Business Center and Gateway Center during the three months ended March 31, 2014. During the three months ended March 31, 2015, the owners of America’s Square prepaid a mezzanine loan that had an outstanding balance of $29.7 million. The proceeds from the loan repayment were used to pay down a portion of the outstanding balance of our unsecured revolving credit facility. In addition, during the three months ended March 31, 2015, cash used for additions to rental property and furniture, fixtures and equipment increased $7.6 million compared with the three months ended March 31, 2014 primarily due to tenant improvement costs at Atlantic Corporate Park in our Northern Virginia region. For the three months ended March 31, 2014, we used cash to fund a $2.0 million deposit made toward the purchase of 1401 K Street, NW, which was acquired on April 8, 2014, and to fund a $9.0 million loan to the owners of 950 F Street, NW, which was provided by a draw under our unsecured revolving credit facility.

Net cash used in financing activities increased $64.4 million for the three months ended March 31, 2015 compared with the same period in 2014. We repaid $79.6 million of outstanding debt and issued $13.0 million of debt during the three months ended March 31, 2015 compared with the repayment of $30.3 million of outstanding debt and the issuance of $27.8 million of debt during the three months ended March 31, 2014.

Contractual Obligations

As of March 31, 2015, we had contractual construction in progress obligations, which included amounts accrued at March 31, 2015, of $25.5 million. The amount of contractual construction in progress obligations are primarily related to development activities for the to-be-constructed building in our Northern Virginia reporting segment. As of March 31, 2015, we had contractual rental property and furniture, fixtures and equipment obligations of $6.7 million outstanding, which included amounts accrued at March 31, 2015. The amount of contractual rental property and furniture, fixtures and equipment obligations at March 31, 2015 included significant tenant improvement costs for a new lease at Atlantic Corporate Park, which is located in our Northern Virginia reporting segment. We anticipate meeting our contractual obligations related to our construction activities with cash from our operating activities. In the event cash from our operating activities is not sufficient to meet our contractual obligations, we can access additional capital through our unsecured revolving credit facility.

We remain liable, solely to the extent of our proportionate ownership percentage, to fund any capital shortfalls or commitments from properties owned through unconsolidated joint ventures.

We have various obligations to certain local municipalities associated with our development projects that will require completion of specified site improvements, such as sewer and road maintenance, grading and other general landscaping work. As of March 31, 2015, we remained liable to those local municipalities for $2.6 million in the event that we do not complete the specified work. We intend to complete the site improvements in satisfaction of these obligations.

We had no other material contractual obligations as of March 31, 2015.

Distributions

We are required to distribute at least 90% of our REIT taxable income to our shareholders in order to maintain qualification as a REIT, including some types of taxable income we recognize for tax purposes but with regard to which we do not receive

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corresponding cash. In addition, we must distribute 100% of our taxable income to our shareholders to eliminate our U.S. federal income tax liability. The funds we use to pay dividends on our common and preferred shares are provided through distributions from the Operating Partnership. For each of our common and preferred shares, the Operating Partnership has issued a corresponding common and preferred unit to us. We are the sole general partner of and, as of March 31, 2015, owned 100% of the preferred interest and 95.7% of the common interest in the Operating Partnership. The remaining common interests in the Operating Partnership are limited partnership interests, some of which are owned by several of our executive officers who contributed properties and other assets to us upon our formation, and the remainder of which are owned by other unrelated parties. The Operating Partnership is required to make cash distributions to us in an amount sufficient to meet our distribution requirements. The cash distributions by the Operating Partnership reduce the amount of cash that is available for general corporate purposes, which includes repayment of debt, funding acquisitions or construction activities, and for other corporate operating activities.

On a quarterly basis, our management team recommends a distribution amount that must then be approved by our Board of Trustees in its sole discretion. The amount of future distributions will be at the discretion of our Board of Trustees and will be based on, among other things: (i) the taxable income and cash flow generated by our operating activities; (ii) cash generated by, or used in, our financing and investing activities; (iii) the annual distribution requirements under the REIT provisions of the Internal Revenue Code; and (iv) such other factors as the Board of Trustees deems relevant. Our ability to make cash distributions will also be limited by the covenants contained in our Operating Partnership agreement and our financing arrangements as well as limitations imposed by state law and the agreements governing any future indebtedness. See “—Financial Covenants” above and “Item 1A – Risk Factors – Risks Related to Our Business and Properties – Covenants in our debt agreements could adversely affect our liquidity and financial condition” in Part I, Item 1A in our Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2014 for additional information regarding the financial covenants.

Dividends

On April 28, 2015, we declared a dividend of $0.15 per common share, equating to an annualized dividend of $0.60 per common share. The dividend will be paid on May 15, 2015 to common shareholders of record as of May 8, 2015. We also declared a dividend of $0.484375 per share on our Series A Preferred Shares. The dividend will be paid on May 15, 2015 to preferred shareholders of record as of May 8, 2015.

Funds From Operations

Funds from operations (“FFO”) is a non-GAAP measure used by many investors and analysts that follow the public real estate industry. We consider FFO a useful measure of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assume that the value of rental property diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a meaningful indication of our performance. We also consider FFO an appropriate supplemental performance measure given its wide use by and relevance to investors and analysts. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assume that the value of real estate diminishes predictably over time.

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), represents net income (computed in accordance with GAAP), excluding gains (losses) on sales of rental property and impairments of rental property, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We compute FFOin accordance with NAREIT’s definition, which may differ from the methodology for calculating FFO, or similarly titled measures, used by other companies and this may not be comparable to those presentations. Our methodology for computing FFO adds back noncontrolling interests in the income from our Operating Partnership in determining FFO. We believe this is appropriate as common Operating Partnership units are presented on an as-converted, one-for-one basis for shares of stock in determining FFO per diluted share.

FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. We present FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding common Operating Partnership units for the periods presented. Our presentation of FFO in accordance with NAREIT’s definition, or as adjusted by us, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

The following table presents a reconciliation of net (loss) income attributable to common shareholders to FFO available to common shareholders and unitholders (dollars in thousands):

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	Three Months Ended March 31,
	2015			2014
Net income (loss) attributable to First Potomac Realty Trust	$	604		$	(1,248	)
Less: Dividends on preferred shares	(3,100		)	(3,100		)
Net loss attributable to common shareholders	(2,496		)	(4,348		)
Add: Depreciation and amortization:
Rental property	16,335			14,310
Discontinued operations	1,222			1,249
Unconsolidated joint ventures	1,011			1,289
Gain on sale of rental property(1)	(857		)	(54		)
Net loss attributable to noncontrolling interests in the Operating Partnership	(112		)	(195		)
FFO available to common shareholders and unitholders	15,103			12,251
Dividends on preferred shares	3,100			3,100
FFO	$	18,203		$	15,351
Weighted average common shares and Operating Partnership units outstanding – diluted	60,986			60,794

⁽¹⁾  For the three months ended March 31, 2015, the gain on sale of rental property is related to the sale of the Richmond Portfolio. For the three months ended March 31, 2014, the gain on sale of rental property is related to the sale of Girard Business Center and Gateway Center.

Off-Balance Sheet Arrangements

We are secondarily liable for $2.8 million of mortgage debt, which represents our proportionate share of the mortgage debt that is secured by two properties, which we own through two unconsolidated joint ventures. Management believes the fair value of the potential liability to us is inconsequential as the likelihood of our need to perform under the debt agreement is remote. See note 6, Investment in Affiliates, in the notes to our condensed consolidated financial statements for more information.

ITEM 3: QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. In the normal course of business, we are exposed to the effect of interest rate changes. We have historically entered into derivative agreements to mitigate exposure to unexpected changes in interest. Market risk refers to the risk of loss from adverse changes in market interest rates. We periodically use derivative financial instruments to seek to manage, or hedge, interest rate risks related to our borrowings. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on their credit rating and other factors. We intend to enter into derivative agreements only with counterparties that we believe have a strong credit rating to mitigate the risk of counterparty default or insolvency.

We had $746.9 million of debt outstanding at March 31, 2015, of which $249.7 million was fixed rate debt and $300.0 million was hedged variable rate debt. The remainder of our debt, $197.2 million, was unhedged variable rate debt that consisted of $143.0 million under the unsecured revolving credit facility, a $22.0 million loan that encumbers the Storey Park land and the $32.2 million outstanding balance under a construction loan. At March 31, 2015, both the Storey Park land loan and the construction loan had a contractual interest rate of LIBOR plus 2.50%. At March 31, 2015, LIBOR was 0.18%. A change in interest rates of 1% would result in an increase or decrease of $2.0 million in interest expense on our unhedged variable rate debt on an annualized basis.

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The table below summarizes our interest rate swap agreements as of March 31, 2015 (dollars in thousands):

Maturity Date	Notional Amount		Interest Rate Contractual Component	Fixed LIBOR Interest Rate
July 2016	$	35,000	LIBOR	1.754	%
July 2016	25,000		LIBOR	1.763	%
July 2017	30,000		LIBOR	2.093	%
July 2017	30,000		LIBOR	2.093	%
July 2017	25,000		LIBOR	1.129	%
July 2017	12,500		LIBOR	1.129	%
July 2017	50,000		LIBOR	0.955	%
July 2018	12,500		LIBOR	1.383	%
July 2018	30,000		LIBOR	1.660	%
July 2018	25,000		LIBOR	1.394	%
July 2018	25,000		LIBOR	1.135	%
Total/Weighted Average	$	300,000		1.505	%

For fixed rate debt, changes in interest rates generally affect the fair value of debt but not our earnings or cash flow. See note 10, Fair Value Measurements, in the notes to our condensed consolidated financial statements for more information on the fair value of our debt.

ITEM 4: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our periodic reports pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) as of the end of the period covered by this report. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to legal proceedings and claims arising in the ordinary course of our business. In the opinion of our management, as of March 31, 2015, we were not involved in any material litigation, nor, to management’s knowledge, is any material litigation threatened against us or the Operating Partnership.

Item 1A. Risk Factors

As of March 31, 2015, there were no material changes to our risk factors previously disclosed in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014.

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

Unregistered Sales of Equity Securities

We did not sell any unregistered equity securities during the three months ended March 31, 2015. During the three months ended March 31, 2015, no common Operating Partnership units were redeemed for either an equivalent number of our common shares or available cash.

Issuer Purchases of Equity Securities

During the three months ended March 31, 2015, certain employees surrendered common shares owned by them to satisfy their statutory minimum federal income tax obligation associated with the vesting of restricted common shares of beneficial interest issued under our 2009 Equity Compensation Plan, as amended.

The following table summarizes all of the repurchases during the first quarter of 2015.

Period	Total Number of Shares Purchased	Average Price Paid Per Share(1)		Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs	Maximum Number Of Shares That May Yet Be Purchased Under The Plans Or Programs
January 1, 2015 through January 31, 2015	—	$	—	N/A	N/A
February 1, 2015 through February 28, 2015	36,256	12.07		N/A	N/A
March 1, 2015 through March 31, 2015	—	—		N/A	N/A
Total	36,256	$	12.07	N/A	N/A

⁽¹⁾  The price paid per share is based on the closing price of our common shares as of the date of the determination of the statutory minimum federal income tax.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

No.	Description
31.1*	Section 302 Certification of Chief Executive Officer.
31.2*	Section 302 Certification of Chief Financial Officer.
32.1**	Section 906 Certification of Chief Executive Officer.
32.2**	Section 906 Certification of Chief Financial Officer.

101* XBRL (Extensible Business Reporting Language). The following materials from the First Potomac Realty Trust’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014; (ii) Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2015 and 2014; (iii) Consolidated Statements of Comprehensive Loss (unaudited) for the three months ended March 31, 2015 and 2014; (iv) Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2015 and 2014; and (v) Notes to Condensed Consolidated Financial Statements (unaudited).

*	Filed herewith.
**	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST POTOMAC REALTY TRUST
Date: April 30, 2015	/s/ Douglas J. Donatelli
	Douglas J. Donatelli
	Chairman of the Board and Chief Executive Officer
Date: April 30, 2015	/s/ Andrew P. Blocher
	Andrew P. Blocher
	Executive Vice President and Chief Financial Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Douglas J. Donatelli, certify that:

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

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

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

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

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

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of 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 registrant’s ability to record, process, summarize and report financial information; and

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

Date: April 30, 2015	/s/Douglas J. Donatelli
	Douglas J. Donatelli
	Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Andrew P. Blocher, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of First Potomac Realty Trust;
2.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of 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 registrant’s ability to record, process, summarize and report financial information; and

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

Date: April 30, 2015	/s/Andrew P. Blocher
	Andrew P. Blocher
	Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Potomac Realty Trust (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas J. Donatelli, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: April 30, 2015	/s/Douglas J. Donatelli
	Douglas J. Donatelli
	Chairman of the Board and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Potomac Realty Trust (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew P. Blocher, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: April 30, 2015	/s/Andrew P. Blocher
	Andrew P. Blocher
	Executive Vice President and Chief Financial Officer

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Earnings Per Common Share - Anti-Dilutive Shares Not Included in Calculation of Diluted Earnings Per Share (Detail) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share, Amount	14,495	14,291
Stock option awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share, Amount	1,083	1,206
Non-vested share awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share, Amount	380	414
Series A Preferred Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share, Amount	13,032	12,671

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Debt - Additional Information (Detail) (USD $)	0 Months Ended	3 Months Ended			0 Months Ended	1 Months Ended
	Jun. 05, 2013	Mar. 31, 2015 Rate Interest_Rate_Swaps Integer		Mar. 31, 2014	Oct. 16, 2014	Jan. 31, 2014	May 31, 2016	Dec. 31, 2014		Aug. 04, 2011 Rate
Debt Instrument [Line Items]
Amount borrowed				$ 21,700,000
Basis spread over variable rate	2.50%
Recourse mortgage debt		746,866,000						813,637,000
Outstanding balance of three tranches		300,000,000						300,000,000
Unsecured revolving credit facility, effective interest rate of LIBOR plus 1.70%, maturing October 2017(2)		143,000,000	[1]					205,000,000	[1],[2]
Interest rate during period		1.90%
Average interest rate at prior period end				1.70%
Maximum outstanding borrowings		218,000,000		112,000,000
Weighted average interest rate		1.90%
Available capacity on the unsecured revolving credit facility		138,200,000
Annual commitment fee		0.25%
Number of interest rate swap agreements		11
Fixed effective interest rate		1.50%
Line Of Credit Facility Basis Spread On Variable Rate Basis		1.70%
Unsecured term loan
Debt Instrument [Line Items]
Number of tranches		3
Outstanding balance of three tranches		300,000,000
Unsecured revolving credit facility
Debt Instrument [Line Items]
Unsecured revolving credit facility, effective interest rate of LIBOR plus 1.70%, maturing October 2017(2)		13,000,000
Proceed to pay loan		75,000,000
440 First Street, NW Construction Loan
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		2.50%
Interest Rate Swap
Debt Instrument [Line Items]
Fixed effective interest rate		1.505%
Amount on variable rate debt		300,000,000
Unused lines of credit
Debt Instrument [Line Items]
Weighted average borrowings outstanding on unsecured revolving credit facility		193,500,000		97,100,000
Greyhound Property [Member]
Debt Instrument [Line Items]
Percentage Of Interest In Joint Venture Owned By Entity										97.00%
Mortgage Loans on Real Estate					22,000,000
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Basis spread over variable rate					2.50%
Maturity date					Oct. 16, 2016
Maturity Period					1 year
Recourse mortgage debt					6,000,000
440 First Street, NW [Member]
Debt Instrument [Line Items]
Amount borrowed						10,500,000
Borrowing capacity of a construction loan	43,500,000
Maturity Period				1 year
Percentage of outstanding principal		50.00%
Subsequent Event [Member] | 440 First Street, NW [Member]
Debt Instrument [Line Items]
Maturity date							May 30, 2016

[1] Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014

[2] At March 31, 2015, LIBOR was 0.18%. All references to LIBOR in the condensed consolidated financial statements refer to one-month LIBOR.

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Dispositions - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015 sqft Integer	Mar. 31, 2014 Integer sqft	Dec. 31, 2014
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Number Of Buildings	112	137
Square feet	7,961,288	8,735,388
Unsecured revolving credit facility	$ 143,000,000		$ 205,000,000
Rents received in advance	291,000	593,000
Richmond
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Disposition Date	Mar. 19, 2015
Number Of Buildings	19
Square feet	827,900
Proceeds from sale of properties	53,768,000
Mortgage loans, effective interest rates ranging from 4.40% to 6.01%, maturing at various dates through June 2023(2)	3,700,000
Loan prepayment penalty	500,000
Unsecured revolving credit facility	48,000,000
Gain (loss) on sale of properties	900,000
Rents received in advance	900,000
Deferred leasing commissions	1,100,000
Unamortized straight-line rent	2,000,000
Disposed Richmond
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Square feet	828,000
Girard Business Center and Gateway Center [Member]
SEC Schedule III, Real Estate and Accumulated Depreciation [Line Items]
Disposition Date	Jan. 29, 2014
Square feet	341,973
Proceeds from sale of properties	31,616,000
Unamortized straight-line rent		$ 1,500,000

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Segment Information - Summary of Segment Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 Integer sqft	Mar. 31, 2014 sqft Integer	Dec. 31, 2014
Segment Reporting Information [Line Items]
Number of buildings	112	137
Square feet	7,961,288	8,735,388
Total revenues	$ 43,849	$ 39,363
Property operating expense	(13,113)	(12,038)
Real estate taxes and insurance	(5,042)	(4,132)
Total property operating income	25,694	23,193
Depreciation and amortization expense	(16,335)	(14,310)
General and administrative	(5,526)	(5,196)
Acquisition costs	0	(68)
Other expenses	(2,734)	(4,205)
Income from discontinued operations	607	857
Net income (loss)	492	(1,443)
Total assets	1,534,448	1,481,336	1,618,460
Capital expenditure	19,242	11,393
Corporate assets not allocated to any reportable segments	59,450	91,673
Capital expenditures for corporate assets not allocated to any reportable segments	309	277
Washington, D.C.
Segment Reporting Information [Line Items]
Number of buildings	6	4
Square feet	916,686	522,560
Total revenues	11,032	6,940
Property operating expense	(3,139)	(1,987)
Real estate taxes and insurance	(2,023)	(1,054)
Total property operating income	5,870	3,899
Total assets	503,651	343,804
Capital expenditure	3,436	6,481
Maryland
Segment Reporting Information [Line Items]
Number of buildings	38	44
Square feet	1,999,300	2,274,813
Total revenues	11,705	11,645
Property operating expense	(4,018)	(3,946)
Real estate taxes and insurance	(891)	(1,004)
Total property operating income	6,796	6,695
Total assets	358,772	393,919
Capital expenditure	2,164	2,390
Northern Virginia
Segment Reporting Information [Line Items]
Number of buildings	49	51
Square feet	3,021,299	3,086,550
Total revenues	14,114	13,666
Property operating expense	(4,064)	(3,976)
Real estate taxes and insurance	(1,549)	(1,524)
Total property operating income	8,501	8,166
Total assets		421,556
Capital expenditure		822
Southern Virginia
Segment Reporting Information [Line Items]
Number of buildings	19	38
Square feet	2,024,003	2,851,465
Total revenues	6,998	7,112
Property operating expense	(1,892)	(2,129)
Real estate taxes and insurance	(579)	(550)
Total property operating income	4,527	4,433
Total assets	167,979	230,384
Capital expenditure	2,490	1,423
Northern Virginia
Segment Reporting Information [Line Items]
Total assets	444,596
Capital expenditure	$ 10,843

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Debt - Unsecured Term Loan (Detail) (USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended
	Jun. 05, 2013	Mar. 31, 2015		Dec. 31, 2014
Debt Instrument [Line Items]
Amount		$ 300,000		$ 300,000
Basis spread over variable rate	2.50%
Tranche A
Debt Instrument [Line Items]
Maturity Date		October 2018
Amount		100,000
Interest Rate		LIBOR, plus 165 basis points	[1]
Basis spread over variable rate		1.65%
Tranche B
Debt Instrument [Line Items]
Maturity Date		October 2019
Amount		100,000
Interest Rate		LIBOR, plus 180 basis points	[1]
Basis spread over variable rate		1.80%
Tranche C
Debt Instrument [Line Items]
Maturity Date		October 2020
Amount		$ 100,000
Interest Rate		LIBOR, plus 205 basis points	[1]
Basis spread over variable rate		2.05%

[1] At March 31, 2015, LIBOR was 0.18%. The interest rate spread is subject to change based on our maximum total indebtedness ratio. For more information, see note 8(e) Debt – Financial Covenants.

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Investment in Affiliates - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended		0 Months Ended
	Sep. 26, 2014 Rate	Mar. 31, 2015 sqft	Mar. 31, 2014	Sep. 26, 2017	Nov. 12, 2014	Jul. 10, 2014
Schedule of Equity Method Investments [Line Items]
Ownership percentage in unconsolidated joint venture		51.00%
Repaid mortgage					$ 48.3
Investment in affiliates variable interest entity square feet		327,000
Financing					50.0
Mortgage interest rate		3.91%
Loan Interest only payment date		Dec. 31, 2024
Loan maturity date		Dec. 01, 2029
Loan prepayment date		Jun. 01, 2029
Interest rate increase (decrease)	(60.00%)
Fees from joint ventures		0.1	0.1
1750 H Street
Schedule of Equity Method Investments [Line Items]
Ownership percentage in unconsolidated joint venture						50.00%
Repaid mortgage						27.9
Financing						32.0
Mortgage interest rate		3.92%
Loan maturity date		Aug. 01, 2024
Loan prepayment date		Aug. 01, 2021
RiversPark I and II
Schedule of Equity Method Investments [Line Items]
Ownership percentage in unconsolidated joint venture	25.00%
Investment in affiliates variable interest entity square feet		308,000
Financing	28.0
Percentage of outstanding principal	25.00%	10.00%
Washington D C Reporting Segment | Maximum | 1750 H Street
Schedule of Equity Method Investments [Line Items]
Investment in affiliates variable interest entity square feet		113,000
Subsequent Event | RiversPark I and II
Schedule of Equity Method Investments [Line Items]
Loan maturity date				Sep. 26, 2017

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Share-Based Payments (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Compensation Plans Option Activity

A summary of our stock option activity during the three months ended March 31 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2014	1,051,359		$	15.33	6.3 years	$	181,352
Granted	119,500		12.48
Exercised	(2,000	)	9.30
Expired	(59,000	)	22.44
Forfeited	(49,771	)	14.48
Outstanding at March 31, 2015	1,060,088		$	14.67	6.8 years	$	107,523
Exercisable at March 31, 2015	516,839		$	15.52	5.8 years	$	87,260
Options expected to vest, subsequent to March 31, 2015	507,651		$	13.97	7.6 years	$	17,602

Assumptions Used in Fair Value Determination of Stock Options Granted

The weighted average assumptions used in the fair value determination of stock options granted to employees during the three months ended March 31, 2015 are summarized as follows:

Risk-free interest rate	1.61	%
Expected volatility	29.16	%
Expected dividend yield	4.79	%
Weighted average expected life of options	5 years

Schedule of Nonvested Share Activity

A summary of our non-vested common share awards at March 31, 2015 is as follows:

	Non-vested Common Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2014	623,421		$	13.16
Granted	121,380		12.11
Vested	(106,300	)	13.97
Expired	(22,260	)	8.42
Forfeited	(154,626	)	13.42
Non-vested at March 31, 2015	461,615		$	12.83

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Derivative Instruments - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Derivatives, Fair Value [Line Items]
Number of interest rate swap agreements	11
Fixed effective interest rate	1.50%
Interest Rate Swap
Derivatives, Fair Value [Line Items]
Fixed effective interest rate	1.505%
Amount on variable rate debt	$ 300,000,000
Interest Rate Swap | Interest Expense
Derivatives, Fair Value [Line Items]
Accumulated other comprehensive loss reclassified as an increase in interest expense	1,000,000	1,000,000
Estimated accumulated other comprehensive loss reclassified as an increase in interest expense over the following twelve months	$ 4,300,000

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Rental Property (Tables)

3 Months Ended

Mar. 31, 2015

Real Estate [Abstract]

Summary of Rental Property

Rental property consists of the following (dollars in thousands):

	March 31, 2015			December 31, 2014(1)
Land and land improvements	$	325,228		$	325,214
Buildings and improvements	950,746			949,683
Construction in progress	73,444			69,181
Tenant improvements	170,443			159,867
Furniture, fixtures and equipment	402			427
	1,520,263			1,504,372
Less: accumulated depreciation	(227,368		)	(215,499		)
	$	1,292,895		$	1,288,873

⁽¹⁾ Excludes rental property totaling $57.7 million at December 31, 2014 related to the sale of the Richmond Portfolio (as defined in note 7, Dispositions), which was classified as held-for-sale at December 31, 2014 and was sold on March 19, 2015.

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Dispositions - Summary of Completed Property Dispositions (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 sqft	Mar. 31, 2014 sqft
Schedule Of Discontinued Operations [Line Items]
Square feet	7,961,288	8,735,388
Richmond
Schedule Of Discontinued Operations [Line Items]
Reporting Segment	Southern Virginia
Disposition Date	Mar. 19, 2015
Property Type	Business Park
Square feet	827,900
Proceeds from sale of properties	$ 53,768
Patrick Center
Schedule Of Discontinued Operations [Line Items]
Reporting Segment	Maryland
Disposition Date	Apr. 16, 2014
Property Type	Office
Square feet	66,269
Proceeds from sale of properties	10,888
Girard Business Center and Gateway Center
Schedule Of Discontinued Operations [Line Items]
Reporting Segment	Maryland
Disposition Date	Jan. 29, 2014
Property Type	Business Park and  Office
Square feet	341,973
Proceeds from sale of properties	31,616
West Park
Schedule Of Discontinued Operations [Line Items]
Reporting Segment	Maryland
Disposition Date	Apr. 02, 2014
Property Type	Office
Square feet	28,333
Proceeds from sale of properties	$ 2,871

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Notes Receivable - Summary of Notes Receivable (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2013	Dec. 31, 2014
Receivables with Imputed Interest [Line Items]
Face Amount			$ 63,720
Unamortized Origination Fees			(41)
Balance			63,679
Notes Receivables Issued on December 2010 [Member]
Receivables with Imputed Interest [Line Items]
Face Amount	34,000		34,000
Unamortized Origination Fees	0		0
Balance	34,000		34,000
Interest Rate	9.75%	9.75%
America Square [Member]
Receivables with Imputed Interest [Line Items]
Face Amount			29,720
Unamortized Origination Fees			(41)
Balance			$ 29,679
Interest Rate		9.00%

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Accounting Policies [Abstract]
Allowance for credit losses for its notes receivable	$ 0	$ 0

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Debt - Schedule of Borrowings (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
Debt Instrument [Line Items]
Mortgage loans, effective interest rates ranging from 4.40% to 6.01%, maturing at various dates through June 2023(2)	$ 303,866,000	[1]	$ 308,637,000	[1],[2]
Unsecured revolving credit facility, effective interest rate of LIBOR plus 1.70%, maturing October 2017(2)	143,000,000	[2]	205,000,000	[1],[2]
Total long term debt	746,866,000		813,637,000
Effective interest rate on the notes	0.18%
Mortgage Loan [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, effective percentage rate range, minimum	4.40%
Debt instrument, interest rate, effective percentage rate range, maximum	6.01%
Debt instrument maturity date	June 2023
Unsecured Term Loan, Effective Interest Rates Ranging from LIBOR Plus 1.45% to LIBOR Plus 1.90%, with Staggered Maturity Dates ranging from October 2018 to October 2020
Debt Instrument [Line Items]
Unsecured term loan, effective interest rates ranging from LIBOR plus 1.65% to LIBOR plus 2.05%, with staggered maturity dates ranging from October 2018 to October 2020(2)	300,000,000	[2]	300,000,000	[1],[2]
Debt instrument maturity date	October 2018 to October 2020
Debt Instrument Basis Spread On Variable Rate Minimum	1.65%
Debt Instrument Basis Spread On Variable Rate Maximum	2.05%
Unsecured revolving credit facility
Debt Instrument [Line Items]
Unsecured revolving credit facility, effective interest rate of LIBOR plus 1.70%, maturing October 2017(2)	13,000,000
Debt instrument maturity date	October 2017
Effective interest rate on the notes	1.70%
Richmond
Debt Instrument [Line Items]
Mortgage loans, effective interest rates ranging from 4.40% to 6.01%, maturing at various dates through June 2023(2)	0		3,498,000
Mortgages Held-for-sale, Fair Value Disclosure	$ 3,500,000

[1] At March 31, 2015, LIBOR was 0.18%. All references to LIBOR in the condensed consolidated financial statements refer to one-month LIBOR.

[2] Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014

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Share-Based Payments Share-Based Payments - Assumptions Used in Fair Value Determination of Stock Options Granted (Details)	3 Months Ended
	Mar. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Risk Free Interest Rate	1.61%
Expected Volatility Rate	29.16%
Expected Dividend Rate	4.79%
Expected Term	5 years 0 months 0 days

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Equity - Additional Information (Detail) (USD $)	0 Months Ended
	Jan. 27, 2015	Apr. 28, 2015
Dividends Payable [Line Items]
Dividend declared date	Jan. 27, 2015
Series A Preferred Shares
Dividends Payable [Line Items]
Dividend paid date	Feb. 17, 2015
Dividend record date	Feb. 10, 2015
Dividends declared on Series A Preferred Shares	0.484375
Common Shares
Dividends Payable [Line Items]
Common share dividend per share declared	0.15
Common share dividend per share annualized	0.60
Dividend paid date	Feb. 17, 2015
Dividend record date	Feb. 10, 2015
Subsequent Event [Member]
Dividends Payable [Line Items]
Dividend declared date		Apr. 28, 2015
Subsequent Event [Member] | Series A Preferred Shares
Dividends Payable [Line Items]
Dividend paid date		May 15, 2015
Dividend record date		May 08, 2015
Dividends declared on Series A Preferred Shares		0.484375
Subsequent Event [Member] | Common Shares
Dividends Payable [Line Items]
Common share dividend per share declared		0.15
Common share dividend per share annualized		0.60
Dividend paid date		May 15, 2015
Dividend record date		May 08, 2015

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Investment in Affiliates - Results of Operations of Company's Unconsolidated Joint Ventures (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Schedule of Equity Method Investments [Line Items]
Total revenues	$ 43,849	$ 39,363
Total operating expenses	(40,016)	(35,744)
Operating income	3,833	3,619
Depreciation and amortization	(16,335)	(14,310)
Interest expense, net	(2,734)	(4,205)
Net income (loss)	346	(227)
Unconsolidated Joint Ventures
Schedule of Equity Method Investments [Line Items]
Total revenues	6,167	5,752
Total operating expenses	(2,156)	(2,226)
Operating income	4,011	3,526
Depreciation and amortization	(2,249)	(2,803)
Interest expense, net	(973)	(1,011)
Net income (loss)	$ 789	$ (288)

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(a) Principles of Consolidation

Our unaudited condensed consolidated financial statements include our accounts and the accounts of our Operating Partnership and the subsidiaries in which we or our Operating Partnership has a controlling interest, which includes First Potomac Management LLC, a wholly-owned subsidiary that manages the majority of our properties. All intercompany balances and transactions have been eliminated in consolidation.

We have condensed or omitted certain information and note 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. We believe 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 our annual report on Form 10-K for the year ended December 31, 2014 and as updated from time to time in other filings with the SEC.

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and accruals necessary to present fairly our financial position as of March 31, 2015 and the results of our operations, our comprehensive loss and our cash flows for the three months ended March 31, 2015 and 2014. 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 as well as the seasonality of certain operating expenses such as utilities expense and snow and ice removal costs.

(b) Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires our management team 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 unaudited condensed 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; derivative valuations; 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 initially recorded at fair value, if acquired in a business combination, or initial cost when constructed or acquired in an asset purchase. 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 our assets, by class, are as follows:

Buildings	39 years
Building improvements	5 to 20 years
Furniture, fixtures and equipment	5 to 15 years
Lease related intangible assets	The term of the related lease
Tenant improvements	Shorter of the useful life of the asset or the term of the related lease

We regularly review 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 carrying value of a property, an impairment analysis is performed. We assess 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 to maintain the operating capacity, 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. Further, we will record an impairment loss if we expect to dispose of a property, in the near term, at a price below carrying value. In such an event, we 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.

We will classify a building as held-for-sale in accordance with GAAP in the period in which we have made the decision to dispose of the building, our Board of Trustees or a designated delegate has approved the sale, there is a high likelihood a binding agreement to purchase the property will be signed under which the buyer will be required to commit 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. We will cease recording depreciation on a building once it has been classified as held-for-sale. In the second quarter of 2014, we prospectively adopted Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which impacts the presentation of operations and gains or losses from disposed properties and properties classified as held-for-sale. ASU 2014-08 states that a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations only if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations or financial results. The operations of all properties that were sold prior to the adoption of ASU 2014-08, two properties that were classified as held-for-sale in previously issued financial statements prior to our adoption of ASU 2014-08 (West Park and Patrick Center) and were subsequently sold, as well as the Richmond Portfolio (as defined below), are reflected within discontinued operations in our consolidated statements of operations for all periods presented.

If the building does not qualify as a discontinued operation under ASU 2014-08, we will classify the building's operating results, together with any impairment charges and any gains or losses on the sale of the building, in continuing operations for all periods presented in our consolidated statements of operations. We will classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheet for the period the held-for-sale criteria were met.

If the building does qualify as a discontinued operation under ASU 2014-08, we will classify the building's operating results, together with any impairment charges and any gains or losses on the sale of the building, in discontinued operations in our consolidated statements of operations for all periods presented and classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheets for the periods presented. Interest expense is reclassified to discontinued operations only to the extent the disposed or held-for-sale property is secured by specific mortgage debt and the mortgage debt will not be assigned to another property owned by us after the disposition.

We recognize the fair value, if sufficient information exists to reasonably estimate the fair value, of any liability for conditional asset retirement obligations when assumed or incurred, which is generally upon acquisition, construction, development or redevelopment and/or through the normal operation of the asset.

We capitalize interest costs incurred on qualifying expenditures for real estate assets under development or redevelopment, which include our investments in assets owned through unconsolidated joint ventures that are under development or redevelopment, while being readied for their intended use in accordance with accounting requirements regarding capitalization of interest. We 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. We also capitalize direct compensation costs of our construction personnel who manage the development and redevelopment projects, but only to the extent the employee’s time can be allocated to a project. Any portion of construction management costs not directly attributable to a specific project are recognized as general and administrative expense in the period incurred. We do not capitalize any other general and administrative costs such as office supplies, office rent expense or an overhead allocation to our development or redevelopment projects. Capitalized compensation costs were immaterial for the three months ended March 31, 2015 and 2014. Capitalization of interest ends 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. We place redevelopment and development assets into service at this time and commence depreciation upon the substantial completion of tenant improvements and the recognition of revenue. Capitalized interest is depreciated over the useful life of the underlying assets, commencing when those assets are placed into service.

(d) Notes Receivable

We provide loans to the owners of real estate properties, which can be collateralized by interest in the real estate property. We record these loans as “Notes receivable, net” in our consolidated balance sheets. The loans 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. We record interest earned from notes receivable and amortization of any discount costs or issuance costs within “Interest and other income” in our consolidated statements of operations.

We will establish a provision for anticipated credit losses associated with our notes receivable when we anticipate that we may be unable to collect any contractually due amounts. This determination is based upon such factors as delinquencies, loss experience, collateral quality and current economic or borrower conditions. Our collectability of our notes receivable may be adversely impacted by the financial stability of the Washington, D.C. region and the ability of the underlying assets to keep current tenants or attract new tenants. Estimated losses are recorded as a charge to earnings to establish an allowance for credit losses that we estimate to be adequate based on these factors. Based on the review of the above criteria, we did not record an allowance for credit losses for our notes receivable during the three months ended March 31, 2015 and 2014.

(e) Application of New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance when it becomes effective on January 1, 2017. Early adoption is not permitted. ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method and are evaluating the impact that ASU 2014-09 will have on our consolidated financial statements or related disclosures.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”), which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The guidance will become effective January 1, 2017. The adoption of ASU 2014-15 is not expected to have an impact on our consolidated financial statements or related disclosures.

In January 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ("ASU 2015-01"), which eliminates the concept of extraordinary items from GAAP and the requirement that an entity separately report extraordinary items in the income statement. ASU 2015-01 also requires that entities continue to evaluate whether items are unusual in nature or infrequent in occurrence for presentation and disclosure purposes. ASU 2015-01 applies to all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted and the guidance may be applied prospectively or retrospectively to all prior periods presented in the consolidated financial statements. The adoption of ASU 2015-01 is not expected to have a material impact on our consolidated financial statements or related disclosures.

In February 2015, the FASB issued Accounting Standards Update 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to the identification of variable interests (fees paid to a decision maker or service provider), the variable interest entity characteristics for a limited partnership or similar entity and the primary beneficiary determination. ASU 2015-02 is effective January 1, 2016. The adoption of ASU 2015-02 is not expected to have a material impact on our consolidated financial statements or related disclosures.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. ASU 2015-03 is effective for periods beginning after December 15, 2015 with early adoption permitted and will be applied on a retrospective basis. The guidance will be effective on January 1, 2016 and is not expected to have a material impact on our consolidated financial statements or related disclosures.

(f) Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation as a result of reclassifying the operating results of several properties as discontinued operations. For more information, see note 7, Dispositions.

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Equity - Company's Allocation Between Non-controlling Interests (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ 710,905	$ 739,291
Net income (loss)	604	(1,248)
Changes in ownership, net	1,185	(1,413)
Distributions to owners	(11,902)	(11,889)
Other comprehensive income	(1,030)	168
Ending Balance	699,762	724,909
Increase (Decrease) in Temporary Equity [Roll Forward]
Beginning Balance, Redeemable noncontrolling interests	33,332	33,221
Net income (loss), Redeemable noncontrolling interests	(112)	(195)
Change in ownership, net, Redeemable noncontrolling interests	(581)	2,067
Distributions to owners, Redeemable noncontrolling interests	(395)	(393)
Other comprehensive income, Redeemable noncontrolling interests	(46)	7
Ending Balance, Redeemable noncontrolling interests	32,198	34,707
First Potomac Realty Trust
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	710,007	738,510
Net income (loss)	604	(1,248)
Changes in ownership, net	1,281	(1,502)
Distributions to owners	(11,902)	(11,889)
Other comprehensive income	(1,030)	168
Ending Balance	698,960	724,039
Non-redeemable Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	898	781
Net income (loss)		0
Changes in ownership, net	(96)	89
Ending Balance	$ 802	$ 870

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Notes Receivable - Additional Information (Detail) (USD $)	3 Months Ended		12 Months Ended	0 Months Ended	12 Months Ended	0 Months Ended
	Mar. 31, 2015 sqft	Mar. 31, 2014 sqft	Dec. 31, 2013	Apr. 01, 2011	Dec. 31, 2010 sqft	Jan. 10, 2014	Dec. 31, 2014	Feb. 24, 2015	Apr. 30, 2011 sqft
Receivables with Imputed Interest [Line Items]
Area of real estate property	7,961,288	8,735,388
Unsecured revolving credit facility	$ 143,000,000						$ 205,000,000
Interest income	1,200,000
Income from amortization of origination fees	5,000	11,000
America Square [Member]
Receivables with Imputed Interest [Line Items]
Area of real estate property									461,000
Mezzanine loan provided to owners								29,700,000	30,000,000
Maturity date of loan	May 01, 2016
Prepayment Fee Income	2,400,000
Fixed interest rate on loan			9.00%
America Square [Member] | Maximum
Receivables with Imputed Interest [Line Items]
Fixed interest rate on loan				9.00%
Notes Receivables Issued on December 2010 [Member]
Receivables with Imputed Interest [Line Items]
Area of real estate property					287,000
Mezzanine loan provided to owners					25,000,000	34,000,000
Maturity date of loan					Apr. 01, 2017
Unsecured revolving credit facility						9,000,000
Fixed interest rate on loan	9.75%		9.75%
Interest income		1,500,000
Write-off of unamortized origination fees		$ 100,000
Notes Receivables Issued on December 2010 [Member] | Maximum
Receivables with Imputed Interest [Line Items]
Fixed interest rate on loan						12.50%
Notes Receivables Issued on December 2010 [Member] | Minimum [Member]
Receivables with Imputed Interest [Line Items]
Fixed interest rate on loan						9.75%

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Debt (Tables)

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Schedule of Borrowings

Our borrowings consisted of the following (dollars in thousands):

	March 31,   2015		December 31, 2014(1)
Mortgage loans, effective interest rates ranging from 4.40% to 6.01%, maturing at various dates through June 2023(2)	$	303,866	$	308,637
Unsecured term loan, effective interest rates ranging from LIBOR plus 1.65% to LIBOR plus 2.05%, with staggered maturity dates ranging from October 2018 to October 2020(2)	300,000		300,000
Unsecured revolving credit facility, effective interest rate of LIBOR plus 1.70%, maturing October 2017(2)	143,000		205,000
	$	746,866	$	813,637

⁽¹⁾  Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014.

⁽²⁾  At March 31, 2015, LIBOR was 0.18%. All references to LIBOR in the condensed consolidated financial statements refer to one-month LIBOR.

Summary of Company's Mortgage Debt

The following table provides a summary of our mortgage debt at March 31, 2015 and December 31, 2014 (dollars in thousands):

Encumbered Property	Contractual Interest Rate	Effective Interest Rate			Maturity Date	March 31,   2015			December 31, 2014
Jackson National Life Loan(1)	5.19%	5.19	%		August 2015	$	64,640		$	64,943
440 First Street, NW(2)	LIBOR + 2.50%	LIBOR + 2.50%			May 2016	32,216			32,216
Storey Park(2)	LIBOR + 2.50%	LIBOR + 2.50%			October 2016	22,000			22,000
Gateway Centre Manassas Building I	7.35%	5.88	%		November 2016	378			432
Hillside I and II	5.75%	4.62	%		December 2016	12,846			12,949
Redland Corporate Center Buildings II & III	4.20%	4.64	%		November 2017	65,503			65,816
840 First Street, NE	5.72%	6.01	%		July 2020	36,379			36,539
Battlefield Corporate Center	4.26%	4.40	%		November 2020	3,651			3,692
1211 Connecticut Avenue, NW	4.22%	4.47	%		July 2022	29,548			29,691
1401 K Street, NW	4.80%	4.93	%		June 2023	36,705			36,861
		4.75	%	(3)		303,866			305,139
Unamortized fair value adjustments						(320		)	(370		)
Principal balance						303,546			304,769
Richmond Portfolio(4)
Hanover Business Center Building D	8.88%	6.63	%		August 2015	—			104
Chesterfield Business Center Buildings C,D,G and H	8.50%	6.63	%		September 2015	—			302
Hanover Business Center Building C	7.88%	6.63	%		December 2017	—			505
Chesterfield Business Center Buildings A,B,E and F	7.45%	6.63	%		June 2021	—			1,674
Airpark Business Center	7.45%	6.63	%		June 2021	—			913
						—			3,498
Total unamortized fair value adjustments - Richmond						—			(73		)
Total principal balance - Richmond						$	—		$	3,425
Total principal balance						$	303,546		$	308,194

⁽¹⁾  At March 31, 2015, the loan was secured by the following properties: Plaza 500, Van Buren Office Park, Rumsey Center, Snowden Center, Greenbrier Technology Center II and Norfolk Business Center. The terms of the loan allow us to substitute collateral, as long as certain debt-service coverage and loan-to-value ratios are maintained, or to prepay a portion of the loan, with a prepayment penalty, subject to a debt-service yield.

⁽²⁾  At March 31, 2015, LIBOR was 0.18%.

⁽³⁾  Weighted average interest rate on total mortgage debt.

⁽⁴⁾  The mortgage loans and unamortized fair value adjustments that encumbered properties within the Richmond Portfolio were classified within “Liabilities held-for-sale” on our consolidated balance sheet at December 31, 2014. The loans were prepaid upon the sale of the Richmond Portfolio on March 19, 2015.

Unsecured Term Loan

The table below shows the outstanding balances and the interest rates of the three tranches of the $300.0 million unsecured term loan at March 31, 2015 (dollars in thousands):

	Maturity Date	Amount		Interest Rate(1)
Tranche A	October 2018	$	100,000	LIBOR, plus 165 basis points
Tranche B	October 2019	100,000		LIBOR, plus 180 basis points
Tranche C	October 2020	100,000		LIBOR, plus 205 basis points
		$	300,000

⁽¹⁾  At March 31, 2015, LIBOR was 0.18%. The interest rate spread is subject to change based on our maximum total indebtedness ratio. For more information, see note 8(e) Debt – Financial Covenants.

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Dispositions (Tables)

3 Months Ended

Mar. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations Square Feet Area [Table Text Block]

The following table is a summary of completed property dispositions whose operating results are included in continuing operations in our consolidated statements of operations for the periods presented (dollars in thousands):

	Reporting Segment	Disposition Date	Property Type	Square Feet	Net Sale Proceeds
Owings Mills Business Park	Maryland	10/16/2014	Business Park	180,475	$	12,417
Corporate Campus at Ashburn Center	Northern Virginia	6/26/2014	Business Park	194,184	39,910

Schedule of Disposal Groups Including Not Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

The following table summarizes the aggregate results of operations for the two properties that are included in continuing operations for the three months ended March 31, 2014 (dollars in thousands):

	2014
Revenues	$	1,465
Property operating expenses	(548		)
Depreciation and amortization	(366		)
Net income from continuing operations	$	551

Summary of Completed Property Dispositions

The following table is a summary of completed property dispositions whose operating results are reflected as discontinued operations in our consolidated statements of operations for the periods presented (dollars in thousands):

	Reporting Segment	Disposition Date	Property Type	Square Feet	Net Sale Proceeds
Richmond Portfolio	Southern Virginia	3/19/2015	Business Park	827,900	$	53,768
Patrick Center	Maryland	4/16/2014	Office	66,269	10,888
West Park	Maryland	4/2/2014	Office	28,333	2,871
Girard Business Center and Gateway Center	Maryland	1/29/2014	Business Park and  Office	341,973	31,616

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

The following table summarizes the results of operations of properties included in discontinued operations (dollars in thousands):

	Three Months Ended   March 31,
	2015			2014
Revenues	$	877		$	1,808
Loss from operations, before taxes(1)	(975		)	(911		)
Loss on debt extinguishment	(489		)	—
Gain on sale of rental property	857			54

⁽¹⁾  For the three months ended March 31, 2015, we accelerated $2.0 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of the Richmond Portfolio in March 2015. For the three months ended March 31, 2014, we accelerated $1.5 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of both Girard Business Center and Gateway Center in January 2014.

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Derivative Instruments - Summary of Interest Rate Swap Agreements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Derivatives, Fair Value [Line Items]
Fixed LIBOR Interest Rate	1.50%
Interest Rate Swap
Derivatives, Fair Value [Line Items]
Notional Amount	$ 300,000
Fixed LIBOR Interest Rate	1.505%
Interest Rate Swap One
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2016
Notional Amount	35,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.754%
Interest Rate Swap Two
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2016
Notional Amount	25,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.763%
Interest Rate Swap Three
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2017
Notional Amount	30,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	2.093%
Interest Rate Swap Four
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2017
Notional Amount	30,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	2.093%
Interest Rate Swap Five
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2018
Notional Amount	30,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.66%
Interest Rate Swap Six
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2018
Notional Amount	25,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.394%
Interest Rate Swap Seven
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2017
Notional Amount	25,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.129%
Interest Rate Swap Eight
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2017
Notional Amount	12,500
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.129%
Interest Rate Swap Nine
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2018
Notional Amount	12,500
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.383%
Interest Rate Swap Ten
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2017
Notional Amount	50,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	0.955%
Interest Rate Swap Eleven
Derivatives, Fair Value [Line Items]
Maturity Date	Jul. 31, 2018
Notional Amount	$ 25,000
Interest Rate Contractual Component	LIBOR
Fixed LIBOR Interest Rate	1.135%

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Investment in Affiliates - Components of Investments in Affiliates (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
Schedule of Equity Method Investments [Line Items]
Company Investment	$ 47,658		$ 47,482
Prosperity Metro Plaza
Schedule of Equity Method Investments [Line Items]
Reporting Segment	Northern Virginia
Ownership Interest	51.00%
Company Investment	24,846		24,651
1750 H Street, NW
Schedule of Equity Method Investments [Line Items]
Reporting Segment	Washington, D.C.
Ownership Interest	50.00%
Company Investment	14,938		14,834
Aviation Business Park
Schedule of Equity Method Investments [Line Items]
Reporting Segment	Maryland
Ownership Interest	50.00%
Company Investment	5,677		5,748
RiversPark I and II
Schedule of Equity Method Investments [Line Items]
Reporting Segment	Maryland
Ownership Interest	25.00%	[1]
Company Investment	$ 2,197	[1]	$ 2,249	[1]

[1] RiversPark I and RiversPark II are owned through two separate joint ventures.

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Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Interest Rate Swap Agreements

Our interest rate swap agreements are summarized below (dollars in thousands):

Maturity Date	Notional Amount		Interest Rate Contractual Component	Fixed LIBOR Interest Rate
July 2016	$	35,000	LIBOR	1.754	%
July 2016	25,000		LIBOR	1.763	%
July 2017	30,000		LIBOR	2.093	%
July 2017	30,000		LIBOR	2.093	%
July 2017	25,000		LIBOR	1.129	%
July 2017	12,500		LIBOR	1.129	%
July 2017	50,000		LIBOR	0.955	%
July 2018	12,500		LIBOR	1.383	%
July 2018	30,000		LIBOR	1.660	%
July 2018	25,000		LIBOR	1.394	%
July 2018	25,000		LIBOR	1.135	%
Total/Weighted Average	$	300,000		1.505	%

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

In accordance with accounting provisions and the fair value hierarchy described above, the following table shows the fair value of our consolidated assets and liabilities that are measured on a non-recurring and recurring basis as of March 31, 2015 and December 31, 2014 (dollars in thousands):

	Balance at    March 31, 2015		Level 1		Level 2		Level 3
Recurring Measurements:
Derivative instrument-swap liabilities	$	4,518	$	—	$	4,518	$	—
	Balance at    December 31, 2014		Level 1		Level 2		Level 3
Recurring Measurements:
Derivative instrument-swap assets	$	133	$	—	$	133	$	—
Derivative instrument-swap liabilities	3,569		—		3,569		—

Fair Value of Debt Instruments

The carrying amount and estimated fair value of our notes receivable and debt instruments are as follows (amounts in thousands):

	March 31, 2015				December 31, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Notes receivable(1)	$	34,000	$	34,000	$	63,679	$	63,720
Financial Liabilities:
Mortgage debt(2)	$	303,866	$	299,042	$	308,637	$	292,882
Unsecured term loan	300,000		300,000		300,000		300,000
Unsecured revolving credit facility	143,000		143,000		205,000		205,000
Total	$	746,866	$	742,042	$	813,637	$	797,882

⁽¹⁾  The principal amount of our notes receivable was $34.0 million and $63.7 million at March 31, 2015 and December 31, 2014, respectively.On February 24, 2015, the owners of America’s Square, a 461,000 square foot office complex located in Washington, D.C., prepaid a mezzanine loan, which had an outstanding $29.7 million balance of the $30.0 million mezzanine loan that we provided them in April 2011.

⁽²⁾  Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014.

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Description of Business

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Description of Business

Description of Business

First Potomac Realty Trust (the “Company”) is a leader in the ownership, management, development and redevelopment of office and business park properties in the greater Washington, D.C. region. The Company strategically focuses on acquiring and redeveloping properties that it believes can benefit from its intensive property management, leasing expertise, market knowledge and established relationships, and seeks to reposition these properties to increase their profitability and value. The Company’s portfolio primarily contains a mix of single-tenant and multi-tenant office properties and business parks. Office properties are single-story and multi-story buildings that are primarily for office use; and business parks contain buildings with office features combined with some industrial property space. The Company separates its properties into four distinct reporting segments, which it refers to as the Washington, D.C., Maryland, Northern Virginia and Southern Virginia reporting segments.

References in these unaudited condensed consolidated financial statements to “we,” “our,” “us,” “the Company” or “First Potomac,” refer to the Company and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.

We conduct our business through First Potomac Realty Investment Limited Partnership, our operating partnership (the “Operating Partnership”). We are the sole general partner of, and, as of March 31, 2015, owned 100% of the preferred interest and 95.7% of the common interest in the Operating Partnership. The remaining common 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 two of our executive officers who contributed properties and other assets to us upon our formation, and the remainder of which are owned by other unrelated parties.

At March 31, 2015, we wholly owned or had a controlling interest in properties totaling 8.0 million square feet and had a noncontrolling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures. We also owned land that can support 1.3 million square feet of additional development. Our consolidated properties were 88.0% occupied by 500 tenants at March 31, 2015. We did not include square footage that was in development or redevelopment, which totaled 0.2 million square feet at March 31, 2015, in our occupancy calculation. We derive substantially all of our revenue from leases of space within our properties. As of March 31, 2015, our largest tenant was the U.S. Government, which accounted for 13.2% of our total annualized cash basis rent, and the U.S. Government combined with government contractors, accounted for 25.9% of our total annualized cash basis rent as of March 31, 2015. We operate so as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

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Equity (Tables)

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Company's Allocation between Non-controlling Interests

Our equity and redeemable noncontrolling interests are as follows (dollars in thousands):

	First Potomac Realty Trust			Non-redeemable noncontrolling interests			Total Equity			Redeemable noncontrolling interests
Balance at December 31, 2014	$	710,007		$	898		$	710,905		$	33,332
Net income (loss)	604			—			604			(112		)
Changes in ownership, net	1,281			(96		)	1,185			(581		)
Distributions to owners	(11,902		)	—			(11,902		)	(395		)
Other comprehensive loss	(1,030		)	—			(1,030		)	(46		)
Balance at March 31, 2015	$	698,960		$	802		$	699,762		$	32,198

	First Potomac Realty Trust			Non-redeemable noncontrolling interests		Total Equity			Redeemable noncontrolling interests
Balance at December 31, 2013	$	738,510		$	781	$	739,291		$	33,221
Net loss	(1,248		)	—		(1,248		)	(195		)
Changes in ownership, net	(1,502		)	89		(1,413		)	2,067
Distributions to owners	(11,889		)	—		(11,889		)	(393		)
Other comprehensive income	168			—		168			7
Balance at March 31, 2014	$	724,039		$	870	$	724,909		$	34,707

Company's Accumulated Other Comprehensive Loss

A summary of our accumulated other comprehensive loss is as follows (dollars in thousands):

	2015			2014
Beginning balance at January 1,	$	(3,268	)	$	(3,836	)
Net unrealized (loss) gain on derivative instruments	(1,076		)	175
Net loss (gain) attributable to noncontrolling interests	46			(7		)
Ending balance at March 31,	$	(4,298	)	$	(3,668	)

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Rental Property - Summary of Rental Property (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Rental property, net	$ 1,292,895	$ 1,288,873
Rental Property [Member]
Property, Plant and Equipment [Line Items]
Land and land improvements	325,228	325,214
Buildings and improvements	950,746	949,683
Construction in process	73,444	69,181
Tenant improvements	170,443	159,867
Furniture, fixtures and equipment	402	427
Rental property, gross	1,520,263	1,504,372
Less: accumulated depreciation	(227,368)	(215,499)
Southern Virginia | Rental Property [Member]
Property, Plant and Equipment [Line Items]
Rental property, net		$ 57,700

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Debt - Summary of Company's Mortgage Debt (Detail) (USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended
	Jun. 05, 2013	Mar. 31, 2015		Dec. 31, 2014
Debt Instrument [Line Items]
Effective Interest Rate		0.18%
Total Mortgage Debt		$ 303,866	[1]	$ 308,637	[1],[2]
Debt, Weighted Average Interest Rate		4.75%	[3]
Carrying amount of mortgages		303,546		308,194
Effective Interest Rate		0.18%
LIBOR plus interest rate	2.50%
Jackson National Life Loan
Debt Instrument [Line Items]
Contractual Interest Rate		5.19%
Effective Interest Rate		5.19%	[4]
Maturity Date		August 2015	[4]
Total Mortgage Debt		64,640	[4]	64,943	[4]
Effective Interest Rate		5.19%	[4]
440 First Street, NW Construction Loan
Debt Instrument [Line Items]
Contractual Interest Rate		2.50%
Contractual Interest Rate		LIBOR + 2.50%
Maturity Date		May 2016	[5]
Total Mortgage Debt		32,216	[5]	32,216	[5]
Storey Park
Debt Instrument [Line Items]
Contractual Interest Rate		2.50%
Contractual Interest Rate		LIBOR + 2.50%
Maturity Date		October 2016	[5]
Total Mortgage Debt		22,000	[5]	22,000	[5]
Gateway Centre Manassas Building I
Debt Instrument [Line Items]
Contractual Interest Rate		7.35%
Effective Interest Rate		5.88%
Maturity Date		November 2016
Total Mortgage Debt		378		432
Effective Interest Rate		5.88%
Hillside I and II
Debt Instrument [Line Items]
Contractual Interest Rate		5.75%
Effective Interest Rate		4.62%
Maturity Date		December 2016
Total Mortgage Debt		12,846		12,949
Effective Interest Rate		4.62%
Redland Corporate Center Buildings II & III
Debt Instrument [Line Items]
Contractual Interest Rate		4.20%
Effective Interest Rate		4.64%
Maturity Date		November 2017
Total Mortgage Debt		65,503		65,816
Effective Interest Rate		4.64%
840 First Street, NE
Debt Instrument [Line Items]
Contractual Interest Rate		5.72%
Effective Interest Rate		6.01%
Maturity Date		July 2020
Total Mortgage Debt		36,379		36,539
Effective Interest Rate		6.01%
Battlefield Corporate Center
Debt Instrument [Line Items]
Contractual Interest Rate		4.26%
Effective Interest Rate		4.40%
Maturity Date		November 2020
Total Mortgage Debt		3,651		3,692
Effective Interest Rate		4.40%
One thousand two hundred eleven Connecticut Avenue NW. [Member]
Debt Instrument [Line Items]
Contractual Interest Rate		4.22%
Effective Interest Rate		4.47%
Maturity Date		July 2022
Total Mortgage Debt		29,548		29,691
Effective Interest Rate		4.47%
1401 K Street, NW
Debt Instrument [Line Items]
Contractual Interest Rate		4.80%
Effective Interest Rate		4.93%
Maturity Date		June 1, 2023
Total Mortgage Debt		36,705		36,861
Effective Interest Rate		4.93%
Hanover Business Center Building D
Debt Instrument [Line Items]
Contractual Interest Rate		8.88%	[6]
Effective Interest Rate		6.63%	[6]
Maturity Date		August 2015	[6]
Total Mortgage Debt		0	[6]	104	[6]
Effective Interest Rate		6.63%	[6]
Chesterfield Business Center Buildings C,D,G and H
Debt Instrument [Line Items]
Contractual Interest Rate		8.50%	[6]
Effective Interest Rate		6.63%	[6]
Maturity Date		September 2015	[6]
Total Mortgage Debt		0	[6]	302	[6]
Effective Interest Rate		6.63%	[6]
Hanover Business Center Building C
Debt Instrument [Line Items]
Contractual Interest Rate		7.88%	[6]
Effective Interest Rate		6.63%	[6]
Maturity Date		December 2017	[6]
Total Mortgage Debt		0	[6]	505	[6]
Effective Interest Rate		6.63%	[6]
Buildings Abe And F
Debt Instrument [Line Items]
Contractual Interest Rate		7.45%	[6]
Effective Interest Rate		6.63%	[6]
Maturity Date		June 2021	[6]
Total Mortgage Debt		0	[6]	1,674	[6]
Effective Interest Rate		6.63%	[6]
Airpark Business Center
Debt Instrument [Line Items]
Contractual Interest Rate		7.45%	[6]
Effective Interest Rate		6.63%	[6]
Maturity Date		June 2021	[6]
Total Mortgage Debt		0	[6]	913	[6]
Effective Interest Rate		6.63%	[6]
Continuing Operations
Debt Instrument [Line Items]
Total Mortgage Debt		303,866		305,139
Total unamortized fair value adjustments - Richmond		(320)		(370)
Carrying amount of mortgages		303,546		304,769
Richmond
Debt Instrument [Line Items]
Total Mortgage Debt		0		3,498
Total unamortized fair value adjustments - Richmond		0		(73)
Richmond | Mortgage Loans
Debt Instrument [Line Items]
Carrying amount of mortgages		$ 0		$ 3,425

[1] At March 31, 2015, LIBOR was 0.18%. All references to LIBOR in the condensed consolidated financial statements refer to one-month LIBOR.

[2] Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014

[3] Weighted average interest rate on total mortgage debt.

[4] At March 31, 2015, the loan was secured by the following properties: Plaza 500, Van Buren Office Park, Rumsey Center, Snowden Center, Greenbrier Technology Center II and Norfolk Business Center. The terms of the loan allow us to substitute collateral, as long as certain debt-service coverage and loan-to-value ratios are maintained, or to prepay a portion of the loan, with a prepayment penalty, subject to a debt-service yield.

[5] At March 31, 2015, LIBOR was 0.18%.

[6] The mortgage loans and unamortized fair value adjustments that encumbered properties within the Richmond Portfolio were classified within “Liabilities held-for-sale” on our consolidated balance sheet at December 31, 2014. The loans were prepaid upon the sale of the Richmond Portfolio on March 19, 2015.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Assets:
Rental property, net	$ 1,292,895	$ 1,288,873
Assets held-for-sale	0	59,717
Cash and cash equivalents	14,686	13,323
Escrows and reserves	2,298	2,986
Accounts and other receivables, net of allowance for doubtful accounts of $1,386 and $1,207, respectively	10,290	10,587
Accrued straight-line rents, net of allowance for doubtful accounts of $133 and $104, respectively	36,761	34,226
Notes receivable, net	34,000	63,679
Investment in affiliates	47,658	47,482
Deferred costs, net	44,882	43,991
Prepaid expenses and other assets	8,049	7,712
Intangible assets, net	42,929	45,884
Total assets	1,534,448	1,618,460
Liabilities:
Mortgage and Construction loans	303,866	305,139
Unsecured term loan	300,000	300,000
Unsecured revolving credit facility	143,000	205,000
Disposal Group, Including Discontinued Operation, Liabilities	0	4,562
Accounts payable and other liabilities	37,107	41,113
Accrued interest	1,694	1,720
Rents received in advance	8,018	7,971
Tenant security deposits	6,136	5,891
Deferred market rent, net	2,667	2,827
Total liabilities	802,488	874,223
Noncontrolling interests in the Operating Partnership	32,198	33,332
Equity:
Common shares, $0.001 par value, 150,000 shares authorized; 58,727 and 58,815 shares issued and outstanding, respectively	59	59
Additional paid-in capital	914,447	913,282
Noncontrolling interests in a consolidated partnership	802	898
Accumulated other comprehensive loss	(4,298)	(3,268)
Dividends in excess of accumulated earnings	(371,248)	(360,066)
Total equity	699,762	710,905
Total liabilities, noncontrolling interests and equity	1,534,448	1,618,460
Series A Preferred Shares
Equity:
Series A Preferred Shares, $25 per share liquidation preference, 6,400 shares issued and outstanding	$ 160,000	$ 160,000

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Investment in Affiliates - Net Assets of Company's Unconsolidated Joint Ventures (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015		Dec. 31, 2014		Mar. 31, 2014	Dec. 31, 2013
Assets:
Rental property, net	$ 1,292,895		$ 1,288,873
Cash and cash equivalents	14,686		13,323		14,842	8,740
Total assets	1,534,448		1,618,460		1,481,336
Liabilities:
Total liabilities	802,488		874,223
Recourse mortgage debt	746,866		813,637
Unconsolidated Joint Ventures
Assets:
Rental property, net	193,201		193,533
Cash and cash equivalents	5,143		4,567
Other assets	16,514		16,748
Total assets	214,858		214,848
Liabilities:
Mortgage loans	110,000	[1]	110,000	[1]
Other liabilities	6,729		7,256
Total liabilities	116,729		117,256
Net assets	98,129		97,592
Unconsolidated Entities
Liabilities:
Recourse mortgage debt	$ 2,800

[1] Of the total mortgage debt that encumbers our unconsolidated properties, $2.8 million is recourse to us. We believe the fair value of the potential liability to us under this guaranty is inconsequential as the likelihood of our need to perform under the debt agreement is remote.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net income (loss)	$ 492	$ (1,443)
Discontinued operations:
Gain on sale of rental property	(857)	(54)
Depreciation and amortization	1,222	1,249
Depreciation and amortization	16,603	14,572
Stock based compensation	700	823
Bad debt expense	302	111
Amortization of deferred market rent	30	(56)
Amortization of financing costs and discounts	279	266
Equity in (earnings) losses of affiliates	(346)	227
Distributions from investments in affiliates	171	106
Changes in assets and liabilities:
Escrows and reserves	688	4,010
Accounts and other receivables	(120)	(2,623)
Accrued straight-line rents	(1,737)	(1,442)
Prepaid expenses and other assets	(591)	651
Tenant security deposits	(464)	58
Accounts payable and accrued expenses	279	(2,189)
Accrued interest	(26)	(17)
Rents received in advance	(291)	(593)
Deferred costs	(3,362)	(2,210)
Total adjustments	12,480	12,889
Net cash provided by operating activities	12,972	11,446
Cash flows from investing activities:
Investment in note receivable	0	(9,000)
Purchase deposit on future acquisition	0	(2,000)
Proceeds from sale of rental property	56,943	31,616
Principal payments from note receivable	29,720	52
Additions to rental property and furniture, fixtures and equipment	(15,881)	(8,297)
Additions to construction in progress	(3,361)	(3,096)
Net cash provided by investing activities	67,421	9,275
Cash flows from financing activities:
Financing costs	(8)	(2)
Issuance of debt	13,000	27,794
Repayments of debt	(79,648)	(30,296)
Dividends to common shareholders	(8,802)	(8,789)
Dividends to preferred shareholders	(3,100)	(3,100)
Contributions from consolidated joint venture partners	0	89
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders	(96)	0
Distributions to noncontrolling interests	(395)	(394)
Proceeds from stock option exercises	19	79
Net cash used in financing activities	(79,030)	(14,619)
Net increase in cash and cash equivalents	1,363	6,102
Cash and cash equivalents, beginning of period	13,323	8,740
Cash and cash equivalents, end of period	14,686	14,842
Cash paid for interest, net	6,553	5,373
Non-cash investing and financing activities:
Value of common shares retired to settle employee income tax obligations	437	383
Change in fair value of the outstanding common Operating Partnership units	(581)	2,027
Issuance of common Operating Partnership units in connection with the acquisition of rental property	0	40
Changes in accruals:
Additions to rental property and furniture, fixtures and equipment	(3,083)	371
Additions to development and redevelopment	$ 514	$ (1,768)

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Fair Value Measurements - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 snapshot
Derivatives, Fair Value [Line Items]
Number of Interest Rate Derivatives Held	11
Interest Rate Swap
Derivatives, Fair Value [Line Items]
Notional Amount	$ 300,000
Minimum number of daily snapshot used for valuation of interest rate swap agreements	7,500

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Description of Business - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 Person JointVenture segment sqft Executives	Mar. 31, 2014 sqft
Real Estate Properties [Line Items]
Number of Reportable Segments	4
Operating Partnership in preferred	100.00%
Interest in Operating Partnership	95.70%
Number of officers who owned limited partnership interests	2
Area of real estate property	7,961,288	8,735,388
Unconsolidated joint ventures	5
Square footage of land for additional development	1,300,000
Occupancy rate in the Company's consolidated properties	88.00%
Number of tenants representing current occupancy rate	500
Square footage in development or redevelopment not included on occupancy calculation	200,000
Percent of Annualized Cash Rent	25.90%
Wholly-owned Properties [Member]
Real Estate Properties [Line Items]
Number of Reportable Segments	4
Area of real estate property	8,000,000
Unconsolidated Properties [Member]
Real Estate Properties [Line Items]
Area of real estate property	900,000
US Government [Member]
Real Estate Properties [Line Items]
Percent of Annualized Cash Rent	13.20%

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Share-Based Payments - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested share awards issued	121,380
Percentage Of Options To Be Vested On First Anniversary Of Grant Date	25.00%
Percentage Of Options To Be Vested After Date Of Grant In Each Subsequent Quarter	6.25%
Share-based Payment Award, Expiration Period	10 years 0 months 0 days
Unrecognized compensation cost related to non-vested shares	$ 1,400,000
Weighted-average period for recognition of non-vested shares	4 years 0 months 0 days
Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 1.96
Employee Service Share-based Compensation, Cash Received from Exercise of Stock Options	19,000	79,000
Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	5,000	18,000
Share-based Payment Award, Shares Purchased for Award	121,380
Share-based Payment Award, Weighted Average Remaining Contractual Terms	3 years 0 months 0 days
Non-Vested Share Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense associated with trustee share based awards	600,000	700,000
Unrecognized compensation cost related to non-vested shares	4,000,000
Weighted-average period for recognition of non-vested shares	2 years 3 months 24 days
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested share awards issued	119,500
Compensation expense associated with trustee share based awards	$ 118,000	$ 137,000

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

Our unaudited condensed consolidated financial statements include our accounts and the accounts of our Operating Partnership and the subsidiaries in which we or our Operating Partnership has a controlling interest, which includes First Potomac Management LLC, a wholly-owned subsidiary that manages the majority of our properties. All intercompany balances and transactions have been eliminated in consolidation.

We have condensed or omitted certain information and note 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. We believe 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 our annual report on Form 10-K for the year ended December 31, 2014 and as updated from time to time in other filings with the SEC.

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and accruals necessary to present fairly our financial position as of March 31, 2015 and the results of our operations, our comprehensive loss and our cash flows for the three months ended March 31, 2015 and 2014. 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 as well as the seasonality of certain operating expenses such as utilities expense and snow and ice removal costs.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires our management team 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 unaudited condensed 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; derivative valuations; 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.

Rental Property

Rental Property

Rental property is initially recorded at fair value, if acquired in a business combination, or initial cost when constructed or acquired in an asset purchase. 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 our assets, by class, are as follows:

Buildings	39 years
Building improvements	5 to 20 years
Furniture, fixtures and equipment	5 to 15 years
Lease related intangible assets	The term of the related lease
Tenant improvements	Shorter of the useful life of the asset or the term of the related lease

We regularly review 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 carrying value of a property, an impairment analysis is performed. We assess 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 to maintain the operating capacity, 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. Further, we will record an impairment loss if we expect to dispose of a property, in the near term, at a price below carrying value. In such an event, we 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.

We will classify a building as held-for-sale in accordance with GAAP in the period in which we have made the decision to dispose of the building, our Board of Trustees or a designated delegate has approved the sale, there is a high likelihood a binding agreement to purchase the property will be signed under which the buyer will be required to commit 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. We will cease recording depreciation on a building once it has been classified as held-for-sale. In the second quarter of 2014, we prospectively adopted Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which impacts the presentation of operations and gains or losses from disposed properties and properties classified as held-for-sale. ASU 2014-08 states that a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations only if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations or financial results. The operations of all properties that were sold prior to the adoption of ASU 2014-08, two properties that were classified as held-for-sale in previously issued financial statements prior to our adoption of ASU 2014-08 (West Park and Patrick Center) and were subsequently sold, as well as the Richmond Portfolio (as defined below), are reflected within discontinued operations in our consolidated statements of operations for all periods presented.

If the building does not qualify as a discontinued operation under ASU 2014-08, we will classify the building's operating results, together with any impairment charges and any gains or losses on the sale of the building, in continuing operations for all periods presented in our consolidated statements of operations. We will classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheet for the period the held-for-sale criteria were met.

If the building does qualify as a discontinued operation under ASU 2014-08, we will classify the building's operating results, together with any impairment charges and any gains or losses on the sale of the building, in discontinued operations in our consolidated statements of operations for all periods presented and classify the assets and liabilities related to the building as held-for-sale in our consolidated balance sheets for the periods presented. Interest expense is reclassified to discontinued operations only to the extent the disposed or held-for-sale property is secured by specific mortgage debt and the mortgage debt will not be assigned to another property owned by us after the disposition.

We recognize the fair value, if sufficient information exists to reasonably estimate the fair value, of any liability for conditional asset retirement obligations when assumed or incurred, which is generally upon acquisition, construction, development or redevelopment and/or through the normal operation of the asset.

We capitalize interest costs incurred on qualifying expenditures for real estate assets under development or redevelopment, which include our investments in assets owned through unconsolidated joint ventures that are under development or redevelopment, while being readied for their intended use in accordance with accounting requirements regarding capitalization of interest. We 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. We also capitalize direct compensation costs of our construction personnel who manage the development and redevelopment projects, but only to the extent the employee’s time can be allocated to a project. Any portion of construction management costs not directly attributable to a specific project are recognized as general and administrative expense in the period incurred. We do not capitalize any other general and administrative costs such as office supplies, office rent expense or an overhead allocation to our development or redevelopment projects. Capitalized compensation costs were immaterial for the three months ended March 31, 2015 and 2014. Capitalization of interest ends 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. We place redevelopment and development assets into service at this time and commence depreciation upon the substantial completion of tenant improvements and the recognition of revenue. Capitalized interest is depreciated over the useful life of the underlying assets, commencing when those assets are placed into service.

Notes Receivable

Notes Receivable

We provide loans to the owners of real estate properties, which can be collateralized by interest in the real estate property. We record these loans as “Notes receivable, net” in our consolidated balance sheets. The loans 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. We record interest earned from notes receivable and amortization of any discount costs or issuance costs within “Interest and other income” in our consolidated statements of operations.

We will establish a provision for anticipated credit losses associated with our notes receivable when we anticipate that we may be unable to collect any contractually due amounts. This determination is based upon such factors as delinquencies, loss experience, collateral quality and current economic or borrower conditions. Our collectability of our notes receivable may be adversely impacted by the financial stability of the Washington, D.C. region and the ability of the underlying assets to keep current tenants or attract new tenants. Estimated losses are recorded as a charge to earnings to establish an allowance for credit losses that we estimate to be adequate based on these factors. Based on the review of the above criteria, we did not record an allowance for credit losses for our notes receivable during the three months ended March 31, 2015 and 2014.

Application of New Accounting Standards

Application of New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance when it becomes effective on January 1, 2017. Early adoption is not permitted. ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method and are evaluating the impact that ASU 2014-09 will have on our consolidated financial statements or related disclosures.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”), which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The guidance will become effective January 1, 2017. The adoption of ASU 2014-15 is not expected to have an impact on our consolidated financial statements or related disclosures.

In January 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ("ASU 2015-01"), which eliminates the concept of extraordinary items from GAAP and the requirement that an entity separately report extraordinary items in the income statement. ASU 2015-01 also requires that entities continue to evaluate whether items are unusual in nature or infrequent in occurrence for presentation and disclosure purposes. ASU 2015-01 applies to all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted and the guidance may be applied prospectively or retrospectively to all prior periods presented in the consolidated financial statements. The adoption of ASU 2015-01 is not expected to have a material impact on our consolidated financial statements or related disclosures.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation as a result of reclassifying the operating results of several properties as discontinued operations. For more information, see note 7, Dispositions.

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Summary of Significant Accounting Policies - Estimated Useful Lives of Company's Assets, by Class (Detail)	3 Months Ended
	Mar. 31, 2015
Property, Plant and Equipment [Line Items]
Lease related intangible assets	The term of the related lease
Tenant improvements	Shorter of the useful life of the asset or the term of the related lease
Buildings
Property, Plant and Equipment [Line Items]
Useful life	39 years
Minimum [Member] | Building improvements
Property, Plant and Equipment [Line Items]
Useful life	5 years
Minimum [Member] | Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Useful life	5 years
Maximum | Building improvements
Property, Plant and Equipment [Line Items]
Useful life	20 years
Maximum | Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Useful life	15 years

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Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Computation of Company's Basic and Diluted Earnings Per Share

The following table sets forth the computation of our basic and diluted earnings per common share (amounts in thousands, except per share amounts):

	Three Months Ended March 31,
	2015			2014
Numerator for basic and diluted earnings per common share:
Income (loss) from continuing operations	$	1,099		$	(586	)
Loss from discontinued operations	(607		)	(857		)
Net income (loss)	492			(1,443		)
Less: Net loss from continuing operations attributable to noncontrolling interests	86			155
Less: Net loss from discontinued operations attributable to noncontrolling interests	26			40
Net income (loss) attributable to First Potomac Realty Trust	604			(1,248		)
Less: Dividends on preferred shares	(3,100		)	(3,100		)
Net loss attributable to common shareholders	(2,496		)	(4,348		)
Less: Allocation to participating securities	(73		)	(78		)
Net loss attributable to common shareholders	$	(2,569	)	$	(4,426	)
Denominator for basic and diluted earnings per common share:
Weighted average common shares outstanding - basic and diluted	58,225			58,097
Basic and diluted earnings per common share:
Loss from continuing operations	$	(0.03	)	$	(0.07	)
Loss from discontinued operations	(0.01		)	(0.01		)
Net loss	$	(0.04	)	$	(0.08	)

Anti-Dilutive Shares Not Included in Calculation of Diluted Earnings Per Share

In accordance with GAAP regarding earnings per common share, we did not include the following potential weighted average common shares in our calculation of diluted earnings per common share as they are anti-dilutive for the periods presented (amounts in thousands):

	Three Months Ended   March 31,
	2015	2014
Stock option awards	1,083	1,206
Non-vested share awards	380	414
Series A Preferred Shares(1)	13,032	12,671
	14,495	14,291

⁽¹⁾  Our Series A Preferred Shares are only convertible into our common shares upon certain changes in control of our Company. The dilutive shares are calculated as the daily average of the face value of the Series A Preferred Shares divided by the outstanding common share price.

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Share-Based Payments - Summary of Company's Non-vested Share Awards (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Non-vested Shares, Beginning Balance	623,421
Non-vested Shares, Granted	121,380
Non-vested Shares, Vested	(106,300)
Non-vested Shares, Expired	(22,260)
Non-vested Shares, Forfeited	(154,626)
Non-vested Shares, Ending Balance	461,615
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted Average Grant Date Fair Value, Beginning Balance	$ 13.16
Weighted Average Grant Date Fair Value, Granted	$ 12.11
Weighted Average Grant Date Fair Value, Vested	$ 13.97
Weighted Average Grant Date Fair Value, Expired	$ 8.42
Weighted Average Grant Date Fair Value, Forfeited	$ 13.42
Weighted Average Grant Date Fair Value, Ending Balance	$ 12.83

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Consolidated Statements of Cash Flows (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Capitalized interest on indebtedness paid in cash	$ 400,000	$ 800,000
Surrendered common shares to satisfy statutory minimum federal income tax obligations	400,000	0
Change in redemption value, noncontrolling interest	4,200,000	5,300,000
Operating Partnership units issued for acquisition	0
Furniture and Fixtures [Member]
Accrued capital expenditure	8,200,000	6,600,000
Development and Redevelopment [Member]
Accrued capital expenditure	800,000	1,900,000
840 First Street, NE [Member]
Operating Partnership units issued for acquisition		3,125
Operating Partnership units fair valued	$ 40,000

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Allowance for doubtful accounts, accounts and other receivables	$ 1,386	$ 1,207
Allowance for doubtful accounts, accrued straight-line rents	$ 133	$ 104
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	50,000,000	50,000,000
Series A Preferred Shares liquidation preference	$ 25	$ 25
Series A Preferred Shares, shares issued	6,400,000	6,400,000
Series A Preferred Shares, shares outstanding	6,400,000	6,400,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	58,727,000	58,815,000
Common stock, shares outstanding	58,727,000	58,815,000

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Fair Value Measurements

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Our application of GAAP outlines a valuation framework and creates 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 required 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 we provide 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 we have 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 our 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 our consolidated assets and liabilities that are measured on a non-recurring and recurring basis as of March 31, 2015 and December 31, 2014 (dollars in thousands):

	Balance at    March 31, 2015		Level 1		Level 2		Level 3
Recurring Measurements:
Derivative instrument-swap liabilities	$	4,518	$	—	$	4,518	$	—
	Balance at    December 31, 2014		Level 1		Level 2		Level 3
Recurring Measurements:
Derivative instrument-swap assets	$	133	$	—	$	133	$	—
Derivative instrument-swap liabilities	3,569		—		3,569		—

We did not re-measure or complete any transactions involving non-financial assets or non-financial liabilities that are measured at fair value on a recurring basis during the three months ended March 31, 2015 and 2014. Also, no transfers into or out of fair value measurement levels for assets or liabilities that are measured on a recurring basis occurred during the three months ended March 31, 2015 and 2014.

Interest Rate Derivatives

At March 31, 2015, we had hedged $300.0 million of our variable rate debt through eleven interest rate swap agreements. See note 9, Derivative Instruments, for more information about our interest rate swap agreements.

The interest rate derivatives are fair valued based on prevailing market yield curves on the measurement date and also incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting any applicable credit enhancements, such as collateral postings, thresholds, mutual inputs and guarantees. We use a third party to assist in valuing our interest rate swap agreements. A daily “snapshot” of the market is taken 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 then compiled through a valuation process that generates daily valuations, which are used to value our interest rate swap agreements. Our interest rate swap derivatives are effective cash flow hedges and the effective portion of the change in fair value is recorded in the equity section of our consolidated balance sheets as “Accumulated other comprehensive loss.”

Financial Instruments

The carrying amounts of cash equivalents, accounts and other receivables, accounts payable and other liabilities, with the exception of any items listed above, approximate their fair values due to their short-term maturities. We determine the fair value of our notes receivable and 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. We deem the fair value measurement of our debt instruments as a Level 2 measurement as we use quoted interest rates for similar debt instruments to value our debt instruments. We also use quoted market interest rates for similar notes to value our notes receivable, which we consider a Level 2 measurement as we do not believe notes receivable trade in an active market.

The carrying amount and estimated fair value of our notes receivable and debt instruments are as follows (amounts in thousands):

	March 31, 2015				December 31, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Notes receivable(1)	$	34,000	$	34,000	$	63,679	$	63,720
Financial Liabilities:
Mortgage debt(2)	$	303,866	$	299,042	$	308,637	$	292,882
Unsecured term loan	300,000		300,000		300,000		300,000
Unsecured revolving credit facility	143,000		143,000		205,000		205,000
Total	$	746,866	$	742,042	$	813,637	$	797,882

⁽¹⁾  The principal amount of our notes receivable was $34.0 million and $63.7 million at March 31, 2015 and December 31, 2014, respectively.On February 24, 2015, the owners of America’s Square, a 461,000 square foot office complex located in Washington, D.C., prepaid a mezzanine loan, which had an outstanding $29.7 million balance of the $30.0 million mezzanine loan that we provided them in April 2011.

⁽²⁾  Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 29, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	FIRST POTOMAC REALTY TRUST
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001254595
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		58,726,808

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Equity

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Equity

Equity

On January 27, 2015, we declared a dividend of $0.15 per common share, equating to an annualized dividend of $0.60 per common share. The dividend was paid on February 17, 2015 to common shareholders of record as of February 10, 2015. We also declared a dividend of $0.484375 per share on our Series A Preferred Shares. The dividend was paid on February 17, 2015 to preferred shareholders of record as of February 10, 2015. Dividends on all non-vested share awards are recorded as a reduction of shareholders’ equity. For each dividend paid by us on our common and preferred shares, the Operating Partnership distributes an equivalent distribution on our common and preferred Operating Partnership units, respectively.

On April 28, 2015, we declared a dividend of $0.15 per common share, equating to an annualized dividend of $0.60 per common share. The dividend will be paid on May 15, 2015 to common shareholders of record as of May 8, 2015. We also declared a dividend of $0.484375 per share on our Series A Preferred Shares. The dividend will be paid on May 15, 2015 to preferred shareholders of record as of May 8, 2015.

Our unsecured revolving credit facility, unsecured term loan, the Construction Loan and the Storey Park land loan contain certain restrictions that include, among other things, requirements to maintain specified coverage ratios and other financial covenants, which may limit our ability to make distributions to our common and preferred shareholders. Further, distributions with respect to our common shares are subject to our ability to first satisfy our obligations to pay distributions to the holders of our Series A Preferred Shares.

As a result of the redemption feature of the Operating Partnership units, the noncontrolling interests associated with the Operating Partnership are recorded outside of permanent equity. Our equity and redeemable noncontrolling interests are as follows (dollars in thousands):

	First Potomac Realty Trust			Non-redeemable noncontrolling interests			Total Equity			Redeemable noncontrolling interests
Balance at December 31, 2014	$	710,007		$	898		$	710,905		$	33,332
Net income (loss)	604			—			604			(112		)
Changes in ownership, net	1,281			(96		)	1,185			(581		)
Distributions to owners	(11,902		)	—			(11,902		)	(395		)
Other comprehensive loss	(1,030		)	—			(1,030		)	(46		)
Balance at March 31, 2015	$	698,960		$	802		$	699,762		$	32,198

	First Potomac Realty Trust			Non-redeemable noncontrolling interests		Total Equity			Redeemable noncontrolling interests
Balance at December 31, 2013	$	738,510		$	781	$	739,291		$	33,221
Net loss	(1,248		)	—		(1,248		)	(195		)
Changes in ownership, net	(1,502		)	89		(1,413		)	2,067
Distributions to owners	(11,889		)	—		(11,889		)	(393		)
Other comprehensive income	168			—		168			7
Balance at March 31, 2014	$	724,039		$	870	$	724,909		$	34,707

A summary of our accumulated other comprehensive loss is as follows (dollars in thousands):

	2015			2014
Beginning balance at January 1,	$	(3,268	)	$	(3,836	)
Net unrealized (loss) gain on derivative instruments	(1,076		)	175
Net loss (gain) attributable to noncontrolling interests	46			(7		)
Ending balance at March 31,	$	(4,298	)	$	(3,668	)

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenues:
Rental	$ 34,379	$ 30,433
Tenant reimbursements and other	9,470	8,930
Total revenues	43,849	39,363
Operating expenses:
Property operating	13,113	12,038
Real estate taxes and insurance	5,042	4,132
General and administrative	5,526	5,196
Acquisition costs	0	68
Depreciation and amortization	16,335	14,310
Total operating expenses	40,016	35,744
Operating income	3,833	3,619
Other expenses (income)
Interest expense	6,908	5,737
Interest and other income	(3,828)	(1,759)
Equity in (earnings) losses of affiliates	(346)	227
Total other expenses (income)	2,734	4,205
Income (loss) from continuing operations	1,099	(586)
Discontinued operations:
Loss from operations	(975)	(911)
Loss on debt extinguishment	(489)	0
Gain on sale of rental property	857	54
Loss from discontinued operations	(607)	(857)
Net income (loss)	492	(1,443)
Less: Net loss attributable to noncontrolling interests	112	195
Net income (loss) attributable to First Potomac Realty Trust	604	(1,248)
Less: Dividends on preferred shares	(3,100)	(3,100)
Net loss attributable to common shareholders	$ (2,496)	$ (4,348)
Basic and diluted earnings per common share:
Loss from continuing operations	$ (0.03)	$ (0.07)
Loss from discontinued operations	$ (0.01)	$ (0.01)
Net loss	$ (0.04)	$ (0.08)
Weighted average common shares outstanding:
Basic and diluted	58,225	58,097
Diluted	58,225	58,097

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Notes Receivable

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Notes Receivable

Notes Receivable

Below is a summary of our notes receivable for our outstanding mezzanine loans (dollars in thousands):

	Balance at March 31, 2015
Property	Face Amount		Unamortized Origination Fees		Balance		Interest Rate
950 F Street, NW	$	34,000	$	—	$	34,000	9.75	%

	Balance at December 31, 2014
Property	Face Amount		Unamortized Origination Fees			Balance		Interest Rate
950 F Street, NW	$	34,000	$	—		$	34,000	9.75	%
America’s Square	29,720		(41		)	29,679		9.0	%
	$	63,720	$	(41	)	$	63,679

On February 24, 2015, the owners of America’s Square, a 461,000 square foot office complex located in Washington, D.C., prepaid a mezzanine loan that had an outstanding balance of $29.7 million. We provided the owners of America’s Square a $30.0 million loan in April 2011, which was secured by a portion of the owner’s interest in the property. The loan had a fixed-interest rate of 9.0% and was scheduled to mature on May 1, 2016. We received a yield maintenance payment of $2.4 million with the repayment of the loan. The proceeds from the loan repayment, including the yield maintenance payment, were used to pay down a portion of the outstanding balance of our unsecured revolving credit facility.

In December 2010, we provided a $25.0 million mezzanine loan to the owners of 950 F Street, NW, a ten-story, 287,000 square-foot office/retail building located in Washington, D.C. that is secured by a portion of the owners’ interest in the property. The loan requires monthly interest-only payments with a constant interest rate over the life of the loan. On January 10, 2014, we amended the loan to increase the outstanding balance to $34.0 million and reduce the fixed interest rate from 12.5% to 9.75%. The amended mezzanine loan matures on April 1, 2017 and is repayable in full on or after December 21, 2015. The $9.0 million increase in the loan was provided by a draw under our unsecured revolving credit facility.

We recorded interest income related to our notes receivable of $1.2 million and $1.5 million for the three months ended March 31, 2015 and 2014, respectively, which is included within “Interest and other income” in our consolidated statements of operations.

We recorded income from the amortization of origination fees of $5 thousand and $11 thousand for the three months ended March 31, 2015 and 2014, respectively. During the first quarter of 2014, we wrote-off $0.1 million of unamortized fees related to the original 950 F Street, NW mezzanine loan. We recorded income from the yield maintenance payment of $2.4 million for the three months ended March 31, 2015. The yield maintenance payment and the amortization and write-off of unamortized fees are recorded within “Interest and other income” in our consolidated statements of operations.

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Rental Property

3 Months Ended

Mar. 31, 2015

Real Estate [Abstract]

Rental Property

Rental Property

Rental property represents buildings and related improvements, net of accumulated depreciation, and developable land that are wholly owned or owned by an entity in which we have a controlling interest. All of our rental properties are located within the greater Washington, D.C. region. Rental property consists of the following (dollars in thousands):

	March 31, 2015			December 31, 2014(1)
Land and land improvements	$	325,228		$	325,214
Buildings and improvements	950,746			949,683
Construction in progress	73,444			69,181
Tenant improvements	170,443			159,867
Furniture, fixtures and equipment	402			427
	1,520,263			1,504,372
Less: accumulated depreciation	(227,368		)	(215,499		)
	$	1,292,895		$	1,288,873

⁽¹⁾ Excludes rental property totaling $57.7 million at December 31, 2014 related to the sale of the Richmond Portfolio (as defined in note 7, Dispositions), which was classified as held-for-sale at December 31, 2014 and was sold on March 19, 2015.

Development and Redevelopment Activity

We will place completed development and redevelopment assets in service upon the earlier of one year after major construction activity is deemed to be substantially complete or upon occupancy. We construct office buildings and/or business parks on a build-to-suit basis or with the intent to lease upon completion of construction. We own developable land that can accommodate 1.3 million square feet of additional building space, of which, 0.7 million is located in the Washington, D.C. reporting segment, 0.1 million in the Maryland reporting segment, 0.4 million in the Northern Virginia reporting segment and 0.1 million in the Southern Virginia reporting segment.

During the third quarter of 2014, we signed a lease for 167,000 square feet at a to-be-constructed building in our Northern Virginia reporting segment on vacant land that we have in our portfolio. We currently expect to complete construction of the new building in the fourth quarter of 2016. At March 31, 2015, our total investment in the development project was $10.2 million, which included the original cost basis of the applicable portion of the vacant land of $5.2 million. The majority of the costs incurred as of March 31, 2015 in excess of the original cost basis of the land relate to site preparation costs.

On August 4, 2011, we formed a joint venture, in which we have a 97% interest, with an affiliate of Perseus Realty, LLC to acquire Storey Park in our Washington, D.C. reporting segment. At the time, the site was leased to Greyhound Lines, Inc. (“Greyhound”), which subsequently relocated its operations. Greyhound’s lease expired on August 31, 2013, at which time the property was placed into development. The joint venture anticipates developing a mixed-use project on the 1.6 acre site, which can accommodate up to 712,000 square feet. At March 31, 2015, our total investment in the development project was $56.0 million, which included the original cost basis of the property of $43.3 million. The majority of the costs in excess of the original cost basis relate to capitalized architectural fees and site preparation costs. We are currently exploring our options related to this property; however, until a definitive plan for the property has been reached and we begin significant development activities, we cannot determine the total cost of the project or the anticipated completion date.

On December 28, 2010, we acquired 440 First Street, NW, a vacant eight-story office building in our Washington, D.C. reporting segment. In October 2013, we substantially completed the redevelopment of the 139,000 square foot property. At March 31, 2015, the property was 58.9% leased and 46.9% occupied. During the fourth quarter of 2014, all vacant space at the property was placed in service. At March 31, 2015, our total investment in the redevelopment project was $55.5 million, which included the original cost basis of the property of $23.6 million.

During the first quarter of 2015, we did not place in-service any completed development or redevelopment space. At March 31, 2015, we had no completed development or redevelopment space that have yet to be placed in service.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Estimated Useful Life of Assets

The estimated useful lives of our assets, by class, are as follows:

Buildings	39 years
Building improvements	5 to 20 years
Furniture, fixtures and equipment	5 to 15 years
Lease related intangible assets	The term of the related lease
Tenant improvements	Shorter of the useful life of the asset or the term of the related lease

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Noncontrolling Interests

3 Months Ended

Mar. 31, 2015

Noncontrolling Interest [Abstract]

Noncontrolling Interests

Noncontrolling Interests

(a) Noncontrolling Interests in the Operating Partnership

Noncontrolling interests relate to the common interests in the Operating Partnership not owned by us. Interests in the Operating Partnership are owned by limited partners who contributed buildings and other assets to the Operating Partnership in exchange for common Operating Partnership units. Limited partners have the right to tender their units for redemption in exchange for, at our option, our common shares on a one-for-one basis or cash based on the fair value of our 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 or losses available to common shareholders, other comprehensive income or losses, distributions received or additional contributions. We account for issuances of common Operating Partnership units individually, which could result in some portion of our noncontrolling interests being carried at fair value with the remainder being carried at historical cost. Based on the closing price of our common shares at March 31, 2015, the cost to acquire, through cash purchase or issuance of our common shares, all of the outstanding common Operating Partnership units not owned by us would be approximately $31.3 million. At March 31, 2015 and December 31, 2014, we recorded adjustments of $4.2 million and $4.7 million, respectively, to present certain common Operating Partnership units at the greater of their carrying value or redemption value.

At March 31, 2015, 2,630,577 of the total common Operating Partnership units, or 4.3%, were not owned by us. There were no common Operating Partnership units redeemed for common shares or cash during the three months ended March 31, 2015. During the first quarter of 2014, we issued 3,125 common Operating Partnership units to the seller of 840 First Street, NE to satisfy a contingent consideration obligation.

(b) Noncontrolling Interests in a Consolidated Partnership

When we are deemed to have a controlling interest in a partially-owned entity, we will consolidate all of the entity’s assets, liabilities and operating results within our condensed consolidated financial statements. The net assets contributed to the consolidated entity by the third party, if any, will be reflected within permanent equity in our 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 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 attributable to noncontrolling interests” in our consolidated statements of operations.

On August 4, 2011, we formed a joint venture, in which we have a 97% interest, with an affiliate of Perseus Realty, LLC to acquire Storey Park in our Washington, D.C. reporting segment. At the time, the site was leased to Greyhound, which subsequently relocated its operations. Greyhound’s lease expired on August 31, 2013, at which time the property was placed into development. The joint venture anticipates developing a mixed-use project on the 1.6 acre site, which can accommodate up to 712,000 square feet. At March 31, 2015, our total investment in the development project was $56.0 million, which included the original cost basis of the property of $43.3 million. The majority of the costs in excess of the original cost basis relate to capitalized architectural fees and site preparation costs. We are currently exploring our options related to this property; however, until a definitive plan for the property has been reached and we begin significant development activities, we cannot determine the total cost of the project or the anticipated completion date.

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Debt

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt

Debt

Our borrowings consisted of the following (dollars in thousands):

	March 31,   2015		December 31, 2014(1)
Mortgage loans, effective interest rates ranging from 4.40% to 6.01%, maturing at various dates through June 2023(2)	$	303,866	$	308,637
Unsecured term loan, effective interest rates ranging from LIBOR plus 1.65% to LIBOR plus 2.05%, with staggered maturity dates ranging from October 2018 to October 2020(2)	300,000		300,000
Unsecured revolving credit facility, effective interest rate of LIBOR plus 1.70%, maturing October 2017(2)	143,000		205,000
	$	746,866	$	813,637

⁽¹⁾  Includes five mortgage loans that were repaid with the sale of the Richmond Portfolio on March 19, 2015. At December 31, 2014, the mortgage loans had an aggregate principal balance of $3.5 million and were classified within “Liabilities held-for-sale” on our consolidated balance sheet for December 31, 2014.

⁽²⁾  At March 31, 2015, LIBOR was 0.18%. All references to LIBOR in the condensed consolidated financial statements refer to one-month LIBOR.

(a) Mortgage Loans

The following table provides a summary of our mortgage debt at March 31, 2015 and December 31, 2014 (dollars in thousands):

Encumbered Property	Contractual Interest Rate	Effective Interest Rate			Maturity Date	March 31,   2015			December 31, 2014
Jackson National Life Loan(1)	5.19%	5.19	%		August 2015	$	64,640		$	64,943
440 First Street, NW(2)	LIBOR + 2.50%	LIBOR + 2.50%			May 2016	32,216			32,216
Storey Park(2)	LIBOR + 2.50%	LIBOR + 2.50%			October 2016	22,000			22,000
Gateway Centre Manassas Building I	7.35%	5.88	%		November 2016	378			432
Hillside I and II	5.75%	4.62	%		December 2016	12,846			12,949
Redland Corporate Center Buildings II & III	4.20%	4.64	%		November 2017	65,503			65,816
840 First Street, NE	5.72%	6.01	%		July 2020	36,379			36,539
Battlefield Corporate Center	4.26%	4.40	%		November 2020	3,651			3,692
1211 Connecticut Avenue, NW	4.22%	4.47	%		July 2022	29,548			29,691
1401 K Street, NW	4.80%	4.93	%		June 2023	36,705			36,861
		4.75	%	(3)		303,866			305,139
Unamortized fair value adjustments						(320		)	(370		)
Principal balance						303,546			304,769
Richmond Portfolio(4)
Hanover Business Center Building D	8.88%	6.63	%		August 2015	—			104
Chesterfield Business Center Buildings C,D,G and H	8.50%	6.63	%		September 2015	—			302
Hanover Business Center Building C	7.88%	6.63	%		December 2017	—			505
Chesterfield Business Center Buildings A,B,E and F	7.45%	6.63	%		June 2021	—			1,674
Airpark Business Center	7.45%	6.63	%		June 2021	—			913
						—			3,498
Total unamortized fair value adjustments - Richmond						—			(73		)
Total principal balance - Richmond						$	—		$	3,425
Total principal balance						$	303,546		$	308,194

⁽¹⁾  At March 31, 2015, the loan was secured by the following properties: Plaza 500, Van Buren Office Park, Rumsey Center, Snowden Center, Greenbrier Technology Center II and Norfolk Business Center. The terms of the loan allow us to substitute collateral, as long as certain debt-service coverage and loan-to-value ratios are maintained, or to prepay a portion of the loan, with a prepayment penalty, subject to a debt-service yield.

⁽²⁾  At March 31, 2015, LIBOR was 0.18%.

⁽³⁾  Weighted average interest rate on total mortgage debt.

⁽⁴⁾  The mortgage loans and unamortized fair value adjustments that encumbered properties within the Richmond Portfolio were classified within “Liabilities held-for-sale” on our consolidated balance sheet at December 31, 2014. The loans were prepaid upon the sale of the Richmond Portfolio on March 19, 2015.

Land Loan

On October 16, 2014, our 97% owned consolidated joint venture that owns Storey Park repaid a $22.0 million loan that encumbered the Storey Park land and was subject to a 5.0% interest rate floor. Simultaneously with the repayment, the joint venture entered into a new $22.0 million land loan with a variable interest rate of LIBOR plus 2.50%. The new loan matures on October 16, 2016, with a one-year extension at our option, and is repayable in full without penalty at any time during the term of the loan. Per the terms of the loan agreement, $6.0 million of the outstanding principal balance and all of the outstanding accrued interest is recourse to us. As of March 31, 2015, we were in compliance with all the financial covenants of the Storey Park land loan.

Construction Loan

On June 5, 2013, we entered into a construction loan (the “Construction Loan”) that is collateralized by our 440 First Street, NW property, which underwent a major redevelopment that was substantially completed in October 2013. The Construction Loan has a borrowing capacity of up to $43.5 million, of which we initially borrowed $21.7 million in 2013 and borrowed an additional $10.5 million in 2014. The Construction Loan has a variable interest rate of LIBOR plus a spread of 2.5% and matures in May 2016, with two one-year extension options at our discretion. We can repay all or a portion of the Construction Loan, without penalty, at any time during the term of the loan. At March 31, 2015, per the terms of the loan agreement, 50% of the outstanding principal balance and all of the outstanding accrued interest were recourse to us. The percentage of outstanding principal balance that is recourse to us can be reduced upon the property achieving certain operating thresholds. As of March 31, 2015, we were in compliance with all the financial covenants of the Construction Loan.

(b) Unsecured Term Loan

The table below shows the outstanding balances and the interest rates of the three tranches of the $300.0 million unsecured term loan at March 31, 2015 (dollars in thousands):

	Maturity Date	Amount		Interest Rate(1)
Tranche A	October 2018	$	100,000	LIBOR, plus 165 basis points
Tranche B	October 2019	100,000		LIBOR, plus 180 basis points
Tranche C	October 2020	100,000		LIBOR, plus 205 basis points
		$	300,000

⁽¹⁾  At March 31, 2015, LIBOR was 0.18%. The interest rate spread is subject to change based on our maximum total indebtedness ratio. For more information, see note 8(e) Debt – Financial Covenants.

The term loan agreement contains various restrictive covenants substantially identical to those contained in our unsecured revolving credit facility, including with respect to liens, indebtedness, investments, distributions, mergers and asset sales. In addition, the agreement requires that we satisfy certain financial covenants that are also substantially identical to those contained in our unsecured 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 our Company under the agreement to be immediately due and payable. As of March 31, 2015, we were in compliance with all the financial covenants of the unsecured term loan.

(c) Unsecured Revolving Credit Facility

During the first quarter of 2015, we borrowed $13.0 million under the unsecured revolving credit facility which was used for general corporate purposes. During the first quarter of 2015, we repaid $75.0 million of the outstanding balance under the unsecured revolving credit facility with our portion of the proceeds from the prepayment of the America’s Square mezzanine loan and the sale of the Richmond Portfolio. For the three months ended March 31, 2015, our weighted average borrowings under the unsecured revolving credit facility were $193.5 million, with a weighted average interest rate of 1.9%, compared with weighted average borrowings of $97.1 million, with a weighted average interest rate of 1.7%, for the three months ended March 31, 2014. Our maximum outstanding borrowings were $218.0 million and $112.0 million for the three months ended March 31, 2015 and 2014, respectively. At March 31, 2015, outstanding borrowings under the unsecured revolving credit facility were $143.0 million with a weighted average interest rate of 1.9%. At March 31, 2015, LIBOR was 0.18% and the applicable spread on our unsecured revolving credit facility was 170 basis points. The available capacity under the unsecured revolving credit facility was $138.2 million as of the date of this filing. We are required to pay an annual commitment fee of 0.25% based on the amount of unused capacity under the unsecured revolving credit facility. As of March 31, 2015, we were in compliance with all the financial covenants of the unsecured revolving credit facility. For more information, see note 8(e) Debt – Financial Covenants.

(d) Interest Rate Swap Agreements

At March 31, 2015, we had eleven interest rate swap agreements outstanding that collectively fixed LIBOR, at a weighted average interest rate of 1.5%, on $300.0 million of our variable rate debt. See note 9, Derivative Instruments, for more information about our interest rate swap agreements.

(e) Financial Covenants

Our outstanding corporate debt agreements contain specific financial covenants that may impact future financing decisions made by us or may be impacted by a decline in operations. These covenants relate to our allowable leverage, minimum tangible net worth, fixed charge coverage and other financial metrics. As of March 31, 2015, we were in compliance with the covenants of our unsecured term loan and unsecured revolving credit facility and any such financial covenants of our mortgage debt (including the Construction Loan and the Storey Park land loan).

Our continued ability to borrow under the unsecured revolving credit facility is subject to compliance with financial and operating covenants, and a failure to comply with any of these covenants could result in a default under the credit facility. These debt agreements also contain cross-default provisions that would be triggered if we were in default under other loans, including mortgage loans, in excess of certain amounts. In the event of a default, the lenders could accelerate the timing of payments under the debt obligations and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition, results of operations and ability to make distributions to our shareholders.

Our unsecured revolving credit facility and unsecured term loan are subject to interest rate spreads that float based on the quarterly measurement of our maximum consolidated total indebtedness to gross asset value ratio. Based on our leverage ratio at March 31, 2015, the applicable interest rate spreads on the unsecured revolving credit facility and the unsecured term loan will be unchanged.

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Fair Value Measurements - Fair Value of Debt Instruments (Detail) (USD $)	Mar. 31, 2015 sqft		Dec. 31, 2014		Mar. 31, 2014 sqft	Feb. 24, 2015	Apr. 30, 2011 sqft
Financial Assets:
Carrying value of notes receivable	$ 34,000,000		$ 63,679,000
Fair value of notes receivable	34,000,000		63,700,000
Financial Liabilities:
Area of real estate property	7,961,288				8,735,388
Carrying Value
Financial Assets:
Carrying value of notes receivable	34,000,000	[1]	63,679,000	[1]
Financial Liabilities:
Carrying value of the debt instruments	746,866,000		813,637,000
Carrying Value | Mortgage debt
Financial Liabilities:
Carrying value of the debt instruments	303,866,000		308,637,000
Carrying Value | Unsecured term loan
Financial Liabilities:
Carrying value of the debt instruments	300,000,000		300,000,000
Carrying Value | Unsecured revolving credit facility
Financial Liabilities:
Carrying value of the debt instruments	143,000,000		205,000,000
Fair Value
Financial Assets:
Fair value of notes receivable	34,000,000	[1]	63,720,000	[1]
Financial Liabilities:
Fair value of the debt instruments	742,042,000		797,882,000
Fair Value | Mortgage debt
Financial Liabilities:
Fair value of the debt instruments	299,042,000		292,882,000
Fair Value | Unsecured term loan
Financial Liabilities:
Fair value of the debt instruments	300,000,000		300,000,000
Fair Value | Unsecured revolving credit facility
Financial Liabilities:
Fair value of the debt instruments	143,000,000		205,000,000
Richmond
Financial Liabilities:
Area of real estate property	827,900
Mortgages Held-for-sale, Fair Value Disclosure	3,500,000
America Square [Member]
Financial Liabilities:
Area of real estate property							461,000
Mezzanine loan provided to owners						$ 29,700,000	$ 30,000,000

[1] The principal amount of our notes receivable was $34.0 million and $63.7 million at March 31, 2015 and December 31, 2014, respectively.

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Investment in Affiliates

3 Months Ended

Mar. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Investment in Affiliates

Investment in Affiliates

We own an interest in several joint ventures that own properties. We do not control the activities that are most significant to the joint ventures. As a result, the assets, the liabilities and the operating results of these noncontrolled joint ventures are not consolidated within our unaudited condensed consolidated financial statements. Our investments in these joint ventures are recorded as “Investment in affiliates” in our consolidated balance sheets. Our investment in affiliates consisted of the following (dollars in thousands):

	Reporting Segment	Ownership Interest		March 31, 2015		December 31, 2014
Prosperity Metro Plaza	Northern Virginia	51	%	$	24,846	$	24,651
1750 H Street, NW	Washington, D.C.	50	%	14,938		14,834
Aviation Business Park	Maryland	50	%	5,677		5,748
RiversPark I and II(1)	Maryland	25	%	2,197		2,249
				$	47,658	$	47,482

⁽¹⁾RiversPark I and RiversPark II are owned through two separate joint ventures.

On November 12, 2014, our 51% owned unconsolidated joint venture repaid a $48.3 million mortgage loan that encumbered Prosperity Metro Plaza, a two-building, 327,000 square-foot office building located in Merrifield, Virginia. Simultaneously with the repayment, the joint venture entered into a new $50.0 million mortgage loan that has a fixed-interest rate of 3.91%. The new loan requires interest only payments through December 2024, at which time the loan requires principal and interest payments through its maturity date. The loan has a maturity date of December 1, 2029 and is repayable in full without penalty on or after June 1, 2029.

On September 26, 2014, our 25% owned unconsolidated joint venture amended a $28.0 million mortgage loan that encumbers Rivers Park I and II, a six-building, 308,000 square-foot business park located in Columbia, Maryland. The amended mortgage loan reduced the variable interest rate spread by 60 basis points and reduced the amount of outstanding principal recourse to us from 25% to 10%. The amended loan matures on September 26, 2017 and is repayable in full without penalty at any time during the term of the loan.

On July 10, 2014, our 50% owned unconsolidated joint venture repaid a $27.9 million mortgage loan that encumbered 1750 H Street, NW, a ten-story, 113,000 square-foot office building located in Washington, D.C. Simultaneously with the repayment, the joint venture entered into a new $32.0 million mortgage loan that has a fixed interest rate of 3.92%, a maturity date of August 1, 2024, and is repayable in full without penalty on or after August 1, 2021. The new loan requires monthly interest-only payments with a constant interest rate over the life of the loan.

The net assets of our unconsolidated joint ventures consisted of the following (dollars in thousands):

	March 31, 2015		December 31, 2014
Assets:
Rental property, net	$	193,201	$	193,533
Cash and cash equivalents	5,143		4,567
Other assets	16,514		16,748
Total assets	214,858		214,848
Liabilities:
Mortgage loans(1)	110,000		110,000
Other liabilities	6,729		7,256
Total liabilities	116,729		117,256
Net assets	$	98,129	$	97,592

⁽¹⁾  Of the total mortgage debt that encumbers our unconsolidated properties, $2.8 million is recourse to us. We believe the fair value of the potential liability to us under this guaranty is inconsequential as the likelihood of our need to perform under the debt agreement is remote.

Our share of earnings or losses related to our unconsolidated joint ventures is recorded in our consolidated statements of operations as “Equity in (earnings) losses of affiliates.”

The following table summarizes the results of operations of our unconsolidated joint ventures, which due to our varying ownership interests in the joint ventures and the varying operations of the joint ventures may or may not be reflective of the amounts recorded in our consolidated statements of operations (dollars in thousands):

	Three Months Ended   March 31,
	2015			2014
Total revenues	$	6,167		$	5,752
Total operating expenses	(2,156		)	(2,226		)
Net operating income	4,011			3,526
Depreciation and amortization	(2,249		)	(2,803		)
Interest expense, net	(973		)	(1,011		)
Net income (loss)	$	789		$	(288	)

We earn various fees from several of our joint ventures, which include management fees, leasing commissions and construction management fees. We recognize fees only to the extent of the third party ownership interest in our unconsolidated joint ventures. We recognized fees from our unconsolidated joint ventures of $0.1 million for both the three months ended March 31, 2015 and 2014, which are reflected within “Tenant reimbursements and other revenues” in our consolidated statements of operations.

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Dispositions

3 Months Ended

Mar. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Dispositions

Dispositions

During the second quarter of 2014, we prospectively adopted ASU 2014-08, which states that a component of an entity or a group of components of an entity is required to be reported in discontinued operations only if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. All other disposed properties will have their operating results reflected within continuing operations on our consolidated statements of operations for all periods presented.

(a) Disposed or Held-for-Sale Properties within Continuing Operations

The following table is a summary of completed property dispositions whose operating results are included in continuing operations in our consolidated statements of operations for the periods presented (dollars in thousands):

	Reporting Segment	Disposition Date	Property Type	Square Feet	Net Sale Proceeds
Owings Mills Business Park	Maryland	10/16/2014	Business Park	180,475	$	12,417
Corporate Campus at Ashburn Center	Northern Virginia	6/26/2014	Business Park	194,184	39,910

In accordance with ASU 2014-08, which we prospectively adopted during the second quarter of 2014, the operating results of Corporate Campus at Ashburn Center and Owings Mills Business Park are reflected in continuing operations in our consolidated statements of operations for the three months ended March 31, 2014. For the three months ended March 31, 2015, there were no operating results from disposed properties included in continuing operations. The following table summarizes the aggregate results of operations for the two properties that are included in continuing operations for the three months ended March 31, 2014 (dollars in thousands):

	2014
Revenues	$	1,465
Property operating expenses	(548		)
Depreciation and amortization	(366		)
Net income from continuing operations	$	551

(b) Discontinued Operations

On March 19, 2015, we sold our Richmond, Virginia portfolio, which included Chesterfield Business Center, Hanover Business Center, Park Central, Virginia Technology Center and a three-acre parcel of undeveloped land (the “Richmond Portfolio”) for net proceeds of $53.8 million. In the aggregate, the Richmond Portfolio was comprised of 19 buildings totaling 828,000 square feet. Net proceeds from the sale reflected the prepayment of $3.7 million of mortgage and other indebtedness secured by the properties, including $0.5 million of associated prepayment penalties. The majority of the remaining net proceeds from the sale were used to repay $48.0 million of the outstanding balance under our unsecured revolving credit facility. We recorded a gain on the sale of the portfolio of $0.9 million in the first quarter of 2015. During the first quarter of 2015, we accelerated the amortization of deferred rent abatements and straight-line rents, totaling $0.9 million, and leasing commissions, totaling $1.1 million, which were on the balance sheet of the Richmond Portfolio. The accelerated amortization resulted in an additional $2.0 million of expense during the first quarter of 2015.

As a result of this sale, we no longer own any properties in the Richmond, Virginia area and have made a strategic shift away from that market. In accordance with ASU 2014-08, the operating results (including the accelerated amortization of deferred rent abatements, straight-line rents and leasing commissions), the loss on debt extinguishment and the gain on sale of the Richmond Portfolio were reflected within discontinued operations for each of the periods presented. In addition to the Richmond Portfolio, all properties sold prior to our adoption of ASU 2014-08 or classified as held-for-sale in previously issued consolidated financial statements prior to our adoption of ASU 2014-08, are classified within discontinued operations.

The following table is a summary of completed property dispositions whose operating results are reflected as discontinued operations in our consolidated statements of operations for the periods presented (dollars in thousands):

	Reporting Segment	Disposition Date	Property Type	Square Feet	Net Sale Proceeds
Richmond Portfolio	Southern Virginia	3/19/2015	Business Park	827,900	$	53,768
Patrick Center	Maryland	4/16/2014	Office	66,269	10,888
West Park	Maryland	4/2/2014	Office	28,333	2,871
Girard Business Center and Gateway Center	Maryland	1/29/2014	Business Park and  Office	341,973	31,616

We have had, and will have, no continuing involvement with any of our disposed properties subsequent to their disposal. The operations of the disposed properties were not subject to any income based taxes. We did not dispose of or enter into any binding agreements to sell any other properties during the three months ended March 31, 2015 and 2014.

The following table summarizes the results of operations of properties included in discontinued operations (dollars in thousands):

	Three Months Ended   March 31,
	2015			2014
Revenues	$	877		$	1,808
Loss from operations, before taxes(1)	(975		)	(911		)
Loss on debt extinguishment	(489		)	—
Gain on sale of rental property	857			54

⁽¹⁾  For the three months ended March 31, 2015, we accelerated $2.0 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of the Richmond Portfolio in March 2015. For the three months ended March 31, 2014, we accelerated $1.5 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of both Girard Business Center and Gateway Center in January 2014.

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Derivative Instruments

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

We are exposed to certain risks arising from business operations and economic factors. We use derivative financial instruments to manage exposures that arise from business activities in which our 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. We do not use derivatives for trading or speculative purposes and we intend to enter into derivative agreements only with counterparties that we believe have a strong credit rating to mitigate the risk of counterparty default or insolvency. No hedging activity can completely insulate us from the risks associated with changes in interest rates. Moreover, interest rate hedging could fail to protect us or adversely affect us because, among other things:

• available interest rate hedging may not correspond directly with the interest rate risk for which we seek 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 our ability to sell or assign its side of the hedging transaction.

We enter into interest rate swap agreements to hedge our exposure on our 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.

At March 31, 2015, we had eleven interest rate swap agreements outstanding that collectively fixed LIBOR, at a weighted average interest rate of 1.5%, on $300.0 million of our variable rate debt. Our interest rate swap agreements are summarized below (dollars in thousands):

Maturity Date	Notional Amount		Interest Rate Contractual Component	Fixed LIBOR Interest Rate
July 2016	$	35,000	LIBOR	1.754	%
July 2016	25,000		LIBOR	1.763	%
July 2017	30,000		LIBOR	2.093	%
July 2017	30,000		LIBOR	2.093	%
July 2017	25,000		LIBOR	1.129	%
July 2017	12,500		LIBOR	1.129	%
July 2017	50,000		LIBOR	0.955	%
July 2018	12,500		LIBOR	1.383	%
July 2018	30,000		LIBOR	1.660	%
July 2018	25,000		LIBOR	1.394	%
July 2018	25,000		LIBOR	1.135	%
Total/Weighted Average	$	300,000		1.505	%

Our interest rate swap agreements are designated as cash flow hedges and we record the effective portion of any unrealized gains associated with the change in fair value of the swap agreements within “Accumulated other comprehensive loss” and “Prepaid expenses and other assets” and the effective portion of any unrealized losses within “Accumulated other comprehensive loss” and “Accounts payable and other liabilities” on our consolidated balance sheets. We record our proportionate share of any unrealized gains or losses on our cash flow hedges associated with our unconsolidated joint ventures within “Accumulated other comprehensive loss” and “Investment in affiliates” on our consolidated balance sheets. We record any gains or losses incurred as a result of each interest rate swap agreement’s fixed rate deviating from our respective loan’s contractual rate within “Interest expense” in our consolidated statements of operations. We did not have any material ineffectiveness associated with our cash flow hedges during the three months ended March 31, 2015 and 2014.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to “Interest expense” on our consolidated statements of operations as interest payments are made on our variable-rate debt. We reclassified accumulated other comprehensive loss as an increase to interest expense of $1.0 million for both the three months ended March 31, 2015 and 2014. As of March 31, 2015, we estimated that $4.3 million of our accumulated other comprehensive loss will be reclassified as an increase to interest expense over the following twelve months.

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Noncontrolling Interests - Additional Information (Detail) (USD $)	3 Months Ended	0 Months Ended	3 Months Ended
	Mar. 31, 2015 sqft	Aug. 04, 2011 acre	Mar. 31, 2014	Dec. 31, 2014	Mar. 31, 2013
Business Acquisition [Line Items]
Cost to acquire all of the outstanding common Operating Partnership units not owned by the Company	$ 31,300,000
Fair value adjustment, cost basis	4,200,000			4,700,000
Outstanding Operating Partnership units not owned by the Company	2,630,577
Operating Partnership units not owned by Company	4.30%
Common operating partnership units redeemed for cash	0				0
Operating Partnership units issued for acquisition	0
Area of land available for development in additional building space	1,300,000
Washington D C Reporting Segment
Business Acquisition [Line Items]
Development of area for operations by joint venture		1.6
Area of land available for development in additional building space	700,000
Projected incremental investment in development project	56,000,000
Original cost basis of the property	$ 43,300,000
840 First Street, NE [Member]
Business Acquisition [Line Items]
Operating Partnership units issued for acquisition			3,125
Greyhound Property [Member] | Washington D C Reporting Segment
Business Acquisition [Line Items]
Percentage of interest in joint venture		97.00%
Greyhound Property [Member] | Washington D C Reporting Segment | Maximum
Business Acquisition [Line Items]
Area of land available for development in additional building space		712,000

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Share-Based Payments Share-Based Payments - Compensation Plans Option Activity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Option, Outstanding	1,060,088		1,051,359
Option, Granted	119,500
Option, Exercised	(2,000)
Option, Expired	(59,000)
Option, Forfeited	(49,771)
Option, Exercisable	516,839
Option, Expected to Vest this Quarter	507,651
Weighted Average Exercise Price, Outstanding	$ 14.67		$ 15.33
Weighted Average Exercise Price, Granted	$ 12.48
Weighted Average Exercise Price, Exercised	$ 9.30
Weighted Average Exercise Price, Expired	$ 22.44
Weighted Average Exercise Price, Forfeited	$ 14.48
Weighted Average Exercise Price, Exercisable	$ 15.52
Weighted Average Exercise Price, Expected to Vest	$ 13.97
Weighted Average Remaining Contractual Term, Outstanding	6 years 9 months 0 days	6 years 3 months 18 days
Weighted Average Remaining Contractual Term, Exercisable	5 years 9 months 0 days
Weighted Average Remaining Contractual Term, Expected to Vest	7 years 7 months 0 days
Aggregate Intrinsic Value, Outstanding	$ 107,523		$ 181,352
Aggregate Intrinsic Value, Exercisable	87,260
Aggregate Intrinsic Value, Expected to Vest	$ 17,602

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Equity - Company's Accumulated Other Comprehensive Loss (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Equity [Abstract]
Beginning balance	$ (3,268)	$ (3,836)
Net unrealized (loss) gain on derivative instruments	(1,076)	175
Net loss (gain) attributable to noncontrolling interests	46	(7)
Ending balance	$ (4,298)	$ (3,668)

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Summary of Segment Information

The results of operations of our four reporting segments for the three months ended March 31, 2015 and 2014 are as follows (dollars in thousands):

	Three Months Ended March 31, 2015
	Washington, D.C.			Maryland			Northern Virginia			Southern Virginia			Consolidated
Number of buildings(1)	6			38			49			19			112
Square feet(1)	916,686			1,999,300			3,021,299			2,024,003			7,961,288
Total revenues	$	11,032		$	11,705		$	14,114		$	6,998		$	43,849
Property operating expense	(3,139		)	(4,018		)	(4,064		)	(1,892		)	(13,113		)
Real estate taxes and insurance	(2,023		)	(891		)	(1,549		)	(579		)	(5,042		)
Total property operating income	$	5,870		$	6,796		$	8,501		$	4,527		25,694
Depreciation and amortization expense													(16,335		)
General and administrative													(5,526		)
Other expenses													(2,734		)
Loss from discontinued operations													(607		)
Net income													$	492
Total assets(2)(3)	$	503,651		$	358,772		$	444,596		$	167,979		$	1,534,448
Capital expenditures(4)	$	3,436		$	2,164		$	10,843		$	2,490		$	19,242
	Three Months Ended March 31, 2014
	Washington, D.C.			Maryland			Northern Virginia			Southern Virginia			Consolidated
Number of buildings(1)(5)	4			44			51			38			137
Square feet(1)(5)	522,560			2,274,813			3,086,550			2,851,465			8,735,388
Total revenues	$	6,940		$	11,645		$	13,666		$	7,112		$	39,363
Property operating expense	(1,987		)	(3,946		)	(3,976		)	(2,129		)	(12,038		)
Real estate taxes and insurance	(1,054		)	(1,004		)	(1,524		)	(550		)	(4,132		)
Total property operating income	$	3,899		$	6,695		$	8,166		$	4,433		23,193
Depreciation and amortization expense													(14,310		)
General and administrative													(5,196		)
Acquisition costs													(68		)
Other expenses													(4,205		)
Loss from discontinued operations													(857		)
Net loss													$	(1,443	)
Total assets(2)(3)	$	343,804		$	393,919		$	421,556		$	230,384		$	1,481,336
Capital expenditures(4)	$	6,481		$	2,390		$	822		$	1,423		$	11,393

⁽¹⁾  Excludes Storey Park from our Washington, D.C. reporting segment, which was placed in development in the third quarter of 2013.

⁽²⁾  Total assets include our investment in properties that are owned through joint ventures that are not consolidated within our condensed consolidated financial statements. For more information on our unconsolidated investments, including location within our reportable segments, see note 6, Investment in Affiliates.

⁽³⁾  Corporate assets not allocated to any of our reportable segments totaled $59,450 and $91,673 at March 31, 2015 and 2014, respectively.

⁽⁴⁾  Capital expenditures for corporate assets not allocated to any of our reportable segments totaled $309 and $277 for the three months ended March 31, 2015 and 2014, respectively.

⁽⁵⁾  Includes occupied space at 440 First Street, NW in our Washington, D.C. reporting segment, which was substantially completed in the third quarter of 2013. In October 2014, the property was placed in service.

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Dispositions - Net (Loss) Income from Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on debt extinguishment	$ (489)		$ 0
Discontinued Operations [Member] | All properties classified within discontinued operations [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	877		1,808
Loss from operations, before taxes(1)	(975)	[1]	(911)	[1]
Gain on sale of rental property	$ 857		$ 54

[1] For the three months ended March 31, 2015, we accelerated $2.0 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of the Richmond Portfolio in March 2015. For the three months ended March 31, 2014, we accelerated $1.5 million of unamortized straight-line rents, deferred rent abatements and leasing commissions related to the sale of both Girard Business Center and Gateway Center in January 2014.

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

Our reportable segments consist of four distinct reporting and operational segments within the greater Washington, D.C. region in which we operate: Washington, D.C., Maryland, Northern Virginia and Southern Virginia. We evaluate the performance of our segments based on the operating results of the properties located within each segment, which excludes large non-recurring gains and losses, gains or losses from sale of rental property, 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 of our four reporting segments for the three months ended March 31, 2015 and 2014 are as follows (dollars in thousands):

	Three Months Ended March 31, 2015
	Washington, D.C.			Maryland			Northern Virginia			Southern Virginia			Consolidated
Number of buildings(1)	6			38			49			19			112
Square feet(1)	916,686			1,999,300			3,021,299			2,024,003			7,961,288
Total revenues	$	11,032		$	11,705		$	14,114		$	6,998		$	43,849
Property operating expense	(3,139		)	(4,018		)	(4,064		)	(1,892		)	(13,113		)
Real estate taxes and insurance	(2,023		)	(891		)	(1,549		)	(579		)	(5,042		)
Total property operating income	$	5,870		$	6,796		$	8,501		$	4,527		25,694
Depreciation and amortization expense													(16,335		)
General and administrative													(5,526		)
Other expenses													(2,734		)
Loss from discontinued operations													(607		)
Net income													$	492
Total assets(2)(3)	$	503,651		$	358,772		$	444,596		$	167,979		$	1,534,448
Capital expenditures(4)	$	3,436		$	2,164		$	10,843		$	2,490		$	19,242
	Three Months Ended March 31, 2014
	Washington, D.C.			Maryland			Northern Virginia			Southern Virginia			Consolidated
Number of buildings(1)(5)	4			44			51			38			137
Square feet(1)(5)	522,560			2,274,813			3,086,550			2,851,465			8,735,388
Total revenues	$	6,940		$	11,645		$	13,666		$	7,112		$	39,363
Property operating expense	(1,987		)	(3,946		)	(3,976		)	(2,129		)	(12,038		)
Real estate taxes and insurance	(1,054		)	(1,004		)	(1,524		)	(550		)	(4,132		)
Total property operating income	$	3,899		$	6,695		$	8,166		$	4,433		23,193
Depreciation and amortization expense													(14,310		)
General and administrative													(5,196		)
Acquisition costs													(68		)
Other expenses													(4,205		)
Loss from discontinued operations													(857		)
Net loss													$	(1,443	)
Total assets(2)(3)	$	343,804		$	393,919		$	421,556		$	230,384		$	1,481,336
Capital expenditures(4)	$	6,481		$	2,390		$	822		$	1,423		$	11,393

⁽¹⁾  Excludes Storey Park from our Washington, D.C. reporting segment, which was placed in development in the third quarter of 2013.

⁽²⁾  Total assets include our investment in properties that are owned through joint ventures that are not consolidated within our condensed consolidated financial statements. For more information on our unconsolidated investments, including location within our reportable segments, see note 6, Investment in Affiliates.

⁽³⁾  Corporate assets not allocated to any of our reportable segments totaled $59,450 and $91,673 at March 31, 2015 and 2014, respectively.

⁽⁴⁾  Capital expenditures for corporate assets not allocated to any of our reportable segments totaled $309 and $277 for the three months ended March 31, 2015 and 2014, respectively.

⁽⁵⁾  Includes occupied space at 440 First Street, NW in our Washington, D.C. reporting segment, which was substantially completed in the third quarter of 2013. In October 2014, the property was placed in service.

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Notes Receivable (Tables)

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Summary of Notes Receivable

Below is a summary of our notes receivable for our outstanding mezzanine loans (dollars in thousands):

	Balance at March 31, 2015
Property	Face Amount		Unamortized Origination Fees		Balance		Interest Rate
950 F Street, NW	$	34,000	$	—	$	34,000	9.75	%

	Balance at December 31, 2014
Property	Face Amount		Unamortized Origination Fees			Balance		Interest Rate
950 F Street, NW	$	34,000	$	—		$	34,000	9.75	%
America’s Square	29,720		(41		)	29,679		9.0	%
	$	63,720	$	(41	)	$	63,679

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Dispositions Dispositions - Disposed or Held-for-Sale Properties within Continuing Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2015	Oct. 16, 2014 sqft
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Square feet	8,735,388	7,961,288
Corporate Campus at Ashburn Center and Owings Mills Business Park | Continuing Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	$ 1,465
Property operating expenses	(548)
Depreciation and amortization	(366)
Net income from continuing operations	551
MARYLAND | Owings Mills Business Park
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Reporting Segment		Maryland
Disposition Date		Oct. 16, 2014
Property Type		Business Park
Square feet			180,475
Proceeds from sale of properties		12,417
Northern Virginia | Corporate Campus at Ashburn Center
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Reporting Segment		Northern Virginia
Disposition Date		Jun. 26, 2014
Property Type		Business Park
Square feet		194,184
Proceeds from sale of properties		$ 39,910

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Rental Property - Additional Information (Detail) (USD $)	3 Months Ended	0 Months Ended
	Mar. 31, 2015 sqft	Aug. 04, 2011 acre	Dec. 31, 2014
Segment Reporting Information [Line Items]
Area of land available for development in additional building space	1,300,000
Occupancy rate in the Company's consolidated properties	88.00%
440 First Street, NW [Member]
Segment Reporting Information [Line Items]
Original cost basis of the property	23,600,000
Projected incremental investment in redevelopment project	55,500,000
Anticipated completion of redevelopment	139,000
Occupancy rate in the Company's consolidated properties	58.90%		46.90%
Redevelopment Efforts Yet To Be Placed In Service	0
Washington D C Reporting Segment
Segment Reporting Information [Line Items]
Area of land available for development in additional building space	700,000
Lease expiration date		Aug. 31, 2013
Development of area for operations by joint venture		1.6
Projected incremental investment in development project	56,000,000
Original cost basis of the property	43,300,000
Washington D C Reporting Segment | Maximum | Greyhound Property [Member]
Segment Reporting Information [Line Items]
Area of land available for development in additional building space		712,000
Washington D C Reporting Segment | 440 First Street, NW [Member]
Segment Reporting Information [Line Items]
Placed in-service redevelopment efforts	0
Maryland Reporting Segment [Member]
Segment Reporting Information [Line Items]
Area of land available for development in additional building space	100,000
Northern Virginia
Segment Reporting Information [Line Items]
Area of land available for development in additional building space	400,000
Area of land placed under development	167,000
Projected incremental investment in development project	10,200,000
Original cost basis of the property	5,200,000
Southern Virginia [Member]
Segment Reporting Information [Line Items]
Area of land available for development in additional building space	100,000

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Consolidated Statements of Comprehensive (Loss) Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 492	$ (1,443)
Unrealized gain on derivative instruments	164	317
Unrealized loss on derivative instruments	(1,240)	(142)
Total comprehensive loss	(584)	(1,268)
Net loss attributable to noncontrolling interests	112	195
Net loss (gain) from derivative instruments attributable to noncontrolling interests	46	(7)
Comprehensive loss attributable to First Potomac Realty Trust	$ (426)	$ (1,080)

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Basic earnings or loss per common share (“EPS”) is calculated by dividing net income or loss attributable to common shareholders by the weighted average common shares outstanding for the periods presented. Diluted EPS is computed after adjusting the basic EPS computation for the effect of dilutive common equivalent shares outstanding during the periods presented, which include stock options, non-vested shares and preferred shares. We apply the two-class method for determining EPS as our outstanding unvested shares with non-forfeitable dividend rights are considered participating securities. Our excess of distributions over earnings related to participating securities is shown as a reduction in total earnings attributable to common shareholders in our computation of EPS.

The following table sets forth the computation of our basic and diluted earnings per common share (amounts in thousands, except per share amounts):

	Three Months Ended March 31,
	2015			2014
Numerator for basic and diluted earnings per common share:
Income (loss) from continuing operations	$	1,099		$	(586	)
Loss from discontinued operations	(607		)	(857		)
Net income (loss)	492			(1,443		)
Less: Net loss from continuing operations attributable to noncontrolling interests	86			155
Less: Net loss from discontinued operations attributable to noncontrolling interests	26			40
Net income (loss) attributable to First Potomac Realty Trust	604			(1,248		)
Less: Dividends on preferred shares	(3,100		)	(3,100		)
Net loss attributable to common shareholders	(2,496		)	(4,348		)
Less: Allocation to participating securities	(73		)	(78		)
Net loss attributable to common shareholders	$	(2,569	)	$	(4,426	)
Denominator for basic and diluted earnings per common share:
Weighted average common shares outstanding - basic and diluted	58,225			58,097
Basic and diluted earnings per common share:
Loss from continuing operations	$	(0.03	)	$	(0.07	)
Loss from discontinued operations	(0.01		)	(0.01		)
Net loss	$	(0.04	)	$	(0.08	)

In accordance with GAAP regarding earnings per common share, we did not include the following potential weighted average common shares in our calculation of diluted earnings per common share as they are anti-dilutive for the periods presented (amounts in thousands):

	Three Months Ended   March 31,
	2015	2014
Stock option awards	1,083	1,206
Non-vested share awards	380	414
Series A Preferred Shares(1)	13,032	12,671
	14,495	14,291

⁽¹⁾  Our Series A Preferred Shares are only convertible into our common shares upon certain changes in control of our Company. The dilutive shares are calculated as the daily average of the face value of the Series A Preferred Shares divided by the outstanding common share price.

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Fair Value Measurements - Fair Value of Assets and Liabilities (Detail) (Recurring Measurements, USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Recurring Measurements:
Derivative instrument-swap assets		$ 133
Derivative instrument-swap liabilities	4,518	3,569
Level 1
Recurring Measurements:
Derivative instrument-swap assets		0
Derivative instrument-swap liabilities	0	0
Level 2
Recurring Measurements:
Derivative instrument-swap assets		133
Derivative instrument-swap liabilities	4,518	3,569
Level 3
Recurring Measurements:
Derivative instrument-swap assets		0
Derivative instrument-swap liabilities	$ 0	$ 0

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Segment Information - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 segment
Segment Reporting [Abstract]
Number of Reportable Segments	4

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Investment in Affiliates (Tables)

3 Months Ended

Mar. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Components of Investments in Affiliates

Our investment in affiliates consisted of the following (dollars in thousands):

	Reporting Segment	Ownership Interest		March 31, 2015		December 31, 2014
Prosperity Metro Plaza	Northern Virginia	51	%	$	24,846	$	24,651
1750 H Street, NW	Washington, D.C.	50	%	14,938		14,834
Aviation Business Park	Maryland	50	%	5,677		5,748
RiversPark I and II(1)	Maryland	25	%	2,197		2,249
				$	47,658	$	47,482

⁽¹⁾RiversPark I and RiversPark II are owned through two separate joint ventures.

Net Assets of Company's Unconsolidated Joint Ventures

The net assets of our unconsolidated joint ventures consisted of the following (dollars in thousands):

	March 31, 2015		December 31, 2014
Assets:
Rental property, net	$	193,201	$	193,533
Cash and cash equivalents	5,143		4,567
Other assets	16,514		16,748
Total assets	214,858		214,848
Liabilities:
Mortgage loans(1)	110,000		110,000
Other liabilities	6,729		7,256
Total liabilities	116,729		117,256
Net assets	$	98,129	$	97,592

⁽¹⁾  Of the total mortgage debt that encumbers our unconsolidated properties, $2.8 million is recourse to us. We believe the fair value of the potential liability to us under this guaranty is inconsequential as the likelihood of our need to perform under the debt agreement is remote.

Results of Operations of Company's Unconsolidated Joint Ventures

The following table summarizes the results of operations of our unconsolidated joint ventures, which due to our varying ownership interests in the joint ventures and the varying operations of the joint ventures may or may not be reflective of the amounts recorded in our consolidated statements of operations (dollars in thousands):

	Three Months Ended   March 31,
	2015			2014
Total revenues	$	6,167		$	5,752
Total operating expenses	(2,156		)	(2,226		)
Net operating income	4,011			3,526
Depreciation and amortization	(2,249		)	(2,803		)
Interest expense, net	(973		)	(1,011		)
Net income (loss)	$	789		$	(288	)

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Earnings Per Common Share - Computation of Company's Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Numerator for basic and diluted earnings per common share:
Income (loss) from continuing operations	$ 1,099	$ (586)
Loss from discontinued operations	(607)	(857)
Net income (loss)	492	(1,443)
Less: Net loss from continuing operations attributable to noncontrolling interests	86	155
Less: Net loss from discontinued operations attributable to noncontrolling interests	26	40
Net income (loss) attributable to First Potomac Realty Trust	604	(1,248)
Less: Dividends on preferred shares	(3,100)	(3,100)
Net loss attributable to common shareholders	(2,496)	(4,348)
Less: Allocation to participating securities	73	78
Net loss attributable to common shareholders	$ (2,569)	$ (4,426)
Denominator for basic and diluted earnings per common share:
Diluted	58,225	58,097
Basic and diluted earnings per common share:
Loss from continuing operations	$ (0.03)	$ (0.07)
Loss from discontinued operations	$ (0.01)	$ (0.01)
Net loss	$ (0.04)	$ (0.08)

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Share-Based Payments

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Payments

Share-Based Payments

We record costs related to our share-based compensation based on the grant-date fair value calculated in accordance with GAAP. We recognize share-based compensation costs on a straight-line basis over the requisite service period for each award and these costs are recorded within “General and administrative expense” or “Property operating expense” in our consolidated statements of operations based on the employee’s job function.

Stock Options Summary

During the three months ended March 31, 2015, we issued 119,500 stock options to our non-officer employees. The stock options vest 25% on the first anniversary of the date of grant and 6.25% in each subsequent calendar quarter. The award described above has a 10-year contractual life. We recognized compensation expense associated with stock option awards of $118 thousand and $137 thousand during the three months ended March 31, 2015 and 2014, respectively.

A summary of our stock option activity during the three months ended March 31 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2014	1,051,359		$	15.33	6.3 years	$	181,352
Granted	119,500		12.48
Exercised	(2,000	)	9.30
Expired	(59,000	)	22.44
Forfeited	(49,771	)	14.48
Outstanding at March 31, 2015	1,060,088		$	14.67	6.8 years	$	107,523
Exercisable at March 31, 2015	516,839		$	15.52	5.8 years	$	87,260
Options expected to vest, subsequent to March 31, 2015	507,651		$	13.97	7.6 years	$	17,602

As of March 31, 2015, we had $1.4 million of unrecognized compensation cost, net of estimated forfeitures, related to stock option awards. We anticipate this cost will be recognized over a weighted-average period of approximately 4.0 years. We calculate the grant date fair value of option awards using a Black-Scholes option-pricing model. Expected volatility is based on an assessment of our realized volatility over the preceding period that is equivalent to the award’s expected life, which in our opinion, gives an accurate indication of future volatility. The expected term represents the period of time the options are anticipated to remain outstanding as well as our historical experience for groupings of employees that have similar behavior and are considered separately for valuation purposes. The risk-free rate is based on the U.S. Treasury rate at the time of grant for instruments of similar terms.

The weighted average assumptions used in the fair value determination of stock options granted to employees during the three months ended March 31, 2015 are summarized as follows:

Risk-free interest rate	1.61	%
Expected volatility	29.16	%
Expected dividend yield	4.79	%
Weighted average expected life of options	5 years

The weighted average grant date fair value of the stock options issued during the three months ended March 31, 2015 was $1.96 per share.

Option Exercises

We received approximately $19 thousand and $79 thousand of proceeds from stock option exercises during the three months ended March 31, 2015 and 2014, respectively. Shares issued as a result of stock option exercises are provided by the issuance of new shares. The total intrinsic value of options exercised during the three months ended March 31, 2015 and 2014 was $5 thousand and $18 thousand, respectively.

Non-Vested Share Awards

We issue non-vested common share awards that either vest over a specific time period that is identified at the time of issuance or vest upon the achievement of specific performance goals that are identified at the time of issuance. We issue new common shares, subject to restrictions, upon each grant of non-vested common share awards. In February 2015, we granted a total of 121,380 non-vested common shares to our officers. The awards will vest ratably on the date of issuance over a three-year term.

We recognized $0.6 million and $0.7 million of compensation expense associated with our non-vested common share awards during the three months ended March 31, 2015 and 2014, respectively. Dividends on all non-vested common share awards are recorded as a reduction of equity. We apply the two-class method for determining EPS as our outstanding non-vested common shares with non-forfeitable dividend rights are considered participating securities. Our excess of dividends over earnings related to participating securities are shown as a reduction in net income or loss attributable to common shareholders in our computation of EPS.

A summary of our non-vested common share awards at March 31, 2015 is as follows:

	Non-vested Common Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2014	623,421		$	13.16
Granted	121,380		12.11
Vested	(106,300	)	13.97
Expired	(22,260	)	8.42
Forfeited	(154,626	)	13.42
Non-vested at March 31, 2015	461,615		$	12.83

We value our non-vested time-based share awards at the grant date fair value, which is the market price of our common shares. As of March 31, 2015, we had $4.0 million of unrecognized compensation cost related to non-vested common shares. We anticipate this cost will be recognized over a weighted-average period of 2.3 years.