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Section 1: 10-Q (10-Q)

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Table of Contents


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________ 
FORM 10-Q
 __________________________________ 
(Mark One)
x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the quarterly period ended March 31, 2018
OR
o
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 001-36113
COLUMBIA PROPERTY TRUST, INC.
(Exact name of registrant as specified in its charter)
  __________________________________
Maryland
 
20-0068852
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
1170 Peachtree Street NE, Suite 600
Atlanta, Georgia 30309
(Address of principal executive offices)
(Zip Code)
(404) 465-2200
(Registrant's telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
  Yes  x  No  o
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 filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act (check one).
Large accelerated filer
x 
Accelerated filer
o
Non-accelerated filer
o (Do not check if a smaller reporting company)
Smaller reporting company
o
 
 
Emerging Growth Company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  o    No  x

Number of shares outstanding of the registrant's
only class of common stock, as of April 20, 2018: 118,601,872 shares
 
 
 
 
 


Table of Contents


FORM 10-Q
COLUMBIA PROPERTY TRUST, INC.
TABLE OF CONTENTS
 
Page No.
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.



Page 2

Table of Contents


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this quarterly report on Form 10-Q of Columbia Property Trust, Inc. ("Columbia Property Trust," "we," "our," or "us"), other than historical facts may constitute "forward-looking statements” within the meaning of the Private Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Columbia Property Trust intends for all such forward-looking statements presented in this quarterly report on Form 10-Q ("Form 10-Q"), or that management may make orally or in writing from time to time, to be covered by the applicable safe harbor provisions for forward-looking statements contained in those acts.
Such statements in this current Form 10-Q include, among other things, information about possible or assumed future results of the business and our financial condition, liquidity, results of operations, plans, strategies, prospects, and objectives. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. As forward-looking statements, these statements are subject to certain risks and uncertainties, including known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. These risks, uncertainties, and other factors include, without limitation:
risks affecting the real estate industry (such as the inability to enter into new leases, dependence on tenants' financial condition, and competition from other owners of real estate);
risks relating to our ability to maintain and increase property occupancy rates and rental rates;
adverse economic or real estate market developments in our target markets;
risks relating to the use of debt to fund acquisitions;
availability and terms of financing;
ability to refinance indebtedness as it comes due;
sensitivity of our operations and financing arrangements to fluctuations in interest rates;
reductions in asset valuations and related impairment charges;
risks associated with joint ventures;
risks relating to repositioning our portfolio;
risks relating to construction and redevelopment activities;
risks relating to acquisition and disposition activities;
risks associated with our ability to continue to qualify as a real estate investment trust ("REIT");
potential liability for uninsured losses and environmental contamination;
potential adverse impact of market interest rates on the market price for our securities; and
risks associated with our dependence on key personnel whose continued service is not guaranteed.
For further discussion of these and additional risks and uncertainties that may cause actual results to differ from expectation, see Item 1A, Risk Factors, in our Form 10-K for the year ended December 31, 2017. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurances that our expectations will be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the U.S. Securities and Exchange Commission ("SEC"). We do not intend to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.


Page 3

Table of Contents


PART I.
FINANCIAL INFORMATION
ITEM 1.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The information furnished in the accompanying consolidated balance sheets and related consolidated statements of operations, comprehensive income, equity, and cash flows, reflects all normal and recurring adjustments that are, in management's opinion, necessary for a fair and consistent presentation of the aforementioned financial statements. The accompanying consolidated financial statements should be read in conjunction with the condensed notes to Columbia Property Trust's financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Quarterly Report on Form 10-Q, and with audited consolidated financial statements and the related notes for the year ended December 31, 2017. Columbia Property Trust's results of operations for the three months ended March 31, 2018 are not necessarily indicative of the operating results expected for the full year.


Page 4

Table of Contents


COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per-share amounts) 
 
(Unaudited)
 
March 31,
2018
 
December 31,
2017
Assets:
 
 
 
Real estate assets, at cost:
 
 
 
Land
$
825,208

 
$
825,208

Buildings and improvements, less accumulated depreciation of $407,894 and $388,796, as of March 31, 2018 and December 31, 2017, respectively
2,059,738

 
2,063,419

Intangible lease assets, less accumulated amortization of $99,092 and $94,065, as of
March 31, 2018 and December 31, 2017, respectively
194,233

 
199,260

Construction in progress
46,814

 
44,742

Total real estate assets
3,125,993

 
3,132,629

Investments in unconsolidated joint ventures
1,058,441

 
943,242

Cash and cash equivalents
21,068

 
9,567

Tenant receivables, net of allowance for doubtful accounts of $0 as of March 31, 2018 and December 31, 2017
2,435

 
2,128

Straight-line rent receivable
102,415

 
92,235

Prepaid expenses and other assets
25,189

 
27,683

Intangible lease origination costs, less accumulated amortization of $59,884 and $57,465, as of March 31, 2018 and December 31, 2017, respectively
40,540

 
42,959

Deferred lease costs, less accumulated amortization of $28,562 and $26,464, as of
March 31, 2018 and December 31, 2017, respectively
142,719

 
141,096

Investment in development authority bonds
120,000

 
120,000

Total assets
$
4,638,800

 
$
4,511,539

Liabilities:
 
 
 
Line of credit and notes payable, net of unamortized deferred financing costs of $2,641 and $2,991, as of March 31, 2018 and December 31, 2017, respectively
$
832,722

 
$
971,185

Bonds payable, net of discounts of $1,439 and $1,484 and unamortized deferred financing costs of $4,607 and $4,760, as of March 31, 2018 and December 31, 2017, respectively
693,954

 
693,756

Accounts payable, accrued expenses, and accrued capital expenditures
105,772

 
125,002

Dividends payable

 
23,961

Deferred income
18,264

 
18,481

Intangible lease liabilities, less accumulated amortization of $19,265 and $19,660, as of
March 31, 2018 and December 31, 2017, respectively
25,629

 
27,218

Obligations under capital lease
120,000

 
120,000

Total liabilities
1,796,341

 
1,979,603

Commitments and Contingencies (Note 7)

 

Equity:
 
 
 
Common stock, $0.01 par value, 225,000,000 shares authorized, 118,601,872 and 119,789,106 shares issued and outstanding, as of March 31, 2018 and December 31, 2017, respectively
1,186

 
1,198

Additional paid-in capital
4,459,354

 
4,487,071

Cumulative distributions in excess of earnings
(1,621,498
)
 
(1,957,236
)
Cumulative other comprehensive loss
3,417

 
903

Total equity
2,842,459

 
2,531,936

Total liabilities and equity
$
4,638,800

 
$
4,511,539

See accompanying notes.

Page 5

Table of Contents


COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
 
(Unaudited)
 
Three Months Ended
March 31,
 
2018
 
2017
Revenues:
 
 
 
Rental income
$
64,817

 
$
71,173

Tenant reimbursements
5,543

 
8,584

Hotel income

 
1,339

Asset and property management fee income
1,759

 
474

Other property income
1,591

 
586

 
73,710

 
82,156

Expenses:
 
 
 
Property operating costs
23,062

 
24,105

Hotel operating costs

 
2,076

Asset and property management fee expenses
208

 
269

Depreciation
20,835

 
21,605

Amortization
8,016

 
9,457

General and administrative – corporate
7,794

 
8,768

General and administrative – unconsolidated joint ventures
731

 

 
60,646

 
66,280


13,064

 
15,876

Other Income (Expense):
 
 
 
Interest expense
(15,895
)
 
(15,115
)
Interest and other income
1,803

 
2,350

Gain on sale of unconsolidated joint venture interests
762

 

Loss on early extinguishment of debt

 
(45
)
 
(13,330
)
 
(12,810
)
Income (loss) before income taxes, unconsolidated joint ventures, and sales of real estate
(266
)
 
3,066

Income tax benefit (expense)
(7
)
 
388

Income (loss) from unconsolidated joint ventures
1,771

 
(1,885
)
Income before sales of real estate
1,498


1,569

Gains on sales of real estate assets

 
73,153

Net income
$
1,498


$
74,722

Per-Share Information – Basic:
 
 
 
Net income
$
0.01

 
$
0.61

Weighted-average common shares outstanding – basic
119,082

 
122,003

Per-Share Information – Diluted:
 
 
 
Net income
$
0.01

 
$
0.61

Weighted-average common shares outstanding – diluted
119,350

 
122,329

Dividends per share
$
0.20

 
$
0.20


See accompanying notes.

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Table of Contents


COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

 
(Unaudited)
 
Three Months Ended
March 31,
 
2018
 
2017
Net income
$
1,498

 
$
74,722

Market value adjustments to interest rate swap
2,514

 
634

Comprehensive income
$
4,012

 
$
75,356


See accompanying notes.



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COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (UNAUDITED)
(in thousands, except per-share amounts)

 
Common Stock
 
Additional
Paid-In
Capital
 
Cumulative
Distributions
in Excess of
Earnings
 
Cumulative
Other
Comprehensive
Income
 
Total
Equity
 
Shares
 
Amount
 
 
 
 
Balance, December 31, 2017
119,789

 
$
1,198

 
$
4,487,071

 
$
(1,957,236
)
 
$
903

 
$
2,531,936

Cumulative-effect adjustment for the adoption of
ASU 2017-05

 

 

 
357,755

 

 
357,755

Cumulative-effect adjustment for the adoption of
ASU 2014-09

 

 

 
343

 

 
343

Repurchases of common stock
(1,295
)
 
(13
)
 
(27,273
)
 

 

 
(27,286
)
Common stock issued to employees and directors, and amortized (net of income tax withholdings)
108

 
1

 
(444
)
 

 

 
(443
)
Distributions to common stockholders ($0.20 per share)

 

 

 
(23,858
)
 

 
(23,858
)
Net income

 

 

 
1,498

 

 
1,498

Market value adjustment to interest rate swap

 

 

 

 
2,514

 
2,514

Balance, March 31, 2018
118,602

 
$
1,186

 
$
4,459,354

 
$
(1,621,498
)
 
$
3,417

 
$
2,842,459

 
Common Stock
 
Additional
Paid-In
Capital
 
Cumulative
Distributions
in Excess of
Earnings
 
Cumulative
Other
Comprehensive
Income (Loss)
 
Total
 Equity
 
Shares
 
Amount
 
 
 
 
Balance, December 31, 2016
122,184

 
$
1,221

 
$
4,538,912

 
$
(2,036,482
)
 
$
(883
)
 
$
2,502,768

Common stock issued to employees and directors, and amortized (net of income tax withholdings)
267

 
3

 
232

 

 

 
235

Distributions to common stockholders ($0.20 per share)

 

 

 
(24,490
)
 

 
(24,490
)
Net income

 

 

 
74,722

 

 
74,722

Market value adjustment to interest rate swap

 

 

 

 
634

 
634

Balance, March 31, 2017
122,451

 
$
1,224

 
$
4,539,144

 
$
(1,986,250
)
 
$
(249
)
 
$
2,553,869

See accompanying notes.

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Table of Contents


COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
(Unaudited)
 
Three Months Ended
March 31,
 
2018
 
2017
Cash Flows From Operating Activities:
 
 
 
Net income
$
1,498

 
$
74,722

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
Straight-line rental income
(9,698
)
 
(6,376
)
Depreciation
20,835

 
21,605

Amortization
7,955

 
8,869

Noncash interest expense
882

 
772

Loss on early extinguishment of debt

 
45

Income (loss) from unconsolidated joint ventures
(1,771
)
 
1,885

Distributions of earnings from unconsolidated joint ventures
8,573

 

Gain on sale of unconsolidated joint venture interests
(762
)
 

Gain on sales of real estate assets

 
(73,153
)
Stock-based compensation expense
1,528

 
1,691

Changes in assets and liabilities, net of acquisitions and dispositions:
 
 
 
Decrease (increase) in tenant receivables, net
(829
)
 
2,611

Decrease (increase) in prepaid expenses and other assets
4,962

 
(1,576
)
Decrease in accounts payable and accrued expenses
(18,185
)
 
(21,118
)
Decrease in deferred income
(217
)
 
(4,579
)
Net cash provided by operating activities
14,771

 
5,398

Cash Flows From Investing Activities:
 
 
 
Net proceeds from the sales of real estate

 
504,660

Net proceeds from sale of investments in unconsolidated joint ventures
235,083

 

Prepaid earnest money

 
(12,000
)
Capital improvement and development costs
(19,363
)
 
(17,268
)
Deferred lease costs paid
(4,514
)
 
(3,906
)
Investments in unconsolidated joint ventures
(1,541
)
 
(1,230
)
Distributions from unconsolidated joint ventures
2,976

 

Net cash provided by investing activities
212,641

 
470,256

Cash Flows From Financing Activities:
 
 
 
Financing costs paid
(17
)
 

Proceeds from lines of credit and notes payable
109,000

 

Repayments of lines of credit and notes payable
(247,814
)
 
(74,406
)
Distributions paid to stockholders
(47,819
)
 
(61,217
)
Redemptions of common stock
(29,261
)
 
(1,461
)
Net cash used in financing activities
(215,911
)
 
(137,084
)
Net increase in cash and cash equivalents
11,501

 
338,570

Cash and cash equivalents, beginning of period
9,567

 
216,085

Cash and cash equivalents, end of period
$
21,068

 
$
554,655

See accompanying notes.

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Table of Contents


COLUMBIA PROPERTY TRUST, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
(unaudited)
1.
Organization
Columbia Property Trust, Inc. ("Columbia Property Trust") (NYSE: CXP) is a Maryland corporation that operates as a real estate investment trust ("REIT") for federal income tax purposes and owns and operates commercial real estate properties. Columbia Property Trust was incorporated in 2003, commenced operations in 2004, and conducts business primarily through Columbia Property Trust Operating Partnership, L.P. ("Columbia Property Trust OP"), a Delaware limited partnership. Columbia Property Trust is the general partner and sole owner of Columbia Property Trust OP and possesses full legal control and authority over its operations. Columbia Property Trust OP acquires, redevelops, owns, leases, and operates real properties directly, through wholly owned subsidiaries, or through unconsolidated joint ventures. Unless otherwise noted herein, references to Columbia Property Trust, "we," "us," or "our" herein shall include Columbia Property Trust and all subsidiaries of Columbia Property Trust, direct and indirect.
Columbia Property Trust typically invests in high-quality, income-generating office properties. As of March 31, 2018, Columbia Property Trust owned 19 operating properties and one property under redevelopment, of which 15 were wholly owned and five were owned through unconsolidated joint ventures. The operating properties are located primarily in New York, San Francisco, Washington, D.C., and Atlanta, contain a total of 9.2 million rentable square feet, and were approximately 96.8% leased as of March 31, 2018.
2.
Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements of Columbia Property Trust have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, the statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Results for these interim periods are not necessarily indicative of a full year's results. For additional information on our unconsolidated joint ventures, which are accounted for using the equity method of accounting, see Note 4, Unconsolidated Joint Ventures. Columbia Property Trust's consolidated financial statements include the accounts of Columbia Property Trust, Columbia Property Trust OP, and any variable-interest entity in which Columbia Property Trust or Columbia Property Trust OP was deemed the primary beneficiary. With respect to entities that are not variable interest entities, Columbia Property Trust's consolidated financial statements also include the accounts of any entity in which Columbia Property Trust, Columbia Property Trust OP, or their subsidiaries own a controlling financial interest and any limited partnership in which Columbia Property Trust, Columbia Property Trust OP, or their subsidiaries own a controlling general partnership interest. All intercompany balances and transactions have been eliminated in consolidation. For further information, refer to the financial statements and footnotes included in Columbia Property Trust's Annual Report on Form 10-K for the year ended December 31, 2017 (the "2017 Form 10-K").
Fair Value Measurements
Columbia Property Trust estimates the fair value of its assets and liabilities (where currently required under GAAP) consistent with the provisions of Accounting Standard Codification 820, Fair Value Measurements ("ASC 820"). Under this standard, fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date, under current market conditions. While various techniques and assumptions can be used to estimate fair value depending on the nature of the asset or liability, the accounting standard for fair value measurements and disclosures provides the following fair value technique parameters and hierarchy, depending upon availability:
Level 1 – Assets or liabilities for which the identical term is traded on an active exchange, such as publicly traded instruments or futures contracts.
Level 2 – Assets or liabilities valued based on observable market data for similar instruments.
Level 3 – Assets or liabilities for which significant valuation assumptions are not readily observable in the market. Such assets or liabilities are valued based on the best available data, some of which may be internally developed. Significant assumptions may include risk premiums that a market participant would consider.

Page 10


Real Estate Assets
Columbia Property Trust is required to make subjective assessments as to the useful lives of its depreciable assets. To determine the appropriate useful life of an asset, Columbia Property Trust considers the period of future benefit of the asset. These assessments have a direct impact on net income. The estimated useful lives of its assets by class are as follows:
Buildings
  
40-45 years
Building and site improvements
  
5-25 years
Tenant improvements
  
Shorter of economic life or lease term
Intangible lease assets
  
Lease term
Assets Held for Sale
Columbia Property Trust classifies properties as held for sale according to Accounting Standard Codification 360, Accounting for the Impairment or Disposal of Long-Lived Assets ("ASC 360"). According to ASC 360, properties having separately identifiable operations and cash flows are considered held for sale when all of the following criteria are met:
Management, having the authority to approve the action, commits to a plan to sell the property.
The property is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such property.
An active program to locate a buyer and other actions required to complete the plan to sell the property have been initiated.
The property is being actively marketed for sale at a price that is reasonable in relation to its current fair value.
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
The sale of the property is probable (i.e., typically subject to a binding sale contract with a non-refundable deposit), and transfer of the property is expected to qualify for recognition as a completed sale within three months.
As of March 31, 2018 and December 31, 2017, none of Columbia Property Trust's properties met the criteria to be classified as held for sale in the accompanying balance sheet.
Evaluating the Recoverability of Real Estate Assets
Columbia Property Trust continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related intangible assets, of both operating properties and properties under redevelopment, may not be recoverable. When indicators of potential impairment are present that suggest that the carrying amounts of real estate assets and related intangible assets and liabilities may not be recoverable, Columbia Property Trust assesses the recoverability of these assets and liabilities by determining whether the respective carrying values will be recovered through the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying values, Columbia Property Trust adjusts the carrying value of the real estate assets and related intangible assets and liabilities to the estimated fair values, pursuant to the property, plant, and equipment accounting standard for the impairment or disposal of long-lived assets, and recognizes an impairment loss. At such time that a property is required to be classified as held for sale, its carrying amount is adjusted to the lower of its depreciated book value or its estimated fair value, less costs to sell, and depreciation is no longer recognized. Based on the assessment as described above, Columbia Property Trust has determined that the carrying values of all its real estate assets and related intangible assets are recoverable as of March 31, 2018.
Estimated fair values are calculated based on the following hierarchy of information: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of future cash flows, including estimated residual value. Projections of expected future operating cash flows require that Columbia Property Trust estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. Due to the inherent subjectivity of the assumptions used to project future cash flows, estimated fair values may differ from the values that would be realized in market transactions. Certain of Columbia Property Trust's assets may be carried at an amount that exceeds that which could be realized in a current disposition transaction.

Page 11


Intangible Assets and Liabilities Arising From In-Place Leases Where Columbia Property Trust Is the Lessor
Upon the acquisition of real properties, Columbia Property Trust allocates the purchase price of the properties to tangible assets, consisting of land, building, site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each case on Columbia Property Trust's estimate of their fair values in accordance with ASC 820 (see Fair Value Measurements section above for additional detail). As of March 31, 2018 and December 31, 2017, Columbia Property Trust had the following intangible assets and liabilities, arising from in-place leases, excluding amounts held for sale (in thousands):
 
 
Intangible Lease Assets
 
Intangible
Lease
Origination
Costs
 
Intangible
Below-Market
In-Place Lease
Liabilities
 
Above-Market
In-Place
Lease Assets
 
Absorption
Period Costs
 
March 31, 2018
Gross
$
2,481

 
$
149,929

 
$
100,424

 
$
44,894

 
Accumulated Amortization
(883
)
 
(74,805
)
 
(59,884
)
 
(19,265
)
 
Net
$
1,598

 
$
75,124

 
$
40,540

 
$
25,629

December 31, 2017
Gross
$
2,481

 
$
149,927

 
$
100,424

 
$
46,878

 
Accumulated Amortization
(833
)
 
(70,465
)
 
(57,465
)
 
(19,660
)
 
Net
$
1,648

 
$
79,462

 
$
42,959

 
$
27,218

For the three months ended March 31, 2018 and 2017, Columbia Property Trust recognized the following amortization of intangible lease assets and liabilities (in thousands):
 
Intangible Lease Assets
 
Intangible
Lease
Origination
Costs
 
Intangible
Below-Market
In-Place Lease
Liabilities
Above-Market
In-Place
Lease Assets
 
Absorption
Period Costs
 
For the Three Months Ended March 31, 2018
$
51

 
$
4,339

 
$
2,419

 
$
1,589

For the Three Months Ended March 31, 2017
$
288

 
$
5,068

 
$
3,089

 
$
2,405

The net intangible assets and liabilities remaining as of March 31, 2018 will be amortized as follows (in thousands):
 
Intangible Lease Assets
 
Intangible
Lease
Origination
Costs
 
Intangible
Below-Market
In-Place Lease
Liabilities
Above-Market
In-Place
Lease Assets
 
Absorption
Period Costs
 
For the remainder of 2018
$
153

 
$
12,583

 
$
7,152

 
$
4,736

For the years ending December 31:
 
 
 
 
 
 
 
2019
203

 
14,665

 
8,651

 
5,968

2020
203

 
12,801

 
7,770

 
4,535

2021
203

 
8,112

 
3,727

 
1,591

2022
203

 
6,585

 
2,708

 
1,287

2023
203

 
5,944

 
2,480

 
1,264

Thereafter
430

 
14,434

 
8,052

 
6,248

 
$
1,598

 
$
75,124

 
$
40,540

 
$
25,629

Intangible Assets and Liabilities Arising From In-Place Leases Where Columbia Property Trust Is the Lessee
Columbia Property Trust is the lessee on certain in-place ground leases. Intangible above-market and below-market in-place lease values are recorded as intangible lease liabilities and assets, respectively, and are amortized as an adjustment to property operating cost over the remaining term of the respective leases. Columbia Property Trust had gross below-market lease assets of approximately
$140.9 million as of March 31, 2018 and December 31, 2017, and recognized amortization of these assets of approximately $0.6 million for the three months ended March 31, 2018 and 2017.


Page 12


As of March 31, 2018, the remaining net below-market intangible lease assets will be amortized as follows (in thousands):
For the remainder of 2018
$
1,912

For the Years Ending December 31:
 
2019
2,549

2020
2,549

2021
2,549

2022
2,549

2023
2,549

Thereafter
102,854

 
$
117,511

Interest Rate Swap Agreements
Columbia Property Trust enters into interest rate swap contracts to mitigate its interest rate risk on the related financial instruments. Columbia Property Trust does not enter into derivative or interest rate swap transactions for speculative purposes; however, certain of its derivatives may not qualify for hedge accounting treatment. Columbia Property Trust records the fair value of its interest rate swaps on its consolidated balance sheet either as prepaid expenses and other assets or as accounts payable, accrued expenses, and accrued capital expenditures. Changes in the fair value of interest rate swaps that are designated as cash flow hedges are recorded as other comprehensive income. All changes in the fair value of interest rate swaps that do not qualify for hedge accounting treatment are recorded as gain or loss on interest rate swaps. Amounts received or paid under interest rate swap agreements are recorded as interest expense for contracts that qualify for hedge accounting treatment and as gain or loss on interest rate swaps for contracts that do not qualify for hedge accounting treatment. The following tables provide additional information related to Columbia Property Trust's interest rate swaps (in thousands):
 
 
 
 
Estimated Fair Value as of
Instrument Type
 
Balance Sheet Classification
 
March 31,
2018
 
December 31,
2017
Derivatives designated as hedging instruments:
 
 
 
 
 
 
Interest rate contracts
 
Prepaid expenses and other assets
 
$
3,417

 
$
903

Columbia Property Trust applied the provisions of ASC 820 in recording its interest rate swaps at fair value. The fair values of the interest rate swaps, classified under Level 2, were determined using a third-party proprietary model that is based on prevailing market data for contracts with matching durations, current and anticipated London Interbank Offered Rate ("LIBOR") information, and reasonable estimates about relevant future market conditions. Columbia Property Trust has determined that the fair value, as determined by the third party, is reasonable.
 
Three Months Ended
March 31,
 
2018
 
2017
Market value adjustment to interest rate swaps designated as hedging instruments and included in other comprehensive income
$
2,514

 
$
634

During the periods presented, there was no hedge ineffectiveness required to be recognized into earnings on the interest rate swaps that qualified for hedge accounting treatment.
Income Taxes
Columbia Property Trust has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code") and has operated as such beginning with its taxable year ended December 31, 2003. To qualify as a REIT, Columbia Property Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its REIT taxable income, as defined by the Code, to its stockholders. As a REIT, Columbia Property Trust generally is not subject to income tax on income it distributes to stockholders. Columbia Property Trust's stockholder distributions typically exceed its taxable income due to the inclusion of noncash expenses, such as depreciation, in taxable income. As a result, Columbia Property Trust typically does not incur federal income taxes other than as described in the following paragraph. Columbia Property Trust is, however,

Page 13


subject to certain state and local taxes related to the operations of properties in certain locations, which have been provided for in the accompanying consolidated financial statements.
Columbia Property Trust TRS, LLC, Columbia KCP TRS, LLC, and Columbia Energy TRS, LLC (collectively, the "TRS Entities") are wholly owned subsidiaries of Columbia Property Trust and are organized as Delaware limited liability companies. The TRS Entities, among other things, provide tenant services that Columbia Property Trust, as a REIT, cannot otherwise provide. Columbia Property Trust has elected to treat the TRS Entities as taxable REIT subsidiaries. Columbia Property Trust may perform certain additional, noncustomary services for tenants of its buildings through the TRS Entities; however, any earnings related to such services are subject to federal and state income taxes. In addition, for Columbia Property Trust to continue to qualify as a REIT, Columbia Property Trust must limit its investments in taxable REIT subsidiaries to 20% of the value of the total assets. The TRS Entities' deferred tax assets and liabilities represent temporary differences between the financial reporting basis and the tax basis of assets and liabilities based on the enacted rates expected to be in effect when the temporary differences reverse. If applicable, Columbia Property Trust records interest and penalties related to uncertain tax positions as general and administrative expense in the accompanying consolidated statements of operations.
Reclassification
Certain prior period amounts may be reclassified to conform to the current-period financial statement presentation. Within revenues on the accompanying consolidated statements of operations, management fees earned from unconsolidated joint ventures have been reclassified from other property income to a dedicated line item, asset and property management fee income, for all periods presented.
Recent Accounting Pronouncements
In February 2017, the FASB issued Accounting Standard Update 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-Financial Assets ("ASU 2017-05"), which applies to the partial sale of non-financial assets, including real estate assets, to unconsolidated joint ventures. ASU 2017-05 requires Columbia Property Trust to measure its residual joint venture interest in properties transferred to unconsolidated joint ventures at fair value as of the transaction date by recognizing a gain or loss on 100% of the asset transferred (i.e. to fully step-up the basis of the residual investment in the joint venture). Columbia Property Trust adopted the new rule effective January 1, 2018 on a modified retrospective basis by recording a cumulative-effect adjustment to equity equal to the total gain on residual joint venture interests as of the transaction dates for the partial sales of Market Square, 333 Market Street, and University Circle, adjusted to reflect the impact of depreciating the additional step-ups through January 1, 2018. The adoption of this standard resulted in an increase to investments in unconsolidated joint ventures and equity of $357.8 million.
In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases ("ASU 2016-02"), which amends the existing standards for lease accounting by requiring lessees to recognize most leases on their balance sheets and by making targeted changes to lessor accounting and reporting. The new standard will require lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months, and classify such leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee, or not. This classification will determine whether the lease expense is recognized based on an effective interest method (finance leases) or on a straight-line basis over the term of the lease (operating leases). Leases with a term of 12 months or less will be accounted for using an approach that is similar to existing guidance for operating leases today. The new standard requires lessors to account for leases, using an approach that is substantially equivalent to existing guidance as applies to sales-type leases, direct financing leases, and operating leases. ASU 2016-02 will be effective for Columbia Property Trust on January 1, 2019 and supersedes previous leasing standards. Upon implementing ASU 2016-02, Columbia Property Trust expects to record right of use assets and the related liabilities, for certain of its ground leases. Columbia Property Trust is in the process of evaluating the financial impact of this accounting change.
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which establishes a comprehensive model to account for revenues arising from contracts with customers. ASU 2014-09 applies to all contracts with customers, except those that are within the scope of other topics in the FASB's Accounting Standards Codification, such as real estate leases. ASU 2014-09 requires companies to perform a five-step analysis of transactions to determine when and how revenue is recognized. For Columbia Property Trust, the new standard applies primarily to fees earned from managing properties owned by its unconsolidated joint ventures and parking agreements with tenants. Given the structure of these agreements, the adoption of ASU 2014-09 has not materially impacted the timing or amount of Columbia Property Trust's revenues; however, Columbia Property Trust has included more extensive disclosures about its revenue streams and contracts with customers, which are presented in Note 11, Revenues. ASU 2014-09 was effective for Columbia Property Trust on January 1, 2018. Columbia Property Trust has applied the modified retrospective approach of adoption, which resulted in the recognition of a cumulative effect adjustment to equity of $0.3 million, with no retrospective adjustments to prior periods.

Page 14


3.
Real Estate Transactions
Acquisitions
Columbia Property Trust did not acquire any properties during the first three months of 2018. During 2017, Columbia Property Trust acquired the following properties and partial interests in properties:
Property
 
Location
 
Date
 
Percent Acquired
 
Purchase Price(1)
(in thousands)
2017
 
 
 
 
 
 
 
 
 
149 Madison Avenue
 
New York, NY
 
November 28, 2017
 
100.0
%
 
$
87,700

 
1800 M Street
 
Washington, D.C.
 
October 11, 2017
 
55.0
%
 
$
231,550

(2) 
245-249 West 17th Street & 218 West 18th Street
 
New York, NY
 
October 11, 2017
 
100.0
%
 
$
514,100

 
114 Fifth Avenue
 
New York, NY
 
July 6, 2017
 
49.5
%
 
$
108,900

(2) 
(1) 
Exclusive of transaction costs and price adjustments. See purchase price allocation table below for a breakout of the net purchase price for wholly owned properties.
(2) 
Purchase price is for our partial interests in the properties. These properties are owned through unconsolidated joint ventures. 
149 Madison Avenue
149 Madison Avenue is a 12-story, 127,000-square-foot office building, which was vacant at the time of acquisition. Columbia Property Trust acquired 149 Madison Avenue subject to a ground lease, which expired in January 2018. Columbia Property Trust is redeveloping this property.
1800 M Street Joint Venture
Columbia Property Trust acquired a 55% interest in 1800 M Street through a newly created joint venture partnership with Allianz Real Estate of America ("Allianz"). 1800 M Street is a 10-story, 581,000-square-foot office building in Washington, D.C., which was 94% leased at acquisition (the “1800 M Street Joint Venture”). The total gross purchase price for 1800 M Street was $421.0 million.
245-249 West 17th Street & 218 West 18th Street
245-249 West 17th Street is made up of two interconnected 12- and six-story towers, totaling 281,000 square feet of office and retail space and 218 West 18th Street is a 12-story, 166,000-square-foot office building. As of the acquisition date, 245-249 West 17th Street was 100% leased at acquisition to four tenants, including Twitter, Inc. (76%) and Room & Board, Inc. (21%); and, as of the acquisition date, 218 West 18th Street was 100% leased at acquisition to seven tenants, including Red Bull North America, Inc. (25%), Company 3 (18%), SY Partners (16%), and SAE (16%).
114 Fifth Avenue Joint Venture
Columbia Property Trust acquired a 49.5% equity interest in a joint venture that owns the 114 Fifth Avenue property from Allianz (the "114 Fifth Avenue Joint Venture"). 114 Fifth Avenue is a 19-story, 352,000-square-foot building located in Manhattan’s Flatiron District that was 100% leased at acquisition, and is unencumbered by debt. The 114 Fifth Avenue Joint Venture is owned by Columbia Property Trust (49.5%), Allianz (49.5%), and L&L Holding Company (1.0%). L&L Holding Company is the general partner and performs asset and property management services for the property.

Page 15


Purchase Price Allocations for Consolidated Property Acquisitions:
 
 
149 Madison Avenue
 
245-249 West
17th Street
 
218 West 18th Street
Location
 
New York, NY

 
New York, NY

 
New York, NY

Date Acquired
 
November 28, 2017

 
October 11, 2017

 
October 11, 2017

Purchase Price (in thousands):
 
 
 
 
 
 
Land
 
$
59,112

 
$
113,149

 
$
43,836

Building and improvements
 
28,989

 
194,109

 
126,957

Intangible lease assets
 

 
27,408

 
12,120

Intangible lease origination costs
 

 
13,062

 
4,168

Intangible below market lease liability
 

 
(7,131
)
 
(11,757
)
Total purchase price
 
$
88,101

 
$
340,597

 
$
175,324

Note 2, Summary of Significant Accounting Policies, provides a discussion of the estimated useful life for each asset class.
Pro Forma Financial Information
The following unaudited pro forma statements of operations for the three months ended March 31, 2017, have been prepared for Columbia Property Trust to give effect to the acquisitions of 245-249 West 17th Street, 218 West 18th Street, and 149 Madison Avenue as if the acquisitions had occurred on January 1, 2016. The following unaudited pro forma financial results for Columbia Property Trust have been prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had these acquisitions been consummated as of January 1, 2016 (in thousands):
 
Three Months Ended
March 31,
 
2017
Revenues
$
91,784

Net income
$
77,049

Net income per share  basic
$
0.63

Net income per share  diluted
$
0.63


Page 16


Dispositions
During 2017 and the first three months of 2018, Columbia Property Trust sold the following properties or partial interests in properties of unconsolidated joint ventures:
Property
 
Location
 
Date
 
% Sold
 
Sales Price(1) 
(in thousands)
 
Gain on Sale
(in thousands)
2018
 
 
 
 
 
 
 
 
 
 
 
 
University Circle &
333 Market Street Joint Ventures
(2)
 
San Francisco, CA
 
February 1, 2018
 
22.5
%
(2) 
 
$
235,300

(2) 
 
$
762

2017
 
 
 
 
 
 
 
 
 
 
 
 
University Circle &
333 Market Street(3)
 
San Francisco, CA
 
July 6, 2017
 
22.5
%
(3) 
 
$
234,000

(3) 
 
$
102,400

Key Center Tower & Marriott(4)
 
Cleveland, OH
 
January 31, 2017
 
100.0
%
 
 
$
267,500

 
 
$
9,500

Houston Properties(5)
 
Houston, TX
 
January 6, 2017
 
100.0
%
 
 
$
272,000

 
 
$
63,700

(1) 
Exclusive of transaction costs and price adjustments.
(2) 
Sale price is for the partial interests in the unconsolidated joint ventures that were sold. As previously agreed, Columbia Property Trust sold an additional 22.5% interest in the University Circle property and 333 Market Street building to its joint venture partner, Allianz, for $235.3 million (the "February 2018 Allianz Transaction").  The February 2018 Allianz Transaction resulted in a $0.8 million gain, which is presented as gain on sale of unconsolidated joint venture interests on the accompanying consolidated statements of operations. The gain is calculated as the sale price over the adjusted joint venture carrying value. In connection with implementing ASU 2017-05, effective January 1, 2018, the joint venture carrying value was increased to reflect its estimated fair value as of the joint venture formation date, July 6, 2017, less depreciation through January 1, 2018. For additional information, see footnote (3) below and Note 2, Summary of Significant Accounting Policies.
The proceeds from this transaction were used to reduce the balance on the $300 Million Bridge Loan and the Revolving Credit Facility, as described in Note 5, Line of Credit and Notes Payable.
(3) 
Sales price is for the partial interests in the properties that were sold. Columbia Property Trust contributed the 333 Market Street building and the University Circle property to joint ventures, and simultaneously sold a 22.5% interest in those joint ventures for $234.0 million to Allianz, an unrelated third party (collectively, the "San Francisco Joint Ventures").
(4) 
Key Center Tower & Marriott were sold in one transaction for $254.5 million of gross proceeds and a $13.0 million, 10-year accruing note receivable from the principal of the buyer. As a result, Columbia Property Trust has applied the installment method to account for this transaction, and deferred $13.0 million of the total $22.5 million gain on sale. The Key Center Tower and Key Center Marriott generated a net loss of $1.9 million for the first 31 days of 2017, excluding the gain on sale.
(5) 
5 Houston Center, Energy Center I, and 515 Post Oak were sold in one transaction. These properties generated a net loss of $14.9 thousand for the first six days of 2017, excluding the gain on sale.

Page 17


4.    Unconsolidated Joint Ventures
As of March 31, 2018 and December 31, 2017, Columbia Property Trust owned interests in the following properties through joint ventures, which are accounted for using the equity method of accounting:
 
 
 
 
 
 
 
 
 
Carrying Value of Investment(1)
Joint Venture
 
Property Name
 
Geographic Market
 
Ownership Interest
 
March 31, 2018
 
December 31, 2017
Market Square Joint Venture
 
Market Square
 
Washington, D.C.
 
51.0
%
 
 
$
134,609

 
$
128,411

University Circle Joint Venture
 
University Circle
 
San Francisco
 
55.0
%
(2) 
 
298,852

 
173,798

333 Market Street Joint Venture
 
333 Market Street
 
San Francisco
 
55.0
%
(2) 
 
276,869

 
288,236

114 Fifth Avenue Joint Venture
 
114 Fifth Avenue
 
New York
 
49.5
%
 
 
106,937

 
110,311

1800 M Street Joint Venture
 
1800 M Street
 
Washington, D.C.
 
55.0
%
 
 
241,174

 
242,486

 
 
 
 
 
 
 
 
 
$
1,058,441

 
$
943,242

(1) 
Includes basis differences. Columbia Property Trust adopted ASU 2017-05 effective January 1, 2018, which requires Columbia Property Trust to measure its residual joint venture interest in the properties transferred to unconsolidated joint ventures at fair value as of the transaction date (i.e., to fully step-up the basis of the residual investment in the joint venture). The new rule was adopted on a modified retrospective basis by recording a cumulative-effect adjustment to equity equal to the original gain or loss as of the respective transaction dates, adjusted to reflect the impact of depreciating the additional step-ups through January 1, 2018. The adoption of this standard resulted in an increase to investments in unconsolidated joint ventures and equity by $357.8 million on January 1, 2018, for the previous partial sales of interest in the Market Square, 333 Market Street, and University Circle properties.
(2) 
On February 1, 2018, Allianz acquired from Columbia Property Trust an additional 22.5% interest in each of the University Circle Joint Venture and the 333 Market Street Joint Venture, thereby reducing Columbia Property Trust's equity interest in each joint venture to 55.0%.
Columbia Property Trust has determined that none of the joint ventures qualify as variable interest entities. However, Columbia Property Trust and its partners have substantive participation rights in the joint ventures, including management selection and termination, and the approval of operating and capital decisions. As such, Columbia Property Trust uses the equity method of accounting to record its investment in these joint ventures. Under the equity method, the investment in the joint venture is recorded at cost and adjusted for cash contributions and distributions, and allocations of income or loss.
Columbia Property Trust evaluates the recoverability of its investments in unconsolidated joint ventures in accordance with accounting standards for equity investments by first reviewing the investment for any indicators of impairment. If indicators are present, Columbia Property Trust estimates the fair value of the investment. If the carrying value of the investment is greater than the estimated fair value, management makes an assessment of whether the impairment is "temporary" or "other-than-temporary." In making this assessment, management considers the following: (1) the length of time and the extent to which fair value has been less than cost, and (2) Columbia Property Trust's intent and ability to retain its interest long enough for a recovery in market value. Based on the assessment as described above, Columbia Property Trust has determined that none of its investments in joint ventures are other than temporarily impaired as of March 31, 2018.
Mortgage Debt and Related Guaranty
The Market Square joint venture is the only joint venture with mortgage debt. As of March 31, 2018 and December 31, 2017, the outstanding balance on the interest-only Market Square mortgage note is $325.0 million, bearing interest at 5.07%. The Market Square mortgage note matures on July 1, 2023. Columbia Property Trust guarantees a portion of the Market Square mortgage note, the amount of which has been reduced to $11.2 million as of March 31, 2018 and December 31, 2017, as a result of leasing at the Market Square Buildings. The amount of the guaranty will continue to be reduced as space is leased.

Page 18


Condensed Combined Financial Information
Summarized balance sheet information for each of the unconsolidated joint ventures is as follows (in thousands):
 
 
Total Assets
 
Total Debt
 
Total Equity(1)
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 2018
 
December 31, 2017
 
March 31, 2018
 
December 31, 2017
Market Square Joint Venture
 
$
585,274

 
$
590,115

 
$
324,721

 
$
324,708

 
$
244,516

 
$
244,506

University Circle Joint Venture
 
230,103

 
227,368

 

 

 
222,159

 
221,154

333 Market Street Joint Venture
 
382,462

 
385,297

 

 

 
366,601

 
368,994

114 Fifth Avenue Joint Venture
 
384,478

 
392,486

 

 

 
164,113

 
170,525

1800 M Street Joint Venture
 
454,473

 
458,964

 

 

 
435,970

 
438,227

 
 
$
2,036,790

 
$
2,054,230

 
$
324,721

 
$
324,708

 
$
1,433,359

 
$
1,443,406

(1) 
Excludes basis differences. There is an aggregate net basis difference of $285.2 million and $32.0 million as of March 31, 2018 and December 31, 2017, respectively, between the historical costs recorded at the joint venture level, and Columbia Property Trust's investment in the joint ventures. The differences result from the basis step-up in accordance with ASU 2017-05, as described in Note 2, Accounting Policies, and the differences in the timing of each partner's interest acquisition and formation costs incurred by Columbia Property Trust. The basis differences are being amortized to income (loss) from unconsolidated joint ventures over the lives of the underlying assets or liabilities.
Summarized income statement information for the unconsolidated joint ventures for the three months ended March 31, 2018 and March 31, 2017 is as follows (in thousands):
 
 
Total Revenues
 
Net Income (Loss)
 
Columbia Property Trust's Share of Net Income (Loss)(1)
 
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Market Square Joint Venture
 
$
11,015

 
$
10,134

 
$
(3,009
)
 
$
(3,696
)
 
$
(1,534
)
 
$
(1,885
)
University Circle Joint Venture
 
10,341

 

 
5,505

 

 
3,429

 

333 Market Street Joint Venture
 
6,668

 

 
3,557

 

 
2,227

 

114 Fifth Avenue Joint Venture
 
10,300

 

 
(2,331
)
 

 
(1,154
)
 

1800 M Street Joint Venture
 
8,897

 

 
243

 

 
133

 

 
 
$
47,221

 
$
10,134

 
$
3,965

 
$
(3,696
)
 
$
3,101

 
$
(1,885
)
(1) 
Excludes the amortization of basis differences described above.
Property and Asset Management Fees
Columbia Property Trust provides property and asset management services to the Market Square Joint Venture, the University Circle Joint Venture, the 333 Market Street Joint Venture, and the 1800 M Street Joint Venture. Under these agreements, Columbia Property Trust oversees the day-to-day operations of these joint ventures and their properties, including property management, property accounting, and other administrative services. During the three months ended March 31, 2018 and 2017, Columbia Property Trust earned the following fees from these unconsolidated joint ventures (in thousands):
 
 
Three Months Ended
March 31,
 
 
2018
 
2017
Market Square Joint Venture
 
$
523

 
$
474

University Circle Joint Venture
 
529

 

333 Market Street Joint Venture
 
197

 

1800 M Street Joint Venture
 
510

 

 
 
$
1,759

 
$
474

Columbia Property Trust also received reimbursements of property operating costs of $1.0 million and $0.2 million for the three months ended March 31, 2018 and 2017, respectively, which are included in other property income revenues in the accompanying consolidated statements of operations. Property management fees of $0.4 million were due to Columbia Property Trust from the joint ventures and are included in prepaid expenses and other assets on the accompanying consolidated balance sheets as of March 31, 2018 and December 31, 2017, respectively.

Page 19

Table of Contents


5.    Line of Credit and Notes Payable
As of March 31, 2018 and December 31, 2017, Columbia Property Trust had the following line of credit and notes payable indebtedness (excluding bonds payable; see Note 6, Bonds Payable) (in thousands):
Facility
 
March 31,
2018
 
December 31,
2017
$300 Million Term Loan
 
$
300,000

 
$
300,000

$300 Million Bridge Loan
 
180,000

 
300,000

$150 Million Term Loan
 
150,000

 
150,000

Revolving Credit Facility
 
134,000

 
152,000

263 Shuman Boulevard mortgage note(1)
 
49,000

 
49,000

One Glenlake mortgage note
 
22,363

 
23,176

Less: Deferred financing costs related to term loans and notes payable, net of accumulated amortization
 
(2,641
)
 
(2,991
)
 
 
$
832,722

 
$
971,185

(1) 
The OfficeMax lease at 263 Shuman Boulevard expired in May 2017, and the mortgage note matured in July 2017. On April 13, 2018, Columbia Property Trust transferred the property to the lender in settlement of the loan principal, accrued interest expense, and accrued property operating expenses, which resulted in a gain on extinguishment of debt of $24.0 million in the second quarter of 2018. In the first quarter of 2018, Columbia Property Trust accrued related interest expense of $1.3 million at the default rate of 10.55%, and property operating expenses of $0.6 million, primarily related to property taxes and repairs and maintenance.
Fair Value of Debt
The estimated fair value of Columbia Property Trust's line of credit and notes payable as of March 31, 2018 and December 31, 2017, was approximately $835.9 million and $975.3 million, respectively. The related carrying value of the line of credit and notes payable as of March 31, 2018 and December 31, 2017, was $835.4 million and $974.2 million, respectively. Columbia Property Trust estimated the fair value of the $300 Million Term Loan (the "$300 Million Term Loan"), the $300 Million Bridge Loan (the $300 Million Bridge Loan"), and the Revolving Credit Facility (the "Revolving Credit Facility") by obtaining estimates for similar facilities from multiple market participants as of the respective reporting dates. Therefore, the fair values determined are considered to be based on observable market data for similar instruments (Level 2). The fair values of all other debt instruments were estimated based on discounted cash flow analyses using the current incremental borrowing rates for similar types of borrowing arrangements as of the respective reporting dates. The discounted cash flow method of assessing fair value results in a general approximation of value, and such value may never actually be realized.
Interest Paid and Capitalized and Debt Covenants
During the three months ended March 31, 2018 and 2017, Columbia Property Trust made interest payments totaling approximately $6.3 million and $6.2 million, respectively, of which approximately $0.9 million and $0.1 million, respectively, were capitalized. As of March 31, 2018, Columbia Property Trust believes it is in compliance with the restrictive financial covenants on its term loans, the Revolving Credit Facility, and notes payable obligations.
Debt Repayments
On February 2, 2018, Columbia Property Trust repaid $120.0 million of the outstanding balance on the $300 Million Bridge Loan, using a portion of the proceeds from the February 2018 Allianz Transaction, as described in Note 3, Real Estate Transactions. The remaining proceeds were used to pay down the Revolving Credit Facility.
6.    Bonds Payable
Columbia Property Trust has two series of bonds outstanding as of March 31, 2018 and December 31, 2017: $350.0 million outstanding on 10-year, unsecured 3.650% senior notes issued at 99.626% of their face value (the "2026 Bonds Payable"); and $350.0 million outstanding on 10-year, unsecured 4.150% senior notes issued at at 99.859% of their face value (the "2025 Bonds Payable"). Both series of bonds require semi-annual interest payments. The principal amount of the 2026 Bonds Payable is due and payable on August 15, 2026, and the principal amount of the 2025 Bonds Payable is due and payable on April 1, 2025.
Interest payments of $6.4 million and $6.5 million were made on the 2026 Bonds Payable during the three months ended March 31, 2018 and 2017, respectively. Columbia Property Trust is subject to substantially similar covenants under the 2026 Bonds Payable

Page 20


and the 2025 Bonds Payable. As of March 31, 2018, Columbia Property Trust believes it was in compliance with the restrictive financial covenants on the 2026 Bonds Payable and the 2025 Bonds Payable.
As of March 31, 2018 and December 31, 2017, the estimated fair value of the 2026 Bonds Payable and the 2025 Bonds Payable was approximately $702.8 million. The related carrying value of the bonds payable, net of discounts, as of March 31, 2018 and December 31, 2017 was $698.6 million and $698.5 million, respectively. The fair value of the bonds payable was estimated based on discounted cash flow analyses using the current incremental borrowing rates for similar types of borrowings as the bonds as of the respective reporting dates (Level 2). The discounted cash flow method of assessing fair value results in a general approximation of value, which may differ from the price that could be achieved in a market transaction.
7.
Commitments and Contingencies
Commitments Under Existing Lease Agreements
Certain lease agreements include provisions that, at the option of the tenant, may obligate Columbia Property Trust to expend capital to expand an existing property or provide other expenditures for the benefit of the tenant. As of March 31, 2018, no tenants have exercised such options that have not been materially satisfied or recorded as a liability on the accompanying consolidated balance sheet.
Guaranty of Debt of Unconsolidated Joint Venture
Upon entering into the Market Square Joint Venture in October 2015, Columbia Property Trust entered into a guaranty of a $25.0 million portion of the Market Square mortgage note, the amount of which is reduced as space is leased. As a result of leasing, the guaranty has been reduced to $11.2 million as of March 31, 2018. Columbia Property Trust believes that the likelihood of making a payment under this guaranty is remote; therefore, no liability has been recorded related to this guaranty as of March 31, 2018.
Litigation
Columbia Property Trust is subject to various legal proceedings, claims, and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any reasonably possible loss relating to these matters using the latest information available. Columbia Property Trust records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, Columbia Property Trust accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, Columbia Property Trust accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, Columbia Property Trust discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, Columbia Property Trust discloses the nature and estimate of the possible loss of the litigation. Columbia Property Trust does not disclose information with respect to litigation where the possibility of an unfavorable outcome is considered to be remote. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business, or financial condition of Columbia Property Trust. Columbia Property Trust is not currently involved in any legal proceedings of which management would consider the outcome to be reasonably likely to have a material adverse effect on the results of operations, liquidity, or financial condition of Columbia Property Trust.

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8.
Stockholders' Equity
Common Stock Repurchase Program
Columbia Property Trust's board of directors authorized a stock repurchase program to purchase up to an aggregate of $200.0 million of its common stock, par value $0.01 per share, from September 4, 2017 through September 4, 2019 (the "2017 Stock Repurchase Program"). During the three months ended March 31, 2018, Columbia Property Trust repurchased 1.3 million shares at an average price of $21.03 per share, for aggregate purchases of $27.3 million. As of March 31, 2018, $167.6 million remains available for repurchases under the 2017 Stock Repurchase Program. Common stock repurchases are charged against equity as incurred, and the repurchased shares are retired. Columbia Property Trust will continue to evaluate the purchase of shares, primarily through open market transactions, which are subject to market conditions and other factors.
Long-Term Incentive Compensation
Columbia Property Trust maintains a shareholder-approved, long-term incentive plan (the "LTI Plan") that provides for grants of up to 4.8 million shares of stock to be made to certain employees and independent directors of Columbia Property Trust.
Employee Awards
Under the LTI Plan, Columbia Property Trust grants time-based stock awards and performance-based restricted stock unit awards to its employees.
On January 1, 2018, Columbia Property Trust granted 128,486 shares of time-based stock awards to employees, which will vest ratably on each anniversary of the grant over the next four years. On January 1, 2018, Columbia Property Trust granted 176,702 performance-based restricted stock unit awards, of which 75% will vest at the conclusion of a three-year performance period, and the remaining 25% will vest one year later (the "Performance-Based RSUs"). Consistent with the 2017 plan, the payout of the 2018 Performance-Based RSUs will be determined based on Columbia Property Trust’s total shareholder return relative to the FTSE NAREIT Equity Office Index. Upon reaching a predefined performance threshold, the payout of Performance-Based RSUs will range from 50% to 150%. A rollforward of unvested employee stock awards and Performance-Based RSUs granted under the LTI Plan for the three months ended March 31, 2018 follows:
 
 
For the Three Months Ended
March 31, 2018
 
 
Shares
(in thousands)
 
Weighted-Average
Grant-Date
Fair Value
(1)
Unvested awards – beginning of period
 
718

 
$
20.45

Granted
 
375

 
$
17.50

Vested
 
(275
)
 
$
16.00

Forfeited
 
(11
)
 
$
18.60

Unvested awards – end of period(2)
 
807

 
$
20.62

(1) 
Columbia Property Trust determined the weighted-average, grant-date fair value using the market closing price on the date of the respective grants.
(2) 
As of March 31, 2018, we expect approximately 776,000 of the 807,000 unvested awards to ultimately vest, assuming a weighted average forfeiture rate of 3.8%, which was determined based on historical forfeiture rates.
Director Awards
Columbia Property Trust grants equity retainers to its directors under the LTI Plan. Such grants vest immediately. Beginning in May 2017, these grants are made annually. Prior to this time, the independent directors' equity retainers were paid quarterly. During the three months ended March 31, 2018, Columbia Property Trust did not grant any equity awards, and during the three months ended March 31, 2017, Columbia Property Trust paid the following equity retainers:
Date of Grant
 
Shares
 
Grant-Date Fair Value
2017 Director Grants:
 
 
 
 
January 3, 2017
 
8,279

 
$
21.58


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Stock-Based Compensation Expense
For the three months ended March 31, 2018 and 2017, Columbia Property Trust incurred the stock-based compensation expense related to the following events (in thousands):
 
Three Months Ended
March 31,
 
2018
 
2017
Amortization of awards granted under the LTI Plan
$
1,036

 
$
917

Amortization of future awards under the LTI Plan(1)
492

 
595

Issuance of shares to independent directors

 
179

Total stock-based compensation expense
$
1,528

 
$
1,691

(1) 
Reflects amortization of awards made under the LTI Plan for service during the current period, for which shares will be issued in future periods.
These expenses are included in general and administrative expenses in the accompanying consolidated statements of operations. As of March 31, 2018 and December 31, 2017, there was $12.3 million and $8.1 million, respectively, of unrecognized compensation costs related to unvested awards under the LTI Plan, which will be amortized over the respective vesting period, ranging from one to four years at the time of grant. In 2017, Columbia Property Trust changed from a one-year performance period to a three-year performance period and granted additional shares to bridge the vesting gap created as a result.
9.     Supplemental Disclosures of Noncash Investing and Financing Activities
Outlined below are significant noncash investing and financing activities for the three months ended March 31, 2018 and 2017 (in thousands): 
 
Three Months Ended
March 31,
 
2018
 
2017
Deposits applied to sales of real estate
$

 
$
10,000

Amortization of net discounts on debt
$
45

 
$
45

Accrued capital expenditures and deferred lease costs
$
12,414

 
$
12,534

Market value adjustments to interest rate swaps that qualify for hedge accounting treatment
$
2,514

 
$
634

Cumulative-effect adjustment for the adoption of ASU 2017-05
$
357,755

 
$

Common stock issued to employees and directors, and amortized (net of income tax withholdings)
$
(443
)
 
$
235

 
10.    Earnings Per Share
For the three months ended March 31, 2018 and 2017, in computing the basic and diluted earnings per share, net income has been reduced for the dividends paid on unvested shares granted under the LTI Plan. The following table reconciles the numerator for the basic and diluted earnings-per-share computations shown on the consolidated statements of operations for the three months ended March 31, 2018 and 2017 (in thousands):
 
 
Three Months Ended
March 31,
 
 
2018
 
2017
Net income
 
$
1,498

 
$
74,722

Distributions paid on unvested shares
 
(73
)
 
(84
)
Net income used to calculate basic and diluted earnings per share
 
$
1,425

 
$
74,638


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The following table reconciles the denominator for the basic and diluted earnings-per-share computations shown on the consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively (in thousands):
 
 
Three Months Ended
March 31,
 
 
2018
 
2017
Weighted-average common shares – basic
 
119,082

 
122,003

Plus incremental weighted-average shares from time-vested conversions, less assumed
share repurchases:
 
 
 
 
Previously granted awards, unvested
 
70

 
64

Future period LTI Plan awards
 
198

 
262

Weighted-average common shares – diluted
 
119,350

 
122,329

11.     Revenues
Columbia Property Trust derives most of its revenues, rental income, and tenant reimbursements from leases. All leases on real estate assets held by Columbia Property Trust are classified as operating leases, and the related base rental income is generally recognized on a straight-line basis over the terms of the respective leases. Tenant reimbursements are recognized as revenue in the period that the related operating costs are incurred and are billed to tenants pursuant to the terms of the underlying leases. Rental income and tenant reimbursements collected in advance are recorded as deferred income in the accompanying consolidated balance sheets. Lease termination fees are recorded as other income and recognized on a straight-line basis from when Columbia Property Trust receives notification of termination through the date the tenant has lost the right to lease the space and Columbia Property Trust has satisfied all obligations under the related lease or lease termination agreement. For the three months ended March 31, 2018 and 2017, Columbia Property Trust earned lease termination revenues of $0.4 million and $0.3 million respectively.
On January 1, 2018, Columbia Property Trust adopted ASU 2014-09 using the modified retrospective approach. ASU 2014-09 applies to all open contracts with customers, except those that are within the scope of other topics in the FASB's Accounting Standards Codification, such as real estate leases. ASU 2014-09 requires companies to perform a five-step analysis of transactions to determine when and how revenue is recognized. For Columbia Property Trust, the new standard applies primarily to the following revenues:
Asset and Property Management Fee Income
Under asset and property management agreements in place with its unconsolidated joint ventures, Columbia Property Trust earns revenue for performing asset and property management functions for properties owned through its joint ventures, as further described in Note 4, Unconsolidated Joint Ventures. During the three months ended March 31, 2018 and 2017, Columbia Property Trust earned revenues of $1.8 million and $0.5 million, respectively, under these agreements. Asset and property management services are ongoing and routine, and are provided on a recurring basis. Therefore, under ASU 2014-09, such fees are recognized ratably over the service period, usually a period of three months, which is consistent with the accounting method used prior to January 1, 2018. Columbia Property Trust receives payments quarterly for asset management fees and monthly for property management fees.
Leasing Override Fees
Under the asset management agreements for properties owned through unconsolidated joint ventures, Columbia Property Trust earns leasing override fees equal to a percentage of the total rental payments to be made by the tenant over the term of the lease. Under ASU 2014-09, such fees are recognized when Columbia Property Trust's obligation to perform is complete, typically upon execution of the lease. Prior to January 1, 2018, such fees were recognized when billable to the applicable joint venture, typically upon commencement of the lease. As a result of implementing ASU 2014-09, effective January 1, 2018, Columbia Property Trust recorded $0.3 million of lease override fees receivable as prepaid expenses and other assets, and  recognized a cumulative-effect adjustment to increase retained earnings by the same amount. For the three months ended March 31, 2018 and 2017, Columbia Property Trust did not earn any leasing override fees.
Salary and Other Reimbursement Revenue
Under the property management agreements for properties owned through unconsolidated joint ventures, Columbia Property Trust receives reimbursements for salaries and property operating costs for certain ongoing and routine services that are provided by Columbia Property Trust employees on a recurring basis. Under ASU 2014-09, such revenues are recognized ratably over the service period, usually a period of one month, three months or one year, which is consistent with the accounting method used prior to January 1, 2018. For the three months ended March 31, 2018 and 2017, Columbia Property Trust earned salary and other

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reimbursement revenue of $1.0 million and $0.2 million, respectively, which is included in other property income on the accompanying consolidated statements of income.
Miscellaneous Revenue
Columbia Property Trust also receives revenues for services provided to its tenants through the TRS Entities, including fitness centers, shuttles, and cafeterias, which are include in other property income on the accompanying consolidated statements of income. Such services are ongoing and routine, and are provided on a recurring basis. Under ASU 2014-09, these revenues are recognized ratably over the service period, usually a period of one month or one quarter, which is consistent with the accounting method used prior to January 1, 2018.
12.    Segment Information
Columbia Property Trust establishes operating segments at the property level and aggregates individual properties into reportable segments for geographic locations in which Columbia Property Trust has significant investments. Columbia Property Trust considers geographic location when evaluating its portfolio composition and in assessing the ongoing operations and performance of its properties. As of March 31, 2018, Columbia Property Trust had the following reportable segments:  New York, San Francisco, Atlanta, Washington, D.C., Boston, Los Angeles, and all other office markets. The all other office markets reportable segment consists of properties in similar low-barrier-to-entry geographic locations in which Columbia Property Trust does not have a substantial presence and does not plan to make further investments. During the periods presented, there have been no material intersegment transactions.
Net operating income ("NOI") is a non-GAAP financial measure. NOI is the primary performance measure reviewed by management to assess operating performance of properties and is calculated by deducting operating expenses from operating revenues. Operating revenues include rental income, tenant reimbursements, hotel income, and other property income; and operating expenses include property and hotel operating costs. The NOI performance metric consists of only revenues and expenses directly related to real estate rental operations. NOI reflects property acquisitions and dispositions, occupancy levels, rental rate increases or decreases, and the recoverability of operating expenses. NOI, as Columbia Property Trust calculates it, may not be directly comparable to similarly titled, but differently calculated, measures for other REITs.
Asset information and capital expenditures by segment are not reported because Columbia Property Trust does not use these measures to assess performance. Depreciation and amortization expense, along with other expense and income items, are not allocated among segments.
The following table presents operating revenues included in NOI by geographic reportable segment (in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
New York(1)
$
40,909

 
$
27,586

San Francisco(2)
23,520

 
27,182

Atlanta
9,858

 
9,328

Washington, D.C.(3)
13,972

 
7,383

Boston
3,370

 
2,904

Los Angeles
1,920

 
1,778

All other office markets
3,936

 
9,591

Total office segments
97,485

 
85,752

Hotel

 
1,218

Corporate
681

 
(120
)
Total operating revenues
$
98,166

 
$
86,850

(1) 
Includes operating revenues for 49.5% of 114 5th Avenue based on our ownership interest, from January 1, 2018 through March 31, 2018.
(2) 
Includes operating revenues from 333 Market Street and University Circle based on our ownership interest:  77.5% from January 1, 2018 through January 31, 2018; 55.0% from February 1, 2018 through March 31, 2018; and 100.0% from January 1, 2017 through March 31, 2017.
(3) 
Includes operating revenues for 51.0% of the Market Square buildings based on our ownership interest, for all periods presented. Includes operating revenues for 55.0% of 1800 M Street from January 1, 2018 through March 31, 2018.

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A reconciliation of GAAP revenues to operating revenues is presented below (in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
Total revenues
$
73,710

 
$
82,156

Operating revenues included in income (loss) from unconsolidated joint ventures(1)
26,215

 
5,168

Less: asset and property management fee income(2)
(1,759
)
 
(474
)
Total operating revenues
$
98,166

 
$
86,850

(1) 
Columbia Property Trust records its interest in properties held through unconsolidated joint ventures using the equity method of accounting, and reflects its interest in the operating revenues of these properties in income (loss) from unconsolidated joint ventures in the accompanying consolidated statements of operations.
(2) 
See Note 4, Unconsolidated Joint Ventures, of the accompanying consolidated financial statements.
The following table presents NOI by geographic reportable segment (in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
New York(1)
$
24,179

 
$
17,616

San Francisco(2)
19,554

 
19,866

Atlanta
8,754

 
8,293

Washington, D.C.(3)
8,330

 
3,278

Boston
1,768

 
1,409

Los Angeles
1,208

 
1,082

All other office markets
3,291

 
6,930

Total office segments
67,084

 
58,474

Hotel

 
(876
)
Corporate
(225
)
 
(22
)
Total
$
66,859

 
$
57,576

(1) 
Includes NOI for 49.5% of 114 5th Avenue based on our ownership interest, from January 1, 2018 through March 31, 2018.
(2) 
Includes NOI from 333 Market Street and University Circle based on our ownership interest:  77.5% from January 1, 2018 through January 31, 2018; 55.0% from February 1, 2018 through March 31, 2018; and 100.0% from January 1, 2017 through March 31, 2017.
(3) 
Includes NOI for 51.0% of the Market Square buildings based on our ownership interest, for all periods presented. Includes NOI for 55.0% of 1800 M Street from January 1, 2018 through March 31, 2018.
A reconciliation of GAAP net income to NOI is presented below (in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
Net income
$
1,498

 
$
74,722

Depreciation
20,835

 
21,605

Amortization
8,016

 
9,457

General and administrative – corporate
7,794

 
8,768

General and administrative – joint ventures
731

 

Net interest expense
15,892

 
14,565

Interest income from development authority bonds
(1,800
)
 
(1,800
)
Gain on sale of unconsolidated joint venture interests
(762
)
 

Loss on early extinguishment of debt

 
45

Income tax expense (benefit)
7

 
(388
)
Asset and property management fee income
(1,759
)
 
(474
)
Adjustments included in income (loss) from unconsolidated joint ventures
16,407

 
4,229

Gain on sales of real estate assets

 
(73,153
)
NOI
$
66,859

 
$
57,576


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13.     Financial Information for Parent Guarantor, Issuer Subsidiary, and Non-Guarantor Subsidiaries
The 2026 Bonds Payable and the 2025 Bonds Payable (see Note 6, Bonds Payable) were issued by Columbia Property Trust OP, and are guaranteed by Columbia Property Trust. In accordance with SEC Rule 3-10(c), Columbia Property Trust includes herein condensed consolidating financial information in lieu of separate financial statements of the subsidiary issuer (Columbia Property Trust OP), as defined in the bond indentures, because all of the following criteria are met:
(1)
The subsidiary issuer (Columbia Property Trust OP) is 100% owned by the parent company guarantor (Columbia Property Trust);
(2)
The guarantee is full and unconditional; and
(3)
No other subsidiary of the parent company guarantor (Columbia Property Trust) guarantees the 2026 Bonds Payable or the 2025 Bonds Payable.
Columbia Property Trust uses the equity method with respect to its investment in subsidiaries included in its condensed consolidating financial statements. We have corrected the presentation of intercompany cash transfers between the REIT Parent and its subsidiaries in the consolidating statements of cash flow. Instead of showing one amount for intercompany transfers between each entity group, intercompany transfers are broken out by cash flow type (i.e., operating, investing, and financing) for all periods presented, consistent with the equity method of accounting. All such changes are eliminated in consolidation, and therefore do not impact Columbia Property Trust's consolidated financial statement totals. Management has concluded that the effect of this correction is not material to the consolidated financial statements. This change had the following impact to the condensed consolidating statement of cash flows for the three months ended March 31, 2017:  increase to operating cash flows for the parent and issuer of $63.2 million and $72.2 million, respectively; and increase (decrease) in investing cash flows for the parent, issuer, and non-guarantors of $93.4 million, $361.1 million and $219.3 million, respectively; and increase (decrease) in financing cash flows for the parent, issuer, and non-guarantors of $(156.6) million, $(433.3) million and $(219.3) million, respectively. The impact to individual financial statement captions within the condensed consolidating statement of cash flows is footnoted below.
Set forth below are Columbia Property Trust's condensed consolidating balance sheets as of March 31, 2018 and December 31, 2017, as well as its condensed consolidating statements of operations and its condensed consolidating statements of comprehensive income for the three months ended March 31, 2018 and 2017; and its condensed consolidating statements of cash flows for the three months ended March 31, 2018 and 2017.

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Condensed Consolidating Balance Sheets (in thousands):
 
As of March 31, 2018
 
Columbia Property Trust
(Parent)
(Guarantor)
 
Columbia
 Property
Trust OP 
(the Issuer)
 
Non-
Guarantors
 
Consolidating
Adjustments
 
Columbia Property Trust
(Consolidated)
Assets:
 
 
 
 
 
 
 
 
 
Real estate assets, at cost:
 
 
 
 
 
 
 
 
 
Land
$

 
$

 
$
825,208

 
$

 
$
825,208

Buildings and improvements, net

 
2,006

 
2,057,732

 

 
2,059,738

Intangible lease assets, net

 

 
194,233

 

 
194,233

Construction in progress

 

 
46,814

 

 
46,814

Total real estate assets

 
2,006

 
3,123,987

 

 
3,125,993

Investments in unconsolidated joint ventures

 
1,058,441

 

 

 
1,058,441

Cash and cash equivalents
255

 
10,455

 
10,358

 

 
21,068

Investment in subsidiaries
2,525,277

 
1,339,612

 

 
(3,864,889
)
 

Tenant receivables, net of allowance

 
30

 
2,405

 

 
2,435

Straight-line rent receivable

 

 
102,415

 

 
102,415

Prepaid expenses and other assets
317,702

 
338,633

 
14,508

 
(645,654
)
 
25,189

Intangible lease origination costs, net

 

 
40,540

 

 
40,540

Deferred lease costs, net

 

 
142,719

 

 
142,719

Investment in development authority bonds

 

 
120,000

 

 
120,000

Total assets
$
2,843,234

 
$
2,749,177

 
$
3,556,932

 
$
(4,510,543
)
 
$
4,638,800

Liabilities:
 
 
 
 
 
 
 
 
 
Line of credit and notes payable, net
$

 
$
761,479

 
$
714,553

 
$
(643,310
)
 
$
832,722

Bonds payable, net

 
693,954

 

 

 
693,954

Accounts payable, accrued expenses, and accrued capital expenditures
775

 
10,032

 
94,971

 
(6
)
 
105,772

Due to affiliates

 

 
2,338

 
(2,338
)
 

Deferred income

 
81

 
18,183

 

 
18,264

Intangible lease liabilities, net

 

 
25,629

 

 
25,629

Obligations under capital lease

 

 
120,000

 

 
120,000

Total liabilities
775

 
1,465,546

 
975,674

 
(645,654
)
 
1,796,341

Equity:
 
 
 
 
 
 
 
 
 
Total equity
2,842,459

 
1,283,631

 
2,581,258

 
(3,864,889
)
 
2,842,459

Total liabilities and equity
$
2,843,234

 
$
2,749,177

 
$
3,556,932

 
$
(4,510,543
)
 
$
4,638,800





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Condensed Consolidating Balance Sheets (in thousands):
 
As of December 31, 2017
 
Columbia Property Trust
(Parent)
(Guarantor)
 
Columbia
Property
Trust OP 
(the Issuer)
 
Non-
Guarantors
 
Consolidating
Adjustments
 
Columbia Property Trust
(Consolidated)
Assets:
 
 
 
 
 
 
 
 
 
Real estate assets, at cost:
 
 
 
 
 
 
 
 
 
Land
$

 
$

 
$
825,208

 
$

 
$
825,208

Building and improvements, net

 
2,110

 
2,061,309

 

 
2,063,419

Intangible lease assets, net

 

 
199,260

 

 
199,260

Construction in progress

 

 
44,742

 

 
44,742

Total real estate assets

 
2,110

 
3,130,519

 

 
3,132,629

Investments in unconsolidated joint ventures

 
943,241

 
1

 

 
943,242

Cash and cash equivalents
692

 
5,079

 
3,796

 

 
9,567

Investment in subsidiaries
2,238,577

 
1,186,594

 

 
(3,425,171
)
 

Tenant receivables, net of allowance

 
30

 
2,098

 

 
2,128

Straight-line rent receivable

 

 
92,235

 

 
92,235

Prepaid expenses and other assets
317,364

 
336,598

 
19,375

 
(645,654
)
 
27,683

Intangible lease origination costs, net

 

 
42,959

 

 
42,959

Deferred lease costs, net

 

 
141,096

 

 
141,096

Investment in development authority bonds

 

 
120,000

 

 
120,000