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2017 Annual Report
2017
IN REVIEW
MARKETS1
NEW YORK
SAN FRANCISCO
WASHINGTON, D.C.
41.4%
21.1%
20.3%
ATLANTA
OTHER
8.5%
8.7%
$1 billion
in Assets Sold
$942 million
Re-invested in Acquisitions
in Key Markets
Unless otherwise noted, all data herein is as of December 31,2017, and
pro forma for the remaining Allianz obligation closed in February 2018
and the planned return of 263 Shuman to the lender.
1Based on gross real estate assets at 100% of all properties, including
those held through joint ventures.
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COLUMBIA PROPERTY TRUST Annual Report 2017 2
2 million
Square Feet Leased
96%
Portfolio Leased Overall
33%
Net Debt to Real-Estate Assets
View from 114 Fifth Avenue
NEW YORK
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COLUMBIA PROPERTY TRUST Annual Report 2017 3
TO OUR STOCKHOLDERS
2017
marked a turning point for
Columbia Property Trust.
Our strategic concentration of the portfolio into three key
markets – New York, San Francisco, and Washington,
D.C. – is now essentially complete.
This portfolio transformation and our continued leasing
success have positioned Columbia for significant growth
in net operating income and funds from operations in
2018 and beyond.
NELSON MILLS
THREE KEY MARKETS
DIFFERENTIATED ASSETS
We hit the ground running in 2017 by completing the last
of our major targeted dispositions of noncore assets – in
Houston, Texas, and Cleveland, Ohio – all of which were
sold by the end of January. We redeployed most of the
capital generated by these sales into compelling new
investments in our three key markets.
We also created an exceptional opportunity to expand
our scale and broaden our reach in these markets –
without impacting our balance sheet – by establishing a
joint venture with Allianz Real Estate, one of the world’s
most respected real estate investors. This venture also
allowed us to realize some of the substantial value
we’ve created in the portfolio by selling Allianz a 45%
stake in two of our San Francisco assets, University
Circle and 333 Market Street. We in turn acquired an
ownership stake in two core-quality, landmark assets:
114 Fifth Avenue in New York and 1800 M Street in
Washington, D.C. In total, the venture now jointly owns
$1.7 billion of real estate, with Columbia as the majority
and managing partner.
Later in the year, we re-invested the proceeds from our
January dispositions into acquisitions in Midtown South
Manhattan. These included two well-leased properties in
Chelsea, 218 W. 18th Street and 245-249 W. 17th Street;
and a redevelopment opportunity, 149 Madison Avenue.
In total, Columbia invested $942 million in attractive
properties in our target markets in 20171, and today, over
80% of our portfolio is concentrated in New York, San
Francisco, and Washington, D.C.2
Why have we chosen to focus on these three high-
barrier-to-entry, gateway cities? Because through
decades of real estate cycles, each has sustained a
healthy level of office demand with limited new supply,
which has led to strong growth in rental rates and asset
values over time. We believe those trends will continue
for these three markets for years to come.
However, to create value and stable cash flows in some
of the world’s most competitive real estate markets,
we must do more than just select the right cities. We
endeavor to identify the strongest submarkets and
neighborhoods in those cities, the best street corners,
and the ideal properties that offer the amenities,
transportation options, and building features that top
tenants demand.
We have invested in such properties throughout our
portfolio, by either purchasing assets that fit our target
profile and/or investing in the upgrades and amenities
necessary to position our existing, well-located
properties to best-in-class standards. Today, Columbia’s
portfolio is hallmarked by architecturally distinct,
modernized properties in amenity-rich, central business
district locations.
The value of this approach is evidenced by our continued
leasing success over the past year. We leased more than
2 million square feet across the portfolio in 2017, with a
30% average roll-up in cash rents. The portfolio is now
greater than 96% leased overall.
COLUMBIA PROPERTY TRUST Annual Report 2017 4 All of this combines to give Columbia
the attractive growth profile we set out
to achieve when we began our portfolio
transition five years ago.
GROWTH AND STABILITY
All of this combines to give Columbia the attractive
growth profile we set out to achieve when we began
our portfolio transition five years ago. Our leasing
accomplishments will generate strong growth in cash
rents as signed leases convert to rent-paying occupancy.
With in-place rents still approximately 10% below market
on average across our portfolio, we expect substantial
growth in net operating income to continue as we
lease approximately 500,000 square feet of remaining
availability and near-term roll in these desirable assets in
very attractive submarkets.
This strong growth is balanced by a healthy foundation
of stability. Not only is our portfolio almost fully leased
today, but we have only 5% of rent expiring across
the portfolio through the end of 2019. And, apart
from finishing current renovation projects and our
redevelopment at 149 Madison in Manhattan this
year, our current portfolio has few remaining capital
requirements moving forward.
1800 M Street | WASHINGTON, D. C.
Throughout the execution of all of these transactions
and capital projects, we have maintained a strong
balance sheet and a well-supported dividend, paying
out $110 million to stockholders in 2017. That strength
is affirmed not only by our continued investment-grade
ratings but also by the commitments of our joint venture
partners, providing us with broad access to cost-
effective capital to expand the portfolio and support
operations, in line with our strategy.
We used a portion of our recent disposition proceeds
to fund debt repayment, as well as to repurchase
approximately $58 million of our shares, which we
continue to believe are significantly discounted in
comparison to their underlying net asset value. We will
continue our work to enhance the value of our portfolio
and to demonstrate this value to the public markets, in
order to improve the price of our stock over time.
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Columbia is very
well positioned for
outperformance among
office REITs in the
years ahead.
DEMONSTRATED ABILITY
In 2018, we are continuing to build upon the track record
of success that we’ve established.
We will look for additional compelling investment
opportunities in our three key markets – either with
partners or independently – and may pursue the
disposition of certain properties in order to preserve and
recycle their value. We’ll continue to keep leasing and
operations as our primary focus, in order to maximize
occupancy and to capitalize on opportunities to drive
rents. And we’ll maintain our long-standing commitment
to a strong balance sheet to provide the capacity and
flexibility to operate efficiently and to facilitate continued
growth and value creation.
As a result of focused determination and unwavering
commitment to our strategy, Columbia is very well-
positioned for outperformance among office REITs in
the years ahead. I am grateful to our employees and our
executive team for demonstrating that commitment, to
our board of directors for their leadership, and to you, our
stockholders, for your continued support as we continue
moving our company successfully ahead.
E. Nelson Mills
President, Chief Executive
Officer and Director
March 30, 2018
1 At our share of those properties held through the joint venture with Allianz.
2 Based on gross real estate assets at 100% of property value, including
properties held through joint ventures.
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650 California Street
SAN FRANCISCO
COLUMBIA PROPERTY TRUST Annual Report 2017 6
FORM 10-K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________
FORM 10-K
_______________________________________________
(mark one)
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2017
OR
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
(State or other jurisdiction of incorporation or organization)
20-0068852
(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)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class
Common Stock
Name of exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Securities registered pursuant to Section 12 (g) of the Act: None
Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes
No
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
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 the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging Growth Company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
No
As of June 30, 2017, the aggregate market value of the common stock of Columbia Property Trust, Inc. held by non-affiliates was
$2,286,239,000 based on the closing price as reported by the New York Stock Exchange.
As of January 31, 2018, 119,897,777 shares of common stock were outstanding.
Registrant incorporates by reference portions of the Columbia Property Trust, Inc. Definitive Proxy Statement for the 2018 Annual Meeting of
Stockholders (Items 10, 11, 12, 13, and 14 of Part III) to be filed prior to April 30, 2018.
FORM 10-K
COLUMBIA PROPERTY TRUST, INC.
TABLE OF CONTENTS
PART I.
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
PART II.
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities(cid:2)
Item 6.
Selected Financial Data
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III.
Item 10.
Directors, Executive Officers, and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters(cid:2)Certain
Item 13.
Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV.
Item 15.
Exhibits and Financial Statement Schedules
Signatures
Page No.
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Page 48
Page 2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-K of Columbia Property Trust, Inc. and its subsidiaries ("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). We intend for all such forward-looking statements presented in this annual report on Form
10-K ("Form 10-K"), 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 Form 10-K 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:
•
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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 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 development activities;
risks relating to acquisition and disposition activities;
risks associated with joint venture relationships;
existence of complex regulations relating to our status as a real estate investment trust ("REIT");
risks associated with our potential failure to qualify as a 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, and other information contained in this Form 10-K and our other periodic reports filed with the
SEC. 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-K 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
ITEM 1.
BUSINESS
General
PART I
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, and 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 December 31, 2017, Columbia
Property Trust owned 19 operating properties, of which 14 were wholly owned and five were owned through unconsolidated joint
ventures. These 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 96.2% leased as of December 31, 2017.
Real Estate Investment Objectives
Columbia Property Trust seeks to invest in and manage a commercial real estate portfolio that provides the size, quality, and market
specialization needed to deliver both income and long-term growth, as measured in the total return to our shareholders. Our primary
strategic objective is to generate long-term shareholder returns from a combination of steadily growing cash flows and appreciation
in our net asset values, through the acquisition and ownership of high-quality office buildings located principally in high-barrier-
to-entry markets. Our value creation and growth strategies are founded in the following:
Targeted Market Strategy
Our portfolio consists of a combination of multi- and single-tenant office properties located primarily in Central Business Districts
("CBD"). We focus our acquisition efforts in select primary markets with strong fundamentals and liquidity, including CBD and
urban in-fill locations. We believe that the major U.S. office markets provide the greatest opportunity for increasing net income
and property values over time. We maintain a long-term goal of increasing our presence in our target markets in order to leverage
our scale, efficiency, and market knowledge.
New Investment Targets
We look to acquire strategic and premier office assets with quality tenants in our target markets. We concentrate on office buildings
that are competitive within the top tier of their markets or that can be repositioned as such through value-add initiatives. In addition,
our investment objectives include optimizing our portfolio allocation between stabilized investments and more growth-oriented,
value-add investments, with an emphasis on central business districts and multi-tenant buildings.
Strong and Flexible Balance Sheet
We are committed to maintaining an investment-grade balance sheet with a strong liquidity profile and proven access to capital.
Our leverage level and other credit metrics provide the financial flexibility to pursue new acquisitions and other growth opportunities
that will further our long-term performance objectives.
Capital Recycling
To date, we have primarily sold non-strategic assets to increase our concentration in our target markets. In the future, we also
anticipate selling some assets from our target markets to maintain a well-balanced portfolio and to harvest capital from mature
assets. Our goals are to foster long-term growth and capital appreciation in our portfolio by maintaining the following: an
appropriate balance of core investments relative to value-add investments, building profiles that will continue to attract prospects
for future rent growth, and activity levels that will continue to support our connections in the real estate community. We routinely
evaluate our portfolio to identify assets that are good candidates for disposition in the furtherance of these goals.
Proactive Asset Management
We believe our team is well equipped to deliver operating results in all facets of the management process. Our leasing efforts are
founded in understanding the varied and complex needs of tenants in the marketplace today. We pursue meeting those needs
through new and renewal leases, as well as lease restructures that further our long-term goals. We are committed to prudent capital
Page 4
investment in our assets to ensure their competitive positioning and status, and rigorously pursue efficient operations and cost
containment at the property level.
Transaction Activity
In connection with repositioning our portfolio, and in furtherance of our real estate investment objectives, we have executed the
following real estate transactions during 2017, 2016, and 2015:
Acquisitions
2017
Property
Location
% Acquired
Square
Feet
Acquisition Date
Purchase Price
(in thousands)
149 Madison Avenue
245-259 West 17th Street
218 West 18th Street
New York, NY
New York, NY
New York, NY
West 17th Street & West 18th Street Acquisition
1800 M Street
114 Fifth Avenue
2015
229 West 43rd Street
116 Huntington Avenue
315 Park Avenue South
1881 Campus Commons
Washington, D.C.
New York, NY
New York, NY
Boston, MA
New York, NY
Reston, VA
100.0%
100.0%
55.0%
49.5%
100.0 %
100.0 %
100.0 %
100.0 %
127,000
281,000
166,000
447,000
581,000
352,000
481,000
271,000
327,000
244,000
November 28, 2017
$
87,700
October 11, 2017
October 11, 2017
July 6, 2017
August 4, 2015
January 8, 2015
January 7, 2015
January 7, 2015
$
$
$
$
$
$
$
514,100
231,550 (1)
108,900 (1)
516,000
152,000
372,000
64,000
(1) Purchase price is for our partial interests in the properties. These properties are owned through unconsolidated joint ventures. Please
refer to Note 3, Real Estate Transactions, and Note 4, Unconsolidated Joint Ventures, of the accompanying consolidated financial
statements for more information.
Page 5
$
$
$
$
$
$
$
$
$
$
$
$
$
121,500 (1)(2)
112,500 (1)(2)
267,500
272,000
58,500
51,000
19,500
174,500
122,000
48,000
187,000
65,000
291,550 (3)
Dispositions
Property
Location
% Sold
Rentable
Square Feet
Disposition Date
Sale Price
(in thousands)
2017
University Circle
333 Market Street
Key Center Tower &
Marriott
5 Houston Center
Energy Center I
515 Post Oak
San Francisco, CA
San Francisco, CA
22.5% (2)
22.5% (2)
451,000
657,000
July 6, 2017
July 6, 2017
Cleveland, OH
100.0%
1,326,000
January 31, 2017
Houston, TX
Houston, TX
Houston, TX
581,000
332,000
274,000
Houston Property Sale
100.0%
1,187,000
January 6, 2017
2016
SanTan Corporate Center
Phoenix, AZ
Sterling Commerce
Dallas, TX
9127 South Jamaica Street
Denver, CO
80 Park Plaza
Newark, NJ
9189, 9191 & 9193 South
Jamaica Street
800 North Frederick
100 East Pratt
Denver, CO
Suburban MD
Baltimore, MD
2015
1881 Campus Commons
Reston, VA
Market Square
170 Park Avenue
180 Park Avenue
Washington, D.C.
Northern NJ
Northern NJ
1580 West Nursery Road
Baltimore, MD
Acxiom
Highland Landmark III
The Corridors III
215 Diehl Road
544 Lakeview
Bannockburn Lake III
Robbins Road
550 King Street
11 Property Sale
Chicago, IL
Chicago, IL
Chicago, IL
Chicago, IL
Chicago, IL
Chicago, IL
Boston, MA
Boston, MA
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
49.0 %
December 15, 2016
November 30, 2016
October 12, 2016
September 30, 2016
September 22, 2016
July 8, 2016
March 31, 2016
December 10, 2015
October 28, 2015
267,000
310,000
108,000
961,000
370,000
393,000
653,000
244,000
698,000
145,000
224,000
315,000
322,000
273,000
222,000
162,000
139,000
106,000
458,000
490,000
100.0 %
2,856,000
July 1, 2015
$
433,250
(1) Sale price is for the partial interests in the properties. After partial sale, these properties are owned through unconsolidated joint
ventures. Please refer to Note 3, Real Estate Transactions, and Note 4, Unconsolidated Joint Ventures, of the accompanying consolidated
financial statements for more information.
(2) On February 1, 2018, we sold an additional 22.5% interest in both University Circle and 333 Market Street to our joint venture partner,
Allianz for $235.3 million, as described in Note 3, Real Estate Transactions, of the accompanying consolidated financial statements.
(3) Sale price is for our partial interest in the property. On October 28, 2015, Columbia Property Trust transferred the Market Square
properties, valued at $595.0 million and subject to a $325.0 million mortgage note, to a joint venture and sold a 49% interest in that
joint venture to Blackstone Property Partners for net proceeds of approximately $120.0 million. See Note 3, Real Estate Transactions,
and Note 4, Unconsolidated Joint Ventures for additional information.
Segment Information
As of December 31, 2017, our reportable segments are determined based on the geographic markets in which we have significant
investments. We consider geographic location when evaluating our portfolio composition and in assessing the ongoing operations
and performance of our properties. See Note 14, Segment Information, to the accompanying consolidated financial statements.
Page 6
Employees
As of December 31, 2017, we employed 94 people.
Competition
Leasing real estate is highly competitive in the current market. As a result, we experience competition for high-quality tenants
from owners and managers of competing projects. Therefore, we may experience delays in re-leasing vacant space; or we may
have to provide rent concessions, incur charges for tenant improvements, or offer other inducements to enable us to timely lease
vacant space, all of which may have an adverse impact on our results of operations. In addition, we are in competition with other
potential buyers for the acquisition of the same properties, which may result in an increase in the amount we must pay to purchase
a property. Further, at the time we elect to dispose of our properties, we will also be in competition with sellers of similar properties
to locate suitable purchasers.
Concentration of Credit Risk
We are dependent upon the ability of our current tenants to pay their contractual rent amounts as they become due. The inability
of a tenant to pay future rental amounts would have a negative impact on our results of operations. We are not aware of any reason
why our current tenants would not be able to pay their contractual rental amounts as they become due in all material respects.
Situations preventing our tenants from paying contractual rents could result in a material adverse impact on our results of operations.
Based on our 2017 annualized lease revenue, no single tenant accounts for more than 6% of our portfolio.
Website Address
Access to copies of each of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,
proxy statements, and other documents filed with, or furnished to, the SEC, including amendments to such filings, may be
obtained free of charge from our website, http://www.columbia.reit, or through a link to the http://www.sec.gov website. The
information contained on our website is not incorporated by reference herein. These filings are available promptly after we file
them with, or furnish them to, the SEC.
ITEM 1A. RISK FACTORS
Below are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our
forward-looking statements. The risks and uncertainties described below are not the only ones we face but do represent those risks
and uncertainties that we believe are material to our business, operating results, prospects, and financial condition. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial may also harm our business.
Risks Related to Our Business and Properties
If we are unable to find suitable investments or pay too much for properties, we may not be able to achieve our investment objectives,
and the returns on our investments will be lower than they otherwise would be.
We are competing for real estate investments with other REITs; real estate limited partnerships; pension funds and their advisors;
bank and insurance company investment accounts; individuals; non U.S. investors; and other entities. The market for high-quality
commercial real estate assets is highly competitive, given how infrequently those assets become available for purchase. As a result,
many real estate investors, including us, face aggressive competition to purchase quality office real estate assets. A significant
number of entities and resources competing for high-quality office properties support relatively high acquisition prices for such
properties, which may reduce the number of acquisition opportunities available to, or affordable for, us and could put pressure on
our profitability and our ability to pay distributions to stockholders. We cannot be sure that we will be successful in obtaining
suitable investments on financially attractive terms or that, if we make investments, our objectives will be achieved.
Economic conditions may cause the creditworthiness of our tenants to deteriorate and occupancy and market rental rates to
decline.
Although U.S. macroeconomic conditions continued to be relatively stable during 2017, several economic factors, including
increases in interest rates, may adversely affect the financial condition and liquidity of many businesses, as well as the demand
for office space generally. Should economic conditions worsen, our tenants' ability to honor their contractual obligations may
suffer. Further, it may become increasingly difficult to maintain our occupancy rate and achieve future rental rates comparable to
the rental rates of our currently in-place leases as we seek to re-lease space and/or renew existing leases.
Our office properties were approximately 96.2% leased at December 31, 2017, and provisions for uncollectible tenant receivables,
net of recoveries, were less than 0.1% of total revenues for the year then ended. As a percentage of 2017 annualized lease revenue,
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approximately 2% of leases expire in 2018, 3% of leases expire in 2019, and 7% of leases expire in 2020 (see Item 2, Properties).
No assurances can be given that economic conditions will not have a material adverse effect on our ability to re-lease space at
favorable rates or on our ability to maintain our current occupancy rate and our low provisions for uncollectible tenant receivables.
Changes in general economic conditions and regulatory matters germane to the real estate industry may cause our operating
results to suffer and the value of our real estate properties to decline.
Our operating results are subject to risks generally incident to the ownership of real estate, including:
•
•
•
•
•
•
•
•
changes in general or local economic conditions;
changes in supply of or demand for similar or competing properties in an area;
changes in interest rates and availability of permanent mortgage funds, which may render the sale of a property difficult
or unattractive;
inability to finance property redevelopment or acquisitions on favorable terms;
the relative illiquidity of real estate investments;
changes in space utilization by our tenants due to technology, economic conditions, and business culture;
changes in tax, real estate, environmental, and zoning laws; and
periods of rising or higher interest rates and tight money supply.
These and other reasons may prevent us from being profitable or from realizing growth or maintaining the value of our real estate
properties.
We are dependent upon the economic climates of our markets - New York; San Fransisco; Washington, D.C.; Boston; and Atlanta.
In addition, market and economic conditions in the metropolitan areas in which we derive a substantial portion of our revenue
such as New York City, New York; San Francisco, California; Washington, D.C.; Boston, Massachusetts; and Atlanta, Georgia,
may have a significant impact on our overall occupancy levels and rental rates and, therefore, our profitability. Furthermore, our
business strategy involves continued focus on select core markets, which will increase the impact of the local economic conditions
in such markets on our results of operations in future periods. These and other reasons may prevent us from being profitable or
from realizing growth or maintaining the value of our real estate properties.
We depend on tenants for our revenue, and lease defaults or terminations could negatively affect our financial condition and results
of operations and limit our ability to make distributions to our stockholders.
The success of our investments materially depends on the financial stability of our tenants. A default or termination by a significant
tenant on its lease payments to us would cause us to lose the revenue associated with such lease and require us to find an alternative
source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage, could cause us
to violate our bank debt covenants, or impact our credit rating. In the event of a tenant default or bankruptcy, we may experience
delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-letting our property.
If a tenant defaults on or terminates a significant lease, we may be unable to lease the property for the rent previously received or
sell the property without incurring a loss. In addition, significant expenditures for our properties and our company, such as real
estate taxes, insurance and maintenance costs, together with general and administrative costs and debt payments, do not decrease
when revenues decrease. Therefore, these events could have a material adverse effect on our results of operations or cause us to
reduce the amount of distributions to stockholders.
Future acquisitions may fail to perform in accordance with our expectations, may require renovation costs exceeding our estimates
or expose us to unknown liabilities, and may be located in new markets where we may face risks associated with investing in an
unfamiliar market.
In the normal course of business, we typically evaluate potential acquisitions, enter into nonbinding letters of intent, and may, at
any time, enter into contracts to acquire additional properties. Acquired properties may fail to perform in accordance with our
expectations due to lease-up risk, renovation cost risks, and other factors. In addition, the renovation and improvement costs we
incur in bringing an acquired property up to market standards may exceed our estimates. We may not have the financial resources
to make suitable acquisitions or renovations on favorable terms or at all. The properties we acquire may be subject to liabilities
for which we have no recourse, or only limited recourse, against the prior owners or other third parties with respect to unknown
liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay
substantial sums to settle or contest it, which could adversely affect our results of operations and cash flow. Unknown liabilities
with respect to acquired properties might include:
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liabilities for clean-up of undisclosed environmental contamination;
claims by tenants, vendors, or other persons against the former owners of the properties;
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•
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liabilities incurred in the ordinary course of business; and
claims for indemnification by general partners, directors, officers, and others indemnified by the former owners of the
properties.
Furthermore, we may acquire properties located in markets in which we do not have an established presence. We may face risks
associated with a lack of market knowledge or understanding of the local economy, forging new business relationships in the area,
and unfamiliarity with local government and permitting procedures. As a result, the operating performance of properties acquired
in new markets may be less than we anticipate, and we may have difficulty integrating such properties into our existing portfolio.
In addition, the time and resources that may be required to obtain market knowledge and/or integrate such properties into our
existing portfolio could divert our management's attention from our existing business or other attractive opportunities in our
established markets.
Real estate investments are illiquid; our inability to sell a property when we plan to do so could limit our operational and financial
flexibility, including our ability to pay cash distributions to our stockholders.
Because real estate investments are relatively illiquid, our ability to sell promptly one or more properties in our portfolio in response
to changing economic, financial, and investment conditions may be limited. Purchasers may not be willing to pay acceptable prices
for properties that we wish to sell. General economic conditions, availability of financing, interest rates, and other factors, including
supply and demand, all of which are beyond our control, affect the real estate market. Therefore, we may be unable to sell a property
for the price, on the terms, or within the time frame that we want. That inability could reduce our cash flow and cause our results
of operations to suffer, limiting our ability to make distributions to our stockholders. Furthermore, our properties' market values
depend principally upon the value of the properties' leases. A property may incur vacancies either by the default of tenants under
their leases or the expiration of tenant leases. If vacancies occur and continue for a prolonged period of time, it may become
difficult to locate suitable buyers for any such property, and property resale values may suffer, which could result in lower returns
for our stockholders.
Uninsured losses relating to real property or excessively expensive premiums for insurance coverage could reduce our net income,
and materially and adversely affect our business or financial condition.
We may incur losses from time to time that are uninsurable or not economically feasible to insure, or may be insured subject to
limitations, such as large deductibles or co-payments. Some of these losses could be catastrophic in nature, such as losses due to
earthquakes, acts of terrorism, fire, floods, tornadoes, hurricanes, pollution, wars, or environmental matters. For example, we have
properties located in San Francisco, California, an area especially susceptible to earthquakes, and, collectively, these properties
represent approximately 28% of our 2017 annualized lease revenue, as described in Item 2, Properties. Because several of these
properties are located in close proximity to one another, an earthquake in the San Francisco area could materially damage, destroy,
or impair the use by tenants of all of these properties. Furthermore, insurance risks associated with potential terrorist acts could
sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some
cases insist that commercial property owners purchase coverage against terrorism as a condition of providing mortgage loans.
Such insurance policies may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance
our properties. In such instances, we may be required to provide other financial support, either through financial assurances or
self-insurance, to cover potential losses. In addition, we may not have adequate coverage for losses. If any of our properties incur
a loss that is not fully insured, the value of that asset will be reduced by such uninsured loss. Furthermore, other than any working
capital reserves or other reserves that we may establish, or our existing line of credit, we do not have additional sources of funding
specifically designated for repairs or reconstruction of any our properties. To the extent we incur significant uninsured losses, or
are required to pay unexpectedly large amounts for insurance, our results of operations or financial condition could be adversely
affected.
If we are unable to fund the future capital needs of our properties, cash distributions to our stockholders and the value of our
investments could decline.
When tenants do not renew their leases or otherwise vacate their space, we often need to expend substantial funds for tenant
improvements to the vacated space in order to attract replacement tenants. In addition, although we expect that our leases with
tenants will require tenants to pay routine property maintenance costs, we will likely be responsible for any major structural repairs,
such as repairs to the foundation, exterior walls, and rooftops.
If we need significant capital in the future to improve or maintain our properties or for any other reason, we will have to obtain
financing from sources such as cash flow from operations, borrowings, property sales, or future equity offerings. These sources
of funding may not be available on attractive terms or at all. If we cannot procure the necessary funding for capital improvements,
our investments may generate lower cash flows or decline in value, or both, which would limit our ability to make distributions
to our stockholders.
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We have incurred and are likely to continue to incur mortgage and other indebtedness, which may increase our business risks.
As of February 2, 2018, our total consolidated indebtedness was approximately $1.5 billion, which includes a $150.0 million term
loan, $700.0 million of bonds, and $71.9 million of mortgage loans, all with fixed interest rates, or with interest rates that are
effectively fixed when considered in connection with an interest rate swap agreement; and $180.0 million outstanding on a bridge
loan, a $300.0 million term loan, and $60.0 million in outstanding borrowings on our line of credit, all with variable interest rates.
We are likely to incur additional indebtedness to acquire properties, to fund property improvements and other capital expenditures,
to pay our distributions, and for other purposes.
Significant borrowings by us increase the risks of an investment in us. If there is a shortfall between the cash flow from properties
and the cash flow needed to service our indebtedness, then the amount available for distributions to stockholders may be reduced.
In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in
lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default. If any of our
properties are foreclosed due to a default, our ability to pay cash distributions to our stockholders will be limited. For tax purposes,
a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance
of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the
property, we would recognize taxable income on foreclosure, but we would not receive any cash proceeds. We may give full or
partial guarantees to lenders of mortgage debt on behalf of the entities that own our properties. When we give a guaranty on behalf
of an entity that owns one of our properties, we are responsible to the lender for satisfaction of the debt if it is not paid by such
entity.
If any mortgages or other indebtedness contain cross-collateralization or cross-default provisions, a default on a single loan could
affect multiple properties. Our unsecured credit facility (the "Revolving Credit Facility") and our three unsecured term loan facilities,
each include a cross-default provision that provides that a payment default under any recourse obligation of $50 million or more
by us, Columbia Property Trust OP, or any of our subsidiaries, constitutes a default under the line of credit and term loan facilities.
Increases in interest rates could increase the amount of our debt payments and make it difficult for us to refinance our unsecured
bank debt or bonds, to finance or refinance properties, which could reduce the number of properties we can acquire, our net
income, and the amount of cash distributions we can make.
We expect to incur additional indebtedness in the future, which may include mortgages, unsecured bonds, term loans, or borrowings
under a credit facility. Increases in interest rates will increase interest costs on our variable-interest debt instruments, which would
reduce our cash flows and our ability to pay distributions. If mortgage debt is unavailable at reasonable interest rates, we may not
be able to finance the purchase of properties. If we place mortgage debt on properties, we run the risk of being unable to refinance
the properties when the loans become due, or of being unable to refinance on favorable terms. In addition, if we need to repay
existing debt during periods of higher interest rates, we may need to sell one or more of our investments in order to repay the debt,
which sale at that time might not permit realization of the maximum return on such investments. If any of these events occur, our
cash flow would be reduced. This, in turn, would reduce cash available for distribution to our stockholders and may hinder our
ability to raise capital in the future through additional borrowings or debt or equity offerings. For additional information, please
refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, for additional information regarding interest rate
risk.
Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make
distributions to our stockholders.
When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability
to incur additional debt. Loan documents we enter into may contain covenants that limit our ability to further mortgage the property
or discontinue insurance coverage. These or other limitations may limit our flexibility and our ability to execute on our operating
plans.
A downgrade in the credit rating of our debt could materially adversely affect our business and financial condition.
Our senior unsecured debt is rated investment grade by Standard & Poor's Corporation and Moody's Investors Service. In
determining our credit ratings, the rating agencies consider a number of both quantitative and qualitative factors, including earnings,
fixed charges, cash flows, total debt outstanding, total secured debt, off balance sheet obligations, total capitalization, and various
ratios calculated from these factors. The rating agencies also consider predictability of cash flows, business strategy, property
development risks, industry conditions, and contingencies. Therefore, any deterioration in our operating performance could cause
our investment-grade rating to come under pressure. Our corporate credit rating at Standard & Poor's Ratings Service is currently
"BBB" with a stable outlook, and our corporate credit rating at Moody's Investor Service is currently "Baa2" with a stable outlook.
There can be no assurance that our credit ratings will not be lowered or withdrawn in their entirety. A negative change in our ratings
outlook or any downgrade in our current investment-grade credit ratings by rating agencies could adversely affect our cost and
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access to sources of liquidity and capital. Additionally, a downgrade could, among other things, increase the costs of borrowing
under our credit facility and term loan, adversely impact our ability to obtain unsecured debt or refinance our unsecured debt on
competitive terms in the future, or require us to take certain actions to support our obligations, any of which would adversely affect
our business and financial condition.
A breach of our privacy or information security systems could materially adversely affect our business and financial condition.
Privacy and information security risks have generally increased in recent years because of the proliferation of new technologies
and the increased sophistication and activities of perpetrators of cyber attacks. As our reliance on technology has increased, so
have the risks to our systems, both internal and those we have outsourced. Risks that could directly result from the occurrence of
a cyber incident include operational interruption, damage to our relationships with our tenants, potential errors from misstated
financial reports, missed reporting deadlines, and private data exposure, among others. Any or all of the preceding risks could
have a material adverse effect on our results of operations, financial condition, and cash flows. Although we make efforts to
maintain the security and integrity of these types of information technology networks and related systems, there can be no assurance
that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful
or damaging. As cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our
information security measures and to investigate and remediate any information security vulnerabilities.
We are and may continue to be subject to litigation, which could have a material adverse effect on our financial condition.
We currently are, and are likely to continue to be, subject to a variety of claims arising in the ordinary course of business, including
contract claims and claims alleging violations of federal and state law regarding workplace and employment matters, discrimination,
and similar matters. Some of these claims may result in significant defense costs and potentially significant judgments against us,
some of which are not, or cannot be, insured against. Although we defend ourselves against any such claims, we cannot be certain
of the ultimate outcomes of currently asserted claims or of those that arise in the future. Resolution of these types of matters against
us may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and
settlements exceed insured levels, would adversely impact our earnings and cash flows, thereby impacting our ability to service
debt and make distributions to our stockholders.
Costs of complying with governmental laws and regulations may reduce our net income and the cash available for distributions
to our stockholders.
All real property and the operations conducted on real property are subject to federal, state, and local laws and regulations relating
to environmental protection and human health and safety. Some of these laws and regulations may impose joint and several liability
on tenants, owners, or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether
the acts causing the contamination were legal. In addition, the presence of hazardous substances, or the failure to properly remediate
these substances, may hinder our ability to sell, rent, or pledge such property as collateral for future borrowings.
Compliance with new laws or regulations, or stricter interpretation of existing laws may require us to incur material expenditures.
Future laws, ordinances, or regulations may impose material environmental liability. Additionally, our tenants' operations, the
existing condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage
tanks or activities of unrelated third parties may affect our properties. Furthermore, there are various local, state, and federal
regulatory requirements, such as fire, health, life-safety, and similar regulations, and the Americans with Disabilities Act, with
which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance.
Any material expenditures, fines, or damages we must pay would adversely impact our earnings and cash flows, thereby impacting
our ability to service debt and make distributions to our stockholders.
Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result
in substantial costs.
The Americans with Disabilities Act generally requires that certain buildings, including office buildings, be made accessible to
disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to
private litigants. If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital
expenditures in one or more of our properties, including the removal of access barriers, it could adversely impact our earnings and
cash flows, thereby impacting our ability to service debt and make distributions to our stockholders.
Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety
requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know
whether existing requirements will change or whether compliance with future requirements will require significant unanticipated
expenditures that will affect our cash flow and results of operations.
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Discovery of previously undetected environmentally hazardous conditions may decrease our revenues and limit our ability to make
distributions.
Under various federal, state, and local environmental laws, ordinances, and regulations, a current or previous real property owner
or operator may be liable for the cost to remove or remediate hazardous or toxic substances on, under, or in such property. These
costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for,
the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which
property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us
from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions
for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain
environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances,
including asbestos-containing materials. Third parties may seek recovery from real property owners or operators for personal injury
or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability,
of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury
claims could have an adverse impact on our business and results of operations.
Property ownership through joint ventures may limit our ability to act exclusively in our interest.
We have entered into five joint venture arrangements and in the future may acquire properties in, or contribute properties to, joint
ventures with other persons or entities when we believe circumstances warrant the use of such structures. We could become engaged
in a dispute with one or more of our joint venture partners, which might affect our ability to operate a jointly-owned property.
Moreover, joint venture partners may have business, economic, or other objectives that are inconsistent with our objectives,
including objectives that relate to the appropriate timing and terms of any sale or refinancing of a property. In some instances,
joint venture partners may have competing interests in our markets that could create conflicts of interest. Also, our joint venture
partners might refuse to make capital contributions when due, and we may be responsible to our partners for indemnifiable losses.
We and our partners may each have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire
our partners' interest, at a time when we otherwise would not have initiated such a transaction and may result in the valuation of
our interest in the joint venture (if we are the seller) or of the other partner's interest in the joint venture (if we are the buyer) at
levels which may not be representative of the valuation that would result from an arm's length marketing process. We are also
subject to risk in cases where an institutional owner is our joint venture partner, including (i) a deadlock if we and our joint venture
partner are unable to agree upon certain major and other decisions, (ii) the limitation of our ability to liquidate our position in the
joint venture without the consent of the other joint venture partner, and (iii) the requirement to provide guarantees in favor of
lenders with respect to the indebtedness of the joint venture.
If we sell properties and provide financing to purchasers, defaults by the purchasers would decrease our cash flows and limit our
ability to make distributions.
In some instances we may sell our properties by providing financing to purchasers. When we provide financing to purchasers, we
will bear the risk that the purchaser may default, which could negatively impact our liquidity and results of operations. Even in
the absence of a purchaser default, the distribution of the proceeds of sales to our stockholders, or the reinvestment of proceeds
in other assets, will be delayed until the promissory notes or other property we may accept upon a sale are actually paid, sold,
refinanced, or otherwise disposed.
We are dependent on our executive officers and employees.
We rely on a small number of persons, particularly E. Nelson Mills and James A. Fleming, to carry out our business and investment
strategies. Any of our senior management, including Messrs. Mills and Fleming, may cease to provide services to us at any time.
The loss of the services of any of our key management personnel or our inability to recruit and retain qualified personnel in the
future, could have an adverse effect on our business and financial results. We will continue to try to attract and retain qualified
additional senior management and other employees, but may not be able to do so on acceptable terms.
Our operating results may suffer because of potential development and construction risks and delays and resultant increased costs.
We may acquire and redevelop properties, including unimproved real estate, upon which we will construct improvements. We will
be subject to uncertainties associated with rezoning for development and our ability to obtain required permits and authorizations;
environmental concerns of governmental entities and/or community groups; and our contractors' abilities to build in conformity
with plans, specifications, budgeted costs, and timetables. If a contractor fails to perform, we may resort to legal action to rescind
the purchase or the construction contract or to compel performance. A contractor's performance may also be affected or delayed
by conditions beyond the contractor's control, and we may incur additional risks when we make periodic progress payments or
other advances to contractors before they complete construction. Delays in completing construction could also give tenants the
right to terminate preconstruction leases. These and other factors can result in increased costs of a project or loss of our investment.
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In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We must rely on rental income and
expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a
purchase price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and our
return on our investment could suffer.
If our disclosure controls or internal control over financial reporting are not effective, investors could lose confidence in our
reported financial information, which could adversely affect the perception of our business and the trading price of our common
stock.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate the effectiveness of our internal control over financial
reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of our internal control
over financial reporting. Deficiencies, including any material weakness, in our internal control over financial reporting that may
occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in
the trading price of our common stock, or otherwise materially adversely affect our business, reputation, results of operations,
financial condition, or liquidity.
Risks Related to Ownership of Our Common Stock
We may be unable to pay or maintain cash distributions or increase distributions over time, which could reduce the funds we have
available for investment and the return to our investors.
There are many factors that can affect the availability and timing of distributions to stockholders. We expect to continue to fund
distributions principally from cash flow from operations; however, from time to time, we may elect to fund a portion of our
distributions from borrowings. If we fund distributions from financings, we will have fewer funds available for the investment in,
and acquisition of, properties; thus, the overall return to our investors may be reduced. We can give no assurance that we will be
able to pay or maintain cash distributions or increase distributions over time.
Our stock price may be volatile or may decline regardless of our operating performance, and may impede our stockholders' ability
to sell their shares at a desirable price.
The market price of our common stock may vary significantly in response to a number of factors, most of which we cannot control,
including those described under this section and the following:
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changes in capital market conditions that could affect valuations of real estate companies in general or other adverse
economic conditions;
our failure to meet any earnings estimates or expectations;
future sales of our common stock by our officers, directors, and significant stockholders;
global economic, legal, and regulatory factors unrelated to our performance;
investors' perceptions of our prospects;
announcements by us or our competitors of significant contracts, acquisitions, joint ventures, or capital commitments;
and
investor perceptions of the investment opportunity associated with our common stock relative to other investment
alternatives.
In addition, from time to time, the New York Stock Exchange (the "NYSE"), has experienced extreme price and volume fluctuations
that have affected the market prices of equity securities of many real estate companies. In the past, stockholders have instituted
securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur
substantial costs, and our resources and the attention of management could be diverted from our business. Furthermore, we currently
have limited research coverage by securities and industry analysts. If additional securities or industry analysts do not commence
coverage of our company, the long-term trading price for our common stock could be negatively impacted. If one or more of
present or future analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our
business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on
us regularly, demand for our common stock could decrease, which could cause our stock price and trading volume to decline.
Our charter limits the number of shares a person may own, which may discourage a takeover that could otherwise result in a
premium price to our stockholders.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our
qualification as a REIT. Unless exempted by our board of directors, no person may own more than 9.8% of our outstanding common
stock. This restriction may have the effect of delaying, deferring, or preventing a change in control, including an extraordinary
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transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price for
holders of our common stock.
Our organizational documents contain provisions that may discourage a takeover of us and could depress the price of our shares
of common stock.
Our organizational documents contain provisions that may discourage a takeover of us and could depress the price of our common
stock. Our organizational documents contain provisions that may have an anti-takeover effect, inhibit a change of our management,
or inhibit, in certain circumstances, tender offers for our common stock or proxy contests to change our board. These provisions
include: ownership limits and restrictions on transferability that are intended to enable us to continue to qualify as a REIT; broad
discretion of our board to take action, without stockholder approval, to issue new classes of securities that may discourage a third
party from acquiring us; the ability, through board action or bylaw amendment to opt-in to certain provisions of Maryland law that
may impede efforts to effect a change in control of us; advance notice requirements for stockholder proposals and stockholder
nominations of directors; and the absence of cumulative voting rights.
In addition, our board of directors may classify or reclassify any unissued preferred stock and establish the preferences; conversion;
or other rights, voting powers, restrictions, or limitations as to distributions, qualifications, and terms or conditions of redemption
of any such stock. Thus, our board of directors could authorize the issuance of preferred stock with terms and conditions that could
have priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such
preferred stock could also have the effect of delaying, deferring, or preventing a change in control of us, including an extraordinary
transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price to
holders of our common stock.
Maryland General Corporation Law provides certain protections relating to deterring or defending hostile takeovers, which may
discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their
stock in connection with a business combination.
Our board of directors has determined to opt out of certain provisions of Maryland law that may impede efforts to effect a change
in control of us as further described below; in the case of the business combination provisions of Maryland law, by resolution of
our board of directors; in the case of the control share provisions of Maryland law, pursuant to a provision in our bylaws; and in
the case of certain provisions of the Maryland Unsolicited Takeover Act, pursuant to Articles Supplementary. Only upon stockholder
approval of an amendment to our Articles of Incorporation, may our board of directors repeal the foregoing opt-outs from the anti-
takeover provisions of Maryland General Corporation Law.
Under Maryland law, "business combinations" between a Maryland corporation and certain interested stockholders or affiliates
of interested stockholders are prohibited for five years after the most recent date on which the interested stockholder becomes an
interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified
in the statute, an asset transfer or issuance or reclassification of equity securities. Also under Maryland law, control shares of a
Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-
thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation, or an employee of
the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control
shares. These provisions may therefore discourage others from trying to acquire control of us and increase the difficulty of
consummating any offer. Similarly, provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law, commonly referred
to as the "Maryland Unsolicited Takeover Act," could provide similar anti-takeover protection.
Federal Income Tax Risks
Failure to qualify as a REIT would reduce our net income and cash available for distributions.
Our qualification as a REIT depends upon our ability to meet requirements regarding our organization and ownership, distributions
of our income, the nature and diversification of our income and assets, and other tests imposed by the Internal Revenue Code (the
"Code"). If we fail to qualify as a REIT for any taxable year, we will be subject to federal and state income tax on our taxable
income at corporate rates, including interest and any applicable penalties. In addition, we would generally be disqualified from
treatment as a REIT for the four taxable years following the year of losing our REIT status. Losing our REIT status would reduce
our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition,
distributions to stockholders would no longer qualify for the dividends-paid deduction, and we would no longer be required to
make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable
tax.
Recharacterization of sale-leaseback transactions may cause us to lose our REIT status, which would reduce the return to our
stockholders.
Page 14
We may purchase properties and lease them back to the sellers of such properties. While we will use our best efforts to structure
any such sale-leaseback transaction such that the lease will be characterized as a "true lease," thereby allowing us to be treated as
the owner of the property for federal income tax purposes, we can give no assurance that the Internal Revenue Service will not
challenge such characterization. In the event that any such sale-leaseback transaction is challenged and recharacterized as a financing
transaction or loan for federal income tax purposes, deductions for depreciation and cost recovery relating to such property would
be disallowed. If a sale-leaseback transaction were so recharacterized, we might fail to satisfy the REIT qualification asset tests
or income tests and, consequently, lose our REIT status. Alternatively, the amount of our REIT taxable income could be recalculated,
which might also cause us to fail to meet the distribution requirement for a taxable year.
Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow
and our ability to make distributions to our stockholders.
Even if we remain qualified as a REIT for federal income tax purposes, we may be subject to some federal, state, and local taxes
on our income or property. For example:
•
In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders
(which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the
distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal and state
corporate income tax on the undistributed income.
• We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar
year are less than the sum of 85% of our ordinary income, 95% of our capital gains net income, and 100% of our
undistributed income from prior years.
•
•
If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary
course of business or other nonqualifying income from foreclosure property, we must pay a tax on that income at the
highest corporate income tax rate.
If we sell a property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course
of business, our gain would be subject to the 100% "prohibited transaction" tax.
• We may perform additional, noncustomary services for tenants of our buildings through our taxable REIT subsidiary,
including real estate or non-real-estate-related services; however, any earnings related to such services are subject to
federal and state income taxes.
Legislative or regulatory action could adversely affect investors.
In recent years, numerous legislative, judicial, and administrative changes have been made in the provisions of federal and state
income tax laws applicable to investments similar to an investment in our shares. In particular, H.R. 1, which generally takes effect
for taxable years beginning on or after January 1, 2018 (subject to certain exceptions), makes many significant changes to the U.S.
federal income tax laws that will profoundly impact the taxation of individuals and corporations (including both regular C
corporations and corporations that have elected to be taxed as REITs). A number of changes that affect noncorporate taxpayers
will expire at the end of 2025 unless Congress acts to extend them. These changes will impact us and our shareholders in various
ways, some of which are adverse or potentially adverse compared to prior law. To date, the IRS has issued only limited guidance
with respect to certain of the new provisions, and there are numerous interpretive issues that will require guidance. It is highly
likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to
Congressional intent. There can be no assurance, however, that technical clarifications or changes needed to prevent unintended
or unforeseen tax consequences will be enacted by Congress in the near future. Additional changes to tax laws are likely to continue
to occur in the future, and we cannot assure investors that any such changes will not adversely affect the taxation of our stockholders.
Any such changes could have an adverse effect on an investment in shares or on the market value or the resale potential of our
properties. Investors are urged to consult with their own tax advisor with respect to the impact of recent legislation on ownership
of shares and the status of legislative, regulatory, or administrative developments and proposals, and their potential effect on
ownership of shares.
To maintain our REIT status, we may be forced to borrow funds or dispose of assets during unfavorable market conditions to make
distributions to our stockholders, which could increase our operating costs and decrease the value of an investment in us.
We intend to make distributions to our stockholders to comply with the requirements of the Code for REITs and to minimize or
eliminate our corporate tax obligations; however, differences between the recognition of taxable income and the actual receipt of
cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the distribution requirements of the
Code. Certain types of assets generate substantial disparity between taxable income and available cash, such as real estate that has
been financed through financing structures which require some or all of available cash flows to be used to service borrowings. In
addition, changes made by H.R. 1 will require us to accrue certain income for U.S. federal income tax purposes no later than when
such income is taken into account as revenue on our financial statements (subject to an exception for certain income that is already
Page 15
subject to a special method of accounting under the Internal Revenue Code). This could cause us to recognize taxable income prior
to the receipt of the associated cash. H.R. 1 also includes limitations on the deductibility of certain compensation paid to our
executives, certain interest payments, and certain net operating loss carryforwards, each of which could potentially increase our
taxable income and our required distributions. As a result, the requirement to distribute a substantial portion of our taxable income
could cause us to: (1) sell assets in adverse market conditions, (2) borrow on unfavorable terms, or (3) distribute amounts that
would otherwise be invested in future acquisitions, capital expenditures, or repayment of debt, in order to comply with REIT
requirements. Any such actions could increase our costs and reduce the value of our common stock. Further, we may be required
to make distributions to our stockholders when it would be more advantageous to reinvest cash in our business or when we do not
have funds readily available for distribution. Compliance with REIT qualification requirements may, therefore, hinder our ability
to operate solely on the basis of maximizing profits.
To maintain our REIT status, we may be forced to forego otherwise attractive opportunities, which could delay or hinder our ability
to meet our investment objectives and lower the return to our stockholders.
To qualify as a REIT, we must satisfy tests on an ongoing basis concerning, among other things, the sources of our income, the
nature of our assets, and the amounts we distribute to our stockholders. We may be required to make distributions to stockholders
at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for
distribution. Compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTIES
Overview
As of December 31, 2017, we owned 19 operating properties, of which 14 were wholly owned and five were owned through
unconsolidated joint ventures. These properties are located primarily in New York, San Francisco, Washington, D.C., and Atlanta
and were approximately 96.2% leased as of December 31, 2017.
Property Statistics
The tables below include statistics for the 14 operating properties that we own directly and our proportional share of the annualized
lease revenue and rentable square feet for the five properties we own through unconsolidated joint ventures. Annualized lease
revenue is an operating metric, calculated as (i) annualized rental payments (defined as base rent plus operating expense
reimbursements, excluding rental abatements) for executed and commenced leases as of December 31, 2017, as well as leases
executed but not yet commenced for vacant space, and (ii) annualized parking revenues, payable either under the terms of an
executed lease or vendor contract ("Annualized Lease Revenue"). Annualized Lease Revenue excludes rental payments for executed
leases that have not yet commenced for space covered by an existing lease.
Page 16
The following table shows lease expirations of our office properties as of December 31, 2017, during each of the next 10 years
and thereafter. This table assumes no exercise of renewal options or termination rights.
Year of Lease Expiration
Rentable
Square Feet
(in thousands)
2017 Annualized
Lease Revenue
(in thousands)
Percentage of
2017 Annualized
Lease Revenue
Vacant
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Thereafter
307
$
94
167
532
1,787
475
529
256
783
786
185
2,257
8,158
$
—
6,315
12,583
25,317
64,317
24,978
31,631
18,701
56,036
35,399
13,777
94,123
383,177
—%
2%
3%
7%
17%
7%
8%
5%
15%
9%
4%
23%
100%
The following table shows the geographic locations of our office properties as of December 31, 2017. For more information about
our geographic locations, see Note 14, Segment Information, of the accompanying consolidated financial statements.
Location
New York
San Francisco
Washington, D.C.
Atlanta
Boston
Los Angeles
Other
Leased
Square Feet
(in thousands)
2017 Annualized
Lease Revenue
(in thousands)
Percentage of
2017 Annualized
Lease Revenue
$
$
2,388
1,663
846
1,656
225
249
824
7,851
147,318
106,747
53,696
40,509
12,081
8,256
14,570
383,177
38%
28%
14%
11%
3%
2%
4%
100%
The following table shows the industry breakdown of our office tenants as of December 31, 2017.
Industry
Business Services
Depository Institutions
Engineering & Management Services
Communications
Legal Services
Nondepository Institutions
Health Services
Electric, Gas, and Sanitary Services
Security & Commodity Brokers
Real Estate
Other(1)
Leased
Square Feet
(in thousands)
2017 Annualized
Lease Revenue
(in thousands)
Percentage of
2017 Annualized
Lease Revenue
$
$
1,281
1,021
495
1,010
303
388
476
877
160
200
1,640
7,851
88,033
42,242
28,591
26,135
23,305
22,752
21,395
17,954
11,594
11,062
90,114
383,177
23%
11%
8%
7%
6%
6%
6%
5%
3%
3%
22%
100%
(1) No more than 2% is attributable to any individual industry.
Page 17
The following table shows the major tenants of our operating properties as of December 31, 2017.
Tenant
AT&T
Wells Fargo
Pershing
Twitter
NYU
Westinghouse Electric
Yahoo!
Other(1)
2017 Annualized
Lease Revenue
(in thousands)
Percentage of
2017 Annualized
Lease Revenue
$
$
22,579
20,522
18,251
15,894
15,277
14,570
14,556
261,528
383,177
6%
5%
5%
4%
4%
4%
4%
68%
100%
(1) No more than 2% is attributable to any individual tenant.
ITEM 3.
LEGAL PROCEEDINGS
From time to time, we are party to legal proceedings, which arise in the ordinary course of our business. We are not currently
involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of
operations or financial condition, nor are we aware of any such legal proceedings contemplated by governmental authorities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Page 18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Holders
Our common stock was listed on the NYSE, on October 10, 2013 under the symbol "CXP." Prior to October 10, 2013, our common
stock was not listed on a national securities exchange, and there was no established public trading market for our shares. As of
January 31, 2018, we had approximately 119.9 million shares of common stock outstanding held by approximately 54,000
stockholders of record.
The closing high and low prices for our stock and dividends declared during 2017 and 2016 were as follows:
2017 Quarters:
First
Second
Third
Fourth
2016 Quarters:
First
Second
Third
Fourth
Distributions
High
Low
Dividends
$
$
$
$
$
$
$
$
23.43
23.13
22.63
23.16
23.20
22.77
24.63
22.22
$
$
$
$
$
$
$
$
21.20
21.45
20.62
20.94
19.81
20.20
21.24
20.47
$
$
$
$
$
$
$
$
0.20
0.20
0.20
0.20
0.30
0.30
0.30
0.30
We intend to make distributions each taxable year (not including a return of capital for federal income tax purposes) equal to at
least 90% of our taxable income. One of our primary goals is to pay regular quarterly distributions to our stockholders. The amount
of distributions paid and the taxable portion thereof in prior periods are not necessarily indicative of amounts anticipated in future
periods.
The amount of distributions to common stockholders is determined by our board of directors and is dependent upon a number of
factors including funds deemed available for distribution, based principally on our current and future projected operating cash
flows, reduced by capital requirements necessary to maintain our existing portfolio. In determining the amount of distributions to
common stockholders, we also consider our future capital needs and future sources of liquidity, as well as the annual distribution
requirements necessary to maintain our status as a REIT under the Code. Investments in new property acquisitions and first-
generation capital improvements, as well as equity repurchases, are generally funded with recycled capital proceeds from property
sales, debt, or cash on hand.
Page 19
Performance Graph
The following graph compares the cumulative total return of our common stock with the S&P 500 Index, Morgan Stanley REIT
Index, and the FTSE NAREIT US Real Estate Index for the period beginning on October 10, 2013 (the date of our initial listing
on the NYSE) through December 31, 2016. Beginning with the year-ended December 31, 2017, we have selected the FTSE
NAREIT Equity Office Index to replace the FTSE NAREIT US Real Estate Index to measure our relative total stockholder return.
The FTSE NAREIT Equity Office Index is used as the basis for measuring our equity compensation. The graph assumes a $100
investment in each of the indices on October 10, 2013, and the reinvestment of all dividends.
Index
Columbia Property
Trust
S&P 500 Index
Morgan Stanley
REIT Index
FTSE NAREIT US
Real Estate Index
FTSE NAREIT
Equity Office Index
$
$
$
$
$
October 10,
2013
December 31,
2013
December 31,
2014
December 31,
2015
December 31,
2016
December 31,
2017
100.00
100.00
100.00
100.00
100.00
$
$
$
$
$
112.10
109.70
97.70
97.68
99.42
$
$
$
$
$
119.00
124.70
127.38
127.40
125.13
$
$
$
$
$
`
115.70
126.40
130.60
131.30
125.49
$
$
$
$
$
112.50
141.50
141.90
141.60
142.01
$
$
$
$
$
124.00
172.40
149.00
147.10
149.46
Page 20
Share Repurchases
Our board of directors approved a stock repurchase program, which authorized us to buy up to $200 million of our common stock
from September 4, 2015 through September 4, 2017 (the "2015 Stock Repurchase Program"); and our board of directors authorized
a second stock repurchase program to purchase up to an aggregate of $200.0 million of our common stock from September 4,
2017 through September 4, 2019 (the "2017 Stock Repurchase Program").
During the quarter ended December 31, 2017, we did not purchase or retire any shares in accordance with the 2017 Stock Repurchase
Program. Activity relates to the remittance of shares for income taxes associated with accelerated vesting under the LTIP (see Note
8, Equity, to the accompanying consolidated financial statements).
Period
October 2017
November 2017(1)
December 2017(1)
Total Number
of Shares
Purchased
Average
Price Paid
per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plan
Maximum
Approximate Dollar
Value Available for
Future Purchase(2)
— $
336
15,885
$
$
—
22.77
22.95
— $
— $
— $
194,826,742
194,826,742
194,826,742
(1) All activity for November and December 2017 relates to the remittance of shares for income taxes associated with accelerated vesting
of certain stock grants made under the LTIP (See Note 8, Equity, to the accompanying consolidated financial statements).
(2) Amounts available for future purchase relate only to our 2017 Stock Repurchase Program and represent the remainder of the $200
million authorized by our board of directors for share repurchases.
Page 21
ITEM 6.
SELECTED FINANCIAL DATA
The following selected financial data for 2017, 2016, 2015, 2014, and 2013 should be read in conjunction with the accompanying
consolidated financial statements and related notes in Item 8, Financial Statements and Supplementary Data, hereof (amounts in
thousands, except per-share data).
2017
2016
2015
2014
2013
As of December 31,
Total assets(1)
Total stockholders' equity
Outstanding debt
Outstanding long-term debt
Obligations under capital leases
Total revenues(2)
Revenues from discontinued operations(2)
Income (loss) from unconsolidated joint
venture
Net income
Net cash provided by operating activities
Net cash provided by (used in) investing
activities
Net cash provided by (used in) financing
activities
Distributions paid(3)
Net proceeds raised through issuance of our
common stock(3)
Stock repurchases(3)(4)
Net debt and bond proceeds (repayments)(3)
Acquisitions, earnest money paid, and
investments in real estate(3)
Per Weighted-Average Common Share Data:
Net income – basic
Net income – diluted
Distributions declared
Weighted-average common shares
outstanding – basic
Weighted-average common shares
outstanding – diluted
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
4,587,301
2,787,823
1,489,179
1,477,563
120,000
2013
526,578
60,046
—
15,720
218,329
4,511,539
2,531,936
1,674,176
1,302,000
120,000
$
$
$
$
$
4,299,793
2,502,768
1,424,602
1,302,602
120,000
$
$
$
$
$
4,678,118
2,614,194
1,735,063
1,577,063
120,000
$
$
$
$
$
4,734,240
2,733,478
1,680,066
1,469,245
120,000
Years Ended December 31,
2017
2016
2015
2014
289,000
$
473,543
$
566,065
$
540,797
— $
— $
— $
119
$
$
$
$
$
$
$
2,651
176,041
61,924
$
$
$
(7,561) $
(1,142) $
— $
44,619
223,080
$
$
92,635
236,906
$
$
84,821
193,091
$
$
$
(347,723) $
525,613
(576,699) $
(23,788) $
495,389
79,281
109,561
$
$
(535,264) $
148,474
$
263,474
112,570
$
$
(163,183) $
(667,417)
149,962
$
191,473
— $
— $
— $
(59,462) $
(53,986) $
(17,057) $
— $
— $
249,573
$
(311,769) $
378,995
$
(11,739) $
46,402
(349,843)
(160,940)
(691,574) $
(39,521) $
(1,145,402) $
(416,991) $
(44,856)
1.45
1.45
0.80
$
$
$
0.68
0.68
1.20
$
$
$
0.36
0.36
1.20
$
$
$
0.74
0.74
1.20
$
$
$
0.12
0.12
1.44
120,795
123,130
124,757
124,860
134,085
121,159
123,228
124,847
124,918
134,085
(1) The amounts for 2014 and 2013 have been adjusted to conform with 2017, 2016, and 2015 presentation by reclassifying debt issuance
costs, other than those related to our revolving credit facility, from total assets to an offset to outstanding debt.
(2) The amounts for 2014 and 2013 have been adjusted to classify revenues generated by certain sold properties as discontinued operations.
(3) Activity is presented on a cash basis. Please refer to our accompanying consolidated statements of cash flows.
(4) Stock repurchases in 2013 relate to redemptions under a tender offer and a redemption plan in place prior to our listing. Stock repurchases
in 2017, 2016, and 2015 were made under board-approved stock repurchase plans or in settlement of taxes related to stock compensation.
Page 22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with the Selected Financial Data in Item 6, Selected Financial
Data, above and our accompanying consolidated financial statements and notes thereto. See also Cautionary Note Regarding
Forward-Looking Statements preceding Part I.
Executive Summary
Our primary strategic objective is to generate long-term shareholder returns from a combination of growing cash flows and
appreciation in the values of our properties, by owning and operating high-quality office properties principally located in high-
barrier-to-entry markets. We concentrate on office buildings that are competitive within the top tier of their markets or that will
be repositioned as such through value-add initiatives. In addition, our investment objectives include optimizing our portfolio
allocation between stabilized investments and more growth-oriented, value-add investments, with an emphasis on central business
districts and multi-tenant buildings.
We recently completed a multi-year capital recycling program that involved selling more than 50 properties in geographically
dispersed markets for aggregate proceeds of $3.6 billion, and reinvested this capital in New York, San Francisco, Washington,
D.C., and Boston. During the second half of 2017, we executed the following transactions:
•
•
On July 6, 2017, we formed a strategic partnership with Allianz Real Estate of America LLC ("Allianz") to increase our
operating scale in key markets by freeing-up capital for additional investment. We consummated the partnership by
simultaneously selling a 22.5% interest in two of our San Francisco properties, 333 Market Street and University Circle,
to Allianz for $234.0 million, and by acquiring a 49.5% interest in 114 Fifth Avenue in Manhattan from Allianz for $108.9
million. In February 2018, we sold an additional 22.5% interest in 333 Market Street and University Circle to Allianz for
$235.3 million.
On October 11, 2017, we acquired a 55% interest in 1800 M Street, a 10-story office building in Washington, D.C., for
$231.6 million through a joint venture with Allianz.
On October 11, 2017, we acquired 245-249 West 17th Street, two interconnected 12- and six-story towers totaling 281,000
square feet of office and retail space, and 218 West 18th Street, a 12-story, 166,000-square-foot office building, in New
York for $514.1 million.
On November 28, 2017, we acquired 149 Madison Avenue in New York, a 12-story, 127,000-square-foot office building
for $87.7 million, subject to a ground lease that expired in January 2018. We are planning to redevelop this property.
We will continue to pursue strategic investment opportunities in our target markets, as well as selective property dispositions.
•
•
Leasing continues to be a key area of focus for both vacant space and upcoming expirations. During 2017, we have leased over
2.0 million square feet of space and addressed some of our most significant near-term expirations and vacancies:
•
•
•
•
At University Circle, we executed a five-year, 119,000-square-foot lease renewal with DLA Piper to extend the lease to
June 2023 and address our most significant 2018 expiration. At 650 California Street, we executed an eight-year, 86,000-
square-foot lease with Affirm; a 22,000-square-foot renewal and expansion with an existing tenant; and a 12-year, 61,000-
square-foot lease with WeWork.
In New York, at 229 West 43rd Street, we expanded Snap Inc.'s leased space by 58,000 square feet to a total of 154,000
square feet, and extended the lease to 2032; and at 315 Park Avenue South, executed 68,000 square feet of new leasing,
and a 17,000-square-foot lease expansion with Bustle Media Group.
In Atlanta, at One Glenlake, we executed a 10-year, 66,000-square-foot lease, and an 11-year, 40,000-square-foot lease
renewal and expansion along with several smaller leases. At Three Glenlake, we executed a 12-year, 161,000-square-
foot lease with Arby's. This lease is for a portion of the space vacated by the exisiting tenant, whose lease is expiring in
December 2018. As a result of this leasing activity, the One & Three Glenlake property is 99.3% leased at year end.
In Pittsburgh, at Cranberry Woods, we executed a lease renewal and extension with Westinghouse, extending the 824,000-
square-foot lease to 2032.
Page 23
We continue to maintain a strong and flexible balance sheet with a weighted-average cost of borrowing of 3.35%(1) per annum as
of December 31, 2017. Our debt capital allocation favors unsecured borrowings with 92%(1) of our portfolio unencumbered by
mortgages. Our debt maturities are well-laddered over the next nine years, and $752.0 million of the borrowings outstanding at
year-end may be repaid prior to maturity, in part or in full, without penalty. Our stock repurchase program allows us to take
advantage of market opportunities from time to time when we believe our stock is undervalued. During 2017, we repurchased
$57.6 million of our common stock (2.7 million shares at an average price of $21.46 per share). Since September 2015, under our
stock repurchase programs, we have repurchased an aggregate of $121.4 million of common stock at an average price of $21.85
per share.
(1) Statistics include our ownership interest in the gross real estate assets and debt at properties held through unconsolidated joint ventures as
described in Note 4, Unconsolidated Joint Ventures, of the accompanying financial statements; and exclude the 263 Shuman mortgage note,
as the note matured in July 2017 and we are in the process of transferring the property to the lender.
Key Performance Indicators
Our operating results depend primarily upon the level of income generated by the leases at our properties. Occupancy and rental
rates are critical drivers of our lease income. Over the last year, our portfolio percentage leased ranged from 90.6% at December
31, 2016 to 96.2% at December 31, 2017. The following table sets forth details related to recent leasing activities, which drive
changes in our rental revenues:
Total number of leases
Square feet of leasing – renewal(1)
Square feet of leasing – new(1)
Total square feet of leasing
Average lease term (months)
Tenant improvements, per square foot – renewal
Tenant improvements, per square foot – new
Tenant improvements, per square foot – all leases
Leasing commissions, per square foot – renewal
Leasing commissions, per square foot – new
Leasing commissions, per square foot – all leases
Rent leasing spread – renewal(2)
Rent leasing spread – new(3)
Rent leasing spread – all leases(2)(3)
Years Ended December 31,
2017
2016
62
1,288,056
716,513
2,004,569
$
$
$
$
$
$
103
20.17
85.55
55.09
12.37
27.76
20.59
28.2%
63.3%
43.6%
54
275,653
746,290
1,021,943
316
35.75
162.03
155.16
14.31
41.91
40.41
27.4%
18.5%
19.0%
$
$
$
$
$
$
(1)
Includes our proportionate share of renewal and new leasing at properties owned through unconsolidated joint ventures.
(2) Rent leasing spreads for renewal leases are calculated based on the change in base rental income measured on a straight-line basis.
(3) Rent leasing spreads for new leases are calculated only for space that has been vacant less than one year, and are measured on a straight-
line basis.
In 2017, rent leasing spreads have been significantly positive (43.6%) due to extending the 119,000-square-foot lease with DLA
Piper at University Circle in San Francisco and leasing 230,000 square feet at 650 California Street in San Francisco. The leasing
at 650 California Street has required significant tenant improvements; however, the net economic impact of leasing at 650 California
Street is favorable. Positive rent leasing spreads for renewal leases are partially offset by a slight rent roll-down for the 824,000-
square-foot lease extension and amendment executed with Westinghouse at Cranberry Woods in Pittsburgh in the fourth quarter
of 2017. In 2016, we executed a new 390,000-square-foot, 30-year lease at our 222 East 41st Street property with NYU Langone
Medical, which resulted in positive rent leasing spreads of 14.4%, tenant improvements of $180.10 per square foot, and leasing
commissions of $44.90 per square foot. Over the next 12 months, approximately 94,000 square feet of our leases (approximately
2% of our office portfolio based on revenues) are scheduled to expire.
Liquidity and Capital Resources
Overview
Cash flows generated from the operation of our properties are primarily used to fund recurring expenditures and stockholder
dividends. The amount of distributions to common stockholders is determined by our board of directors and is dependent upon a
Page 24
number of factors, including funds deemed available for distribution based principally on our current and future projected operating
cash flows, reduced by capital requirements necessary to maintain our existing portfolio. In determining the amount of distributions
to common stockholders, we also consider our future capital needs and future sources of liquidity, as well as the annual distribution
requirements necessary to maintain our status as a REIT under the Code. We have transformed the composition of our portfolio
by selling suburban assets and reinvesting in assets in high-barrier-to-entry markets that offer lower initial yields and higher
potential for growth over time. As a result, our board of directors elected to adjust our payout level to be consistent with our current
investment objectives, by reducing the quarterly stockholder distribution rate from $0.30 per share to $0.20 per share beginning
with the first quarter of 2017. This rate has been maintained through the first quarter of 2018. We believe this dividend rate is
sustainable over the near and medium term and offers the potential for growth over the long term.
Investments in new property acquisitions and first-generation capital improvements are generally funded with capital proceeds
from property sales, debt, or cash on hand.
Short-Term Liquidity and Capital Resources
During 2017, we generated net cash flows from operating activities of $61.9 million, which consists primarily of receipts from
tenants for rent and reimbursements, reduced by payments for operating costs, administrative expenses, interest expense, and lease
inducements. During the same period, we paid total distributions to stockholders of $109.6 million, which included dividend
payments for four quarters ($36.7 million for the fourth quarter of 2016 and an aggregate of $72.9 million for the first three quarters
of 2017). Distributions to stockholders exceeded net cash flow from operating activities for 2017 primarily due to the impact of
timing differences between selling assets and redeploying capital, and of new and renewal leases in free rent periods. Properties
acquired in 2017 and recent leases are expected to contribute to additional cash flow from operations in future periods.
During 2017, we sold five wholly owned properties and partial interests in two additional properties for net proceeds of $737.6
million. We used these proceeds, along with a $300.0 million bridge loan and borrowings on our line of credit, to fund acquisitions
of three wholly owned properties for $604.8 million and partial interests in two properties for $353.6 million; the repayment of
$197.8 million of mortgage notes; leasing and capital projects at our consolidated and joint venture-owned properties of $129.0
million; and share repurchases of $59.5 million.
Over the short-term, we expect our primary sources of capital to be operating cash flows and debt. We expect that our principal
demands for funds will be property acquisitions, capital improvements to our existing portfolio, stock repurchases, stockholder
distributions, operating expenses, and interest and principal payments on current and maturing debt. On February 1, 2018, we sold
a second 22.5% interest in University Circle and 333 Market Street to our joint venture partner, Allianz, for $235.3 million. We
used the proceeds from this transaction to reduce borrowing on our Revolving Credit Facility and the $300 Million Bridge Loan,
both described below. We believe that we have adequate liquidity and capital resources to meet our other current obligations as
they come due, including our remaining 2018 debt maturities of $202.9 million. As of February 2, 2018, we had access to $440
million of the borrowing capacity under the Revolving Credit Facility.
Long-Term Liquidity and Capital Resources
Over the long term, we expect that our primary sources of capital will include operating cash flows, select property dispositions,
and proceeds from secured or unsecured borrowings. We expect that our primary uses of capital will continue to include stockholder
distributions; repaying or refinancing debt; acquisitions; and capital expenditures, such as building improvements, tenant
improvements, and leasing costs.
Consistent with our financing objectives and operational strategy, we have generally maintained debt levels less than 40% of the
cost of our assets. We believe that preserving investor capital while generating stable current income is in the best interest of our
stockholders. Our debt-to-real-estate-asset ratio is calculated using the outstanding debt balance and real estate at cost. As of
December 31, 2017, our debt-to-real-estate-asset ratio, including 51% of the debt and real estate at the Market Square Joint venture,
which we own through an unconsolidated joint venture, was approximately 38.7%.
Bridge Loan
We have a $300.0 million, one-year, unsecured loan (the "$300 Million Bridge Loan"), which is set to mature on November 27,
2018. The $300 Million Bridge Loan bears interest at either (ii) LIBOR, plus an applicable margin ranging from 0.90% to 1.75%
for LIBOR loans, or (ii) an alternate base rate, plus an applicable margin ranging from 0.00% to 0.75%. The $300 Million Bridge
Loan provides for one six-month extension option to May 24, 2019, subject to certain fees and the satisfaction of certain other
conditions.
Page 25
Revolving Credit Facility
Our Revolving Credit Facility has a capacity of $500.0 million and matures in July 2019, with two six-month extension options.
As of December 31, 2017, we had $152.0 million in outstanding borrowings on the Revolving Credit Facility. Amounts outstanding
under the Revolving Credit Facility bear interest at the London Interbank Office Rate ("LIBOR"), plus an applicable margin
ranging from 0.875% to 1.55% for LIBOR borrowings, or an alternate base rate, plus an applicable margin ranging from 0.00%
to 0.55% for base rate borrowings, based on our applicable credit rating. The per annum facility fee on the aggregate revolving
commitment (used or unused) ranges from 0.125% to 0.30%, also based on our applicable credit rating. Additionally, we have the
ability to increase the capacity of the Revolving Credit Facility, along with the $300 Million Term Loan, which provides for four
accordion options for an aggregate additional amount of up to $400 million, subject to certain limitations.
Term Loans
We have a $300.0 million unsecured term loan, which matures in July 2020 (the "$300 Million Term Loan"), and, along with the
Revolving Credit Facility, provides for four accordion options for an aggregate amount of up to $400 million, subject to certain
conditions. The $300 Million Term Loan bears interest, at our option, at either (i) LIBOR, plus an applicable margin ranging from
0.90% to 1.75% for LIBOR loans, or (ii) an alternate base rate, plus an applicable margin ranging from 0.00% to 0.75% for base
rate loans, based on our applicable credit rating.
We have a $150.0 million unsecured term loan, which matures in July 2022 (the "$150 Million Term Loan"). The $150 Million
Term Loan bears interest, at our option, at either (i) LIBOR, plus an applicable margin ranging from 0.90% to 1.75% for LIBOR
loans, or (ii) alternative base rate, plus an applicable margin ranging from 0.00% to 0.75% for base rate loans. The interest rate
on the $150 Million Term Loan is effectively fixed with an interest rate swap agreement, which is designated as a cash flow hedge.
Based on the terms of the interest rate swap and our current credit rating, the interest rate on the $150 Million Term Loan is
effectively fixed at 3.07%.
Debt Covenants
The $300 Million Term Loan, $300 Million Bridge Loan, the $150 Million Term Loan, and the Revolving Credit Facility contain
the following restrictive covenants:
•
•
•
•
•
•
limits the ratio of secured debt to total asset value, as defined therein, to 40% or less;
requires the fixed charge coverage ratio, as defined therein, to be at least 1.50:1.00;
limits the ratio of debt to total asset value, as defined therein, to 60% or less;
requires the ratio of unencumbered adjusted net operating income, as defined therein, to unsecured interest expense, as
defined therein, to be at least 1.75:1.00;
requires the ratio of unencumbered asset value, as defined therein, to total unsecured debt, as defined therein, to be at
least 1.66:1.00; and
requires maintenance of certain minimum tangible net worth balances.
As of December 31, 2017, we believe we were in compliance with the restrictive covenants on these outstanding debt obligations.
Bonds Payable
In August 2016, we issued $350.0 million of 10-year, unsecured 3.650% senior notes at 99.626% of their face value (the "2026
Bonds Payable"). We received proceeds from the 2026 Bonds Payable, net of fees, of $346.4 million, which were used to prepay
our $250 million bonds payable, originally due in April of 2018. The 2026 Bonds Payable require semi-annual interest payments
in February and August based on a contractual annual interest rate of 3.650%. The principal amount of the 2026 Bonds Payable
is due and payable on the maturity date, August 15, 2026.
In March 2015, we issued $350.0 million of 10-year, unsecured 4.150% senior notes at 99.859% of their face value (the "2025
Bonds Payable"). We received proceeds from the 2025 Bonds Payable, net of fees, of $347.2 million, a portion of which was used
to repay a bridge loan, which was originated in January 2015. The 2025 Bonds Payable require semi-annual interest payments in
April and October based on a contractual annual interest rate of 4.150%. The principal amount of the 2025 Bonds Payable is due
and payable on the maturity date, April 1, 2025.
The restrictive covenants on the 2026 Bonds Payable and the 2025 Bonds Payable as defined pursuant to an indenture include:
•
•
a limitation on the ratio of debt to total assets, as defined, to 60%;
limits to our ability to incur debt if the consolidated income available for debt service to annual debt service charge, as
defined, for four previous consecutive fiscal quarters is less than 1.5:1 on a pro forma basis;
Page 26
•
•
limits to our ability to incur liens if, on an aggregate basis for us, the secured debt amount would exceed 40% of the value
of the total assets; and
a requirement that the ratio of unencumbered asset value, as defined, to total unsecured debt be at least 150% at all times.
As of December 31, 2017, we believe we were in compliance with the restrictive covenants on the 2026 Bonds Payable and the
2025 Bonds Payable.
Debt Repayments, Maturities, and Interest Payments
During 2017 and 2016, we made the following debt repayments:
•
•
•
•
•
•
On August 17, 2017, we repaid the $124.8 million balance of the 650 California Street building mortgage note, which
was originally scheduled to mature on July 1, 2019. Columbia Property Trust recognized a loss on early extinguishment
of debt of $0.3 million related to unamortized deferred financing costs.
On March 10, 2017, we repaid the $73.0 million balance of the 221 Main Street building mortgage note, which was
originally scheduled to mature on May 10, 2017. Columbia Property Trust recognized a loss on early extinguishment of
debt of $45,000 related to unamortized deferred financing costs.
On October 3, 2016, a portion of the proceeds from the sale of the 80 Park Plaza Property was used to repay the $99.0
million remaining outstanding balance on our Revolving Credit Facility.
On September 2, 2016, the proceeds from the 2026 Bonds Payable, as described above, were used to redeem $250.0
million of seven-year, unsecured 5.875% senior notes due April 2018, including a $17.9 million make-whole payment
recorded as an early loss on extinguishment of debt in the accompanying consolidated statement of operations.
On June 30, 2016, we used borrowings on the Revolving Credit Facility to repay the $39.0 million SanTan Corporate
Center mortgage notes, which were scheduled to mature on October 11, 2016, resulting in the write-off of approximately
$10,000 of related unamortized financing costs, which are included in loss on early extinguishment in the accompanying
statements of operations.
On April 1, 2016, we repaid the $119.0 million remaining on a $300 million, six-month, unsecured loan, which was used
to finance a portion of the 229 West 43rd Street Building acquisition in August of 2015 (the "2015 Bridge Loan"). The
2015 Bridge Loan was scheduled to mature on August 4, 2016. We recognized a loss on early extinguishment of debt of
$82,000 related to unamortized deferred financing costs.
During 2017 and 2016, we made interest payments of approximately $21.5 million and $27.8 million, respectively, related to our
term loans, line of credit, and notes payable. During 2017 and 2016, we made interest payments of $27.4 million and $28.0 million,
respectively, on our bonds payable.
Contractual Commitments and Contingencies
As of December 31, 2017, our contractual obligations will become payable in the following periods (in thousands):
Contractual Obligations
Debt obligations(1)(2)
Interest obligations on debt(1)(3)
Capital lease obligations(4)
Operating lease obligations(5)
Total
2018
2019-2020
2021-2022
Thereafter
$
1,790,926
$
323,176
$
452,000
$
150,000
$
319,920
120,000
1,389,662
60,577
—
9,222
95,856
—
18,622
78,698
120,000
18,872
865,750
84,789
—
1,342,946
Total
$
3,620,508
$
392,975
$
566,478
$
367,570
$
2,293,485
(1)
Includes 51% of the debt and interest obligations for the Market Square Joint Venture, which we own through an unconsolidated joint
venture. The Market Square Joint Venture has a $325 million mortgage loan on the Market Square Buildings, which bears interest at
5.07% and matures on July 1, 2023. We guarantee $11.2 million of the Market Square Buildings mortgage loan (see Note 7, Commitments
& Contingencies, to the accompanying financial statements).
(2) Debt obligations exclude the $49.0 million 263 Shuman Boulevard mortgage note, which matured in July 2017. We are in the process
of working to transfer this property to the lender in settlement of the mortgage note.
(3)
Interest obligations on variable-rate debt are measured at the rate at which they are effectively fixed with interest rate swap agreements
(where applicable) or the rate in effect as of December 31, 2017. Interest obligations on all other debt instruments are measured at the
contractual rate. See Item 7A, Quantitative and Qualitative Disclosure About Market Risk, for more information regarding our interest
rate swaps.
(4) Amounts include principal obligations only. We made interest payments on these obligations of $7.2 million during 2017, all of which
was funded with interest income earned on the corresponding investments in development authority bonds.
Page 27
(5) These obligations are related to ground leases at certain properties, including 49.5% of the ground lease obligation at 114 Fifth Avenue,
based on our ownership interest in the unconsolidated joint venture that owns that property, and our corporate office lease. In addition
to the amounts shown, certain lease agreements include provisions that, at the option of the tenant, may obligate us to expend capital
to expand an existing property or provide other expenditures for the benefit of the tenant, including a commitment to contribute $54.7
million toward remaining leasehold improvements at our 222 East 41st Street property.
Results of Operations
Overview
As of December 31, 2017, Columbia Property Trust owned 19 operating properties, of which 14 were wholly owned and five were
owned through unconsolidated joint ventures. These properties are located primarily in New York, San Francisco, Washington,
D.C., and Atlanta, and were approximately 96.2% leased as of December 31, 2017. Our period-over-period operating results are
heavily impacted by the real estate activities set forth in the Transaction Activity section of Item 1, Business, including acquisitions
and dispositions made directly and through unconsolidated joint ventures. Other than real estate transactions, we expect real estate
operating income to vary, primarily based on leasing activity over the near term.
Comparison of the Year Ended December 31, 2017 Versus the Year Ended December 31, 2016
Rental income was $257.1 million for 2017, which represents a decrease from $366.2 million for 2016. The decrease is primarily
due to dispositions ($94.3 million) and transferring University Circle and 333 Market Street to unconsolidated joint ventures ($24.4
million), partially offset by the acquisitions in the fourth quarter of 2017 ($8.4 million). We expect future rental income to vary
based on recent and future investing and leasing activities.
Tenant reimbursements and property operating costs were $23.5 million and $87.8 million, respectively, for 2017, which represents
a decrease from $69.8 million and $155.0 million, respectively, for 2016. The decrease in tenant reimbursements is primarily due
to dispositions ($35.5 million), transferring University Circle and 333 Market Street to unconsolidated joint ventures ($4.9 million),
and the new net lease at 222 East 41st Street ($3.3 million). The decrease in property operating costs is primarily due to dispositions
($58.3 million), the new net lease at 222 East 41st Street ($9.9 million), and transferring University Circle and 333 Market Street
to unconsolidated joint ventures ($5.5 million), partially offset by the acquisitions in the fourth quarter of 2017 ($2.2 million).
Tenant reimbursements and property operating costs are expected to vary with future leasing activities and other changes in our
portfolio.
Hotel income, net of hotel operating costs, was $(0.8) million for 2017, which represents a decrease as compared with $4.0 million
for 2016, due to the sale of the Key Center Marriott on January 31, 2017.
Asset and property management fee income was $3.8 million for 2017, which represents an increase as compared with $2.1 million
for 2016. The increase is due to the asset and property management services we began to provide to several properties owned in
unconsolidated joint ventures in 2017, including 333 Market Street, University Circle, and 1800 M Street. Asset and property
management fees have also been earned for services provided to the Market Square Joint Venture since its inception in the fourth
quarter of 2015. We anticipate future asset and property management fee income to increase as we earn fees from the newly
established joint ventures for full periods (see Note 4, Unconsolidated Joint Ventures).
Other property income was $3.3 million for 2017, which represents a decrease as compared with $12.8 million for 2016, primarily
due to earning an early termination fee of $6.8 million at 222 East 41st Street in June 2016 and $4.0 million for other lease
terminations in 2016. The terminated lease at 222 East 41st Street was replaced with a full-building lease, which commenced in
the fourth quarter of 2016. Other property operating income is expected to vary in the future, based on additional lease restructuring
activities.
Asset and property management fee expenses were $0.9 million for 2017, which represents a decrease as compared with $1.4
million for 2016, primarily due to the sale of the Key Center Marriott in January 2017 ($0.4 million). Future asset and property
management fee expenses are expected to remain stable in the near term and may increase as a result of future investing activities.
Depreciation was $80.4 million for 2017, which represents a decrease as compared with $108.5 million for 2016. The decrease is
primarily due to dispositions ($24.5 million) and transferring University Circle and 333 Market Street to unconsolidated joint
ventures ($6.6 million), partially offset by acquisitions in the fourth quarter of 2017 ($2.3 million). Depreciation is expected to
vary based on recent and future investing activities.
Amortization was $32.4 million for 2017, which represents a decrease as compared with $56.8 million for 2016. The decrease is
primarily due to intangibles written off due to the early termination or expiration of leases ($11.1 million), dispositions ($10.9
million), and transferring University Circle and 333 Market Street to unconsolidated joint ventures ($2.5 million). We expect future
amortization to vary based on recent and future investing activities.
Page 28
Effective July 1, 2017, we began to specifically identify general and administrative costs incurred to manage assets owned by our
unconsolidated joint ventures. The method for measuring aggregate general and administrative expenses has not changed.
Aggregate general and administrative expenses were $36.4 million for 2017, which represents an increase as compared to $33.9
million for 2016, primarily due to additional vesting under our stock-based incentive plan ($3.0 million) and expenses incurred
for managing unconsolidated joint ventures ($1.5 million), partially offset by prior-year costs incurred related to the development
of our regional management platform ($1.2 million), prior-year lease termination activity ($0.5 million), and prior period bad debt
expenses ($0.2 million). General and administrative expenses – corporate are expected to remain at similar levels over the near
term; and general and administrative expenses – unconsolidated joint ventures are expected to vary as a result of future joint
venture activity.
Interest expense was $60.5 million for 2017, which represents a decrease as compared with $67.6 million for 2016, primarily due
to mortgage note payoffs ($5.4 million), bond interest savings resulting from the issuance of the 2026 Bonds Payable and redemption
of the 2018 Bonds Payable in 2016 ($2.1 million), and an overall reduction in borrowings on our Revolving Credit Facility in the
current period ($1.5 million). We expect interest expense to increase in the near term, due to borrowings to fund recent investing
activities.
Interest and other income was $9.5 million for 2017, which represents an increase as compared with $7.3 million for 2016. The
increase is due to earning interest on our large cash balance for the first nine months of 2017 ($2.2 million). The majority of our
interest income is earned on investments in development authority bonds with a remaining term of approximately four years as
of December 31, 2017. Interest income earned on investments in development authority bonds is entirely offset by interest expense
incurred on the corresponding capital leases. We expect interest and other income to decrease slightly over the near term as cash
deposits were applied to recent investing activities.
We recognized a loss on early extinguishment of debt of $0.3 million and $19.0 million in 2017 and 2016, respectively. In 2017,
we repaid two mortgage notes. resulting in the write-off of the related deferred financing costs. In 2016, we incurred an early
redemption premium on the settlement of the 2018 Bonds Payable of $17.9 million, and write-offs of deferred financing costs in
connection with other early repayments. We expect future gains or losses on early extinguishments of debt to vary with financing
activities.
We recognized income from unconsolidated joint ventures of $2.7 million for 2017, which represents an increase from a loss on
unconsolidated joint ventures of $(7.6) million for 2016. The increase is due to the July 2017 transfer of University Circle and
333 Market Street to unconsolidated joint ventures, in which we retained a 77.5% ownership interest; the July 2017 acquisition
of a 49.5% interest in 114 Fifth Avenue; and the October 2017 acquisition of a 55.0% interest in 1800 M Street. Future income or
loss from unconsolidated joint ventures will vary as a result of future investing activities and leasing at the properties held in
unconsolidated joint ventures.
We recognized gains on sales of real estate assets of $175.5 million in 2017, as a result of selling three properties in Houston,
Texas, and the Key Center Tower and Marriott in Cleveland, Ohio in January 2017; and selling a 22.5% interest in each of the
University Circle property and the 333 Market Street building in July 2017. We recognized gains on sales of real estate assets of
$72.3 million in 2016, as a result of selling seven properties in separate transactions during the the year. See Note 3, Real Estate
Transactions, of the accompanying financial statements, for additional details of these dispositions. We expect future gains on
sales of real estate assets will vary with disposition activity.
Net income was $176.0 million, or $1.45 per basic and diluted share, for 2017, which represents an increase from $84.3 million,
or $0.68 per basic and diluted share, for 2016. The increase is due to gains on sale of real estate ($103.2 million) and financing
activities resulting in interest savings in the current year and losses on early extinguishment of debt in the prior year ($25.8 million),
partially offset by lost income from sold properties ($38.4 million). See the "Supplemental Performance Measures" section below
for our same-store results compared with the prior year. We expect future earnings to vary as a result of leasing activity at our
existing properties and investing activities.
Comparison of the Year Ended December 31, 2016 Versus the Year Ended December 31, 2015
Rental income was $366.2 million for 2016, which represents a decrease from $436.0 million for 2015. The decrease is primarily
due to current-year and prior-year dispositions ($53.0 million); transferring the Market Square Buildings to a joint venture in the
fourth quarter of 2015 ($30.9 million); and vacancy at our 222 East 41st Street property for a portion of 2016 ($7.4 million) while
the building was being prepared for NYU's Langone Medical lease to commence, partially offset by additional rental income from
the acquisition of the 229 West 43rd Street Building in August 2015 ($19.9 million).
Tenant reimbursements and property operating costs were $69.8 million and $155.0 million, respectively, for 2016, which represents
an increase from $99.7 million and $188.1 million, respectively, for 2015. The decrease in property operating costs is due to
dispositions ($23.4 million) and the transfer of the Market Square Buildings to a joint venture ($16.4 million), partially offset by
Page 29
additional property operating costs from the acquisition of the 229 West 43rd Street Building ($6.6 million). The proportional
decrease in tenant reimbursements is also due to dispositions ($17.3 million) and the transfer of the Market Square Buildings to
a joint venture ($9.4 million), partially offset by additional tenant reimbursements from the acquisition of the 229 West 43rd Street
Building ($2.9 million).
Hotel income, net of hotel operating costs, was $4.0 million for 2016, which represents a decrease as compared with $4.7 million
for 2015, due to additional group bookings and meetings at the hotel.
Asset and property management fee income was $2.1 million for 2016, which represents an increase as compared with $0.6 million
for 2015. We began earning such fees in October 2015, upon the formation of the Market Square Joint Venture.
Other property income was $12.8 million for 2016, which represents an increase as compared with $5.4 million for 2015, primarily
due to an early termination at our 222 East 41st Street property ($6.8 million).
Asset and property management fees were $1.4 million for 2016, which represents a decrease as compared with $1.8 million for
2015, primarily due to transferring Market Square to a joint venture in the fourth quarter of 2015.
Depreciation was $108.5 million for 2016, which represents a decrease as compared with $131.5 million for 2015, primarily due
to dispositions ($16.3 million) and transferring Market Square to a joint venture ($11.6 million), partially offset by additional
depreciation from the acquisition of 229 West 43rd Street in August 2015 ($5.4 million).
Amortization was $56.8 million for 2016, which represents a decrease as compared with $87.1 million for 2015. The decrease is
primarily due to dispositions ($16.1 million); intangibles written off related to the expiration or termination of leases ($9.8 million);
and transferring Market Square to a joint venture ($5.9 million); partially offset by additional amortization from the acquisition
of 229 West 43rd Street in August 2015 ($2.6 million).
General and administrative expenses – corporate was $33.9 million for 2016, which represents an increase from $29.7 million for
2015. The increase is due to costs incurred to develop our regional management and investment platform ($2.9 million), and
additional vesting under our stock-based incentive compensation plan ($1.0 million).
We incurred acquisition expenses of $3.7 million for 2015 in connection with acquiring three properties in January 2015 and the
229 West 43rd Street Building in New York in August 2015. See Note 3, Real Estate Transactions, to the accompanying financial
statements for additional details. We adopted Accounting Standards Update 2017-01, Clarifying the Definition of a Business, in
the fourth quarter of 2017. (See Note 2, Summary of Significant Accounting Policies, of the accompanying consolidated financial
statements.) As a result, we capitalized acquisition costs related to fourth quarter 2017 acquisitions and do not anticipate incurring
future expenses related to acquisitions of properties.
Interest expense was $67.6 million for 2016, which represents a decrease as compared with $85.3 million for 2015, primarily due
to transferring the Market Square mortgage note to a joint venture ($13.6 million) and repaying mortgage loans ($5.4 million),
partially offset by the 2025 Bonds Payable outstanding for the entire year ($3.0 million).
Interest and other income was stable at $7.3 million for 2016 and 2015.
We recognized a loss on interest rate swaps that do not qualify for hedge accounting treatment of approximately $1.1 million for
2015, primarily due to the settlement of the swap related to a $450 million term loan, which was replaced with other unsecured
borrowings in July 2015.
We recognized a loss on early extinguishment of debt of $19.0 million and $3.1 million in 2016 and 2015, respectively. In 2016,
we incurred an early redemption premium on the settlement of the 2018 Bonds Payable of $17.9 million, and write-offs of deferred
financing costs in connection with other early repayments. In 2015, we incurred a prepayment premium of $2.1 million related to
the early repayment of the 215 Diehl Building mortgage note, approximately two years prior to its maturity and write-offs of
deferred financing costs in connection with other early repayments.
We recognized a loss from unconsolidated joint ventures of $7.6 million for 2016, which represents an increase as compared with
a loss of $1.1 million for 2015. The Market Square Joint Venture was formed on October 28, 2015. Since inception, real estate
operating income from Market Square has been reduced by interest incurred on the property's $325 million mortgage note, and
Market Square experienced reduced occupancy levels throughout 2016 due to lease expirations.
We recognized gains on sales of real estate assets of $72.3 million in 2016, as a result of selling six properties in separate transactions
for an aggregate of $660.5 million, exclusive of transaction costs. We recognized gains on sales of real estate assets of $23.9
million in 2015, as a result of selling 12 properties for an aggregate of $498.3 million, exclusive of transaction costs, and the sale
Page 30
of a 49% interest in Market Square for a gross sales price of $120.0 million. See Note 3, Real Estate Transactions, of the
accompanying financial statements, for additional details of these dispositions.
Net income was $84.3 million, or $0.68 per basic and diluted share, for 2016, which represents an increase from $44.6 million,
or $0.36 per basic and diluted share, for 2015. The increase is due to additional year-over-year gains on sales of real estate ($48.5
million) and a decrease in interest expense and other financing costs ($17.7 million), partially offset by additional year-over-year
losses on early extinguishment of debt ($15.8 million), lower earnings due to property sales ($5.3 million), and increase in equity
in loss of unconsolidated joint ventures ($6.4 million) due to reduced occupancy at Market Square. See "Supplemental Performance
Measures" section below for our same-store results compared with the prior year period.
NOI by Geographic Segment
We consider geographic location when evaluating our portfolio composition, and in assessing the ongoing operations and
performance of our properties. As of December 31, 2017, we aggregated our properties into the following geographic segments:
New York, San Francisco, Atlanta, Washington, D.C., Boston, Los Angeles, and all other office markets. All other office markets
consists of properties in low-barrier-to-entry geographic locations, in which we do not have a substantial presence and do not plan
to make further investments. See Note 14, Segment Information, to the accompanying consolidated financial statements.
The following table presents NOI by geographic segment (in thousands):
New York
San Francisco
Atlanta
Washington, D.C.
Boston
Los Angeles
All other office markets
Total office segments
Hotel
Corporate
Total
For the Years Ended December 31,
2017
2016
2015
$
73,893
$
70,038
$
76,163
33,603
18,496
5,380
4,529
18,550
230,614
(913)
(826)
80,529
32,939
16,372
5,114
4,523
92,756
302,271
3,988
(158)
54,692
83,826
31,912
36,958
12,519
4,853
129,199
353,959
4,593
(586)
$
228,875
$
306,101
$
357,966
Comparison of the Year Ended December 31, 2017 Versus the Year Ended December 31, 2016
San Francisco
NOI has decreased during 2017 due to the sale of a 22.5% interest in both University Circle and 333 Market Street. San Francisco
NOI is expected to decrease in the near term as a result of the sale of an additional 22.5% interest in each of these properties, as
described in Note 3, Real Estate Transactions, of the accompanying consolidated financial statements.
Washington, D.C.
NOI has increased during 2017 due to the October 2017 acquisition of a 55% interest in 1800 M Street, as described in Note 3,
Real Estate Transactions, of the accompanying consolidated financial statements, which is partially offset by decreased occupancy
at 80 M Street and Market Square earlier in the current year. Over the near term, Washington, D.C. NOI is expected to increase
as a result of recent leasing activity at 80 M Street and Market Square and recognizing a full period for our interest in 1800 M
Street.
All other office markets
NOI has decreased significantly year over year as a result of asset sales, as described in Note 3, Real Estate Transactions, of the
accompanying consolidated financial statements.
Hotel
The Key Center Marriott, our only hotel, was sold on January 31, 2017.
Comparison of the Year Ended December 31, 2016 versus the Year Ended December 31, 2015
Page 31
New York
NOI increased year over year as a result of the acquisition of 229 West 43rd Street in August of 2015.
San Francisco
NOI decrease year over year as a result of decreased occupancy at 650 California Street.
Washington, D.C.
NOI decreased year over year as a result of selling a 49% interest in Market Square in October of 2015.
Boston
NOI decreased year over year as a result of selling 550 King Street and Robbins Road in the 11 Property Sale, as described in
Note 3, Real Estate Transactions, of the accompanying consolidated financial statements.
All other office markets
NOI has decreased significantly year over year as a result of asset sales, as described in Note 3, Real Estate Transactions, of the
accompanying consolidated financial statements.
Supplemental Performance Measures
In addition to net income, we measure the performance of the company using certain non-GAAP supplemental performance
measures, including: (i) Funds From Operations ("FFO"), (ii) Net Operating Income ("NOI"), and (iii) Same Store Net Operating
Income ("Same Store NOI"). These non-GAAP metrics are commonly used by industry analysts and investors as supplemental
operation performance measures of REITs and are viewed by management to be useful indicators of operating performance.
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets
diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many
industry analysts and investors have considered presentation of operating results for real estate companies using historical cost
accounting alone to be insufficient. Management believes that the use of FFO, NOI, and Same Store NOI, combined with net
income, improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT
operating results more meaningful.
Net income is the most comparable GAAP measure to FFO, NOI, and Same Store NOI. Each of these supplemental performance
measures exclude expenses that materially impact our overall results of operations and, therefore, should not be considered as a
substitute for net income, income from continuing operations before income taxes, or any other measures derived in accordance
with GAAP. Furthermore, these metrics may not be comparable to other similarly titled measures used by other companies.
Funds From Operations
FFO is a non-GAAP measure used by many investors and analysts who follow the real estate industry to measure the performance
of an equity REIT. We consider FFO a useful measure of our performance because it principally adjusts for the effects of GAAP
depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time.
Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a meaningful
supplemental measure of our performance. We believe that the use of FFO, combined with the required GAAP presentations, is
beneficial in improving our investors' understanding of our operating results and allowing for comparisons among other companies
who define FFO as we do.
FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), represents net income (computed in
accordance with GAAP), excluding gains or losses on sales of real estate and impairments of real estate assets, plus real estate-
related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures, for both continuing
and discontinued operations. We compute FFO in accordance with NAREIT's definition, which may differ from the methodology
for calculating FFO, or similarly titled measures, used by other companies, and this may not be comparable to those presentations.
FFO does not represent amounts available for management's discretionary use because of needed capital replacement or expansion,
debt service obligations, or other commitments and uncertainties, nor is it indicative of funds available to fund our cash needs,
including our ability to make distributions. Our presentation of FFO should not be considered as an alternative to net income
(computed in accordance with GAAP) as an indicator of financial performance.
Page 32
Net income reconciles to FFO as follows (in thousands):
Reconciliation of Net Income to Funds From Operations:
Net income
Adjustments:
Depreciation of real estate assets
Amortization of lease-related costs
Depreciation and amortization included in loss from unconsolidated joint
venture(1)
Gains on sales of real estate assets
Total funds from operations adjustments
Years Ended December 31,
2017
2016
2015
$
176,041
$
84,281
$
44,619
80,394
32,403
21,288
(175,518)
(41,433)
108,543
56,775
8,776
(72,325)
101,769
131,490
87,128
1,606
(23,860)
196,364
240,983
Funds from operations
$
134,608
$
186,050
$
(1) Reflects our ownership interest in depreciation and amortization for investments in unconsolidated joint ventures.
Page 33
Net Operating Income
As set forth below, NOI is calculated by deducting property operating costs from rental and other property revenues for continuing
operations. As a performance metric consisting of only revenues and expenses directly related to ongoing real estate rental
operations, which have been or will be settled in cash, NOI is narrower in scope than FFO.
NOI, as we calculate it, may not be directly comparable to similarly titled, but differently calculated, measures for other REITs.
We believe that NOI is another useful supplemental performance measure, as it is an input in many REIT valuation models, and
it provides a means by which to evaluate the performance of the properties.
The major factors influencing our NOI are property acquisitions and dispositions, occupancy levels, rental rate increases or
decreases, and the recoverability of operating expenses.
Same Store Net Operating Income
We also evaluate the performance of our properties, on a "same store" basis, using a metric referred to as Same Store NOI. We
view Same Store NOI as a useful supplemental performance measure because it improves comparability between periods by
eliminating the effects of changes in the composition of our portfolio. On an individual property basis, Same Store NOI is computed
in a consistent manner as NOI (as described in the previous section). For the periods presented, we have defined our same store
portfolio as those properties that have been continuously owned and operating since January 1, 2016. NOI and Same Store NOI
are calculated as follows for the years ended December 31, 2017 and 2016 (in thousands):
Same-Store NOI - wholly-owned properties:
Revenues:
Rental income
Tenant reimbursements
Other property income
Total revenues
Operating expenses
Same Store NOI – wholly-owned properties(1)
Same Store NOI – joint-venture owned properties(2)
Total Same-Store NOI
NOI from acquisitions(3)
NOI from dispositions(4)
NOI
Years Ended December 31,
2017
2016
$
$
217,615
$
18,221
3,242
239,078
(79,508)
159,570
51,665
211,235
10,793
6,847
228,875
$
213,161
22,868
12,052
248,081
(83,742)
164,339
49,522
213,861
—
92,240
306,101
(1) Reflects NOI from properties that were wholly owned for the entirety of the periods presented.
(2) For all periods presented, reflects our ownership interest in NOI for properties owned through unconsolidated joint ventures as of
December 31, 2017 (Market Square, University Circle, 333 Market Street, 114 Fifth Avenue, and 1800 M Street). The NOI for properties
held through unconsolidated joint ventures is included in income (loss) from unconsolidated joint ventures in our accompanying
consolidated statements of operations. See Note 4, Unconsolidated Joint Ventures, of the accompanying consolidated financial
statements, for more information.
(3) Reflects activity for the following properties acquired since January 1, 2016: 55% of 1800 M Street, 218 West 18th Street, and 245-249
West 17th Street, and 49.5% of 114 Fifth Avenue.
(4) Reflects activity for the following properties sold since January 1, 2016: 22.5% of University Circle, and 22.5% of 333 Market Street,
Key Center Tower, Key Center Marriott, 515 Post Oak, Energy Center, 5 Houston Center, SanTan Corporate Center, Sterling Commerce,
80 Park Plaza, 9127, 9189, 9191 & 9193 South Jamaica Street, 800 North Frederick, and 100 East Pratt.
The slight decline in Same Store NOI is due to a temporary decline in occupancy at 650 California Street in San Francisco and
at 315 Park Avenue South in New York. Anticipated lease expirations at 650 California Street and at 315 Park Avenue
South allowed us to roll below-market leases up to market rates with recent leasing activities. As a result, future Same Store NOI
is expected to increase at these properties and across the portfolio. The slight decline in Same Store NOI from prior year is also
impacted by a lease expiration at 263 Shuman Boulevard, which is in the process of being returned to the lender in settlement of
the mortgage note.
Page 34
A reconciliation of Net Income to NOI and Same Store NOI is presented below (in thousands):
Years Ended December 31,
2017
2016
$
176,041
$
Net income
Depreciation
Amortization
General and administrative – corporate
General and administrative – joint venture
Net interest expense
Interest income from development authority bonds
Loss on early extinguishment of debt
Income tax expense
Asset and property management fee income
Adjustment included in loss from unconsolidated joint venture
Gains on sales of real estate assets
Net operating income
Same Store NOI – joint venture owned properties(1)
NOI from acquisitions(2)
NOI from dispositions(3)
Same Store NOI - wholly owned properties(4)
$
$
80,394
32,403
34,966
1,454
58,187
(7,200)
325
(213)
(3,782)
31,818
(175,518)
228,875
$
(51,665)
(10,793)
(6,847)
159,570
$
84,281
108,543
56,775
33,876
—
67,538
(7,200)
18,997
445
(2,122)
17,293
(72,325)
306,101
(49,522)
—
(92,240)
164,339
(1) For all periods presented, reflects our ownership interest in NOI for properties owned through unconsolidated joint ventures as of
December 31, 2017 (Market Square, University Circle, 333 Market Street, 114 Fifth Avenue, and 1800 M Street). The NOI for properties
held through unconsolidated joint ventures is included in income (loss) from unconsolidated joint ventures in our accompanying
consolidated statements of operations. See Note 4, Unconsolidated Joint Ventures, of the accompanying consolidated financial
statements, for more information.
(2) Reflects activity for the following properties acquired since January 1, 2016: 55% of 1800 M Street, 218 West 18th Street, and 245-249
West 17th Street, and 49.5% of 114 Fifth Avenue.
(3) Reflects activity for the following properties sold since January 1, 2016: 22.5% of University Circle, and 22.5% of 333 Market Street,
Key Center Tower, Key Center Marriott, 515 Post Oak, Energy Center, 5 Houston Center, SanTan Corporate Center, Sterling Commerce,
80 Park Plaza, 9127, 9189, 9191 & 9193 South Jamaica Street, 800 North Frederick, and 100 East Pratt.
(4) Reflects NOI from properties that were wholly owned for the entirety of the periods presented.
Page 35
Portfolio Information
As of December 31, 2017, we owned 19 operating properties, of which 14 were wholly owned and five were owned through
unconsolidated joint ventures. These 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 96.2% leased as of December 31, 2017.
As of December 31, 2017, our five highest geographic reportable segments, based on Annualized Lease Revenue, were as follows.
For more information about our reportable segments, see Note 14, Segment Information, to the accompanying consolidated financial
statements.
Location
New York
San Francisco
Washington, D.C.
Atlanta
Boston
Leased
Square Feet
(in thousands)
2017 Annualized
Lease Revenue
(in thousands)
Percentage of
2017 Annualized
Lease Revenue
$
$
2,388
1,663
846
1,656
225
6,778
147,318
106,747
53,696
40,509
12,081
360,351
38%
28%
14%
11%
3%
94%
As of December 31, 2017, our five highest tenant industry concentrations, based on Annualized Lease Revenue, were as follows:
Industry
Business Services
Depository Institutions
Engineering & Management Services
Communications
Legal Services
Leased
Square Feet
(in thousands)
2017 Annualized
Lease Revenue
(in thousands)
Percentage of
2017 Annualized
Lease Revenue
$
$
1,281
1,021
495
1,010
303
4,110
88,033
42,242
28,591
26,135
23,305
208,306
23%
11%
8%
7%
6%
55%
As of December 31, 2017, our five highest tenant concentrations, based on Annualized Lease Revenue, were as follows:
Tenant
AT&T
Wells Fargo
Pershing
Twitter
NYU
2017 Annualized
Lease Revenue
(in thousands)
Percentage of
2017 Annualized
Lease Revenue
$
$
22,579
20,522
18,251
15,894
15,277
92,523
6%
5%
5%
4%
4%
24%
For more information on our portfolio, see Item 2, Properties.
Election as a REIT
We have elected to be taxed as a REIT under the Code, and have operated as such beginning with our taxable year ended
December 31, 2003. To qualify as a REIT, we must meet certain organizational and operational requirements, including a
requirement to distribute at least 90% of our adjusted taxable income, as defined in the Code, to our stockholders, computed
without regard to the dividends-paid deduction and by excluding our net capital gain. As a REIT, we generally will not be subject
to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will
then be subject to federal income taxes on our taxable income for that year and for the four years following the year during which
qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could
materially affect our net income and net cash available for distribution to our stockholders. However, we believe that we are
organized and operate in such a manner as to qualify for treatment as a REIT for federal income tax purposes.
Page 36
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. We have
elected to treat the TRS Entities as taxable REIT subsidiaries. We may perform certain additional, noncustomary services for
tenants of our buildings through the TRS Entities; however, any earnings related to such services are subject to federal and state
income taxes. In addition, for us to continue to qualify as a REIT, we must limit our investments in taxable REIT subsidiaries to
25% of the value of our total assets. Deferred tax assets and liabilities are established for temporary differences between the
financial reporting basis and the tax basis of assets and liabilities at the enacted rates expected to be in effect when the temporary
differences reverse.
No provisions for federal income taxes have been made in our accompanying consolidated financial statements, other than the
provisions relating to the TRS Entities, as we made distributions in excess of taxable income for the periods presented. We are
subject to certain state and local taxes related to property operations in certain locations, which have been provided for in our
accompanying consolidated financial statements.
Inflation
We are exposed to inflation risk, as income from long-term leases is the primary source of our cash flows from operations. There
are provisions in the majority of our tenant leases that are intended to protect us from, and mitigate the risk of, the impact of
inflation. These provisions include rent steps, reimbursement billings for operating expense pass-through charges, real estate tax
and insurance reimbursements on a per-square-foot basis, or in some cases, annual reimbursement of operating expenses above a
certain per-square-foot allowance. However, due to the long-term nature of the leases, the leases may not reset frequently enough
to fully cover inflation.
Application of Critical Accounting Policies
Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with
GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions.
These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates
of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or
interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting
policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies
may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar
businesses.
Investment in Real Estate Assets
We are required to make subjective assessments as to the useful lives of our depreciable assets. To determine the appropriate useful
life of an asset, we consider the period of future benefit of the asset. These assessments have a direct impact on net income. The
estimated useful lives of our assets by class are as follows:
Buildings
Building and site improvements
Tenant improvements
Intangible lease assets
40-45 years
5-25 years
Shorter of economic life or lease term
Lease term
Evaluating the Recoverability of Real Estate Assets
We continually monitor events and changes in circumstances that could indicate that the carrying amounts of the real estate and
related intangible assets of both operating properties and properties under construction, 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 (liabilities)
may not be recoverable, we assess the recoverability of these assets by determining whether the respective carrying values will
be recovered through the estimated undiscounted future operating 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, we adjust the carrying
value of the real estate assets and related intangible assets to the estimated fair values, pursuant to the property, plant, and equipment
accounting standard for the impairment or disposal of long-lived assets, and recognize an impairment loss. Estimated fair values
are calculated based on the following hierarchy of information, depending upon availability: (Level 1) recently quoted market
prices; (Level 2) market prices for comparable properties; or (Level 3) the present value of future cash flows, including estimated
residual value. Certain of our assets may be carried at an amount that exceeds that which could be realized in a current disposition
Page 37
transaction. We have determined that there is no impairment in the carrying values of our real estate assets and related intangible
assets for the year ended December 31, 2017.
Projections of expected future operating cash flows require that we 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.
Allocation of Purchase Price of Acquired Assets
Upon the acquisition of real properties, we allocate the purchase price of properties to tangible assets, consisting of land and
building, site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each
case on our estimate of their fair values.
The fair values of the tangible assets of an acquired property (which includes land and building) are determined by valuing the
property as if it were vacant, and the "as-if-vacant" value is then allocated to land and building based on our determination of the
relative fair value of these assets. We determine the as-if-vacant fair value of a property using methods similar to those used by
independent appraisers. Factors we consider in performing these analyses include an estimate of carrying costs during the expected
lease-up periods considering current market conditions and costs to execute similar leases, including leasing commissions and
other related costs. In estimating carrying costs, we include real estate taxes, insurance, and other operating expenses during the
expected lease-up periods based on current market demand.
Intangible Assets and Liabilities Arising From In-Place Leases Where We Are the Lessor
As further described below, in-place leases where we are the lessor may have values related to direct costs associated with obtaining
a new tenant, opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease, tenant relationships,
and effective contractual rental rates that are above or below market rates:
•
•
•
Direct costs associated with obtaining a new tenant, including commissions, tenant improvements, and other direct costs,
are estimated based on management's consideration of current market costs to execute a similar lease. Such direct costs
are included in intangible lease origination costs in the accompanying consolidated balance sheets and are amortized to
expense over the remaining terms of the respective leases.
The value of opportunity costs associated with lost rentals avoided by acquiring an in-place lease is calculated based on
the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease.
Such opportunity costs are included in intangible lease assets in the accompanying consolidated balance sheets and are
amortized to expense over the remaining terms of the respective leases.
The value of effective rental rates of in-place leases that are above or below the market rates of comparable leases is
calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of
the difference between (i) the contractual amounts to be received pursuant to the in-place leases and (ii) management's
estimate of fair market lease rates for the corresponding in-place leases. This calculation includes significantly below-
market renewal options for which exercise of the renewal option appears to be reasonably assured. These intangible assets
or liabilities are measured over the actual or assumed (in the case of renewal options) remaining lease terms. The capitalized
above-market and below-market lease values are recorded as intangible lease assets or liabilities and amortized as an
adjustment to rental income over the remaining terms of the respective leases.
Evaluating the Recoverability of Intangible Assets and Liabilities
The values of intangible lease assets and liabilities are determined based on assumptions made at the time of acquisition and have
defined useful lives, which correspond with the lease terms. There may be instances in which intangible lease assets and liabilities
become impaired, and we are required to write off the remaining asset or liability immediately or over a shorter period of time.
Lease restructurings, including lease terminations and lease extensions, may impact the value and useful life of in-place leases.
In-place leases that are terminated, partially terminated, or modified will be evaluated for impairment if the original in-place
lease terms have been modified. In the event that the discounted cash flows of the original in-place lease stream do not exceed
the discounted modified in-place lease stream, we adjust the carrying value of the intangible lease assets to the discounted cash
flows and recognize an impairment loss. For in-place lease extensions that are executed more than one year prior to the original in-
place lease expiration date, the useful life of the in-place lease will be extended over the new lease term with the exception of
those in-place lease components, such as lease commissions and tenant allowances, which have been renegotiated for the extended
term. Renegotiated in-place lease components, such as lease commissions and tenant allowances, will be amortized over the shorter
of the useful life of the asset or the new lease term.
Page 38
Intangible Assets and Liabilities Arising From In-Place Leases Where We Are the Lessee
In-place ground leases where we are the lessee may have value associated with effective contractual rental rates that are above or
below market rates. Such values are calculated based on the present value (using a discount rate that reflects the risks associated
with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place lease and
(ii) management's estimate of fair market lease rates for the corresponding in-place lease at the time of execution or assumption.
This calculation includes significantly below market renewal options for which exercise of the renewal option appears to be
reasonably assured. These intangible assets and liabilities are measured over the actual or assumed (in the case of renewal options)
remaining lease terms. The capitalized 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 ground leases.
Related-Party Transactions and Agreements
During 2017, 2016, and 2015, we did not have any related party transactions, except as described in Note 4, Unconsolidated Joint
Venture, of the accompanying consolidated financial statements.
Commitments and Contingencies
We are subject to certain commitments and contingencies with regard to certain transactions. Refer to Note 7, Commitments &
Contingencies, to the accompanying consolidated financial statements for further explanation. Examples of such commitments
and contingencies include:
•
•
•
•
•
guaranty of debt of an unconsolidated joint venture of $11.2 million;
obligations under operating leases;
obligations under capital leases;
commitments under existing lease agreements; and
litigation.
Subsequent Events
We have evaluated subsequent events in connection with the preparation of our consolidated financial statements and notes thereto
included in this report on Form 10-K and noted the following items in addition to those disclosed elsewhere in this report:
•
•
•
On February 7, 2018, the board of directors declared dividends for the first quarter of 2018 in the amount of $0.20 per
share, payable on March 15, 2018, to stockholders of record on March 1, 2018.
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, Allianz, as described in Note 3, Real Estate Transactions, to the accompanying
consolidated financial statements.
On January 4, 2018, we paid an aggregate amount of $24.0 million in dividends for the fourth quarter of 2017 to
shareholders of record on December 1, 2017.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a result of our debt facilities, we are exposed to interest rate changes. Our interest rate risk management objectives are to limit
the impact of interest rate changes on earnings and cash flow, primarily through a moderate level of overall borrowings. However,
we currently have a substantial amount of debt outstanding. The majority of our borrowings are in the form of effectively fixed-
rate financings, which helps to insulate our portfolio from interest rate risk. We closely monitor interest rates and will continue to
consider the sources and terms of our borrowing facilities to determine whether we have appropriately guarded ourselves against
the fluctuation of interest rates in future periods.
Additionally, we have entered into interest rate swaps, and may enter into other interest rate swaps, caps, or other arrangements
to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for
speculative purposes; however, certain of our derivatives may not qualify for hedge accounting treatment. All of our debt was
entered into for other-than-trading purposes. As of December 31, 2017 and 2016, the estimated fair value of our consolidated line
of credit and notes payable and bonds was $1.7 billion and $1.4 billion, respectively.
Page 39
Our financial instruments, including bonds payable, consist of both fixed- and variable-rate debt. As of December 31, 2017,
adjusting for 51% of the debt at the Market Square Joint Venture, which we own through an unconsolidated joint venture, our debt
consisted of the following, in thousands:
2018
2019
2020
2021
2022
Thereafter
Total
$ 300,000
$ 152,000
$ 300,000
$
— $
— $
— $ 752,000
$
23,176
$
— $
— $
— $ 150,000
$ 864,265
$ 1,037,441
Maturing Debt:
Effectively variable-rate debt
Effectively fixed-rate debt(1)
Average Interest Rate:
Effectively variable-rate debt
Effectively fixed-rate debt(1)
2.60%
5.80%
2.57%
—%
2.66%
—%
—%
—%
—%
3.07%
—%
4.12%
2.62%
4.04%
(1) Fixed-rate debt and the related average interest rates exclude the $49.0 million mortgage note for 263 Shuman Boulevard, which
matured in July 2017. We are in the process of working to transfer this property to the lender in settlement of the mortgage note. Interest
is being accrued at the default rate of 10.55%.
Our variable-rate borrowings consist of the Revolving Credit Facility, the $300 Million Bridge Loan, the $300 Million Term Loan,
and the $150 Million Term Loan. However, only the Revolving Credit Facility, the $300 Million Bridge Loan, and the $300 Million
Term Loan bear interest at effectively variable rates, as the variable rate on the $150 Million Term Loan has been effectively fixed
through the interest rate swap agreement described herein.
As of December 31, 2017, we had $152.0 million outstanding borrowings under the Revolving Credit Facility; $150.0 million
outstanding on the $150 Million Term Loan; $300.0 million outstanding on the $300 Million Bridge Loan; $300.0 million
outstanding on the $300 Million Term Loan; $348.9 million in 2026 Bonds Payable outstanding; $349.6 million in 2025 Bonds
Payable outstanding; and $72.2 million outstanding on fixed-rate, term mortgage loans. The weighted-average interest rate of all
of our consolidated debt instruments was 3.47% as of December 31, 2017.
Approximately $920.7 million of our consolidated debt outstanding as of December 31, 2017, is subject to fixed rates, either
directly or when coupled with an interest rate swap agreement. As of December 31, 2017, these balances incurred interest expense
at an average interest rate of 4.17% and have expirations ranging from 2018 through 2026. A change in the market interest rate
impacts the net financial instrument position of our fixed-rate debt portfolio; however, it has no impact on interest incurred or
cash flows. A 1 percent change in interest rates would have a $7.5 million annual impact on our interest payments. The amounts
outstanding on our variable-rate debt facilities in the future will largely depend upon future acquisition and disposition activity
and other financing activities.
Our Market Square Joint Venture holds a $325 million mortgage note, which bears interest at 5.07%. Adjusting for 51% of the
debt at the Market Square Joint Venture, which we own through an unconsolidated joint venture, our weighted-average interest
rate of all of our debt instruments, including our share of the Market Square mortgage note is 3.62%.
We do not believe there is any exposure to increases in interest rates related to the capital lease obligations of $120.0 million at
December 31, 2017, as the obligations are at fixed interest rates.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data filed as part of this report are set forth beginning on page F-1 of this report.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There were no disagreements with our independent registered public accountants during 2017, 2016, or 2015.
ITEM 9A. CONTROLS AND PROCEDURES
Management's Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of management, including the Principal Executive
Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this report. Based upon that evaluation,
Page 40
the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective
as of the end of the period covered by this report in providing a reasonable level of assurance that information we are required to
disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time
periods in SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by
us in such reports is accumulated and communicated to our management, including our Principal Executive Officer and our
Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Report of Management on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as a process designed by, or under the supervision of, the Principal Executive
Officer and Principal Financial Officer and effected by our management and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
GAAP and includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition
of our assets;
provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements
in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations
of management and/or members of the board of directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of our assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of human error and the
circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely basis. In addition,
projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because
of changes and conditions or that the degree of compliance with policies or procedures may deteriorate. Accordingly, even internal
controls determined to be effective can provide only reasonable assurance that the information required to be disclosed in reports
filed under the Exchange Act is recorded, processed, summarized, and represented within the time periods required.
Our management has assessed the effectiveness of our internal control over financial reporting at December 31, 2017. To make
this assessment, we used the criteria for effective internal control over financial reporting described in the Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this
assessment, our management believes that our system of internal control over financial reporting met those criteria, and therefore
our management has concluded that we maintained effective internal control over financial reporting as of December 31, 2017.
The report of the Company's independent registered public accounting firm on internal control over financial reporting for the
Company is included in Part IV, Item 15, of this annual report on Form 10-K and is incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2017, that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Page 41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Columbia Property Trust, Inc.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Columbia Property Trust, Inc. and subsidiaries (the “Company”)
as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal
Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2017,
of the Company and our report dated February 15, 2018, expressed an unqualified opinion on those consolidated financial statements
and financial statement schedule.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 15, 2018
Page 42
ITEM 9B. OTHER INFORMATION
During the fourth quarter of 2017, there was no information that was required to be disclosed in a report on Form 8-K that was
not disclosed in a report on Form 8-K.
Page 43
PART III
We will file a definitive Proxy Statement for our 2018 Annual Meeting of Stockholders (the "2018 Proxy Statement") with the
SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required
by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the 2018 Proxy Statement that
specifically address the items required to be set forth herein are incorporated by reference.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
We have adopted a Code of Ethics that applies to all of our executive officers and directors, including but not limited to, our
principal executive officer and principal financial officer. Our Code of Ethics may be found at http://www.columbia.reit. Any
amendments to, or waivers of, the Code of Ethics for our principal executive officer, principal financial officer, principal accounting
officer, or controller or persons performing similar functions will be disclosed on our website promptly following the date of such
amendment or waiver.
The other information required by this Item is incorporated by reference from our 2018 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from our 2018 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
See the table below for securities authorized to be issued under our equity compensation plan as of December 31, 2017. The other
information required by this Item is incorporated by reference from our 2018 Proxy Statement.
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
Number of Securities
to Be Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and Rights
Common Stock Issued
Under the LTIP
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
— $
—
— $
—
—
—
1,293,931
—
1,293,931
3,506,069
—
3,506,069
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference from our 2018 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference from our 2018 Proxy Statement.
Page 44
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. A list of the financial statements contained herein is set forth on page F-1 hereof.
(a) 2.
Schedule III - Real Estate Assets and Accumulated Depreciation
Information with respect to this item begins on page S-1 hereof. Other schedules are omitted because of the absence of
conditions under which they are required or because the required information is given in the financial statements or notes
thereto.
(a) 3.
The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
(b)
(c)
See (a) 3 above.
See (a) 2 above.
EXHIBIT INDEX TO
2017 FORM 10-K OF
COLUMBIA PROPERTY TRUST, INC.
The following documents are filed as exhibits to this report. Exhibits that are not required for this report are omitted.
Ex.
3.1
3.2
3.3
3.4
3.5
3.6
3.7
4.1
4.2
4.3
4.4
4.5
4.6
10.1
10.2
10.3
10.4+
10.5+
Description
Second Amended and Restated Articles of Incorporation as Amended by the First Articles of Amendment (incorporated by reference to
Exhibit 3.1 to the Company's Annual Report on Form 10-K filed with the Commission on March 1, 2013).
Second Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the
Commission on August 15, 2013).
Third Articles of Amendment (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the
Commission on August 15, 2013).
Fourth Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the
Commission on July 1, 2014).
Fifth Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the
Commission on May 3, 2017).
Articles Supplementary (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Commission
on September 4, 2013).
Third Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the
Commission on February 13, 2017).
Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and
without charge to stockholders issued shares without certificates) (incorporated by reference to Exhibit 4.1 to the Company's Annual
Report on Form 10-K filed with the Commission on March 1, 2013).
Indenture, dated March 12, 2015 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the
Commission on March 12, 2015).
Supplemental Indenture, dated March 12, 2015 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed
with the Commission on March 12, 2015).
Form of 4.150% Senior Notes due 2025 (incorporated by reference to in Exhibit 4.3 to the Company's Current Report on Form 8-K filed
with the Commission on March 12, 2015).
Supplemental Indenture, dated August 12, 2016 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K
filed with the Commission on August 12, 2016).
Form of 3.650% Senior Notes due 2026 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed with
the Commission on August 12, 2016).
Amended and Restated Term Loan Agreement dated as of August 21, 2013, by and among Columbia Property Trust Operating Partnership,
L.P., as Borrower; J.P. Morgan Securities LLC and PNC Capital Markets LLC, as Joint Lead Arrangers and Joint Bookrunners; JPMorgan
Chase Bank, N.A., as Administrative Agent; PNC Bank, National Association, as Syndication Agent; and Regions Bank, U.S. Bank
National Association, and Union Bank, N.A., as Documentation Agents (incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q filed with the Commission on November 5, 2013).
Supplemental Indenture dated as of February 3, 2012, among Wells Operating Partnership II, L.P., the Guarantors Party Hereto, and U.S.
Bank National Association, as Trustee (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed
with the Commission on May 4, 2012).
Columbia Property Trust, Inc. Amended and Restated 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit A to
the Company's Proxy Statement for its 2017 Annual Meeting of Stockholders filed with the Commission on March 17, 2017).
Form of Restricted Stock Award Agreement under the Columbia Property Trust, Inc. Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on January 24, 2014).
Columbia Property Trust Executive Change in Control Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report
on From 8-K filed with the Commission on December 19, 2016).
Page 45
Ex.
10.6*+
10.7*+
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18*
12.1*
21.1*
23.1*
31.1*
31.2*
32.1*
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
Description
Form of 2018 Restricted Stock Award (Time-Based) under the Columbia Property Trust Inc. Amended and Restated 2013 Long-Term
Incentive Plan.
Form of 2018 Restricted Stock Award (Performance-Based) under the Columbia Property Trust Inc. Amended and Restated 2013 Long-
Term Incentive Plan.
Amended and Restated Credit Agreement dated as of August 21, 2013, by and among Columbia Property Trust Operating Partnership, L.P.,
as Borrower; J.P. Morgan Securities LLC and PNC Capital Markets LLC, as Joint Lead Arrangers and Joint Bookrunners; JPMorgan Chase
Bank, N.A., as Administrative Agent; PNC Bank, National Association, as Syndication Agent; and Regions Bank, U.S. Bank National
Association, and BMO Capital Market Financing, Inc., as Documentation Agents (incorporated by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q filed with the Commission on November 5, 2013).
Investor Services Agreement between the Company and Wells Real Estate Funds, Inc. dated February 28, 2013, and effective as of March
1, 2013 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed with the Commission on May 8,
2013).
Consulting Services Agreement between the Company and Wells Real Estate Funds, Inc. dated February 28, 2013, and effective as of
March 1, 2013 (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed with the Commission on
May 8, 2013).
Assignment and Assumption Agreement between Wells Real Estate Funds, Inc. to Wells Operating Partnership II, L.P., dated as of
February 28, 2013 (related to Wells Real Estate Advisory Services II, LLC) (incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q filed with the Commission on May 8, 2013).
Assignment and Assumption Agreement between Wells Real Estate Funds, Inc. to Wells Operating Partnership II, L.P. dated as of
February 28, 2013 (related to Wells Real Estate Services, LLC) (incorporated by reference to Exhibit 10.6 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on May 8, 2013).
Term Loan Agreement dated as of January 6, 2015, by and among the Columbia Property Trust Operating Partnership, L.P. as borrower;
J.P. Morgan Securities LLC, as sole lead arranger and sole bookrunner; JPMorgan Chase Bank, N.A., as administrative agent; PNC Bank,
National Association, as syndication agent; Morgan Stanley Bank, N.A., U.S. Bank National Association and Wells Fargo Bank, National
Association, as documentation agents; and each of the financial institutions a signatory thereto, as lenders (incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K filed with the Commission on February 12, 2015).
Amended and Restated Revolving Credit and Term Loan Agreement, dated July 30, 2015, by and among Columbia Property Trust Operating
Partnership, L.P., as borrower; J.P. Morgan Securities LLC and PNC Capital Markets LLC, as joint lead arrangers and joint bookrunners;
JPMorgan Chase Bank, N.A., as administrative agent; PNC Bank, National Association, as syndication agent; and Regions Bank, U.S. Bank
National Association, MUFG Union Bank, N.A. and Wells Fargo Bank, N.A., as documentation agents, and each of the financial institutions
a signatory thereto, as lenders (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the
Commission on October 29, 2015).
Term Loan Agreement, dated July 30, 2015, by and among Columbia Property Trust Operating Partnership, L.P., as borrower; the financial
institutions party thereto, as lenders; Wells Fargo Bank, National Association, as administrative agent; Wells Fargo Securities, LLC,
Regions Capital Markets and U.S. Bank National Association, as joint lead arrangers and joint bookrunners; Regions Bank and U.S.
National Association, as syndication agents; and PNC Bank, National Association, as documentation agent (incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed with the Commission on October 29, 2015).
First Amendment to $150 Million Term Loan Agreement, dated as of July 25, 2017, by and among Columbia Property Trust Operating
Partnership, L.P., as borrower; the financial institutions party thereto, as lenders; Wells Fargo Bank, National Association, as administrative
agent; Wells Fargo Securities, LLC, Regions Capital Markets and U.S. Bank National Association, as joint lead arrangers and joint
bookrunners; Regions Bank and U.S. National Association, as syndication agents; and PNC Bank, National Association, as documentation
agent (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed with the Commission on October
26, 2017).
Term Loan Agreement, dated August 4, 2015, by and among the Columbia Property Trust Operating Partnership, L.P., as borrower; J.P.
Morgan Securities LLC, as joint lead arranger and sole bookrunner; JPMorgan Chase Bank, N.A., as administrative agent; PNC Bank,
National Association, Capital One, National Association, and Wells Fargo Bank, N.A. as joint lead arrangers and co-syndication agents; and
each of the financial institutions a signatory thereto, as lenders (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q filed with the Commission on October 29, 2015).
Term Loan Agreement dated as of November 27, 2017, by and among Columbia Property Trust Operating Partnership, L.P., as borrower;
JPMorgan Chase Bank, N.A., as joint lead arranger and sole bookrunner; PNC Capital Markets LLC, Regions Capital Markets, SunTrust
Robinson Humphrey, Inc., U.S. Bank National Association, and Wells Fargo Securities LLC, as joint lead arrangers; JPMorgan Chase Bank,
N.A., as administrative agent; PNC Bank, National Association, Regions Bank, SunTrust Bank, U.S. Bank National Association and Wells
Fargo Bank, National Association as documentation agents; and each of the financial institutions a signatory thereto, as lenders.
Calculation of Earnings to Fixed Charges.
Subsidiaries of Columbia Property Trust, Inc.
Consent of Deloitte & Touche LLP.
Certification of the Principal Executive Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Principal Financial Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Principal Executive Officer and Principal Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
XBRL Instance Document.
XBRL Taxonomy Extension Schema.
XBRL Taxonomy Extension Calculation Linkbase.
XBRL Taxonomy Extension Definition Linkbase.
XBRL Taxonomy Extension Label Linkbase.
XBRL Taxonomy Extension Presentation Linkbase.
Page 46
Ex.
Description
* Filed herewith.
+ Identifies each management contract or compensatory plan required to be filed.
Page 47
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SIGNATURES
COLUMBIA PROPERTY TRUST, INC.
(Registrant)
Dated: February 15, 2018
By:
/s/ James A. Fleming
JAMES A. FLEMING
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated: February 15, 2018
/s/ Wendy W. Gill
WENDY W. GILL
Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacity as and on the date indicated.
Signature
Title
/s/ Carmen M. Bowser
Independent Director
Carmen M. Bowser
/s/ Charles R. Brown
Charles R. Brown
Independent Director
/s/ Richard W. Carpenter
Independent Director
Richard W. Carpenter
/s/ John L. Dixon
John L. Dixon
/s/ David B. Henry
David B. Henry
/s/ Murray J. McCabe
Murray J. McCabe
/s/ E. Nelson Mills
E. Nelson Mills
Independent Director
Independent Director
Independent Director
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Constance B. Moore
Independent Director
Constance B. Moore
/s/ Michael S. Robb
Michael S. Robb
/s/ George W. Sands
George W. Sands
Independent Director
Independent Director
/s/ Thomas G. Wattles
Independent Director
Thomas G. Wattles
Date
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
February 15, 2018
Page 48
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2017 and 2016
Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016, and 2015(cid:2)
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2017, 2016, and 2015(cid:2)
Consolidated Statements of Equity for the Years Ended December 31, 2017, 2016, and 2015
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, and 2015
Notes to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Columbia Property Trust, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Columbia Property Trust, Inc. and subsidiaries (the "Company")
as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, equity, and cash
flows, for each of the three years in the period ended December 31, 2017, and the related notes and the schedule listed in the Index
at Item 15(a)(2) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles
generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated February 15, 2018, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 15, 2018
We have served as the Company's auditor since 2008.
F-2
COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per-share amounts)
Assets:
Real Estate Assets, at Cost:
Land
December 31,
2017
2016
$
825,208
$
751,351
Buildings and improvements, less accumulated depreciation of $388,796 and $435,457, as
of December 31, 2017 and 2016, respectively
2,063,419
2,121,150
Intangible lease assets, less accumulated amortization of $94,065 and $112,777, as of
December 31, 2017 and 2016, respectively
Construction in progress
Real estate assets held for sale, less accumulated depreciation and amortization of $180,791
as of December 31, 2016
Total real estate assets
Investment in unconsolidated joint ventures
Cash and cash equivalents
Tenant receivables, net of allowance for doubtful accounts of $0 and $31 as of December 31,
2017 and 2016, respectively
Straight-line rent receivable
Prepaid expenses and other assets
Intangible lease origination costs, less accumulated amortization of $57,465 and $74,578, as of
December 31, 2017 and 2016, respectively
Deferred lease costs, less accumulated amortization of $26,464 and $22,753, as of
December 31, 2017 and 2016, respectively
Investment in development authority bonds
Other assets held for sale, less accumulated amortization of $34,152 as of December 31, 2016
Total assets
Liabilities:
Line of credit and notes payable, net of deferred financing costs of $2,991 and $3,136, as of
December 31, 2017 and 2016, respectively
Bonds payable, net of discount of $1,484 and $1,664 and deferred financing costs of $4,760
and $5,364, as of December 31, 2017 and 2016, respectively
Accounts payable, accrued expenses, and accrued capital expenditures
Dividends payable
Deferred income
Intangible lease liabilities, less accumulated amortization of $19,660 and $44,564, as of
December 31, 2017 and 2016, respectively
Obligations under capital leases
Liabilities held for sale, less accumulated amortization of $1,239 as of December 31, 2016
Total liabilities
Commitments and Contingencies (Note 7)
Equity:
Common stock, $0.01 par value, 225,000,000 shares authorized, 119,789,106 and 122,184,193
shares issued and outstanding as of December 31, 2017 and 2016, respectively
Additional paid-in capital
Cumulative distributions in excess of earnings
Accumulated other comprehensive income (loss)
Total equity
Total liabilities and equity
199,260
44,742
—
3,132,629
943,242
9,567
2,128
92,235
27,683
42,959
141,096
120,000
—
193,311
36,188
412,506
3,514,506
127,346
216,085
7,163
64,811
24,275
54,279
125,799
120,000
45,529
$
$
4,511,539
$
4,299,793
971,185
$
721,466
693,756
125,002
23,961
18,481
27,218
120,000
—
692,972
131,028
36,727
19,694
33,375
120,000
41,763
1,979,603
1,797,025
—
—
1,198
4,487,071
(1,957,236)
903
2,531,936
$
4,511,539
$
1,221
4,538,912
(2,036,482)
(883)
2,502,768
4,299,793
See accompanying notes.
F-3
COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
Revenues:
Rental income
Tenant reimbursements
Hotel income
Asset and property management fee income
Other property income
Expenses:
Property operating costs
Hotel operating costs
Asset and property management fee expenses
Depreciation
Amortization
General and administrative – corporate
General and administrative – unconsolidated joint ventures
Acquisition expenses
Other Income (Expense):
Interest expense
Interest and other income
Loss on interest rate swaps
Loss on the early extinguishment of debt
Income (loss) before income tax, unconsolidated joint ventures, and gains on
sales of real estate assets
Income tax benefit (expense)
Income (loss) from unconsolidated joint ventures
Income before gains on sales of real estate assets
Gains on sales of real estate assets
Net income
Per-Share Information – Basic:
Net income
Weighted-average common shares outstanding – basic
Per-Share Information – Diluted:
Net income
Weighted-average common shares outstanding – diluted
Years Ended December 31,
2017
2016
2015
$
257,059
$
366,186
$
436,048
23,511
1,339
3,782
3,309
69,770
22,661
2,122
12,804
99,655
24,309
605
5,448
289,000
473,543
566,065
87,805
2,089
918
80,394
32,403
34,966
1,454
—
240,029
48,971
154,968
18,686
1,415
108,543
56,775
33,876
—
—
374,263
99,280
(60,516)
(67,609)
9,529
—
(325)
(51,312)
(2,341)
213
2,651
523
175,518
176,041
1.45
120,795
$
$
7,288
—
(18,997)
(79,318)
19,962
(445)
(7,561)
11,956
72,325
84,281
0.68
123,130
$
$
1.45
$
0.68
$
121,159
123,228
188,078
19,615
1,816
131,490
87,128
29,683
—
3,675
461,485
104,580
(85,296)
7,254
(1,110)
(3,149)
(82,301)
22,279
(378)
(1,142)
20,759
23,860
44,619
0.36
124,757
0.36
124,847
$
$
$
See accompanying notes.
F-4
COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Market value adjustment to interest rate swap
Settlement of interest rate swap
Comprehensive income
Years Ended December 31,
2017
2016
2015
$
$
176,041
$
84,281
$
1,786
—
1,553
—
177,827
$
85,834
$
44,619
(1,570)
1,102
44,151
See accompanying notes.
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COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash Flows from Operating Activities:
Net income
Adjustments to Reconcile Net Income to Net Cash Provided by Operating
Activities:
Straight-line rental income
Depreciation
Amortization
Noncash interest expense
Loss on early extinguishment of debt
Gain on interest rate swaps
Gains on sales of real estate assets
Loss (income) from unconsolidated joint ventures
Distributions of earnings from unconsolidated joint ventures
Stock-based compensation expense
Changes in Assets and Liabilities, Net of Acquisitions and Dispositions:
Decrease (increase) in tenant receivables, net
Decrease (increase) in prepaid expenses and other assets
Increase (decrease) in accounts payable and accrued expenses
Increase (decrease) in deferred income
Net cash provided by operating activities
Cash Flows From Investing Activities:
Net proceeds from the sale of real estate
Real estate acquisitions
Deposits
Capital improvements and development costs
Deferred lease costs paid
Investments in unconsolidated joint ventures
Distributions in excess of earnings from unconsolidated joint ventures
Years Ended December 31,
2017
2016
2015
$
176,041
$
84,281
$
44,619
(32,737)
80,394
31,907
3,009
325
—
(175,518)
(2,651)
3,681
7,580
4,222
(1,754)
(28,133)
(4,442)
61,924
737,631
(604,769)
—
(86,805)
(26,722)
(369,043)
1,985
(21,875)
108,543
52,530
3,549
18,997
—
(72,325)
7,561
—
4,558
4,251
5,533
(1,607)
(905)
(16,632)
131,490
78,000
4,335
3,149
(1,532)
(23,860)
1,142
—
3,548
(4,414)
(2,155)
3,330
2,060
193,091
223,080
603,732
596,734
—
(1,062,031)
10,000
(39,521)
(32,386)
(16,212)
—
—
(83,371)
(22,531)
(5,500)
—
Net cash provided by (used in) investing activities
(347,723)
525,613
(576,699)
Cash Flows From Financing Activities:
Financing costs paid
Prepayments to settle debt and interest rate swap
Proceeds from lines of credit and notes payable
Repayments of lines of credit and notes payable
Proceeds from issuance of bonds payable
Repayment of bonds payable
Distributions paid to stockholders
Redemptions of common stock
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
See accompanying notes.
F-7
(1,269)
—
783,000
(533,427)
—
—
(109,561)
(59,462)
79,281
(206,518)
216,085
(3,114)
(17,921)
435,000
(9,729)
(3,165)
1,884,000
(845,460)
(1,854,512)
348,691
(250,000)
(148,474)
(53,986)
(535,264)
183,440
32,645
349,507
—
(112,570)
(17,057)
236,474
(117,145)
149,790
32,645
$
9,567
$
216,085
$
COLUMBIA PROPERTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017, 2016, AND 2015
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, 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 December 31, 2017, Columbia
Property Trust owned 19 operating properties, of which 14 were wholly owned and five were owned through unconsolidated joint
ventures. These 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 96.2% leased as of December 31, 2017.
2.
Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements of Columbia Property Trust have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") and include the accounts of Columbia Property Trust, Columbia Property Trust OP, and any
variable interest entity ("VIE") in which Columbia Property Trust or Columbia Property Trust OP was deemed the primary
beneficiary. With respect to entities that are not VIEs, Columbia Property Trust's consolidated financial statements shall also include
the accounts of any entity in which Columbia Property Trust, Columbia Property Trust OP, or its subsidiaries own a controlling
financial interest and any limited partnership in which Columbia Property Trust, Columbia Property Trust OP, or its subsidiaries
own a controlling general partnership interest. In determining whether Columbia Property Trust or Columbia Property Trust OP
has a controlling interest, the following factors are considered, among other things: the ownership of voting interests, protective
rights, and participatory rights of the investors.
All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the accompanying consolidated financial statements and the accompanying notes.
Actual results could differ from those estimates.
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. 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 and 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.
F-8
Real Estate Assets
Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets
consist of the cost of acquisition or construction, and any tenant improvements or major improvements and betterments that extend
the useful life of the related asset. All repairs and maintenance are expensed as incurred. Additionally, Columbia Property Trust
capitalizes interest while the development of a real estate asset is in progress. During the years ended December 31, 2017 and
2016, $0.7 million and $0.3 million of interest was capitalized, respectively.
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
Building and site improvements
Tenant improvements
Intangible lease assets
40-45 years
5-25 years
Shorter of economic life or lease term
Lease term
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 construction, 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 (liabilities) may not be recoverable, Columbia Property Trust assesses the recoverability of these assets by determining
whether the respective carrying values will be recovered through the estimated undiscounted future operating 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
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. Estimated fair values are calculated based on the following hierarchy of
information: (Level 1) recently quoted market prices, (Level 2) market prices for comparable properties, or (Level 3) the present
value of future cash flows, including estimated residual value. 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 December 31, 2017.
Projections of expected future operating cash flows require that Columbia Property Trust estimates 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.
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 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.
•
•
•
•
At such time that a property is determined to be 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; and assets and liabilities are required
F-9
to be classified as held for sale on the accompanying consolidated balance sheet. As of December 31, 2017, none of Columbia
Property Trust's properties met the criteria to be classified as held for sale in the accompanying consolidated balance sheet. As of
December 31, 2016, Key Center Tower, Key Center Marriott, 5 Houston Center, Energy Center I, and 515 Post Oak were subject
to binding sale contracts and met the other aforementioned criteria; thus, these properties are classified as held for sale in the
accompanying consolidated balance sheet as of that date. The sale of 5 Houston Center, Energy Center I, and 515 Post Oak closed
on January 6, 2017, and the sale of Key Center Tower and Key Center Marriott closed on January 31, 2017 (see Note 3, Real Estate
Transactions).
The major classes of assets and liabilities classified as held for sale as of December 31, 2016, are provided below (in thousands):
December 31, 2016
Real Estate Assets Held for Sale:
Real Estate Assets, at Cost:
Land
Buildings and improvements, less accumulated depreciation of $152,246
Intangible lease assets, less accumulated amortization of $28,545
Construction in progress
Total real estate assets held for sale, net
Other Assets Held for Sale:
Tenant receivables, net of allowance for doubtful accounts
Straight-line rent receivable
Prepaid expenses and other assets
Intangible lease origination costs, less accumulated amortization of $22,949
Deferred lease costs, less accumulated amortization of $11,203
Total other assets held for sale, net
Liabilities Held for Sale:
Accounts payable, accrued expenses, and accrued capital expenditures
Deferred income
Intangible lease liabilities, less accumulated amortization of $1,239
Total liabilities held for sale, net
Allocation of Purchase Price of Acquired Assets
$
$
$
$
$
$
30,243
366,126
13,365
2,772
412,506
1,722
20,221
3,184
1,815
18,587
45,529
34,812
4,214
2,737
41,763
Upon the acquisition of real properties, Columbia Property Trust allocates the purchase price of 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 details). Columbia Property Trust adopted ASU 2017-01, as described in the Recent
Accounting Pronouncements section below, effective October 1, 2017. As a result, transaction costs for properties acquired in the
fourth quarter have been capitalized and included in the purchase price allocated for properties acquired in the period. Prior to
October 1, 2017, transaction costs were expensed and included in acquisition expense on the accompanying statements of operations.
The fair values of the tangible assets of an acquired property (which includes land, building, and site improvements) are determined
by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building, and site improvements
based on management's determination of the relative fair value of these assets. Management determines the as-if-vacant fair value
of a property using methods similar to those used by independent appraisers. Factors considered by management in performing
these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions
and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, management
includes real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market
demand.
Intangible Assets and Liabilities Arising From In-Place Leases Where Columbia Property Trust Is the Lessor
As further described below, in-place leases with Columbia Property Trust as the lessor may have values related to: direct costs
associated with obtaining a new tenant, opportunity costs associated with lost rentals that are avoided by acquiring an in-place
lease, tenant relationships, and effective contractual rental rates that are above or below market rates:
F-10
•
•
•
Direct costs associated with obtaining a new tenant, including commissions, tenant improvements, and other direct costs,
are estimated based on management's consideration of current market costs to execute a similar lease. Such direct costs
are included in intangible lease origination costs in the accompanying consolidated balance sheets and are amortized to
expense over the remaining terms of the respective leases.
The value of opportunity costs associated with lost rentals avoided by acquiring an in-place lease is calculated based on
contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Such
opportunity costs ("Absorption Period Costs") are included in intangible lease assets in the accompanying consolidated
balance sheets and are amortized to expense over the remaining terms of the respective leases.
The value of effective rental rates of in-place leases that are above or below the market rates of comparable leases is
calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of
the difference between (i) the contractual amounts to be received pursuant to the in-place leases and (ii) management's
estimate of fair market lease rates for the corresponding in-place leases. This calculation includes significantly below-
market renewal options for which exercise of the renewal option appears to be reasonably assured. These intangible assets
or liabilities are measured over the actual or assumed (in the case of renewal options) remaining lease terms. The capitalized
above-market and below-market lease values are recorded as intangible lease assets or liabilities and amortized as an
adjustment to rental income over the remaining terms of the respective leases.
As of December 31, 2017 and 2016, Columbia Property Trust had the following gross intangible in-place lease assets and liabilities,
excluding amounts held for sale (in thousands):
December 31, 2017
Gross
Accumulated Amortization
December 31, 2016
Net
Gross
Accumulated Amortization
Net
Intangible Lease Assets
Above-Market
In-Place
Lease Assets
Absorption
Period Costs
Intangible
Lease
Origination
Costs
Intangible
Below-Market
In-Place Lease
Liabilities
$
$
$
$
2,481
(833)
1,648
10,589
(9,305)
1,284
$
$
$
$
149,927
(70,465)
79,462
154,582
(83,254)
71,328
$
$
$
$
100,424
(57,465)
42,959
128,857
(74,578)
54,279
$
$
$
$
46,878
(19,660)
27,218
77,939
(44,564)
33,375
During 2017, 2016, and 2015, Columbia Property Trust recognized the following amortization of intangible lease assets and
liabilities (in thousands):
For the Years Ended December 31,
2017
2016
2015
Intangible Lease Assets
Above-Market
In-Place
Lease Assets
Absorption
Period Costs
Intangible
Lease
Origination
Costs
Intangible
Below-Market
In-Place Lease
Liabilities
$
$
$
519
2,513
4,412
$
$
$
16,807
28,718
45,972
$
$
$
10,124
17,501
28,530
$
$
$
6,883
12,996
19,345
F-11
The remaining net intangible assets and liabilities as of December 31, 2017, excluding amounts held for sale, will be amortized
as follows (in thousands):
For the Years Ending December 31,
2018
2019
2020
2021
2022
Thereafter
Weighted-average amortization period
Intangible Lease Assets
Above-Market
In-Place
Lease Assets
Absorption
Period Costs
Intangible
Lease
Origination
Costs
Intangible
Below-Market
In-Place Lease
Liabilities
$
203
203
203
203
203
633
$
16,898
$
9,566
$
14,665
12,800
8,112
6,585
20,402
8,651
7,770
3,727
2,708
10,537
$
1,648
$
79,462
$
42,959
$
8 years
5 years
5 years
6,325
5,968
4,535
1,591
1,287
7,512
27,218
6 years
Intangible Assets and Liabilities Arising From In-Place Leases Where Columbia Property Trust Is the Lessee
In-place ground leases where Columbia Property Trust is the lessee may have positive or negative value associated with effective
contractual rental rates that are above or below market rates at the time of execution or assumption. Such values are calculated
based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between
(i) the contractual amounts to be paid pursuant to the in-place lease and (ii) management's estimate of fair market lease rates for
the corresponding in-place lease at the time of execution or assumption. This calculation includes significantly below-market
renewal options for which exercise of the renewal option appears to be reasonably assured. These intangible assets and liabilities
are measured over the actual or assumed (in the case of renewal options) remaining lease terms. The capitalized 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 December 31, 2017 and 2016, net of accumulated amortization of $22.8
million and $20.2 million as of December 31, 2017 and 2016, respectively. Columbia Property Trust recognized amortization
expense related to these assets of approximately $2.5 million for 2017, 2016, and 2015.
As of December 31, 2017, the remaining net below-market lease asset will be amortized as follows (in thousands):
For the Years Ending December 31:
2018
2019
2020
2021
2022
Thereafter
Weighted-average amortization period
Cash and Cash Equivalents
$
$
2,549
2,549
2,549
2,549
2,549
105,405
118,150
47 years
Columbia Property Trust considers all highly liquid investments purchased with an original maturity of three months or less to be
cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which
approximates fair value as of December 31, 2017 and 2016.
Tenant Receivables, Net
Tenant receivables consist of rental and reimbursement billings due from tenants. Tenant receivables are recorded at the original
amount earned, less an allowance for any doubtful accounts, which approximates fair value. Management assesses the realizability
of tenant receivables on an ongoing basis and provides for allowances as such balances, or portions thereof, become uncollectible.
F-12
Columbia Property Trust adjusted the allowance for doubtful accounts by recording a provision for doubtful accounts, net of
recoveries, in general and administrative expenses in the accompanying consolidated statements of operations of approximately
$26,000 and $289,000 for 2017 and 2016, respectively.
Straight Line Rent Receivable
Straight line rent receivable reflects the amount of cumulative adjustments necessary to present rental income on a straight-line
basis. Columbia Property Trust recognizes revenues on a straight-line basis, ratably over the term of each lease; however, leases
often provide for payment terms that differ from the revenue recognized. When the amount of cash received is less than the amount
of revenue recognized, typically early in the lease, straight line rent receivable is recorded for the difference. The receivable is
depleted during periods later in the lease when the amount of cash paid by the tenant is greater than the amount of revenue
recognized.
Prepaid Expenses and Other Assets
Prepaid expenses and other assets primarily include earnest money deposits, escrow accounts held by lenders to pay future real
estate taxes, insurance and tenant improvements, notes receivable, nontenant receivables, prepaid taxes, insurance and operating
costs, unamortized deferred financing costs related to the line of credit (the "Revolving Credit Facility"), interest rate swaps (when
in an asset position), certain corporate assets, hotel inventory, and deferred tax assets. Prepaid expenses are recognized over the
period to which the good or service relates. Other assets are written off when the asset no longer has future value, or when the
company is no longer obligated for the corresponding liability.
Deferred Financing Costs
Deferred financing costs include costs incurred to secure debt from third-party lenders. Deferred financing costs, except for costs
related to the Revolving Credit Facility, are presented as a direct reduction to the carrying amount of the related debt for all periods
presented. Deferred financing costs related to the Revolving Credit Facility are included in prepaid expenses and other assets.
Columbia Property Trust recognized amortization of deferred financing costs for the years ended December 31, 2017, 2016, and
2015 of approximately $2.8 million, $3.3 million, and $4.4 million, respectively, which is included in interest expense in the
accompanying consolidated statements of operations.
Deferred Lease Costs
Deferred lease costs include costs incurred to procure leases that are paid to third parties or tenants, and incentives that are provided
to tenants under the terms of their leases. These costs are capitalized and amortized on a straight-line basis over the terms of the
lease. Amortization of third-party leasing costs is reflected as amortization expense, and amortization of lease incentives is reflected
as an adjustment to rental income. During 2017, 2016, and 2015, Columbia Property Trust recognized amortization expense for
deferred lease costs of $5.2 million, $9.3 million, and $8.9 million, respectively. During 2017, 2016, and 2015, Columbia Property
Trust recognized adjustments to rental income for amortization of deferred lease costs of $3.3 million, $3.9 million, and $3.7
million, respectively. Upon receiving notification of a tenant's intention to terminate a lease, unamortized deferred lease costs are
amortized over the shortened lease period. As of December 31, 2017 and 2016, deferred lease costs includes $68.4 million and
$69.0 million, respectively, in unamortized lease incentives for a lease at the 222 East 41st Street Property, which will continue
to be amortized to rental income over the approximately 30-year remaining lease term.
Investments in Development Authority Bonds and Obligations Under Capital Leases
In connection with the acquisition of certain real estate assets, Columbia Property Trust has assumed investments in development
authority bonds and corresponding obligations under capital leases of land or buildings. The county development authority issued
bonds to developers to finance the initial development of these projects, a portion of which was then leased back to the developer
under a capital lease. This structure enabled the developer to receive property tax abatements over the concurrent terms of the
development authority bonds and capital leases. The remaining property tax abatement benefits transferred to Columbia Property
Trust upon assumption of the bonds and corresponding capital leases at acquisition. The development authority bonds and the
obligations under the capital leases are both recorded at their net present values, which Columbia Property Trust believes
approximates fair value. The related amounts of interest income and expense are recognized as earned in equal amounts and,
accordingly, do not impact net income.
Accounts Payable, Accrued Expenses, and Accrued Capital Expenditures
Accounts payable, accrued expenses, and accrued capital expenditures primarily include payables related to property operations,
capital projects, and interest rate swaps (when in a liability position). As of December 31, 2017 and 2016, accounts payable, accrued
F-13
expenses, and accrued capital expenditures includes approximately $54.7 million and $69.0 million in lease incentives related to
a lease at the 222 East 41st Street Property.
Line of Credit and Notes Payable
Certain mortgage notes included in line of credit and notes payable in the accompanying consolidated balance sheets were assumed
upon the acquisition of real properties. When debt is assumed, Columbia Property Trust records the loan at fair value. The fair
value adjustment is amortized to interest expense over the term of the loan using the effective interest method.
As described in the Deferred Financing Costs section above, line of credit and notes payable is presented on the accompanying
consolidated balance sheet net of deferred financing costs related to term loans and notes payable of $3.0 million and $3.1 million
as of December 31, 2017 and December 31, 2016, respectively.
Bonds Payable
In August 2016, Columbia Property Trust issued $350 million of its 10-year unsecured 3.650% senior notes at 99.626% of their
face value (the "2026 Bonds Payable"). In March 2015, Columbia Property Trust issued $350.0 million of its 10-year unsecured
4.150% senior notes at 99.859% of their face value (the "2025 Bonds Payable"). The discount on the 2026 Bonds Payable and the
2025 Bonds Payable is amortized to interest expense over the term of the bonds using the effective-interest method.
As described in the Deferred Financing Costs section above, bonds payable are presented on the accompanying consolidated
balance sheet net of deferred financing costs related to bonds payable of $4.8 million and $5.4 million as of December 31, 2017
and December 31, 2016, respectively.
Common Stock Repurchase Program
Columbia Property Trust's board of directors has authorized the repurchases of its common stock, par value $0.01 per share, subject
to certain limitations, as described in Note 8, Equity. Columbia Property Trust expects to acquire shares primarily through open
market transactions, subject to market conditions and other factors. As of December 31, 2017, $194.8 million remains available
for repurchases under the current stock repurchase program. Common stock repurchases are charged against equity as incurred,
and the repurchased shares are retired. See Note 8, Equity, for additional details.
Preferred Stock
Columbia Property Trust is authorized to issue up to 100.0 million shares of one or more classes or series of preferred stock with
a par value of $0.01 per share. Columbia Property Trust's board of directors may determine the relative rights, preferences, and
privileges of each class or series of preferred stock issued, which may be more beneficial than the rights, preferences, and privileges
attributable to Columbia Property Trust's common stock. To date, Columbia Property Trust has not issued any shares of preferred
stock.
Common Stock
The par value of Columbia Property Trust's issued and outstanding shares of common stock is classified as common stock, with
the remainder allocated to additional paid-in capital.
Distributions
To maintain its status as a REIT, Columbia Property Trust is required by the Internal Revenue Code of 1986, as amended (the
"Code"), to make distributions to stockholders each taxable year equal to at least 90% of its REIT taxable income, computed
without regard to the dividends-paid deduction and by excluding net capital gains attributable to stockholders ("REIT taxable
income"). Distributions to the stockholders are determined by the board of directors of Columbia Property Trust and are dependent
upon a number of factors relating to Columbia Property Trust, including funds available for payment of distributions, financial
condition, the timing of property acquisitions, capital expenditure requirements, and annual distribution requirements in order to
maintain Columbia Property Trust's status as a REIT under the Code.
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 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 the effective portion of interest rate swaps that are designated as cash
F-14
flow hedges are recorded as other comprehensive income, while changes in the fair value of the ineffective portion of a hedge, if
any, is recognized currently in earnings. 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 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 as of December 31,
2017 and 2016 (in thousands):
Instrument Type
Derivatives Designated as Hedging Instruments:
Interest rate contracts
Interest rate contracts
Balance Sheet Classification
2017
2016
Estimated Fair Value as of
December 31,
Prepaid expenses and other assets
Accounts payable
$
$
903
$
— $
—
(882)
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.
Years Ended December 31,
2017
2016
2015
Market value adjustment to interest rate swaps designated as hedging
instruments and included in other comprehensive income
Loss on interest rate swap recognized through earnings
$
$
1,786
$
— $
1,553
$
— $
(1,570)
(1,110)
In July 2015, Columbia Property Trust paid $1.1 million to settle the interest rate swap on a $450 million term loan, which is
reflected in earnings. During the periods presented, there was no other hedge ineffectiveness required to be recognized into earnings
on the interest rate swaps that qualified for hedge accounting treatment.
Revenue Recognition
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 cost is 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. Management fees earned by Columbia Property Trust for services provided to certain of its
unconsolidated joint ventures are recorded as asset and property management fee income during the period in which such services
are provided. Lease termination fees are recorded as other property 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.
In conjunction with certain acquisitions, Columbia Property Trust has entered into master lease agreements with various sellers,
whereby the sellers are obligated to pay rent pertaining to certain nonrevenue-producing spaces either at the time of, or subsequent
to, the property acquisition. These master leases were established at the time of acquisition to mitigate the potential negative effects
of lost rental revenues and expense reimbursement income. Columbia Property Trust records payments received under master
lease agreements as a reduction of the basis of the underlying property rather than rental income. There were no proceeds received
from master leases during 2017, 2016, or 2015.
Prior to disposition on January 31, 2017, Columbia Property Trust owned the Key Center Marriott, a full-service hotel, through a
taxable REIT subsidiary. Revenues derived from the operations of the hotel include, but are not limited to, revenues from rental
of rooms, food and beverage sales, telephone usage, and other service revenues. Revenue was recognized when rooms were
occupied, when services performed, and when products were delivered.
F-15
Income Taxes
Columbia Property Trust has elected to be taxed as a REIT under 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, 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 25% 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.
Segment Information
As of December 31, 2017, Columbia Property Trust's reportable segments are determined based on the geographic markets in
which it 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 (see Note 14, Segment Information).
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 August 2017, the Financial Accounting Standards Board (the "FASB") issued Accounting Standard Update 2017-12, Targeted
Improvements to Accounting for Hedging Activities ("ASU 2017-12"). ASU 2017-12 aligns reporting requirements for hedging
relationships with risk management activities and simplifies the application of hedge accounting. ASU 2017-12 eliminates the
concept of recognizing periodic hedge ineffectiveness for cash flow hedges and allows for ongoing qualitative, rather than
quantitative, testing of hedge effectiveness. ASU 2017-12 will be effective for Columbia Property Trust on January 1, 2019, with
early adoption permitted. Columbia Property Trust elected to early adopt ASU 2017-12 effective December 1, 2017. The adoption
of ASU 2017-12 resulted in a simplified process to determine the ongoing effectiveness of its cash flow hedge with no material
impact on its consolidated financial statements or other disclosures.
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 will apply to the partial sale of non-financial
assets, including real estate assets, to unconsolidated joint ventures. ASU 2017-05 will require 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 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 will adopt the new rule effective January 1, 2018 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 will result in
an increase to investment in unconsolidated joint ventures and equity by $357.8 million for the investments in the Market Square,
333 Market Street, and University Circle properties.
F-16
In January 2017, the FASB issued Accounting Standards Update 2017-01, Clarifying the Definition of a Business ("ASU 2017-01"),
which provides a more narrow definition of a business to be used in determining the accounting treatment of acquisitions. As a
result, under the new standard, many acquisitions previously classified as business combinations will be treated as asset acquisitions.
For asset acquisitions, unlike business combinations, transaction costs may be capitalized, and purchase price may be allocated
on a relative fair-value basis. Columbia Property Trust elected to early adopt ASU 2017-01 as of October 1, 2017. As a result,
transaction costs of $2.2 million were capitalized during the fourth quarter related to the acquisitions of 245-249 West 17th
Street, 218 West 18th Street, and 149 Madison Avenue. See Note 3, Real Estate Transactions, for more information about these
acquisitions.
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. Columbia
Property Trust is primarily a lessor and is monitoring additional clarification regarding the treatment of certain features of its lease
agreements that might be classified as non-lease components. Columbia Property Trust is also a lessee, primarily on ground leases,
and it is evaluating the impact of ASU 2016-02 on accounting for such leases.
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 will require companies to perform a five-step analysis of transactions to
determine when and how revenue is recognized. Columbia Property Trust expects the new standard to apply primarily to fees
earned from managing properties owned by its unconsolidated joint ventures and certain parking agreements. Revenues for such
services represented $6.7 million, $3.6 million, and $1.8 million, or 2.3%, 0.8%, and 0.3% of total revenues, for the years ended
December 31, 2017, 2016, and 2015, respectively. Revenues derived from leases, which are excluded from ASU 2014-09 represented
$281.0 million, $447.3 million, and $539.9 million, or 97.2%, 94.5%, and 95.4% of total revenues for the years ended December
31, 2017, 2016, and 2015, respectively. Given the structure of the asset and property management agreements currently in place
with unconsolidated joint ventures and the parking agreements currently in place with existing tenants, Columbia Property Trust
does not expect ASU 2014-09 to materially impact the timing or amount of revenue recognition; however, Columbia Property
Trust will be required to provide more extensive disclosures about its revenue streams and contracts with customers. ASU 2014-09
was effective for Columbia Property Trust on January 1, 2018. Columbia Property Trust will use the modified retrospective approach
of adoption, which will result in the recognition of a cumulative effect adjustment to equity, with no retrospective adjustments to
prior periods.
F-17
3.
Real Estate Transactions
Acquisitions
During 2017, 2016, and 2015, Columbia Property Trust acquired the following properties and partial interests in properties:
Property
2017
Location
Date
Percent
Acquired
Purchase Price
(in thousands)(1)
149 Madison Avenue
1800 M Street
New York, NY
Washington, D.C.
November 28, 2017
October 11, 2017
245-249 West 17th Street & 218 West
18th Street
114 Fifth Avenue
2015
229 West 43rd Street
116 Huntington Avenue
315 Park Avenue South & 1881
Campus Commons
New York, NY
New York, NY
New York NY
Boston, MA
New York, NY &
Reston, VA
100.0% $
55.0% $
100.0% $
49.5% $
87,700
231,550 (2)
514,100
108,900 (2)
October 11, 2017
July 6, 2017
August 4, 2015
January 8, 2015
100.0 % $
100.0 % $
516,000
152,000
January 7, 2015
100.0 % $
436,000
(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 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
plans to redevelop this property. For the period from November 28, 2017 to December 31, 2017, Columbia Property Trust recognized
$10,300 of revenues and net income of $9,200 from 149 Madison Avenue.
1800 M Street Joint Venture
Columbia Property Trust entered a new joint venture partnership with Allianz Real Estate of America LLC ("Allianz"), which
simultaneously acquired 1800 M Street, a 10-story, 581,000-square-foot office building in Washington, D.C., that is 94% leased,
for a total of $421.0 million (the "1800 M Street Joint Venture"). Columbia Property Trust owns a 55% interest in the 1800 M
Street Joint Venture, and Allianz owns the remaining 45%.
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 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 to seven tenants, including Red Bull North America, Inc. (25%), Company 3 (18%),
SY Partners (16%), and SAE (16%). For the period from October 11, 2017 to December 31, 2017, Columbia Property Trust
recognized revenues of $5.9 million and a net income of $1.8 million from 245-249 West 17th Street, and revenues of $3.0 million
and net income of $0.8 million from 218 West 18th Street.
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 is 100% leased, 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 will
continue to perform asset and property management services for the property.
229 West 43rd Street
On August 4, 2015, Columbia Property Trust acquired the 481,000-square-foot office portion of the 229 West 43rd Street, a 16-
story, 732,000-square-foot building located in the Times Square sub-market of Manhattan in New York, New York, for $516.0
million, exclusive of transaction costs and purchase price adjustments. As of the acquisition date, the 229 West 43rd Street Building
F-18
was 98.0% leased to nine tenants, including Yahoo! (40%), Snapchat (13%), Collective, Inc. (12%), and MongoDB (10%). For
the period from August 4, 2015 to December 31, 2015, Columbia Property Trust recognized revenues of $15.3 million and net
income of $2.2 million from the 229 West 43rd Street. The net income includes acquisition expenses of $1.7 million.
116 Huntington Avenue
On January 8, 2015, Columbia Property Trust acquired 116 Huntington Avenue, a 271,000-square-foot office building in Boston,
Massachusetts, for $152.0 million, inclusive of capital credits. As of the acquisition date, the 116 Huntington Avenue Building
was 78.0% leased to 17 tenants, including American Tower (21%), GE Healthcare (13%), and Brigham and Women's (12%). For
the period from January 8, 2015 to December 31, 2015, Columbia Property Trust recognized revenues of $11.3 million and a net
loss of $0.7 million from the 116 Huntington Avenue. The net loss includes acquisition expenses of $0.3 million.
315 Park Avenue South Building & 1881 Campus Commons Building
On January 7, 2015, Columbia Property Trust acquired a portfolio of two assets, which included 315 Park Avenue South, a 327,000-
square-foot office building in New York, New York, and 1881 Campus Commons, a 244,000-square-foot office building in Reston,
Virginia. This portfolio was acquired for $436.0 million, exclusive of transaction costs and purchase price adjustments.
As of the acquisition date, the 315 Park Avenue South was 94.9% leased to nine tenants, including Credit Suisse (74%). For the
period from January 7, 2015 to December 31, 2015, Columbia Property Trust recognized revenues of $25.1 million and a net loss
of $6.6 million from the 315 Park Avenue South. The net loss includes acquisition expenses of $1.2 million.
As of the acquisition date, the 1881 Campus Commons was 78.0% leased to 15 tenants, including SOS International (15%) and
Siemens (12%). For the period from January 7, 2015 to December 31, 2015, Columbia Property Trust recognized revenues of $5.8
million and a net loss of $1.3 million from the 1881 Campus Commons. The net loss includes acquisition expenses of $0.5 million.
Columbia Property Trust sold 1881 Campus Commons on December 10, 2015, as described in the Dispositions section below.
Purchase Price Allocations for Consolidated Property Acquisitions:
149 Madison
Avenue
245-249 West
17th Street
218 West 18th
Street
229 West 43rd
Street
116
Huntington
Avenue
315 Park
Avenue
South
1881 Campus
Commons
Location
New York, NY
New York, NY
New York, NY
New York, NY
Boston, MA
New York, NY
Reston, VA
Date Acquired November 28, 2017
October 11, 2017 October 11, 2017 August 4, 2015
January 8, 2015
January 7, 2015
January 7, 2015
Purchase
Price:
Land
Building
and
improve-
ments
Intangible
lease assets
Intangible
below
market
ground lease
assets
Intangible
lease origin-
ation costs
Intangible
below
market lease
liability
Total
purchase
price
$
59,112
$
113,149
$
43,836
$
207,233
— $
119,633
$
7,179
28,989
194,109
126,957
265,952
108,383
232,598
49,273
—
—
—
—
27,408
12,120
27,039
7,907
16,912
4,643
—
—
—
30,244
—
—
13,062
4,168
10,059
2,669
4,148
1,603
(7,131)
(11,757)
—
(1,878)
(7,487)
(97)
$
88,101
$
340,597
$
175,324
$
510,283
147,325
$
365,804
$
62,601
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 presented for 2017, 2016, and 2015, 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; and 315 Park Avenue South, 1881 Campus Commons, 116 Huntington Avenue,
F-19
and 229 West 43rd Street as if the acquisitions had occurred on January 1, 2014. 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 and
January 1, 2014 (in thousands):
Revenues
Net income
Net income per share – basic
Net income per share – diluted
Dispositions
2017
2016
2015
$
$
$
$
319,064
183,318
1.51
1.51
$
$
$
$
511,306
93,537
0.76
0.76
$
$
$
$
582,699
46,363
0.37
0.37
During 2017, 2016, and 2015, Columbia Property Trust sold the following properties and partial interest in properties:
Location
Date
% Sold
Sales Price(1)
(in thousands)
Gain (Loss) on
Sale (rounded,
in thousands)
Property
2017
University Circle & 333
Market Street(2)
Key Center Tower &
Marriott(4)
Houston Properties(5)
2016
San Francisco, CA
July 6, 2017
22.5% (3)
$ 234,000 (2)(3)
Cleveland, OH
January 31, 2017
Houston, TX
January 6, 2017
100.0%
100.0%
$ 267,500
$ 272,000
SanTan Corporate Center
Phoenix, AZ
December 15, 2016
Sterling Commerce
Dallas, TX
November 30, 2016
9127 South Jamaica Street
Denver, CO
October 12, 2016
80 Park Plaza
Newark, NJ
September 30, 2016
9189, 9191 & 9193 South
Jamaica Street
800 North Frederick
100 East Pratt(7)
2015
Denver, CO
September 22, 2016
Suburban, MD
Baltimore, MD
July 8, 2016
March 31, 2016
1881 Campus Commons(8)
Market Square(9)
11 Property Sale(10)
Reston, VA
December 10, 2015
Washington, D.C.
Various(10)
October 28, 2015
July 1, 2015
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
49.0 %
100.0 %
$
$
$
58,500
51,000
19,500
$ 174,500
$ 122,000
$
48,000
$ 187,000
65,000
$
$ 291,600 (9)
$ 433,300
$
$
$
$
$
$
$
$
$
$
$
$
$
102,400
9,500
63,700
9,800
12,500
— (6)
21,600
27,200
2,100
(300)
500
3,100
20,200
(1) Exclusive of transaction costs and price adjustments.
(2) 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").
(3) On February 1, 2018, Allianz acquired another 22.5% interest in each of the San Francisco Joint Ventures at an aggregate price of
$235.3 million, thereby reducing Columbia Property Trust's equity interest in each joint venture to 55.0%. These proceeds 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.
(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 net income of $14.5 million and $12.1 million for the years ended December 31, 2016 and 2015, respectively; and 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 net income of $11.1
million and $12.9 million for the years ended December 31, 2016 and 2015, respectively; and a net loss of $14.9 thousand for the first
six days of 2017, excluding the gain on sale.
(6) Columbia Property Trust recorded a de minimus loss on the sale of 9127 South Jamaica Street.
(7) The net sale proceeds of $159.4 million from 100 East Pratt were used to repay the $119.0 million remaining on the 2015 Bridge Loan
on April 1, 2016.
F-20
(8) The net proceeds from the sale of 1881 Campus Commons were used to reduce the outstanding balance of the 2015 Bridge Loan.
(9) Sale price is for our partial interest in the property. On October 28, 2015, Columbia Property Trust transferred the Market Square
properties, valued at $595.0 million and subject to a $325.0 million mortgage note, to a joint venture and sold a 49% interest in that
joint venture to Blackstone Property Partners for net proceeds of approximately $120.0 million. Columbia Property Trust retains a
51% interest in the Market Square Joint Venture. See Note 4, Unconsolidated Joint Ventures, for additional information.
(10) Columbia Property Trust closed on the sale of 11 properties on July 1, 2015 (the "11 Property Sale"). The 11 Property Sale included
170 and 180 Park Avenue in Northern New Jersey; 1580 West Nursery Road in Baltimore; Acxiom, Highland Landmark III, The
Corridors III, 215 Diehl Road, 544 Lakeview, and Bannockburn Lake III in Chicago; and Robbins Road and 550 King Street in Boston.
The proceeds for 10 of the properties were available on July 1, 2015, and the remaining proceeds were available on August 3, 2015.
For the period from January 1, 2015 through July 1, 2015, the aggregate net income, excluding the gain on sale, for the properties
included in the 11 Property Sale was $6.5 million; and for the year ended December 31, 2015, the net income for the properties included
in the 11 Property Sale was $3.0 million, excluding the gain on sale.
4.
Unconsolidated Joint Ventures
As of December 31, 2017 and December 31, 2016, Columbia Property Trust owns interests in the following properties through
joint ventures, which are accounted for using the equity method of accounting:
Joint Venture(1)
Property Name
Geographic Market
Market Square Joint Venture
Market Square
Washington, D.C.
University Circle Joint Venture
University Circle
San Francisco
333 Market Street Joint Venture
333 Market Street
San Francisco
114 Fifth Avenue Joint Venture
114 Fifth Avenue
New York
1800 M Street Joint Venture
1800 M Street
Washington, D.C.
Carrying Value of Investment
Ownership
Interest
December 31,
2017
December 31,
2016
51.0%
77.5% (2)
77.5% (2)
49.5%
55.0%
$
128,411
$
127,346
173,798
288,236
110,311
242,486
—
—
—
—
$
943,242
$
127,346
(1) See Note 3, Real Estate Transactions, for a description of the formation of these joint ventures.
(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 each of the joint ventures do not 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 ventures 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 investment 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 "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 December 31, 2017.
Mortgage Debt and Related Guaranty
The Market Square Joint Venture is the only joint venture with mortgage debt. As of December 31, 2017 and December 31, 2016,
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 December 31, 2017 from $16.1 million as of December 31,
2016, as a result of leasing at the property. The amount of the guaranty will continue to be reduced as space is leased.
F-21
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)
December 31,
2017
December 31,
2016
December 31,
2017
December 31,
2016
December 31,
2017
December 31,
2016
Market Square Joint Venture
$
590,115
$
587,344
$
324,708
$
324,656
$
244,506
$
242,802
University Circle Joint Venture
333 Market Street Joint Venture
114 Fifth Avenue Joint Venture
1800 M Street Joint Venture
227,368
385,297
392,486
458,964
—
—
—
—
—
—
—
—
—
—
—
—
221,154
368,994
170,525
438,227
—
—
—
—
$
2,054,230
$
587,344
$
324,708
$
324,656
$
1,443,406
$
242,802
(1) There is an aggregate basis difference of $32.0 million, which represents the differences between the historical costs recorded at the
joint venture level, and Columbia Property Trust's investment in the joint ventures and results from differences in the timing of each
partner's interest acquisition and formation costs incurred by Columbia Property Trust. The basis difference is being amortized to
income (loss) from unconsolidated joint ventures over the lives of the related assets or liabilities.
Summarized income statement information for the unconsolidated joint ventures for the years ended December 31, 2017, 2016
and 2015 is as follows (in thousands):
Total Revenues
Net Income (Loss)
Columbia Property Trust's Share
of Net Income (Loss)
2017
2016
2015
2017
2016
2015
2017
2016
2015
Market Square Joint Venture
$
41,749
$
41,230
$
7,962
$ (15,192) $ (14,825) $
(2,239) $
(7,747) $
(7,561) $
(1,142)
University Circle Joint Venture
333 Market Street Joint Venture
114 Fifth Avenue Joint Venture
1800 M Street Joint Venture
19,386
12,971
20,133
8,005
—
—
—
—
—
—
—
—
9,826
6,948
(4,885)
619
—
—
—
—
—
—
—
—
7,561
5,331
(2,820)
326
—
—
—
—
—
—
—
—
$ 102,244
$
41,230
$
7,962
$
(2,684) $ (14,825) $
(2,239) $
2,651
$
(7,561) $
(1,142)
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 years ended December 31, 2017, 2016, and 2015, Columbia
Property Trust earned the following fees from these unconsolidated joint ventures:
Market Square Joint Venture
University Circle Joint Venture
333 Market Street Joint Venture
1800 M Street Joint Venture
2017
2016
2015
1,998
$
2,122
$
1,000
367
417
—
—
—
3,782
$
2,122
$
213
—
—
—
213
$
$
Columbia Property Trust also received reimbursements of property operating costs of $2.0 million and $0.5 million for the years
ended December 31, 2017 and 2016, respectively, and none for the year ended December 31, 2015, which are included in other
property income revenues in the accompanying consolidated statements of operations. Property management fees of $0.4 million,
and $0.1 million, respectively, 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 December 31, 2017 and December 31, 2016, respectively.
F-22
5.
Line of Credit and Notes Payable
As of December 31, 2017 and 2016, Columbia Property Trust had the following line of credit and notes payable indebtedness
outstanding (excluding bonds payable; see Note 6, Bonds Payable) in thousands:
Term Debt or
Interest Only
Outstanding Balance as of
December 31,
Maturity
2017
2016
Interest only
7/31/2020
$
300,000
$
300,000
Facility
$300 Million Term Loan
$300 Million Bridge Loan
Revolving Credit Facility
$150 Million Term Loan
263 Shuman Boulevard Building mortgage note(5)
One Glenlake Building mortgage note
650 California Street Building mortgage note
221 Main Building mortgage note
Less: Deferred financing costs related to term loans,
bridge loan, and mortgage notes payable
Total indebtedness
Rate as of
December 31, 2017
LIBOR + 110 bp (1)
LIBOR + 110 bp (2)
LIBOR + 100 bp (3)
LIBOR + 110 bp (4)
Interest only
11/27/2018
Interest only
Interest only
Term debt
Term debt
7/31/2019
7/29/2022
7/1/2017
12/10/2018
7/1/2019
Interest only
5/10/2017
10.55%
Interest only
5.80%
3.60%
3.95%
300,000
152,000
150,000
49,000
23,176
—
—
(2,991)
$
971,185
$
—
—
150,000
49,000
26,315
126,287
73,000
(3,136)
721,466
(1) The $300 Million Term Loan bears interest, at Columbia Property Trust's option, at LIBOR, plus an applicable margin ranging from
0.90% to 1.75% for LIBOR loans, or an alternate base rate, plus an applicable margin ranging from 0.00% to 0.75% for base-rate
loans, based on Columbia Property Trust's applicable credit rating.
(2) The $300 Million Bridge Loan bears interest, at Columbia Property Trust's option, at LIBOR, plus an applicable margin ranging from
0.90% to 1.75% for LIBOR loans, or an alternate base rate, plus an applicable margin ranging from 0.00% to 0.75% for base-rate
loans, based on Columbia Property Trust's applicable credit rating.
(3) Borrowings under the Revolving Credit Facility, as described below, bear interest at the option of Columbia Property Trust at LIBOR,
plus an applicable margin ranging from 0.875% to 1.55% for LIBOR-based borrowings, or an alternate base rate, plus an applicable
margin ranging from 0.00% to 0.55% for base-rate borrowings, based on Columbia Property Trust's applicable credit rating.
(4) Columbia Property Trust is party to an interest rate swap agreement with a notional amount of $150.0 million, which effectively fixes
its interest rate on the $150 Million Term Loan, as further described below, at 3.07% and terminates on July 29, 2022. This interest
rate swap agreement qualifies for hedge accounting treatment; therefore, changes in the fair value are recorded as a market value
adjustment to interest rate swap in the accompanying consolidated statement of other comprehensive income.
(5) The OfficeMax lease at 263 Shuman Boulevard expired in May 2017, and the mortgage note matured in July 2017. Columbia Property
Trust is working with the special-servicer to effect the transfer of the property to the lender in settlement of the loan principal, accrued
interest expense and accrued property operating expenses. In the third and fourth quarters of 2017, Columbia Property Trust accrued
related interest expense of $2.6 million at the default rate of 10.55%, and property operating expenses of $0.9 million, primarily related
to property taxes and repairs and maintenance.
$300 Million Bridge Loan
On November 27, 2017, Columbia Property Trust entered into a $300.0 million, one-year, unsecured loan with a syndicate of
banks led by JPMorgan Chase Bank, N.A. (the "$300 Million Bridge Loan"). The proceeds from the $300 Million Bridge were
used to repay borrowings under the Revolving Credit Facility, which were used to fund real estate acquisitions. At Columbia
Property Trust's option, borrowings under the $300 Million Bridge Loan bear interest at either (i) an alternate base rate, plus an
applicable margin based on five stated pricing levels ranging from 0.00% to 0.75% or (ii) LIBOR, plus an applicable margin based
on five stated pricing levels ranging from 0.90% to 1.75%, in each case based on Columbia Property Trust's credit rating. The
$300 Million Bridge Loan provides for one six-month extension option to May 24, 2019, subject to certain fees and the satisfaction
of certain other conditions.
Term Loan Amendment
On July 25, 2017, Columbia Property Trust amended the terms of its $150 Million Term Loan, to reduce the current interest rate
from 3.52% to 3.07% per annum. The amendment reduced the interest rate from LIBOR, plus an applicable margin ranging from
1.40% to 2.35%, to LIBOR, plus an applicable margin ranging from 0.90% to 1.75%. The maturity date, debt covenants, and other
terms of the $150 Million Term Loan are unchanged. The interest rate is effectively fixed with an interest rate swap agreement,
which is designated as a cash flow hedge.
F-23
Debt Covenants
The $300 Million Term Loan, the $300 Million Bridge Loan, the $150 Million Term Loan, and the Revolving Credit Facility
(collectively, the "Debt Facilities") contain representations and warranties, financial and other affirmative and negative covenants,
events of defaults, and remedies typical for these types of facilities. The financial covenants in the Debt Facilities:
(a)
limit the ratio of secured debt to total asset value, as defined therein, to 40% or less;
(b) require the fixed charge coverage ratio, as defined therein, to be at least 1.50:1.00;
limit the ratio of debt to total asset value, as defined therein, to 60% or less;
(c)
(d) require the ratio of unencumbered adjusted net operating income, as defined therein, to unsecured interest expense, as
defined therein, to be at least 1.75:1.00;
(e)
require the ratio of unencumbered asset value, as defined therein, to total unsecured debt, as defined therein, to be at
least 1.66:1.00; and
(f)
require maintenance of certain minimum tangible net worth balances.
As of December 31, 2017, Columbia Property Trust believes it was in compliance with the restrictive financial covenants on its
Debt Facilities and notes payable obligations.
Fair Value of Debt
The estimated fair value of Columbia Property Trust's consolidated line of credit and notes payable as of December 31, 2017 and
2016, was approximately $975.3 million and $728.5 million, respectively. The related carrying value of the line of credit and notes
payable as of December 31, 2017 and 2016, was $974.2 million and $724.6 million, respectively. Columbia Property Trust estimated
the fair value of its line of credit 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 (Level 3).
Interest Paid and Capitalized
As of December 31, 2017 and 2016, Columbia Property Trust's weighted-average interest rate on its consolidated line of credit
and notes payable was approximately 3.16% and 3.09%, respectively. Columbia Property Trust made interest payments of
approximately $21.5 million, $27.8 million, and $54.0 million during 2017, 2016, and 2015, respectively, of which approximately
$0.7 million, $0.3 million, and $0.6 million was capitalized during 2017, 2016, and 2015, respectively.
Debt Repayments and Maturities
During 2017 and 2016 Columbia Property Trust made the following debt repayments:
•
•
•
•
•
On August 17, 2017, Columbia Property Trust repaid the $124.8 million balance of the 650 California Street building
mortgage note, which was originally scheduled to mature on July 1, 2019. Columbia Property Trust recognized a loss on
early extinguishment of debt of $0.3 million related to unamortized deferred financing costs.
On March 10, 2017, Columbia Property Trust repaid the $73.0 million balance of the 221 Main Street building mortgage
note, which was originally scheduled to mature on May 10, 2017. Columbia Property Trust recognized a loss on early
extinguishment of debt of $45,000 related to unamortized deferred financing costs.
On October 3, 2016, a portion of the proceeds from the sale of the 80 Park Plaza Property was used to repay the $99.0
million remaining outstanding balance on the Revolving Credit Facility.
On June 30, 2016, Columbia Property Trust used borrowings on the Revolving Credit Facility to repay the $39.0 million
SanTan Corporate Center mortgage notes, which were scheduled to mature on October 11, 2016. Columbia Property
Trust recognized a loss on early extinguishment of debt of $10,000 related to unamortized deferred financing costs.
On April 1, 2016, Columbia Property Trust repaid the $119.0 million remaining on the 2015 Bridge Loan, which was
used to finance a portion of the 229 West 43rd Street Building acquisition in August of 2015. The 2015 Bridge Loan was
scheduled to mature on August 4, 2016. Columbia Property Trust recognized a loss on early extinguishment of debt of
$82,000 related to unamortized deferred financing costs.
F-24
The following table summarizes the aggregate maturities of Columbia Property Trust's line of credit and notes payable as of
December 31, 2017 (in thousands):
2018
2019
2020
2021
2022
Thereafter
Total(1)
$
323,176
152,000
300,000
—
150,000
—
$
925,176
(1) The $49.0 million 263 Shuman mortgage note is excluded from this table. The mortgage note matured in July 2017. Columbia Property
Trust is working with the special-servicer to effect the transfer of the property to the lender in settlement of the loan principal, accrued
interest expense, and accrued property operating expenses.
6.
Bonds Payable
On August 12, 2016, Columbia Property Trust OP issued $350 million of 10-year, unsecured 3.650% senior notes, which are
guaranteed by Columbia Property Trust, at 99.626% of its face value (the "2026 Bonds Payable"), pursuant to a shelf registration
statement. Columbia Property Trust OP received net proceeds from the 2026 Bonds Payable of $346.4 million, which were used
to redeem $250.0 million of seven-year, unsecured 5.875% senior notes due April 2018 (the "2018 Bonds Payable"). The 2026
Bonds Payable require semi-annual interest payments in February and August based on a contractual annual interest rate of 3.650%.
In the accompanying consolidated balance sheets, the 2026 Bonds Payable are shown net of the initial issuance discount of
approximately $1.3 million, which will be amortized to interest expense over the term of the 2026 Bonds Payable using the effective
interest method. The principal amount of the 2026 Bonds Payable is due and payable on the maturity date, August 15, 2026.
In March 2015, Columbia Property Trust OP issued $350.0 million of 10-year, unsecured 4.150% senior notes, which are guaranteed
by Columbia Property Trust, at 99.859% of their face value (the "2025 Bonds Payable"), pursuant to a shelf registration statement.
Columbia Property Trust OP received proceeds from the 2025 Bonds Payable, net of fees, of $347.2 million. The 2025 Bonds
Payable require semi-annual interest payments in April and October based on a contractual annual interest rate of 4.150%. In the
accompanying consolidated balance sheets, the 2025 Bonds Payable are shown net of the initial issuance discount of approximately
$0.5 million, which will be amortized to interest expense over the term of the 2025 Bonds Payable using the effective interest
method. The principal amount of the 2025 Bonds Payable is due and payable on the maturity date, April 1, 2025.
During the year ended December 31, 2017, Columbia Property Trust made interest payments of $27.4 million on the 2025 Bonds
Payable and 2026 Bonds Payable; and during the year ended December 31, 2016, Columbia Property Trust made interest payments
of $28.0 million on the 2025 Bonds Payable and the 2018 Bonds Payable. Interest payments on the 2026 Bonds Payable began
in February 2017.
The restrictive covenants on the 2026 Bonds Payable and the 2025 Bonds Payable, as defined, pursuant to an indenture include:
•
•
•
•
a limitation on the ratio of debt to total assets, as defined, to 60%;
limits to Columbia Property Trust's ability to incur debt if the consolidated income available for debt service to annual
debt service charge, as defined, for four previous consecutive fiscal quarters is less than 1.5:1 on a pro forma basis;
limits to Columbia Property Trust's ability to incur liens if, on an aggregate basis for Columbia Property Trust, the secured
debt amount would exceed 40% of the value of the total assets; and
a requirement that the ratio of unencumbered asset value, as defined, to total unsecured debt be at least 150% at all times.
As of December 31, 2017, Columbia Property Trust believes it was in compliance with the restrictive financial covenants on its
2026 Bonds Payable and 2025 Bonds Payable.
The estimated fair value of the 2025 Bonds Payable and the 2026 Bonds Payable as of December 31, 2017 and 2016, was
approximately $702.8 million and $703.1 million, respectively. The related carrying value of the bonds payable, net of discounts,
as of December 31, 2017 and 2016, was $698.5 million and $698.3 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 borrowing
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.
F-25
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 December 31, 2017, no
tenants have exercised such options that have not been materially satisfied or recorded as a liability in the accompanying consolidated
balance sheets.
Obligations Under Operating Leases
Columbia Property Trust owns three properties that are subject to ground leases with expiration dates of February 28, 2062,
December 14, 2077, and July 31, 2099, respectively. The lease expiring on December 14, 2077, has been fully prepaid. Columbia
Property Trust also leases space for its corporate office. Columbia Property Trust incurred $2.6 million in rent expense related to
such leases in 2017, 2016, and 2015. As of December 31, 2017, the required payments under the terms of the remaining two
consolidated ground leases and the corporate office lease are as follows (in thousands):
2018
2019
2020
2021
2022
Thereafter
Total
$
$
3,282
3,360
3,382
3,405
3,587
192,352
209,368
Obligations Under Capital Leases
The building at Three Glenlake is subject to a capital lease of land. This obligation requires payments equal to the amounts of
principal and interest receivable from related investments in development authority bonds, which mature in 2021. The required
payments under the terms of the leases are as follows as of December 31, 2017 (in thousands):
2018
2019
2020
2021
2022
Thereafter
Amounts representing interest
Total
Guaranty of Debt of Unconsolidated Joint Venture
$
7,200
7,200
7,200
127,200
—
—
148,800
(28,800)
$
120,000
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 December 31, 2017. 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 December 31,
2017.
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
F-26
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 or financial condition of Columbia Property Trust.
8.
Equity
Common Stock Repurchase Program
Columbia Property Trust's board of directors authorized the repurchase of up to an aggregate of $200.0 million of its common
stock, par value $0.01 per share, from September 4, 2015 through September 4, 2017 (the "2015 Stock Repurchase Program").
Under the 2015 Stock Repurchase Program, Columbia Property Trust acquired 5.6 million shares at an average price of $21.85
per share, for aggregate purchases of $121.4 million. Columbia Property Trust's board of directors authorized a second 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 year ended December 31,
2017, Columbia Property Trust repurchased 2.7 million shares at an average price of $21.46 per share, for aggregate purchases of
$57.6 million under the 2015 Stock Repurchase Program and the 2017 Stock Repurchase Program. As of December 31, 2017,
$194.8 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 Plan
Columbia Property Trust maintains a shareholder-approved, long-term incentive plan that provides for grants of stock to be made
to certain employees and independent directors of Columbia Property Trust (as amended and restated, the "LTIP"). In May 2017,
Columbia Property Trust's shareholders approved the LTIP, and 4.8 million shares are authorized and reserved for issuance under
the LTIP.
On January 20, 2017, Columbia Property Trust granted 193,535 shares of common stock to employees, net of 17,938 shares
withheld to settle the related tax liability, under the LTIP for 2016 performance, of which 25% vested upon grant; the remaining
shares will vest ratably, with the passage of time, on January 31, 2018, 2019, and 2020. Employees receive quarterly dividends
related to their entire grant, including the unvested shares, on each dividend payment date.
For 2017, Columbia Property Trust modified the structure of awards granted under the LTIP to include both time-based awards
and performance-based awards for all participants. For the 2017 time-based awards, Columbia Property Trust issued 139,825
shares of common stock to employees, which will vest ratably on each anniversary of the grant date over the next four years. For
the 2017 performance-based awards, Columbia Property Trust granted 193,219 restricted share 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. In addition, Columbia Property Trust granted 45,076 and 92,585 one-time transitional Performance-Based RSUs, which
will fully vest at the conclusion of one-year and two-year performance periods, respectively. Upon reaching a predefined
performance threshold, the payout of the Performance-Based RSUs will range from 50% to 150% of the Performance-Based RSUs
granted, depending on Columbia Property Trust’s total stockholder return relative to the FTSE NAREIT Equity Office Index. All
awards are expensed over the vesting period based on their estimated fair values. The fair-value of time-based awards is estimated
using the closing stock price on the grant date; and fair values of performance-based awards are estimated using a Monte Carlo
valuation method.
The 2018 LTIP awards are consistent with the 2017 LTIP awards. 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 RSUs, of which 75% will vest at the conclusion
of a three-year performance period, and the remaining 25% will vest one year later. 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.
F-27
Below is a summary of the shares of stock issued under the LTIP for the years ended December 31, 2017, 2016, and 2015:
Unvested shares as of January 1, 2015
Granted
Vested
Forfeited
Unvested shares as of December 31, 2015
Granted
Vested
Forfeited
Unvested shares as of December 31, 2016
Granted
Vested
Forfeited
Unvested shares as of December 31, 2017
Shares
(in thousands)
Weighted-Average,
Grant-Date Fair Value(1)
104
123
(74)
(2)
151
247
(138)
(4)
256
333
(193)
$
$
$
$
$
$
$
$
$
$
$
(7)
$
389 (2) $
24.82
24.40
24.60
24.56
24.59
21.79
23.32
21.90
22.62
21.59
22.42
21.81
21.85
(1) Columbia Property Trust determined the weighted-average grant-date fair value using the market closing price on the date of the grant.
(2) As of December 31, 2017, Columbia Property Trust expects approximately 370,000 of the 389,000 unvested shares to ultimately vest,
assuming a forfeiture rate of 5%, which was determined based on peer company data, adjusted for the specifics of the LTIP.
A summary of the activity for the Performance-Based RSUs under the LTIP follows:
Unvested performance-based share awards as of December 31, 2016
Granted
Vested
Forfeited
Unvested performance-based share awards as of December 31, 2017
Performance-Based
RSU Awards
(in thousands)
Weighted-Average,
Grant-Date Fair Value(1)
—
331
—
$
$
$
(2)
$
329 (2) $
—
18.78
—
19.01
18.78
(1) Columbia Property Trust determined the weighted-average grant-date fair value using the estimated fair value on the date of grant.
(2) As of December 31, 2017, Columbia Property Trust expects approximately 303,000 of the 329,000 unvested performance-based
restricted share units to ultimately vest, assuming a forfeiture rate of 8%, which was determined based on peer company data, adjusted
for the specifics of the LTIP.
F-28
Director Stock Grants
In May 2017, Columbia Property Trust began paying its directors' equity retainers on an annual basis for the ensuing period. From
January 2014 through January 3, 2017, Columbia Property Trust paid these equity retainers in quarterly installments. The equity
retainers vest at the time of grant. A summary of these grants, made under the LTIP, follows:
Date of Grant
2017 Director Grants:
January 3, 2017
May 2, 2017
November 27, 2017(1)
2016 Director Grants:
January 4, 2016
April 1, 2016
July 1, 2016
October 3, 2016
2015 Director Grants:
January 2, 2015
April 1, 2015
July 1, 2015
October 1, 2015
Shares
Weighted-Average
Grant-Date Fair Value
8,279
33,581
1,596
7,439
8,120
8,158
7,727
5,850
4,995
4,144
4,571
$
$
$
$
$
$
$
$
$
$
$
21.58
22.57
23.07
23.00
21.89
21.52
22.19
25.75
27.16
24.84
23.40
(1)
In November 2017, a new director was appointed to the board of directors of Columbia Property Trust. The new director received a
pro-rated annual equity retainer grant at appointment.
Stock-Based Compensation Expense
Columbia Property Trust incurred stock-based compensation expense related to the following events (in thousands):
Amortization of unvested LTIP awards
Future employee awards(1)
Issuance of shares to independent directors
Total stock-based compensation expense
2017
2016
2015
$
$
4,098
$
2,856
$
2,509
973
1,006
696
7,580
$
4,558
$
1,699
1,353
496
3,548
(1) Reflects amortization of LTIP awards 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.
There were $8.1 million and $3.2 million of unrecognized compensation costs related to unvested awards under the LTIP as of
December 31, 2017 and December 31, 2016, respectively. This amount will be amortized over the respective vesting period,
ranging from one year to four years at the time of grant. Effective in 2017, Columbia Property Trust changed from an LTIP measured
over a one-year performance period to an LTIP measured over a three-year performance period and, as a result, has issued additional
unvested shares in 2017.
Independent Director Stock Option Plan
Columbia Property Trust previously maintained an independent director stock option plan that provides for grants of stock to be
made to independent directors of Columbia Property Trust (the "Director Plan"). A total of 25,000 shares were authorized and
reserved for issuance under the Director Plan, which was suspended in April of 2008. Under the Director Plan, options were granted
upon appointment to the board and on each annual meeting date. All options granted under the Director Plan have expired.
F-29
A summary of stock option activity under the Director Plan during 2017, 2016, and 2015, follows:
Outstanding as of December 31, 2014
Granted
Expired
Number
Exercise
Price
Exercisable
3,875
$
48.00
3,875
—
(2,000)
Outstanding as of December 31, 2015
1,875
$
48.00
1,875
Granted
Expired
—
(500)
Outstanding as of December 31, 2016
1,375
$
48.00
1,375
Granted
Expired
—
(1,375)
Outstanding as of December 31, 2017
— $
—
—
Columbia Property Trust has evaluated the fair values of options granted under the Director Plan using the Black-Scholes-Merton
model and concluded that such values are insignificant as of the end of the period presented.
9.
Operating Leases
Columbia Property Trust's real estate assets are leased to tenants under operating leases for which the terms vary, including certain
provisions to extend the lease agreement, options for early terminations, subject to specified penalties, and other terms and
conditions as negotiated. Columbia Property Trust retains substantially all of the risks and benefits of ownership of the real estate
assets leased to tenants. Amounts required as security deposits vary depending upon the terms of the respective leases and the
creditworthiness of the tenant; however, such deposits generally are not significant. Therefore, exposure to credit risk exists to the
extent that the receivables exceed this amount. Security deposits related to tenant leases are included in accounts payable, accrued
expenses, and accrued capital expenditures in the accompanying consolidated balance sheets.
Based on 2017 annualized lease revenue, as defined, none of Columbia Property Trust's tenants represent more than 6% of Columbia
Property Trust's portfolio. Tenants in business services, depository institutions, and engineering and management services represent
23%, 11%, and 8%, respectively, of Columbia Property Trust's annualized lease revenue. Columbia Property Trust's properties
are located primarily in New York, San Francisco, Washington, D.C., and Atlanta. As of December 31, 2017, approximately 38%,
28%, and 14% of Columbia Property Trust's office properties are located in New York, San Francisco, and Washington, D.C.,
respectively, based on annualized lease revenue.
The future minimum rental income from Columbia Property Trust's investment in real estate assets under noncancelable operating
leases, excluding lease incentives, as of December 31, 2017, is as follows (in thousands):
2018
2019
2020
2021
2022
Thereafter
Total
$
$
231,641
247,774
243,053
207,919
192,322
1,440,917
2,563,626
As of December 31, 2017, Columbia Property Trust has recognized lease incentive obligations of $66.3 million, which will be
amortized against rental income over the 30-year life of the related lease.
F-30
10.
Supplemental Disclosures of Noncash Investing and Financing Activities
Outlined below are significant noncash investing and financing activities for the years ended December 31, 2017, 2016, and 2015
(in thousands):
Investment in real estate funded with other assets
Deposits applied to sales of real estate
Other assets assumed upon acquisition
Other liabilities assumed upon acquisition
Real estate assets transferred to unconsolidated joint venture
Mortgage note transferred to unconsolidated joint venture
Other assets transferred to unconsolidated joint venture
Other liabilities transferred to unconsolidated joint venture
Discount on issuance of bonds payable
Amortization of discounts (premiums) on debt
$
$
$
$
$
$
$
$
$
$
Market value adjustment to interest rate swaps that qualify for hedge accounting treatment $
Accrued capital expenditures and deferred lease costs
Accrued dividends payable
Common stock issued to employees and directors, and amortized (net of income tax
witholdings)
$
$
$
11.
Income Taxes
Years Ended December 31,
2017
2016
2015
311
10,000
1,014
268
558,122
$
$
$
$
$
— $
43,700
21,347
$
$
— $
180
1,786
25,069
23,961
5,764
$
$
$
$
$
1,442
$
27,000
— $
— $
— $
— $
— $
— $
— $
1,309
267
1,553
15,042
36,727
3,388
$
$
$
$
$
$
—
7,785
4,765
531,696
325,000
37,987
20,595
494
(18)
(1,570)
19,324
37,354
3,548
Columbia Property Trust's income tax basis net income during 2017, 2016, and 2015 (in thousands) follows:
GAAP basis financial statement net income attributable to the common
stockholders of Columbia Property Trust, Inc.
Increase (Decrease) in Net Income Resulting From:
Depreciation and amortization expense for financial reporting purposes in
excess of amounts for income tax purposes
Rental income accrued for financial reporting purposes in excess of amounts for
income tax purposes
Net amortization of above-/below-market lease intangibles for financial
reporting purposes less than amounts for income tax purposes
Gain on interest rate swaps that do not qualify for hedge accounting treatment
for financial reporting purposes in excess of amounts for income tax purposes
Bad debt expense for financial reporting purposes less than amounts for income
tax purposes
Income from unconsolidated joint ventures for financial reporting purchases in
excess of amount for income tax purposes
Gains or losses on disposition of real property for financial reporting purposes
that are more favorable than amounts for income tax purposes
2017
2016
2015
$
176,041
$
84,281
$
44,619
33,918
34,569
81,559
(38,426)
(26,900)
(13,409)
(6,091)
(9,013)
—
(31)
13,902
—
(261)
—
(6,626)
(2,633)
5
—
(126,770)
(71,701)
(117,857)
Other expenses for financial reporting purposes in excess of amounts for
income tax purposes
11,331
Income tax basis net income, prior to dividends-paid deduction
$
63,874
$
(2,707)
8,268
$
14,342
—
F-31
As of December 31, 2017, the tax basis carrying value of Columbia Property Trust's total assets was approximately $4.6 billion.
For income tax purposes, distributions to common stockholders are characterized as ordinary income, capital gains, or as a return
of a stockholder's invested capital. Columbia Property Trust's distributions per common share are summarized as follows:
Ordinary income
Capital gains
Return of capital
Total
2017
2016
2015
58.5%
—%
41.5%
100.0%
5.6%
—%
94.4%
100.0%
—%
—%
100.0%
100.0%
As of December 31, 2017, returns for the calendar years 2013 through 2017 remain subject to examination by U.S. or various
state tax jurisdictions.
No provisions for federal income taxes have been made in the accompanying consolidated financial statements, other than the
provisions relating to the TRS Entities, as Columbia Property Trust made distributions in excess of taxable income for the periods
presented. Columbia Property Trust is subject to certain state and local taxes related to property operations in certain locations,
which have been provided for in the accompanying consolidated financial statements. The income taxes recorded by the TRS
Entities for the years ended December 31, 2017, 2016, and 2015, are as follows:
Federal income tax
State income tax
Total income tax
Years Ended December 31,
2017
2016
2015
$
$
188
38
226
$
$
255
21
276
$
$
17
25
42
As of December 31, 2017, Columbia Property Trust had a deferred tax asset of $205,000, and as of December 31, 2016, Columbia
Property Trust had a deferred tax liability of $22,000, which are included in prepaid expenses and other assets in the accompanying
consolidated balance sheets.
F-32
12.
Earnings Per Share
The basic and diluted earnings-per-share computations and net income have been reduced for the dividends paid on unvested
shares related to the LTIP grants, as described in Note 8, Equity. The following table reconciles the numerator for the basic and
diluted earnings-per-share computations shown on the consolidated statements of income (in thousands):
Net income
Distributions paid on unvested shares
Net income used to calculate basic and diluted earnings per share
2017
2016
2015
$
$
176,041
(337)
175,704
$
$
84,281
(314)
83,967
$
$
44,619
(185)
44,434
The following table reconciles the denominator for the basic and diluted earnings-per-share computations shown on the consolidated
statements of income (in thousands):
Weighted-average common shares – basic
Plus Incremental Weighted-Average Shares From Time-Vested
Conversions Less Assumed Share Repurchases:
Previously granted LTIP awards, unvested
Future LTIP awards
2017
2016
2015
120,795
123,130
124,757
116
248
58
40
33
57
Weighted-average common shares – diluted
121,159
123,228
124,847
F-33
13.
Quarterly Results (Unaudited)
Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2017 and 2016
(in thousands, except per-share data):
Revenues
Net income
Net income per share – basic
Net income per share – diluted
Dividends declared per share
Revenues
Net income
Net income per share – basic
Net income per share – diluted
Dividends declared per share
First
Quarter
82,156
74,722 (1)
0.61
0.61
0.20
$
$
$
$
$
2017
Second
Quarter
Third
Quarter
Fourth
Quarter
74,857
1,133
0.01
0.01
0.20
$
60,362
$ 101,534 (2)
0.84
$
$
$
0.84
0.20
$
$
$
$
$
71,625
(1,348)
(0.01)
(0.01)
0.20
2016
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
126,579
$ 127,930
$ 113,266
$ 105,768
6,697
0.05
0.05
0.30
$
$
$
$
13,286 (3)
0.11
0.11
0.30
$
$
$
$
36,898 (4)
0.30
0.30
0.30
$
$
$
$
27,400 (5)
0.22
0.22
0.30
$
$
$
$
$
$
$
$
$
$
(1) Net income for the first quarter of 2017 includes gains on sales of real estate assets of $73.2 million related to the sales of real estate
assets as described in Note 3, Real Estate Transactions.
(2) Net income for the third quarter of 2017 includes gains on sales of real estate assets of $102.4 million related to the sales of real estate
assets as described in Note 3, Real Estate Transactions.
(3) Net income for the second quarter of 2016 includes an early termination payment at 222 East 41st Street of $6.2 million.
(4) Net income for the third quarter of 2016 includes gains on sales of real estate assets of $50.4 million related to the sales of real estate
assets as described in Note 3, Real Estate Transactions; partially offset by losses on early extinguishment of debt of $18.9 million
related to the early repayment of the 2018 Bonds Payable.
(5) Net income for the fourth quarter of 2016 includes gains on sales of real estate assets of $22.2 million related to the sales of real estate
assets as described in Note 3, Real Estate Transactions.
F-34
14.
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 December 31, 2017, 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 inter-segment transactions.
Net operating income ("NOI") is a non-GAAP financial measure and is not considered a measure of operating results or cash flows
from operations under GAAP. 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 property operating revenues by geographic reportable segment (in thousands):
New York(1)
San Francisco(2)
Atlanta
Washington, D.C.(3)
Boston
Los Angeles
All other office markets
Total office segments
Hotel
Corporate(4)
For the Years Ended December 31,
2017
2016
2015
$
123,280
$
105,550
37,803
36,934
11,559
7,462
21,460
344,048
1,328
579
117,235
$
109,995
36,742
33,024
11,796
7,443
152,858
469,093
22,958
397
$
345,955
$
492,448
$
97,643
112,696
35,715
62,766
20,895
7,588
207,367
544,670
24,583
267
569,520
Total
(1)
(2)
(3)
Includes operating revenues for 49.5% of 114 Fifth Avenue based on Columbia Property Trust's ownership interest, from July 6, 2017
through December 31, 2017. These operating revenues are included in equity in income (loss) of unconsolidated joint ventures in the
accompanying consolidated statements of operations.
Includes operating revenues for 100.0% of 333 Market Street and University Circle through July 5, 2017. Includes operating revenues
for 77.5% of 333 Market Street and University Circle based on Columbia Property Trust's ownership interest, from July 6, 2017 through
December 31, 2017, which are included in equity in income (loss) of unconsolidated joint ventures in the accompanying consolidated
statements of operations.
Includes operating revenues for 100.0% of Market Square through October 28, 2015. Includes operating revenues for 51.0% of the
Market Square buildings based on Columbia Property Trust's ownership interest, from October 28, 2015 through December 31, 2017;
and includes operating revenues for 55.0% of 1800 M Street based on Columbia Property Trust's ownership interest, from October
11, 2017 through December 31, 2017, which are included in equity in income (loss) of unconsolidated joint ventures in the accompanying
consolidated statements of operations.
(4) The amounts for 2016 and 2015 have been adjusted to conform with 2017 presentation by removing asset and property management
fee income.
F-35
A reconciliation of GAAP revenues to operating revenues is presented below (in thousands):
Total revenues
Operating revenues included in income (loss) from
unconsolidated joint ventures(1)
Asset and property management fee income(2)
Total property operating revenues
$
$
For the Years Ended December 31,
2017
2016
2015
289,000
$
473,543
$
566,065
60,737
(3,782)
21,027
(2,122)
345,955
$
492,448
$
4,060
(605)
569,520
(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 net operating income by geographic reportable segment (in thousands):
New York(1)
San Francisco(2)
Atlanta
Washington, D.C.(3)
Boston
Los Angeles
All other office markets
Total office segments
Hotel
Corporate(4)
Total
For the Years Ended December 31,
2017
2016
2015
$
73,893
$
70,038
$
76,163
33,603
18,496
5,380
4,529
18,550
230,614
(913)
(826)
80,529
32,939
16,372
5,114
4,523
92,756
302,271
3,988
(158)
$
228,875
$
306,101
$
54,692
83,826
31,912
36,958
12,519
4,853
129,199
353,959
4,593
(586)
357,966
(1)
(2)
(3)
Includes net operating income for 49.5% of 114 Fifth Avenue based on Columbia Property Trust's ownership interest, from July 6,
2017 through December 31, 2017. This net operating income is included in equity in income (loss) of unconsolidated joint ventures
in the accompanying consolidated statements of operations.
Includes net operating income for 100.0% of 333 Market Street and University Circle through July 5, 2017. Includes net operating
income for 77.5% of 333 Market Street and University Circle based on Columbia Property Trust's ownership interest, from July 6,
2017 through December 31, 2017, which is included in equity in income (loss) of unconsolidated joint ventures in the accompanying
consolidated statements of operations.
Includes net operating income for 100.0% of Market Square through October 28, 2015. Includes net operating income for 51.0% of
the Market Square buildings based on Columbia Property Trust's ownership interest, from October 28, 2015 through December 31,
2017; and includes net operating income for 55.0% of 1800 M Street based on Columbia Property Trust's ownership interest, from
October 11, 2017 through December 31, 2017. This net operating income is included in equity in income (loss) of unconsolidated joint
ventures in the accompanying consolidated statements of operations.
(4) The amounts for 2016 and 2015 have been adjusted to conform with 2017 presentation by removing asset and property management
fee income.
F-36
A reconciliation of GAAP net income to NOI is presented below (in thousands):
For the Years Ended December 31,
2017
2016
2015
$
176,041
$
84,281
$
Net income
Depreciation
Amortization
General and administrative – corporate
General and administrative – joint venture
Real estate acquisition costs
Net interest expense
Interest income from development authority bonds
Interest rate swap valuation adjustment
Interest expense associated with interest rate swap
Settlement of interest rate swap
Loss on early extinguishment of debt
Income tax expense
Asset and property management fee income
Adjustments included in loss from unconsolidated joint venture
80,394
32,403
34,966
1,454
—
58,187
(7,200)
—
—
—
325
(213)
(3,782)
31,818
108,543
56,775
33,876
—
—
67,538
(7,200)
—
—
—
18,997
445
(2,122)
17,293
(72,325)
306,101
$
44,619
131,490
87,128
29,683
—
3,675
85,265
(7,200)
(2,634)
2,642
1,102
3,149
378
(605)
3,134
(23,860)
357,966
Gains on sales of real estate assets
Net operating income
$
(175,518)
228,875
$
15.
Financial Information for Parent Guarantor, Other Guarantor Subsidiaries, 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 guarantees are full and unconditional; and
(3) no other subsidiary of the parent company guarantor (Columbia Property Trust) guarantees the 2025 Bonds Payable or
the 2018 Bonds Payable.
Columbia Property Trust uses the equity method with respect to its investment in subsidiaries included in its condensed consolidating
financial statements. Columbia Property Trust has 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 years ended December 31, 2016: increase to operating cash flows for
the parent and issuer of $53.1 million and $136.7 million, respectively; and increase (decrease) in investing cash flows for the
parent, issuer, and non-guarantors of $(281.8) million, $568.5 million and $603.7 million, respectively; and increase (decrease)
in financing cash flows for the parent, issuer, and non-guarantors of $228.7 million, $(705.2) million, and $(603.7) million,
respectively. This change had the following impact to the condensed consolidating statement of cash flows for the years ended
December 31, 2015: increase to operating cash flows for the parent of $15.7 million; and increase (decrease) in investing cash
flows for the parent, issuer, and non-guarantors of $1,045.9 million, $(145.3) million and $(468.0) million, respectively; and
increase (decrease) in financing cash flows for the parent, issuer, and non-guarantors of $(1,061.6) million, $145.3 million and
$468.0 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 December 31, 2017 and 2016 (in
thousands), as well as its condensed consolidating statements of operations and its condensed consolidating statements of
F-37
comprehensive income for 2017, 2016, and 2015 (in thousands); and its condensed consolidating statements of cash flows for
2017, 2016, and 2015 (in thousands).
Condensed Consolidating Balance Sheets (in thousands)
As of December 31, 2017
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Assets:
Real Estate Assets, at Cost:
Land
$
— $
— $
825,208
$
— $
(4,070,825) $
4,511,539
825,208
2,063,419
199,260
44,742
3,132,629
943,242
9,567
—
2,128
92,235
27,683
42,959
141,096
120,000
971,185
693,756
125,002
23,961
—
18,481
27,218
120,000
1,979,603
2,531,936
4,511,539
Buildings and improvements, net
Intangible lease assets, net
Construction in progress
Total real estate assets
Investment in unconsolidated joint
ventures
Cash and cash equivalents
Investment in subsidiaries
Tenant receivables, net of allowance
Straight-line rent receivable
2,110
2,061,309
—
—
199,260
44,742
2,110
3,130,519
—
—
—
—
—
692
943,241
5,079
2,238,577
1,186,594
—
—
30
—
Prepaid expenses and other assets
317,364
336,598
Intangible lease origination costs, net
Deferred lease costs, net
Investment in development authority
bonds
Total assets
Liabilities:
Line of credit and notes payable, net
Bonds payable, net
Accounts payable, accrued expenses, and
accrued capital expenditures
$
$
Dividends payable
Due to affiliates
Deferred income
Intangible lease liabilities, net
Obligations under capital leases
$
$
—
—
—
—
—
—
2,556,633
$
2,473,652
— $
—
732
23,961
—
4
—
—
899,168
693,756
10,325
—
—
81
—
—
Total liabilities
24,697
1,603,330
—
—
—
—
—
—
(3,425,171)
—
—
(645,654)
—
—
—
(643,310) $
—
(4)
—
(2,340)
—
—
—
(645,654)
1
3,796
—
2,098
92,235
19,375
42,959
141,096
120,000
3,552,079
715,327
—
113,949
—
2,340
18,396
27,218
120,000
997,230
$
$
Equity:
Total equity
2,531,936
870,322
2,554,849
(3,425,171)
Total liabilities and equity
$
2,556,633
$
2,473,652
$
3,552,079
$
(4,070,825) $
F-38
Condensed Consolidating Balance Sheets (in thousands)
As of December 31, 2016
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Assets:
Real Estate Assets, at Cost:
Land
$
— $
— $
751,351
$
— $
751,351
2,121,150
193,311
36,188
412,506
3,514,506
127,346
216,085
—
7,163
64,811
24,275
54,279
125,799
120,000
45,529
721,466
692,972
131,028
36,727
—
19,694
33,375
120,000
41,763
1,797,025
2,502,768
4,299,793
Building and improvements, net
Intangible lease assets, net
Construction in progress
Real estate assets held for sale, net
Total real estate assets
Investment in unconsolidated joint
ventures
Cash and cash equivalents
Investment in subsidiaries
Tenant receivables, net of allowance
Straight-line rent receivable
—
—
—
—
—
—
174,420
2,047,922
—
—
219
—
—
34,956
35,175
127,346
16,509
1,782,752
—
—
Prepaid expenses and other assets
317,153
262,216
$
$
Intangible lease origination costs, net
Deferred lease costs, net
Investment in development authority
bonds
Other assets held for sale, net
Total assets
Liabilities:
Lines of credit and notes payable, net
Bonds payable, net
Accounts payable, accrued expenses,
and accrued capital expenditures
Dividends payable
Due to affiliates
Deferred income
Intangible lease liabilities, net
Obligations under capital leases
Liabilities held for sale, net
$
$
—
—
—
—
—
—
—
3,767
2,539,495
$
2,227,765
— $
—
—
36,727
—
—
—
—
—
447,643
692,972
10,395
—
58
—
—
—
2,651
2,120,931
193,311
36,188
377,550
3,479,331
—
25,156
—
7,163
64,811
15,593
54,279
125,799
120,000
41,814
3,933,946
704,585
—
120,633
—
1,534
19,694
33,375
120,000
177,497
$
$
Total liabilities
36,727
1,153,719
1,177,318
Equity:
—
—
—
—
—
—
—
(3,830,674)
—
—
(570,687)
—
—
—
(52)
(430,762) $
—
—
—
(1,592)
—
—
—
(138,385)
(570,739)
Total equity
2,502,768
1,074,046
2,756,628
(3,830,674)
Total liabilities and equity
$
2,539,495
$
2,227,765
$
3,933,946
$
(4,401,413) $
F-39
(4,401,413) $
4,299,793
Consolidating Statements of Operations (in thousands)
Revenues:
Rental income
Tenant reimbursements
Hotel income
Asset and property management fee
income
Other property income
Expenses:
Property operating costs
Hotel operating costs
Asset and Property Management Fee
Expenses:
Related-party
Other
Depreciation
Amortization
General and administrative – corporate
General and administrative – joint
ventures
Other Income (Expense):
Interest expense
Interest and other income
Loss on early extinguishment of debt
Income (loss) before income taxes,
unconsolidated entities, and gains on
sales of real estate assets
Income tax expense
Income (loss) from unconsolidated
entities
Income before gains on sales of real
estate assets
Gains on sales of real estate assets
For the Year Ended December 31, 2017
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
$
— $
51
$
257,368
$
(360) $
257,059
—
—
1,908
—
1,908
—
—
—
—
—
—
259
—
259
1,649
—
16,535
—
16,535
18,184
—
(60)
—
—
—
(9)
308
—
3
—
869
5
9,048
—
10,233
(10,242)
(44,259)
7,762
—
(36,497)
(46,739)
(1)
23,571
1,339
1,874
3,327
287,479
87,857
2,089
—
918
79,525
32,398
25,674
1,454
229,915
57,564
(38,238)
7,213
(325)
(31,350)
26,214
214
—
—
—
(18)
(378)
(360)
—
(3)
—
—
—
(15)
—
(378)
—
21,981
(21,981)
—
—
—
—
157,857
198,620
—
(353,826)
176,041
—
151,880
11,050
26,428
164,468
(353,826)
—
23,511
1,339
3,782
3,309
289,000
87,805
2,089
—
918
80,394
32,403
34,966
1,454
240,029
48,971
(60,516)
9,529
(325)
(51,312)
(2,341)
213
2,651
523
175,518
176,041
Net income
$
176,041
$
162,930
$
190,896
$
(353,826) $
F-40
Consolidating Statements of Operations (in thousands)
For the Year Ended December 31, 2016
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
$
— $
3,622
$
362,947
$
(383) $
366,186
Revenues:
Rental income
Tenant reimbursements
Hotel income
Asset and property management fee
income
Other property income
Expenses:
Property operating costs
Hotel operating costs
Asset and Property Management Fee
Expenses:
Related-party
Other
Depreciation
Amortization
General and administrative – corporate
Other Income (Expense):
Interest expense
Interest and other income
Loss on early extinguishment of debt
Income (loss) before income taxes,
unconsolidated entities, and gains on
sales of real estate assets
Income tax expense
Income (loss) from unconsolidated
entities
Income before gains (loss) on sales of
real estate assets
Gains (loss) on sales of real estate
assets
—
—
574
406
980
—
—
—
—
—
—
154
154
826
—
14,268
—
14,268
15,094
—
1,963
—
—
—
5,585
3,209
—
154
—
2,760
364
8,566
15,053
(9,468)
(46,797)
15,272
(18,987)
(50,512)
(59,980)
(20)
67,807
22,661
1,548
12,804
467,767
152,142
18,686
—
1,415
105,783
56,411
25,408
359,845
107,922
(50,302)
7,238
(10)
(43,074)
64,848
(425)
—
—
—
(406)
(789)
(383)
—
(154)
—
—
—
(252)
(789)
—
29,490
(29,490)
—
—
—
—
69,187
113,105
—
(189,853)
84,281
53,105
—
—
64,423
72,325
(189,853)
—
69,770
22,661
2,122
12,804
473,543
154,968
18,686
—
1,415
108,543
56,775
33,876
374,263
99,280
(67,609)
7,288
(18,997)
(79,318)
19,962
(445)
(7,561)
11,956
72,325
84,281
Net income
$
84,281
$
53,105
$
136,748
$
(189,853) $
F-41
Consolidating Statements of Operations (in thousands)
For the Year Ended December 31, 2015
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
$
— $
2,662
$
433,763
$
(377) $
436,048
Revenues:
Rental income
Tenant reimbursements
Hotel income
Asset and property management fee
income
Other property income
Expenses:
Property operating costs
Hotel operating costs
Asset and Property Management Fee
Expenses:
Related-party
Other
Depreciation
Amortization
General and administrative – corporate
Acquisition expenses
Other Income (Expense):
Interest expense
Interest and other income
Loss on interest rate swaps
Loss on early extinguishment of debt
Income before income taxes,
unconsolidated entities, and gains on
sales of real estate assets
Income tax expense
Income (loss) from unconsolidated
entities
Income before gains on sales of real
estate assets
Gains on sales of real estate assets
—
—
171
—
171
—
—
—
—
—
—
152
—
152
19
—
14,141
—
—
14,141
14,160
—
30,459
44,619
—
1,316
—
—
—
3,978
3,065
—
100
—
2,571
237
8,754
11
14,738
(10,760)
(44,919)
12,565
(1,101)
(1,050)
(34,505)
(45,265)
(25)
59,165
13,875
(19)
98,339
24,309
434
5,781
562,626
185,390
19,615
—
1,816
128,919
86,891
21,010
3,664
447,305
115,321
(67,076)
7,247
(9)
(2,099)
(61,937)
53,384
(353)
—
—
—
(333)
(710)
(377)
—
(100)
—
—
—
(233)
—
(710)
—
26,699
(26,699)
—
—
—
—
—
—
(90,766)
53,031
23,879
(90,766)
—
99,655
24,309
605
5,448
566,065
188,078
19,615
—
1,816
131,490
87,128
29,683
3,675
461,485
104,580
(85,296)
7,254
(1,110)
(3,149)
(82,301)
22,279
(378)
(1,142)
20,759
23,860
44,619
Net income
$
44,619
$
13,856
$
76,910
$
(90,766) $
F-42
Consolidating Statements of Comprehensive Income (in thousands)
For the Year Ended December 31, 2017
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Net income
Market value adjustment to interest
rate swap
Comprehensive income
$
$
176,041
$
162,930
$
190,896
$
(353,826) $
176,041
1,786
1,786
—
(1,786)
177,827
$
164,716
$
190,896
$
(355,612) $
1,786
177,827
For the Year Ended December 31, 2016
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Net income
Market value adjustment to interest
rate swap
Comprehensive income
$
$
84,281
$
53,105
$
136,748
$
(189,853) $
84,281
1,553
1,553
—
(1,553)
85,834
$
54,658
$
136,748
$
(191,406) $
1,553
85,834
For the Year Ended December 31, 2015
Columbia
Property Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Net income
Market value adjustment to interest
rate swap
Settlement of interest rate swap
Comprehensive income
$
$
44,619
$
13,856
$
76,910
$
(90,766) $
44,619
(1,570)
1,102
(1,570)
1,102
—
—
1,570
(1,102)
44,151
$
13,388
$
76,910
$
(90,298) $
(1,570)
1,102
44,151
F-43
Consolidating Statements of Cash Flows (in thousands)
For the Year Ended December 31, 2017
Columbia
Property Trust
(Parent)
Columbia
Property Trust
OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Cash flows from operating activities
$
3,966
$
(46,268) $
104,226
$
— $
61,924
Cash Flows From Investing Activities:
Net proceeds from the sale of real
estate
Investment in real estate and related
assets
Investment in unconsolidated joint
ventures
Distributions in excess of earnings
from unconsolidated joint ventures
—
—
—
—
Investments in subsidiaries
(8,671)
49,531
688,100
(2,203)
(716,093)
(369,043)
1,985
(97,505)
—
—
—
—
—
—
—
106,176
737,631
(718,296)
(369,043)
1,985
—
Net cash provided by (used in)
investing activities
Cash Flows From Financing Activities:
Borrowings, net of fees
Repayments
Redemptions of common stock
Distributions
Net cash provided by (used in)
financing activities
Net decrease in cash and cash
equivalents
Cash and cash equivalents, beginning of
period
Cash and cash equivalents, end of
period
(8,671)
(417,235)
(27,993)
106,176
(347,723)
—
—
(59,462)
(109,561)
781,731
(331,000)
—
1,342
—
(202,427)
—
104,834
—
—
—
(106,176)
781,731
(533,427)
(59,462)
(109,561)
(169,023)
452,073
(97,593)
(106,176)
79,281
(173,728)
(11,430)
(21,360)
174,420
16,509
25,156
—
—
(206,518)
216,085
$
692
$
5,079
$
3,796
$
— $
9,567
F-44
Consolidating Statements of Cash Flows (in thousands)
For the Year Ended December 31, 2016
Columbia
Property
Trust
(Parent)
Columbia
Property
Trust OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Cash flows from operating activities
$
53,980
$
86,846
$
242,118
$
(189,853) $
193,091
Cash Flows From Investing Activities:
Net proceeds from the sale of real
estate(1)
Investment in real estate and related
assets
Investment in unconsolidated joint
ventures
Distributions from subsidiaries(2)
Net cash provided by investing
activities
Cash Flows From Financing Activities:
Borrowings, net of fees(3)
Repayments(4)
Prepayments to settle debt and interest
rate swap(5)
Redemptions of common stock
Distributions(6)
Net cash used in financing
activities
Net increase in cash and cash
equivalents
Cash and cash equivalents, beginning of
period
Cash and cash equivalents, end of
period
—
—
—
321,911
—
613,732
(2,157)
(69,750)
(16,212)
568,480
—
—
—
—
—
(890,391)
613,732
(71,907)
(16,212)
—
321,911
550,111
543,982
(890,391)
525,613
—
—
—
(53,986)
(148,474)
780,577
(1,051,000)
(17,921)
—
(347,073)
—
(44,460)
—
—
—
—
—
—
(733,171)
1,080,244
780,577
(1,095,460)
(17,921)
(53,986)
(148,474)
(202,460)
(635,417)
(777,631)
1,080,244
(535,264)
173,431
1,540
989
14,969
8,469
16,687
—
—
183,440
32,645
$
174,420
$
16,509
$
25,156
$
— $
216,085
(1) Net proceeds from the sale of real estate increased (decreased) by $(603.7) million and $603.7 million for the parent and non-guarantors,
respectively.
(2) Distributions from subsidiaries increased (decreased) by $321.9 million, $568.5 million, and $(890.4) million for the parent, issuer,
and eliminations, respectively.
(3) Borrowings, net of fees, increased (decreased) by $(781.4) million and $781.4 million for the parent and issuer, respectively.
(4) Repayments increased (decreased) by $1,090.0 million, $(1,051.0) million, and $(39.0) million for the parent, issuer, and non-guarantors
respectively.
(5) Prepayments to settle debt and interest rate swap increased (decreased) by $17.9 million and $(17.9) million for the parent and issuer,
respectively.
(6) Distributions (increased) decreased by $(347.1) million, $(733.2) million, and $1,080.3 million, for the issuer, non-guarantors, and
eliminations, respectively. The intercompany transfers, net line item is no longer presented based on the changes to the other line items
described herein.
F-45
For the Year Ended December 31, 2015
Columbia
Property Trust
(Parent)
Columbia
Property Trust
OP
(the Issuer)
Non-
Guarantors
Consolidating
Adjustments
Columbia
Property Trust
(Consolidated)
Cash flows from operating activities
$
15,743
$
(50,601) $
273,655
$
(15,717) $
223,080
Cash Flows From Investing Activities:
Net proceeds from the sale of real
estate(1)
Investments in real estate and related
assets(2)
Investment in unconsolidated joint
ventures
Investments in subsidiaries(3)
Net cash used in investing activities
Cash Flows From Financing Activities:
Borrowings, net of fees(3)
Repayments
Prepayments to settle debt and interest
rate swap
Redemptions of common stock
Distributions(4)
Net cash provided by (used in)
financing activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents, beginning of
period
Cash and cash equivalents, end of
period
—
—
—
(4,615)
(4,615)
—
—
—
(17,057)
(112,570)
—
—
596,734
(1,167,933)
(5,500)
(628,393)
(633,893)
2,223,778
(1,518,000)
(1,102)
—
(15,717)
—
—
(571,199)
—
(336,512)
(2,063)
—
633,008
—
—
—
633,008
633,008
—
—
—
—
(617,291)
596,734
(1,167,933)
(5,500)
—
(576,699)
2,223,778
(1,854,512)
(3,165)
(17,057)
(112,570)
(129,627)
688,959
294,433
(617,291)
236,474
(118,499)
119,488
4,465
10,504
(3,111)
19,798
—
—
(117,145)
149,790
$
989
$
14,969
$
16,687
$
— $
32,645
(1) Net proceeds from the sales of real estate increased (decreased) by $(72.4) million, $(524.4) million, and $596.7 million for the parent,
issuer, and non-guarantors, respectively.
(2)
(3)
Investments in real estate and related assets increased (decrease) by $57.2 million, $1,007.5 million, and $(1,064.7) million for the
parent, issuer, and non-guarantors, respectively.
Investments in subsidiaries increased (decreased) by $1,061.1 million, $(628.4) million, and $(432.7) million for the parent, issuer,
and eliminations, respectively.
(4) Distributions (increased) decreased by $(15.7) million, $633.0 million, and $(617.3) million, for the issuer, non-guarantors, and
eliminations, respectively. The intercompany transfers, net line item is no longer presented based on the changes to the other line items
described herein.
16.
Subsequent Events
Columbia Property Trust has evaluated subsequent events in connection with the preparation of its consolidated financial statements
and notes thereto included in this report on Form 10-K and noted the following items in addition to those disclosed elsewhere in
this report:
•
•
•
On February 7, 2018, the board of directors declared dividends for the first quarter of 2018 in the amount of $0.20 per
share, payable on March 15, 2018, to stockholders of record on March 1, 2018.
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, Allianz, as described in Note 3, Real Estate Transactions.
On January 5, 2018, Columbia Property Trust paid an aggregate amount of $24.0 million in dividends for the fourth
quarter of 2017 to shareholders of record on December 1, 2017.
F-46
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Columbia Property Trust, Inc.
Schedule III – Real Estate Assets and Accumulated Depreciation and Amortization
(in thousands)
Real Estate:
Balance at beginning of year
Additions to/improvements of real estate
Sale/transfer of real estate
Write-offs of building and tenant improvements
Write-offs of intangible assets(3)
Write-offs of fully depreciated assets
Balance at end of year
Accumulated Depreciation and Amortization:
Balance at beginning of year
Depreciation and amortization expense
Sale/transfer of real estate
Write-offs of tenant improvements
Write-offs of intangible assets(3)
Write-offs of fully depreciated assets
For the Years Ended December 31,
2017
2016
2015
$
4,243,531
$
4,948,605
$
5,050,482
$
$
698,567
(1,285,915) (1)
(3,087)
(14,432)
(26,370)
3,612,294
729,025
97,732
(302,157) (1)
(1,406)
(14,197)
(26,370)
$
$
41,848
(673,164)
(5,559)
(30,435)
(37,764)
4,243,531
863,724
140,823
(203,248)
(4,336)
(30,174)
(37,764)
$
$
1,162,068
(1,188,083) (2)
(1,552)
(12,614)
(61,696)
4,948,605
973,920
183,492
(221,481) (2)
(948)
(9,563)
(61,696)
Balance at end of year
$
482,627
$
729,025
$
863,724
(1)
(2)
Includes the transfer of 100% of University Circle and 333 Market Street to unconsolidated joint ventures, in which Columbia Property
Trust currently owns a 77.5% interest.
Includes the transfer of 100% of the Market Square Buildings to an unconsolidated joint venture, in which Columbia Property Trust
currently owns a 51% interest.
(3) Consists of write-offs of intangible lease assets related to lease restructurings, amendments, and terminations.
S-2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-217720 on Form S-8 of our reports dated February
15, 2018, relating to the consolidated financial statements and financial statement schedule of Columbia Property Trust, Inc. and
subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting, appearing in this
Annual Report on Form 10-K of Columbia Property Trust, Inc. and subsidiaries for the year ended December 31, 2017.
Exhibit 23.1
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 15, 2018
EXHIBIT 31.1
PRINCIPAL EXECUTIVE OFFICER
CERTIFICATION
PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)
I, E. Nelson Mills, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Columbia Property Trust, Inc. for the year ended
December 31, 2017;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Dated: February 15, 2018
By:
/s/ E. Nelson Mills
E. Nelson Mills
Principal Executive Officer
EXHIBIT 31.2
PRINCIPAL FINANCIAL OFFICER
CERTIFICATION
PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)
I, James A. Fleming, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Columbia Property Trust, Inc. for the year ended
December 31, 2017;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Dated: February 15, 2018
By:
/s/ James A. Fleming
James A. Fleming
Principal Financial Officer
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)
In connection with the Annual Report of Columbia Property Trust, Inc. (the “Registrant”) on Form 10-K for the year ended
December 31, 2017, as filed with the Securities and Exchange Commission (the “Report”), the undersigned, E. Nelson Mills,
Principal Executive Officer of the Registrant, and James A. Fleming, Principal Financial Officer of the Registrant, hereby
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that, to the best of our knowledge and
belief:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Registrant.
/s/ E. NELSON MILLS
E. Nelson Mills
Principal Executive Officer
February 15, 2018
/s/ JAMES A. FLEMING
James A. Fleming
Principal Financial Officer
February 15, 2018
(cid:60)(cid:53)(cid:73)(cid:74)(cid:84)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:79)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:77)(cid:90)(cid:1)(cid:77)(cid:70)(cid:71)(cid:85)(cid:1)(cid:67)(cid:77)(cid:66)(cid:79)(cid:76)(cid:62)
(cid:60)(cid:53)(cid:73)(cid:74)(cid:84)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:79)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:77)(cid:90)(cid:1)(cid:77)(cid:70)(cid:71)(cid:85)(cid:1)(cid:67)(cid:77)(cid:66)(cid:79)(cid:76)(cid:62)
Board of Directors
Senior Management
Company Information
E. Nelson Mills
President and Chief
Executive Officer
E. Nelson Mills
President and Chief
Executive Officer
Inquiries:
1170 Peachtree Street
Suite 600
Atlanta, GA 30309
Independent Accountants
Deloitte & Touche LLP
Atlanta, Georgia
Corporate Counsel
King & Spalding LLP
Atlanta, Georgia
Annual Meeting
The 2018 Annual Meeting of
Stockholders of Columbia
Property Trust, Inc., will be
held at the Conrad New York
at 102 North End Avenue
in New York, New York, at
1:30 pm ET on May 14, 2018.
Investor Relations
Address inquiries to Investor
Relations at the Company’s
Atlanta office or by email to
ir@columbia.reit.
Shares Listed
New York Stock Exchange
Symbol: CXP
Stockholder Services &
Transfer Agent/Registrar
American Stock Transfer &
Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
855.347.0042
Internet Access to
SEC Filings
A copy of the Company’s
Annual Report on Form
10-K for the year ended
December 31, 2017, which
has been filed with the U.S.
Securities and Exchange
Commission (SEC), forms
part of this annual report. All
reports filed electronically
by Columbia Property Trust
with the SEC, including the
Annual Report on Form 10-K,
Quarterly Reports on Form
10-Q, and Current Reports
on Form 8-K, are accessible
at www.columbia.reit.
James A. Fleming
Executive Vice President
and Chief Financial Officer
Linda M. Bolan
Senior Vice President,
Property Management and
Sustainability
David S. Dowdney
Senior Vice President,
Head of Leasing
Wendy W. Gill
Senior Vice President,
Corporate Operations and
Chief Accounting Officer
Kevin A. Hoover
Senior Vice President,
Portfolio Management and
Transactions
Amy C. Tabb
Senior Vice President,
Business Development
John L. Dixon
Chairman of the Board;
Former President and
Director, Pacific Select
Group, LLC
Carmen M. Bowser
Former Managing
Vice President,
Capital One Bank,
New York
Charles R. Brown*
Chairman, CRB Realty
Associates
Richard W. Carpenter
Director, Carpenter
Properties, L.P.
David B. Henry
Chairman and Co-Founder,
Peaceable Street Capital;
Former Chief Executive
Officer, Kimco Realty
Corporation
Murray J. McCabe
Managing Partner,
Blum Capital Partners, L.P.
Constance B. Moore
Former Chief Executive
Officer, BRE Properties, Inc.
Michael S. Robb
Former Executive Vice
President, Real Estate
Division, Pacific Life
Insurance Company
George W. Sands
Former Partner, KPMG LLP
Thomas G. Wattles
Former Executive Chairman,
DCT Industrial Trust, Inc.
* Mr. Brown will retire from the board as
of our 2018 annual meeting. We are
grateful for his service to Columbia.
249 W. 17th Street
NEW YORK
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NYSE: CXP | www.columbia.reit
002-CORPREPT1801