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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, 2019
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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols
Name of each exchange on which registered
Common Stock
CXP
NYSE
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 every Interactive Data File required to be submitted 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 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 22, 2019: 116,879,665 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, and the office sector in particular, (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 relating to construction, development, and redevelopment activities;
risks associated with joint ventures, including disagreements with, or misconduct by, joint venture partners;
risks relating to repositioning our portfolio;
risks relating to reduced demand for, or over supply of, office space in our markets;
risks relating to lease terminations, lease defaults, or changes in the financial condition of our tenants, particularly by a significant tenant;
risks relating to acquisition and disposition activities;
risks associated with our ability to continue to qualify as a real estate investment trust ("REIT");
risks associated with possible cybersecurity attacks against us or any of our tenants;
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, 2018. 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, 2018. Columbia Property Trust's results of operations for the three months ended March 31, 2019 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,
2019
 
December 31,
2018
Assets:
 
 
 
Real estate assets, at cost:
 
 
 
Land
$
803,986

 
$
817,975

Buildings and improvements, less accumulated depreciation of $375,981 and $403,355, as of March 31, 2019 and December 31, 2018, respectively
1,791,926

 
1,910,041

Intangible lease assets, less accumulated amortization of $74,807 and $84,881, as of
March 31, 2019 and December 31, 2018, respectively
64,250

 
98,540

Construction in progress
37,772

 
33,800

Real estate assets held for sale, less accumulated depreciation and amortization of $56,948 as of March 31, 2019
145,346

 

Total real estate assets
2,843,280

 
2,860,356

Operating lease assets
63,829

 

Investments in unconsolidated joint ventures
1,067,905

 
1,071,353

Cash and cash equivalents
18,551

 
17,118

Tenant receivables, net of $4 allowance for doubtful accounts as of December 31, 2018
3,760

 
3,258

Straight-line rent receivable
83,828

 
87,159

Prepaid expenses and other assets
31,520

 
23,218

Intangible lease origination costs, less accumulated amortization of $60,186 and $65,348, as of March 31, 2019 and December 31, 2018, respectively
31,626

 
34,092

Deferred lease costs, less accumulated amortization of $22,325 and $27,735, as of
March 31, 2019 and December 31, 2018, respectively
58,932

 
77,439

Other assets held for sale, less accumulated amortization of $13,593 as of March 31, 2019
20,498

 

Total assets
$
4,223,729

 
$
4,173,993

Liabilities:
 
 
 
Line of credit and notes payable, net of unamortized deferred financing costs of $2,544 and $2,692, as of March 31, 2019 and December 31, 2018, respectively
$
680,456

 
$
629,308

Bonds payable, net of discounts of $1,259 and $1,304 and unamortized deferred financing costs of $4,005 and $4,158, as of March 31, 2019 and December 31, 2018, respectively
694,736

 
694,538

Operating lease liabilities
34,738

 

Accounts payable, accrued expenses, and accrued capital expenditures
37,962

 
49,117

Dividends payable

 
23,340

Deferred income
16,943

 
15,593

Intangible lease liabilities, less accumulated amortization of $22,812 and $21,766, as of
March 31, 2019 and December 31, 2018, respectively
19,539

 
21,081

Liabilities held for sale, less accumulated amortization of $380 as of March 31, 2019
20,491

 

Total liabilities
1,504,865

 
1,432,977

Commitments and Contingencies (Note 7)

 

Equity:
 
 
 
Common stock, $0.01 par value, 225,000,000 shares authorized, 116,879,665 and 116,698,033 shares issued and outstanding, as of March 31, 2019 and December 31, 2018, respectively
1,169

 
1,167

Additional paid-in capital
4,420,727

 
4,421,587

Cumulative distributions in excess of earnings
(1,703,945
)
 
(1,684,082
)
Cumulative other comprehensive income
913

 
2,344

Total equity
2,718,864

 
2,741,016

Total liabilities and equity
$
4,223,729

 
$
4,173,993

See accompanying notes.

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COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
 
(Unaudited)
 
Three Months Ended
March 31,
 
2019
 
2018
Revenues:
 
 
 
Rental income and tenant reimbursements
$
71,862

 
$
70,360

Asset and property management fee income
1,869

 
1,759

Other property income
1,702

 
1,591

 
75,433

 
73,710

Expenses:
 
 
 
Property operating costs
24,237

 
23,062

Asset and property management fee expenses
255

 
208

Depreciation
20,404

 
20,835

Amortization
7,461

 
8,016

General and administrative – corporate
8,424

 
7,794

General and administrative – unconsolidated joint ventures
809

 
731

 
61,590

 
60,646

Other Income (Expense):
 
 
 
Interest expense
(12,095
)
 
(15,895
)
Interest and other income
1

 
1,803

Gain on sale of unconsolidated joint venture interests

 
762

Income tax expense
(7
)
 
(7
)
Income from unconsolidated joint ventures
1,771

 
1,771

 
(10,330
)
 
(11,566
)
Net income
$
3,513


$
1,498

Per-Share Information – Basic:
 
 
 
Net income
$
0.03

 
$
0.01

Weighted-average common shares outstanding – basic
116,462

 
119,082

Per-Share Information – Diluted:
 
 
 
Net income
$
0.03

 
$
0.01

Weighted-average common shares outstanding – diluted
116,880

 
119,350


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,
 
2019
 
2018
Net income
$
3,513

 
$
1,498

Market value adjustments to interest rate swap
(1,431
)
 
2,514

Comprehensive income
$
2,082

 
$
4,012


See accompanying notes.



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COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (UNAUDITED)
(in thousands, except per-share amounts)

 
Common Stock
 
Additional
Paid-In
Capital
 
Cumulative
Distributions
in Excess of
Earnings
 
Cumulative
Other
Comprehensive
Income (Loss)
 
Total
Equity
 
Shares
 
Amount
 
 
 
 
Balance, December 31, 2018
116,698

 
$
1,167

 
$
4,421,587

 
$
(1,684,082
)
 
$
2,344

 
$
2,741,016

Common stock issued to employees and directors, and amortized (net of income tax withholdings)
182

 
2

 
(860
)
 

 

 
(858
)
Distributions to common stockholders ($0.20 per share)


 


 

 
(23,376
)
 

 
(23,376
)
Net income

 

 

 
3,513

 

 
3,513

Market value adjustment to interest rate swap

 

 

 

 
(1,431
)
 
(1,431
)
Balance, March 31, 2019
116,880

 
$
1,169

 
$
4,420,727

 
$
(1,703,945
)
 
$
913

 
$
2,718,864

 
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

See accompanying notes.

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COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
(Unaudited)
 
Three Months Ended
March 31,
 
2019
 
2018
Cash Flows From Operating Activities:
 
 
 
Net income
$
3,513

 
$
1,498

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
Straight-line rental income
(4,631
)
 
(9,698
)
Noncash operating lease expense
212

 

Depreciation
20,404

 
20,835

Amortization
6,351

 
7,955

Stock-based compensation expense
1,539

 
1,528

Noncash interest expense
640

 
882

Gain on sale of unconsolidated joint venture interests

 
(762
)
Income from unconsolidated joint ventures
(1,771
)
 
(1,771
)
Distributions of earnings from unconsolidated joint ventures
6,161

 
8,573

Changes in assets and liabilities, net of acquisitions and dispositions:
 
 
 
Increase in tenant receivables, net
(294
)
 
(829
)
Decrease in prepaid expenses and other assets
3,563

 
4,962

Decrease in accounts payable and accrued expenses
(2,701
)
 
(18,185
)
Increase (decrease) in deferred income
2,093

 
(217
)
Net cash provided by operating activities
35,079

 
14,771

Cash Flows From Investing Activities:
 
 
 
Net proceeds from sale of investments in unconsolidated joint ventures

 
235,083

Prepaid transaction costs and earnest money
(13,701
)
 

Capital improvement and development costs
(19,014
)
 
(19,363
)
Deferred lease costs paid
(1,937
)
 
(4,514
)
Investments in unconsolidated joint ventures
(6,528
)
 
(1,541
)
Distributions from unconsolidated joint ventures
5,672

 
2,976

Net cash provided by (used in) investing activities
(35,508
)
 
212,641

Cash Flows From Financing Activities:
 
 
 
Financing costs paid
(21
)
 
(17
)
Proceeds from lines of credit and notes payable
74,000

 
109,000

Repayments of lines of credit and notes payable
(23,000
)
 
(247,814
)
Distributions paid to stockholders
(46,716
)
 
(47,819
)
Redemptions of common stock
(2,401
)
 
(29,261
)
Net cash provided by (used in) financing activities
1,862

 
(215,911
)
Net increase in cash and cash equivalents
1,433

 
11,501

Cash and cash equivalents, beginning of period
17,118

 
9,567

Cash and cash equivalents, end of period
$
18,551

 
$
21,068

See accompanying notes.

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Table of Contents


COLUMBIA PROPERTY TRUST, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2019
(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 conducts business primarily through Columbia Property Trust Operating Partnership, L.P. ("Columbia Property Trust OP"), a Delaware limited partnership in which Columbia Property Trust is the general partner and sole owner. Columbia Property Trust acquires, develops, redevelops, owns, leases, and operates real properties directly, through wholly owned subsidiaries, or through 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.
As of March 31, 2019, Columbia Property Trust owned 18 operating properties and two properties under development or redevelopment, of which 14 were wholly owned and six were owned through unconsolidated joint ventures, located primarily in New York, San Francisco, Washington, D.C., and Atlanta. As of March 31, 2019, the operating properties contained 8.9 million rentable square feet and were approximately 97.1% leased.
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 Columbia Property Trust's 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 is 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, 2018 (the "2018 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 years
Building and site improvements
  
5-25 years
Tenant improvements
  
Shorter of economic life or lease term
Intangible lease assets
  
Lease term
As further described in Note 5, Line of Credit and Notes Payable, Columbia Property Trust capitalizes interest incurred on outstanding debt balances as well as joint venture investments, as appropriate, during development or redevelopment of real estate held directly or in unconsolidated joint ventures. During both the three months ended March 31, 2019 and 2018, $0.9 million of interest was capitalized to construction in progress; and during the three months ended March 31, 2019, $0.3 million was capitalized to investments in unconsolidated joint ventures. 
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 one year.

Page 11


As of March 31, 2019, One & Three Glenlake Parkway met the criteria to be classified as held for sale in the accompanying balance sheet. The major classes of assets and liabilities classified as held for sale as of March 31, 2019 are provided below (in thousands):
 
March 31, 2019
Real Estate Assets Held for Sale:
 
Real Estate Assets, at Cost:
 
Land
$
13,989

Buildings and improvements, less accumulated depreciation of $46,118
104,030

Intangible lease assets, less accumulated amortization of $10,830
533

Construction in progress
26,794

Total real estate assets held for sale, net
$
145,346

Other Assets Held for Sale:
 
Tenant receivables
$
53

Straight-line rent receivable
7,700

Prepaid expenses and other assets
49

Intangible lease origination costs, less accumulated amortization of $7,109
350

Deferred lease costs, less accumulated amortization of $6,484
12,346

Total other assets held for sale, net
$
20,498

Liabilities Held for Sale:
 
Accounts payable, accrued expenses, and accrued capital expenditures
$
19,632

Deferred income
743

Intangible lease liabilities, less accumulated amortization of $380
116

Total liabilities held for sale, net
$
20,491

Evaluating the Recoverability of Real Estate Assets
Columbia Property Trust continually monitors events and changes in circumstances that could indicate that the net carrying amounts of its real estate and related intangible assets and liabilities, of both operating properties and properties under development or redevelopment, may not be recoverable. When indicators of potential impairment are present that suggest that the net carrying amounts of real estate assets and related intangible assets and liabilities may not be recoverable, Columbia Property Trust assesses the recoverability of these net assets by determining whether the respective carrying values will be recovered through the estimated undiscounted future cash flows expected from the use of the net 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 values 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 net 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.
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. Columbia Property Trust has determined that the carrying values of its real estate assets and related intangible assets are recoverable as of March 31, 2019.

Page 12


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, 2019 and December 31, 2018, Columbia Property Trust had the following intangible assets and liabilities, arising from in-place leases, excluding amounts held for sale, if applicable (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, 2019
Gross
$
3,174

 
$
135,883

 
$
91,812

 
$
42,351

 
Accumulated Amortization
(1,142
)
 
(73,665
)
 
(60,186
)
 
(22,812
)
 
Net
$
2,032

 
$
62,218

 
$
31,626

 
$
19,539

December 31, 2018
Gross
$
3,174

 
$
147,668

 
$
99,440

 
$
42,847

 
Accumulated Amortization
(1,060
)
 
(81,220
)
 
(65,348
)
 
(21,766
)
 
Net
$
2,114

 
$
66,448

 
$
34,092

 
$
21,081

For the three months ended March 31, 2019 and 2018, 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, 2019
$
82

 
$
3,656

 
$
2,100

 
$
1,426

For the Three Months Ended March 31, 2018
$
51

 
$
4,339

 
$
2,419

 
$
1,589

The net intangible assets and liabilities remaining as of March 31, 2019 will be amortized as follows, excluding amounts held for sale, if applicable (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 2019
$
246

 
$
10,397

 
$
5,963

 
$
4,122

For the years ending December 31:
 
 
 
 
 
 
 
2020
275

 
12,338

 
7,406

 
4,597

2021
247

 
7,490

 
3,429

 
1,714

2022
243

 
5,848

 
2,406

 
1,374

2023
243

 
5,098

 
2,165

 
1,308

2024
230

 
4,756

 
2,062

 
1,162

Thereafter
548

 
16,291

 
8,195

 
5,262

 
$
2,032

 
$
62,218

 
$
31,626

 
$
19,539


Page 13


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. 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,
2019
 
December 31,
2018
Derivatives designated as hedging instruments:
 
 
 
 
 
 
Interest rate contracts
 
Prepaid expenses and other assets
 
$
913

 
$
2,344

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,
 
2019
 
2018
Market value adjustment to interest rate swaps designated as hedging instruments and included in other comprehensive income
$
(1,431
)
 
$
2,514

During the periods presented, no hedge ineffectiveness was 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. To the extent that Columbia Property Trust satisfies the distribution requirement but distributes less than 100% of its REIT taxable income, Columbia Property Trust would be subject to federal and state corporate income tax on the undistributed income. Generally, Columbia Property Trust does not incur federal income taxes, other than as described in the following paragraph, because its stockholder distributions typically exceed its taxable income due to noncash expenses such as depreciation. Columbia Property Trust is, however, 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.

Page 14


Reclassification
In connection with adopting Accounting Standard Codification ("ASC") 842, Leases ("ASC 842"), effective January 1, 2019, rental income and tenant reimbursements have been combined into a single line on the consolidated statements of operations for all periods presented. See Recent Accounting Pronouncements below for additional details.
Recent Accounting Pronouncements
Effective January 1, 2019, Columbia Property Trust adopted ASC 842, which amends the lease accounting rules with the following key changes:
Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months, and to 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 using the effective interest method (finance leases) or on a straight-line basis over the term of the lease (operating leases).
Lessors are required to account for leases using an approach that is substantially similar to the pre-existing rules for operating leases, sales-type leases and direct financing leases, with a few targeted changes, including that: (i) lessors are no longer permitted to capitalize and amortize initial indirect costs incurred to obtain a lease, and (ii) provisions for uncollectible tenant receivables are reflected as a reduction to lease revenues, instead of as general and administrative expense.
In connection with transitioning to ASC 842, Columbia Property Trust elected to use certain practical expedients which impact the Company as follows:
Prospective implementation. In-place contracts retain their character as to whether they meet the definition of a lease or not; in-place leases retain their classification as an operating, sales-type, or direct financing lease; and prior-period accounting and presentation is unchanged.
Rental income and tenant reimbursements are combined in a single line on the statements of operations for all periods presented.
Leases with a term of 12 months or less are expensed as incurred, as provided for in a practical expedient elected by Columbia Property Trust.
See Note 10, Leases, for additional information.
Accounting Standard Update 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which will be effective for Columbia Property Trust on January 1, 2020, expands the disclosure requirements related to a change in fair value technique hierarchy. ASU 2018-13 is not expected to have a material impact on Columbia Property Trust's consolidated financial statements or disclosures.
3.
Real Estate Transactions
Acquisitions
During 2018, Columbia Property Trust acquired the following properties and partial interests in properties. Columbia Property Trust did not acquire any properties during the three months ended March 31, 2019.
Property
 
Location
 
Date
 
Percent Acquired
 
Purchase Price(1)
(in thousands)
2018
 
 
 
 
 
 
 
 
 
799 Broadway
 
New York, NY
 
October 3, 2018
 
49.7
%
 
$
30,200

(2) 
Lindbergh Center – Retail
 
Atlanta, GA
 
October 24, 2018
 
100.0
%
 
$
23,000

 
(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 Columbia Property Trust's partial interests in the property, which is owned through an unconsolidated joint venture.
799 Broadway Joint Venture
On October 3, 2018, Columbia Property Trust formed a joint venture with Normandy Real Estate Partners ("Normandy") for the purpose of developing a 12-story, 182,000-square-foot office building at 799 Broadway in New York (the "799 Broadway Joint

Page 15


Venture"). Columbia Property Trust made an initial equity contribution of $30.2 million in the 799 Broadway Joint Venture for a 49.7% interest therein. At inception, the 799 Broadway Joint Venture acquired the property located at 799 Broadway for $145.5 million, exclusive of transaction costs and development costs, and borrowed $97.0 million under a construction loan with total capacity of $187.0 million.
Lindbergh Center – Retail
On October 24, 2018, Columbia Property Trust acquired the 147,000 square feet of ancillary retail and office space surrounding its existing property, Lindbergh Center, for a gross purchase price of $23.0 million. As of the acquisition date, Lindbergh Center – Retail was 91% leased to 14 tenants, including Pike Nurseries (18%).
Purchase Price Allocations for Consolidated Property Acquisitions
 
 
Lindbergh Center – Retail
Location
 
Atlanta, GA

Date acquired
 
October 24, 2018

Purchase Price (in thousands):
 
 
Building and improvements
 
$
17,558

Intangible lease assets
 
5,726

Intangible lease origination costs
 
794

Intangible below market lease liability
 
(715
)
Total purchase price
 
$
23,363

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, 2018, have been prepared for Columbia Property Trust to give effect to the acquisition of Lindbergh Center – Retail as if the acquisition had occurred on January 1, 2017. Columbia Property Trust owned Lindbergh Center – Retail for the entirety of the three months ended March 31, 2019. 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 this acquisition been consummated as of January 1, 2017 (in thousands):
 
Three Months Ended
March 31, 2018
Revenues
$
74,458

Net income
$
1,521


Page 16


Dispositions
2019 Dispositions
One & Three Glenlake Parkway
On April 15, 2019, Columbia Property Trust closed on the sale of One & Three Glenlake Parkway for a gross sale price of $227.5 million, and expects to recognize a gain related to the sale in the second quarter of 2019. As described in Note 2, Summary of Significant Accounting Policies, One & Three Glenlake Parkway are classified as held for sale as of March 31, 2019, on the accompanying consolidated balance sheet.
2018 Dispositions
During 2018, Columbia Property Trust disposed of 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)
222 East 41st Street
 
New York, NY
 
May 29, 2018
 
100.0
%
 
$
332,500

 
$

263 Shuman Boulevard
 
Chicago, IL
 
April 13, 2018
 
100.0
%
 
$
49,000

 
$
24,000

University Circle &
333 Market Street Joint Ventures
 
San Francisco, CA
 
February 1, 2018
 
22.5
%
 
$
235,300

 
$
800

(1) 
Exclusive of transaction costs and price adjustments.
222 East 41st Street
On May 29, 2018, Columbia Property Trust closed on the sale of 222 East 41st Street in New York, for $332.5 million, exclusive of transaction costs. Columbia Property Trust recognized an impairment loss of $30.8 million related to this property in the second quarter of 2018, as further described in Note 2, Summary of Significant Accounting Policies. The proceeds from this transaction were used to fully repay the $180.0 million remaining balance on a bridge loan.
263 Shuman Boulevard
On April 13, 2018, Columbia Property Trust transferred 263 Shuman Boulevard to the lender, which extinguished the $49.0 million mortgage liability, accrued interest, and accrued property operating costs, and resulted in a $24.0 million gain on extinguishment of debt.
University Circle & 333 Market Street Joint Ventures
On July 6, 2017, Columbia Property Trust contributed University Circle and 333 Market Street to joint ventures, and simultaneously sold a 22.5% interest in these joint ventures. On February 1, 2018, Columbia Property Trust sold an additional 22.5% interest in University Circle and 333 Market Street to its joint venture partner for $235.3 million, which resulted in a $0.8 million gain on sale of unconsolidated joint venture interests. The gain on sale is calculated as the net sales price over the adjusted carrying value of the joint venture interest sold. Following this transaction, Columbia Property Trust owns a 55.0% interest in the University Circle and 333 Market Street joint ventures. The proceeds from the February 1, 2018 transaction were used to reduce the balance on a bridge loan and the Revolving Credit Facility, as described in Note 5, Line of Credit and Notes Payable.

Page 17


4.    Unconsolidated Joint Ventures
As of March 31, 2019 and December 31, 2018, 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, 2019
 
December 31, 2018
Market Square Joint Venture
 
Market Square
 
Washington, D.C.
 
51.0
%
 
$
137,825

 
$
134,250

University Circle Joint Venture
 
University Circle
 
San Francisco
 
55.0
%
 
291,159

 
292,951

333 Market Street Joint Venture
 
333 Market Street
 
San Francisco
 
55.0
%
 
272,519

 
273,783

114 Fifth Avenue Joint Venture
 
114 Fifth Avenue
 
New York
 
49.5
%
 
96,059

 
99,283

1800 M Street Joint Venture
 
1800 M Street
 
Washington, D.C.
 
55.0
%
 
234,837

 
237,333

799 Broadway Joint Venture(2)
 
799 Broadway
 
New York, NY
 
49.7
%
 
35,506

 
33,753

 
 
 
 
 
 
 
 
$
1,067,905

 
$
1,071,353

(1) 
Includes basis differences.
(2) 
Columbia Property Trust capitalized interest of $0.3 million on its investment in the 799 Broadway Joint Venture during the three months ended March 31, 2019.
Columbia Property Trust has determined that none of its unconsolidated joint ventures are 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 deficit is "temporary" or "other-than-temporary," and if other-than-temporary, reduces the carrying value to reflect the estimated fair value by recording an impairment loss. 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 analysis described above, Columbia Property Trust has determined that none of its investments in joint ventures are impaired as of March 31, 2019.

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, 2019
 
December 31, 2018
 
March 31, 2019
 
December 31, 2018
 
March 31, 2019
 
December 31, 2018
Market Square Joint Venture
 
$
586,797

 
$
582,176

 
$
324,775

(2) 
 
$
324,762

 
$
248,004

 
$
241,581

University Circle Joint Venture
 
225,398

 
224,746

 

 
 

 
218,753

 
219,390

333 Market Street Joint Venture
 
372,814

 
375,884

 

 
 

 
358,452

 
360,915

114 Fifth Avenue Joint Venture
 
498,686

 
377,970

 

 
 

 
143,138

 
149,243

1800 M Street Joint Venture
 
441,114

 
447,585

 

 
 

 
424,501

 
429,016

799 Broadway Joint Venture
 
170,075

 
168,390

 
98,130

(3) 
 
95,630

 
69,836

 
67,189

 
 
$
2,294,884

 
$
2,176,751

 
$
422,905

 
 
$
420,392

 
$
1,462,684

 
$
1,467,334

(1) 
Excludes basis differences. There is an aggregate net difference of $281.2 million and $282.0 million as of March 31, 2019 and December 31, 2018, respectively, between the historical costs recorded at the joint venture level, and Columbia Property Trust's investments in unconsolidated joint ventures. Such basis differences result from the timing of each partner's joint venture interest acquisition; and formation costs incurred by Columbia Property Trust. Basis differences are amortized to income (loss) from unconsolidated joint ventures over the lives of the underlying assets or liabilities.
(2) 
The Market Square Joint Venture has a $325.0 million mortgage note. The Market Square mortgage note bears interest at 5.07% and matures on July 1, 2023. For a discussion of Columbia Property Trust's guaranty of a portion of this mortgage note, see Note 7, Commitments and Contingencies.
(3) 
Reflects $103.1 million outstanding, net of $5.0 million of net unamortized deferred financing costs, on the 799 Broadway construction loan.  The 799 Broadway construction loan is being used to finance a portion of the 799 Broadway development project, has total capacity of $187.0 million and bears interest at LIBOR, capped at 4.00%, plus a spread of 425 basis points (the "Construction Loan").  A portion of the monthly interest payments accrue into the balance of the loan. The Construction Loan matures on October 9, 2021, with two one-year extension options. For a discussion of Columbia Property Trust's equity guaranty related to the Construction Loan, see Note 7, Commitments and Contingencies.
Summarized income statement information for the unconsolidated joint ventures for the three months ended March 31, 2019 and 2018 is as follows (in thousands):
 
 
Total Revenues
 
Net Income (Loss)
 
Columbia Property Trust's Share of Net Income (Loss)(1)
 
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Market Square Joint Venture
 
$
11,337

 
$
11,015

 
$
(2,595
)
 
$
(3,009
)
 
$
(1,323
)
 
$
(1,534
)
University Circle Joint Venture
 
11,272

 
10,341

 
6,364

 
5,505

 
3,500

 
3,429

333 Market Street Joint Venture
 
7,054

 
6,668

 
3,713

 
3,557

 
2,042

 
2,227

114 Fifth Avenue Joint Venture
 
10,919

 
10,300

 
(2,506
)
 
(2,331
)
 
(1,240
)
 
(1,154
)
1800 M Street Joint Venture
 
9,454

 
8,897

 
388

 
243

 
214

 
133

799 Broadway Joint Venture
 

 

 
(526
)
 

 
(262
)
 

 
 
$
50,036

 
$
47,221

 
$
4,838

 
$
3,965

 
$
2,931

 
$
3,101

(1) 
Excludes amortization of basis differences described in footnote (1) to the above table, which are recorded as income (loss) from unconsolidated joint ventures in the accompanying consolidated statements of operations.

Page 19


Asset and Property 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, 2019 and 2018, Columbia Property Trust earned the following fees from these unconsolidated joint ventures (in thousands):
 
 
Three Months Ended
March 31,
 
 
2019
 
2018
Market Square Joint Venture
 
$
568

 
$
523

University Circle Joint Venture
 
574

 
529

333 Market Street Joint Venture
 
207

 
197

1800 M Street Joint Venture
 
520

 
510

 
 
$
1,869

 
$
1,759

Columbia Property Trust also received reimbursements of property operating costs of $1.2 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively. These reimbursements are included in other property income revenues in the accompanying consolidated statements of operations. Property and asset management fees of $0.6 million and $0.7 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, 2019 and December 31, 2018, respectively. Additionally, Columbia Property Trust leases office space from the Market Square Joint Venture, and the 799 Broadway Joint Venture leases retail space from Columbia Property Trust. Under these leases, Columbia Property Trust paid $37,000 to the Market Square Joint Venture and received $30,000 from the 799 Broadway Joint Venture, for the three months ended March 31, 2019.
5.    Line of Credit and Notes Payable
As of March 31, 2019 and December 31, 2018, 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,
2019
 
December 31,
2018
Revolving Credit Facility
 
$
533,000

 
$
482,000

$150 Million Term Loan
 
150,000

 
150,000

Less: Deferred financing costs related to term loans and notes payable, net of accumulated amortization
 
(2,544
)
 
(2,692
)
 
 
$
680,456

 
$
629,308

On December 7, 2018, Columbia Property Trust amended and restated its $500.0 million revolving credit facility and $300.0 million unsecured term loan (together, the "Credit Agreement"). The Credit Agreement provides for (i) a $650.0 million unsecured revolving credit facility (the "Revolving Credit Facility"), with an initial term ending January 31, 2023 and two six-month extension options (for a total possible extension option of one year to January 31, 2024), subject to the paying of certain fees and the satisfaction of certain other conditions, and (ii) a 12-month, delayed-draw, $300.0 million unsecured term loan, with a term ending January 31, 2024 (the "$300 Million Term Loan"). The $300 Million Term Loan remains undrawn at March 31, 2019 and may be drawn until December 7, 2019.
At Columbia Property Trust's option, borrowings under the Credit Agreement bear interest at either (i) the alternate base rate plus an applicable margin based on five stated pricing levels ranging from 0.00% to 0.45% for the Revolving Credit Facility and 0.00% to 0.65% for the $300 Million Term Loan, or (ii) the LIBOR rate, as defined in the credit agreement, plus an applicable margin based on five stated pricing levels ranging from 0.775% to 1.45% for the Revolving Credit Facility and 0.85% to 1.65% for the $300 Million Term Loan, in each case based on the Columbia Property Trust's credit rating.
Fair Value of Debt
The estimated fair value of Columbia Property Trust's line of credit and notes payable as of March 31, 2019 and December 31, 2018, was approximately $683.1 million and $632.1 million, respectively. The related carrying value of the line of credit and notes payable as of March 31, 2019 and December 31, 2018, was $683.0 million and $632.0 million, respectively. Columbia Property Trust estimated the fair value of the $150 Million Term Loan and the Revolving Credit Facility by obtaining estimates for similar

Page 20

Table of Contents


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).
Interest Paid and Capitalized
During the three months ended March 31, 2019 and 2018, Columbia Property Trust made interest payments of approximately $5.6 million and $6.3 million, respectively.
Columbia Property Trust capitalizes interest on development, redevelopment, and improvement projects funded directly and through its interest in unconsolidated joint ventures, using the weighted-average interest rate of its consolidated borrowings for the period. During the three months ended March 31, 2019, Columbia Property Trust capitalized interest of $1.2 million, $0.9 million of which was capitalized to construction in progress, and $0.3 million of which was capitalized to investments in unconsolidated joint ventures. During the three months ended March 31, 2018, Columbia Property Trust capitalized interest of $0.9 million, all of which was capitalized to construction in progress. For the three months ended March 31, 2019, the weighted average interest rate on Columbia Property Trust’s outstanding borrowings was 3.59%.
Debt Covenants
As of March 31, 2019, Columbia Property Trust was in compliance with all of its debt covenants on its term loans and the Revolving Credit Facility.
6.    Bonds Payable
Columbia Property Trust has two series of bonds outstanding as of March 31, 2019 and December 31, 2018: $350.0 million of 10-year, unsecured 3.650% senior notes issued at 99.626% of their face value (the "2026 Bonds Payable"); and $350.0 million of 10-year, unsecured 4.150% senior notes issued at 99.859% of their face value (the "2025 Bonds Payable"), (collectively, the "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 were made on the Bonds Payable during both the three months ended March 31, 2019 and 2018. Columbia Property Trust is subject to substantially similar covenants under the 2026 Bonds Payable and the 2025 Bonds Payable. As of March 31, 2019, Columbia Property Trust was in compliance with the restrictive financial covenants on the 2026 Bonds Payable and the 2025 Bonds Payable.
As of March 31, 2019 and December 31, 2018, the estimated fair value of the Bonds Payable was approximately $695.1 million and $685.0 million, respectively, and the related carrying value, net of discounts, as of both March 31, 2019 and December 31, 2018 was $698.7 million. The fair value of the Bonds Payable was estimated based on a discounted cash flow analysis, using observable market data for its bonds payable and similar instruments (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 tenant allowances that, at the option of the tenant, may obligate Columbia Property Trust to expend capital to improve an existing property, or to provide other expenditures for the benefit of the tenant. As of March 31, 2019, Columbia Property Trust had one individually significant unrecorded tenant allowance commitment: $28.3 million for the WeWork lease at 149 Madison Avenue. These commitments will be accrued as the related costs are incurred.
Guaranties of Debt of Unconsolidated Joint Ventures
Columbia Property Trust guarantees portions of the debt at two of its unconsolidated joint ventures (see Note 4, Unconsolidated Joint Ventures).
As of March 31, 2019, Columbia Property Trust guaranteed $4.0 million of the $325.0 million Market Square mortgage loan. In April 2019, as a result of additional leasing, the guaranty was reduced to $0 and eliminated.
As of March 31, 2019, the 799 Broadway Joint Venture has $103.1 million in outstanding borrowings on the Construction Loan. Pursuant to a joint and several guaranty agreement with the Construction Loan lender, Columbia Property Trust and its joint venture partner are required to make aggregate additional equity contributions to the joint venture based on the initial expected project costs, less the amount of equity contributions made to date. As of March 31, 2019, the remaining equity contribution requirement is $47.7 million, of which $23.7 million reflects Columbia Property Trust's allocated

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Table of Contents


share. Equity contributions become payable by Columbia Property Trust to the joint venture when a capital call is received. As of March 31, 2019, no capital calls remain unpaid; therefore, no liability has been recorded related to this guaranty.
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.
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, 2019, Columbia Property Trust did not make any share repurchases. As of March 31, 2019, $124.4 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.

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Long-Term Incentive Compensation
Columbia Property Trust maintains a stockholder-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, 2019, Columbia Property Trust granted 175,129 shares of stock awards (the "Time-Based Restricted Shares") to employees, which will vest ratably on each anniversary of the grant over the next four years. On January 1, 2019, Columbia Property Trust granted 221,199 of performance-based restricted stock units (the "Performance-Based RSUs"), of which 75% will vest at the conclusion of a three-year performance period, and the remaining 25% will vest one year later. The payout of the 2019 Performance-Based RSUs will be determined based on Columbia Property Trust's total stockholder return relative to the FTSE NAREIT Equity Office Index. Below is a summary of the employee awards issued under the LTI Plan in the three months ended March 31, 2019:
 
 
Time-Based Awards
 
Performance-Based Awards
 
 
Restricted Shares
(in thousands)
 
Weighted-Average
Grant-Date
Fair Value
(1)
 
RSUs
(in thousands)
 
Weighted-Average
Grant-Date
Fair Value
(2)
Unvested awards – beginning of period
 
375

 
$
22.15

 
454

 
 
$
19.37

Granted
 
175

 
$
19.35

 
256

(3) 
 
$
17.66

Vested
 
(165
)
 
$
21.98

 
(121
)
 
 
$
19.08

Forfeited
 

 
$

 

 
 
$

Unvested awards – end of period(4)
 
385

 
$
20.95

 
589

 
 
$
18.77

(1) 
Reflects the weighted-average, grant-date fair value using the market closing price on the date of the respective grants.
(2) 
Reflects the weighted-average, grant-date fair value using a Monte Carlo valuation.
(3) 
Includes approximately 35,000 RSUs, which were converted to shares based on performance, as defined by the LTI Plan, over the period from January 1, 2017 through December 31, 2018.
(4) 
As of March 31, 2019, Columbia Property Trust expects approximately 370,000 of the 385,000 unvested restricted stock units to ultimately vest and approximately 566,000 of the 589,000 unvested Performance-Based RSUs, assuming a weighted-average forfeiture rate of 3.8%, which was determined based on historical forfeiture rates.
Director Stock Grants
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 for the following year. For the three months ended March 31, 2018 and 2019, no stock grants were made to the directors.
Stock-Based Compensation Expense
For the three months ended March 31, 2019 and 2018, Columbia Property Trust incurred stock-based compensation expense related to the following events (in thousands):
 
Three Months Ended
March 31,
 
2019
 
2018
Amortization of time-based awards granted under the LTI Plan
$
884

 
$
1,036

Amortization of performance-based awards granted under the LTI Plan(1)
655

 
492

Total stock-based compensation expense
$
1,539

 
$
1,528

(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 – corporate in the accompanying consolidated statements of operations. As of March 31, 2019 and December 31, 2018, there were $13.6 million and $8.6 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.

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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, 2019 and 2018 (in thousands): 
 
Three Months Ended
March 31,
 
2019
 
2018
Amortization of net discounts on debt
$
45

 
$
45

Accrued investments in unconsolidated joint ventures
$
88

 
$

Accrued capital expenditures and deferred lease costs
$
19,603

 
$
12,414

Operating lease liability recorded at adoption of ASC 842
$
34,791

 
$

Market value adjustments to interest rate swaps that qualify for hedge accounting treatment
$
(1,431
)
 
$
2,514

Cumulative-effect adjustment to equity for the adoption of ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-Financial Assets
$

 
$
357,755

Amortization of common stock issued to employees and directors
$
1,539

 
$
1,528



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10.     Leases
Columbia Property Trust as Lessee
Columbia Property Trust is a lessee on ground leases at certain of its investment properties, office space leases, and various information technology equipment leases. Operating lease assets represent Columbia Property Trust's right to use the underlying asset over the lease term, and operating lease liabilities represent Columbia Property Trust's obligation to make lease payments over the lease term. Operating lease liabilities are measured as the present value of lease payments over the lease term. As most of Columbia Property Trust's leases do not provide an implicit rate, Columbia Property Trust uses its incremental borrowing rate, based on information available at commencement, to calculate the present value of lease payments. Lease term extensions are included in the operating lease liability when it is reasonably certain that they will be exercised. Any variable payments for non-lease services provided under leases are expensed as incurred. Operating lease assets are measured based on the corresponding operating lease liability amount, reduced for lease incentives and straight-line rent payable (receivable) balances at adoption of ASC 842. Operating lease expense is recognized on a straight-line basis over the lease term, and is reflected as property operating costs for ground leases and as general and administrative – corporate for all other operating leases. Contracts are evaluated at commencement to determine if the contract contains a lease, and the appropriate classification for such leases.
As of March 31, 2019, Columbia Property Trust has three ground leases with remaining lease terms ranging from 58 years to 111 years, inclusive of renewal options, which are included in operating lease assets of $63.8 million. Under one of the ground leases, payments for all future periods have already been made. Thus, as of March 31, 2019, operating lease liabilities of $34.7 million reflect the present value of future payments due under the other two ground leases, which have remaining lease terms ranging from 80 years to 111 years, inclusive of renewal options.
As of March 31, 2019, the future minimum lease payments to be made by Columbia Property Trust under its operating leases are as follows (thousands):
Remainder of 2019
$
1,877

2020
2,539

2021
2,704

2022
2,743

2023
2,023

2024
1,962

Thereafter
174,821

     Total lease payments
188,669

Less: interest expense
(153,931
)
Present value of lease liabilities
$
34,738

Weighted-average remaining lease term (years)
76 years

Weighted-average discount rate
6.6
%
As of December 31, 2018, the future minimum lease payments to be made by Columbia Property Trust under its operating leases are as follows (in thousands):
2019
$
2,502

2020
2,539

2021
2,704

2022
2,743

2023
2,023

Thereafter
176,782

       Total
$
189,293


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Columbia Property Trust's operating leases had the following impacts on the consolidated balance sheet as of March 31, 2019 (in thousands):
 
Ground Leases
 
Office Lease
 
Total Operating Leases
Assets:
 
 
 
 
 
Total operating lease assets
$
61,849

 
$
1,980

 
$
63,829

Liabilities:
 
 
 
 
 
Total operating lease liabilities
$
32,112

 
$
2,626

 
$
34,738

Columbia Property Trust's operating leases had the following impacts on the consolidated statements of operations for the three months ended March 31, 2019 (in thousands):
 
Ground Leases
 
Office Lease
 
Total Operating Leases
Property operating costs
$
692

 
$

 
$
692

General and administrative  corporate

 
145

 
145

Total operating lease expenses
$
692

 
$
145

 
$
837

Columbia Property Trust's operating leases had the following impacts on the consolidated statements of cash flows for the three months ended March 31, 2019:
 
Ground Leases
 
Office Lease
 
Total Operating Leases
Cash paid for operating lease liabilities included in cash flows from operations
$
(451
)
 
$
(174
)
 
$
(625
)
Columbia Property Trust as Lessor
Columbia Property Trust owns and leases commercial real estate, primarily office space, to tenants under operating leases for specified periods of time. Some of Columbia Property Trust's leases contain extension and/or termination options; however, the exercise of these extensions or terminations is at the discretion of the tenant and subject to negotiations. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. Rental income related to such leases is recognized on a straight-line basis over the remaining lease period, and is included in rental income and tenant reimbursements on the consolidated statements of operations. Contracts are evaluated at commencement to determine if the contract contains a lease, and the appropriate classification for such leases. As of March 31, 2019, the weighted-average remaining term for such leases is approximately 6.9 years.
Rental income and tenant reimbursements include fixed and variable payments. Fixed payments primarily relate to base rent; and variable payments primarily relate to tenant reimbursements for certain property operating costs. Fixed and variable payments for the three months ended March 31, 2019 are as follows (in thousands):
 
Three Months Ended March 31, 2019
Fixed payments
$
65,517

Variable payments
6,345

Total rental income and tenant reimbursements
$
71,862


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As of March 31, 2019, the future minimum lease payments due to Columbia Property Trust under non-cancelable operating leases are as follows (thousands):
Remainder of 2019
$
184,860

2020
251,836

2021
225,294

2022
213,492

2023
196,011

2024
183,205

Thereafter
939,626

     Total
$
2,194,324

As of December 31, 2018, the future minimum lease payments due to Columbia Property Trust under non-cancelable operating leases are as follows (in thousands):
2019
$
242,370

2020
247,826

2021
221,692

2022
209,845

2023
192,261

Thereafter
1,106,275

     Total
$
2,220,269



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11.     Non-Lease Revenues
Columbia Property Trust derives most of its revenues from leases, as described in Note 10, Leases. Columbia Property Trust also has the following non-lease revenue streams.
Asset and Property Management Fee Income
Under asset and property management agreements in place with certain of 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. For the three months ended March 31, 2019 and 2018, Columbia Property Trust earned revenues of $1.9 million and $1.8 million, respectively, under these agreements.
Leasing Override Fees
Under the asset management agreements for certain properties owned through unconsolidated joint ventures, Columbia Property Trust is eligible to earn leasing override fees equal to a percentage of the total rental payments to be made by the tenant over the term of the lease. For the three months ended March 31, 2019, Columbia Property Trust earned leasing override fees of $3,000, which are included in asset and property management fee income on the accompanying consolidated statements of operations.
Salary and Other Reimbursement Revenue
Under the property management agreements for certain properties owned through unconsolidated joint ventures, Columbia Property Trust receives reimbursements for salaries and property operating costs for services that are provided by Columbia Property Trust employees on an ongoing basis. For the three months ended March 31, 2019 and 2018, Columbia Property Trust earned salary and other reimbursement revenue of $1.1 million and $1.0 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 included in other property income on the accompanying consolidated statements of income. For both the three months ended March 31, 2019 and 2018, Columbia Property Trust earned miscellaneous revenue of $0.2 million, which is included in other property income on the accompanying consolidated statements of income.

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12.    Earnings Per Share
For the three months ended March 31, 2019 and 2018, 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, 2019 and 2018 (in thousands):
 
 
Three Months Ended
March 31,
 
 
2019
 
2018
Net income
 
$
3,513

 
$
1,498

Distributions paid on unvested shares
 
(77
)
 
(73
)
Net income used to calculate basic and diluted earnings per share
 
$
3,436

 
$
1,425

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, 2019 and 2018, respectively (in thousands):
 
 
Three Months Ended
March 31,
 
 
2019
 
2018
Weighted-average common shares – basic
 
116,462

 
119,082

Plus incremental weighted-average shares from time-vested conversions, less assumed
stock repurchases:
 
 
 
 
Previously granted awards, unvested
 
90

 
70

Future period LTI Plan awards
 
328

 
198

Weighted-average common shares – diluted
 
116,880

 
119,350

13.    Segment Information
Columbia Property Trust establishes operating segments at the property level and aggregates individual properties into reportable segments for high-barrier-to-entry markets and other 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, 2019, 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, and other property income; and operating expenses include property operating costs. The NOI performance metric consists only of 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.

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The following table presents operating revenues included in NOI by geographic reportable segment for Columbia Property Trust's respective ownership interests (in thousands):
 
Three Months Ended March 31,
 
2019
 
2018
New York(1)
$
38,696

 
$
40,909

San Francisco(2)
27,763

 
23,520

Atlanta
11,223

 
9,858

Washington, D.C.(3)
14,130

 
13,972

Boston
3,674

 
3,370

Los Angeles
1,934

 
1,920

All other office markets
3,903

 
3,936

Total office segments
101,323

 
97,485

Corporate
786

 
681

Total operating revenues
$
102,109

 
$
98,166

(1) 
Includes operating revenues for one unconsolidated property, 114 Fifth Avenue, based on Columbia Property Trust's ownership interest: 49.5% for all periods presented.
(2) 
Includes operating revenues for two unconsolidated properties, 333 Market Street and University Circle, based on Columbia Property Trust's ownership interests:  77.5% from January 1, 2018 through January 31, 2018; and 55.0% from February 1, 2018 through March 31, 2019.
(3) 
Includes operating revenues for two unconsolidated properties, Market Square and 1800 M Street, based on Columbia Property Trust's ownership interests: 51.0% for the Market Square and 55.0% for 1800 M Street for all periods presented.
A reconciliation of GAAP revenues to operating revenues is presented below (in thousands):
 
Three Months Ended March 31,
 
2019
 
2018
Total revenues
$
75,433

 
$
73,710

Operating revenues included in income from unconsolidated joint ventures(1)
28,545

 
26,215

Less: asset and property management fee income(2)
(1,869
)
 
(1,759
)
Total operating revenues
$
102,109

 
$
98,166

(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 from unconsolidated joint ventures in the accompanying consolidated statements of operations.
(2) 
See Note 11, Non-Lease Revenues, of the accompanying consolidated financial statements.

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The following table presents NOI by geographic reportable segment (in thousands):
 
Three Months Ended March 31,
 
2019
 
2018
New York(1)
$
22,806

 
$
24,179

San Francisco(2)
20,497

 
19,554

Atlanta
8,151

 
8,754

Washington, D.C.(3)
8,453

 
8,330

Boston
1,989

 
1,768

Los Angeles
1,119

 
1,208

All other office markets
3,836

 
3,291

Total office segments
66,851

 
67,084

Corporate
(205
)
 
(225
)
Total NOI
$
66,646

 
$
66,859

(1) 
Includes NOI for two unconsolidated properties, 114 Fifth Avenue and 799 Broadway, based on Columbia Property Trust's ownership interest: 49.5% for 114 Fifth Avenue for all periods presented; and 49.7% for 799 Broadway from October 3, 2018 through March 31, 2019.
(2) 
Includes NOI for two unconsolidated properties, 333 Market Street and University Circle, based on Columbia Property Trust's ownership interests:  77.5% from January 1, 2018 through January 31, 2018; and 55.0% from February 1, 2018 through March 31, 2019.
(3) 
Includes NOI for two unconsolidated properties, Market Square and 1800 M Street, based on Columbia Property Trust's ownership interests: 51.0% for the Market Square and 55.0% for 1800 M Street for all periods presented.
A reconciliation of GAAP net income to NOI is presented below (in thousands):
 
Three Months Ended March 31,
 
2019
 
2018
Net income
$
3,513

 
$
1,498

Depreciation
20,404

 
20,835

Amortization
7,461

 
8,016

General and administrative – corporate
8,424

 
7,794

General and administrative – unconsolidated joint ventures
809

 
731

Net interest expense
12,094

 
15,892

Interest income from development authority bonds

 
(1,800
)
Gain on sale of unconsolidated joint venture interests

 
(762
)
Income tax expense
7

 
7

Asset and property management fee income
(1,869
)
 
(1,759
)
Adjustments included in income from unconsolidated joint ventures
15,803

 
16,407

NOI
$
66,646

 
$
66,859


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14.     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 consolidated financial statements. Set forth below are Columbia Property Trust's condensed consolidating balance sheets as of March 31, 2019 and December 31, 2018, as well as its condensed consolidating statements of operations, its condensed consolidating statements of comprehensive income, and its condensed consolidating statements of cash flows for the three months ended March 31, 2019 and 2018.

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Condensed Consolidating Balance Sheets (in thousands):
 
As of March 31, 2019
 
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
$

 
$

 
$
803,986

 
$

 
$
803,986

Buildings and improvements, net

 
1,633

 
1,790,293

 

 
1,791,926

Intangible lease assets, net

 

 
64,250

 

 
64,250

Construction in progress

 

 
37,772

 

 
37,772

Real estate assets held for sale, net

 

 
145,346

 

 
145,346

Total real estate assets

 
1,633

 
2,841,647

 

 
2,843,280

Operating lease assets
1,980

 

 
61,849

 

 
63,829

Investments in unconsolidated joint ventures

 
1,067,905

 

 

 
1,067,905

Cash and cash equivalents
165

 
11,768

 
6,618

 

 
18,551

Investment in subsidiaries
2,578,461

 
1,202,861

 

 
(3,781,322
)
 

Tenant receivables

 

 
3,760

 

 
3,760

Straight-line rent receivable

 

 
83,828

 

 
83,828

Prepaid expenses and other assets
140,890

 
352,349

 
7,309

 
(469,028
)
 
31,520

Intangible lease origination costs, net

 

 
31,626

 

 
31,626

Deferred lease costs, net

 

 
58,932

 

 
58,932

Other assets held for sale

 

 
20,498

 

 
20,498

Total assets
$
2,721,496

 
$
2,636,516

 
$
3,116,067

 
$
(4,250,350
)
 
$
4,223,729

Liabilities:
 
 
 
 
 
 
 
 
 
Line of credit and notes payable, net
$

 
$
680,456

 
$
467,344

 
$
(467,344
)
 
$
680,456

Bonds payable, net

 
694,736

 

 

 
694,736

Operating lease liabilities
2,626

 

 
32,112

 

 
34,738

Accounts payable, accrued expenses, and accrued capital expenditures
6

 
10,628

 
27,328

 

 
37,962

Due to affiliates

 

 
1,684

 
(1,684
)
 

Deferred income

 

 
16,943

 

 
16,943

Intangible lease liabilities, net

 

 
19,539

 

 
19,539

Liabilities held for sale

 

 
20,491

 

 
20,491

Total liabilities
2,632

 
1,385,820

 
585,441

 
(469,028
)
 
1,504,865

Equity:
 
 
 
 
 
 
 
 
 
Total equity
2,718,864

 
1,250,696

 
2,530,626

 
(3,781,322
)
 
2,718,864

Total liabilities and equity
$
2,721,496

 
$
2,636,516

 
$
3,116,067

 
$
(4,250,350
)
 
$
4,223,729





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Condensed Consolidating Balance Sheets (in thousands):
 
As of December 31, 2018