2019 Annual Report
Our portfolio is uniquely positioned to deliver growth.
Focused in four gateway markets, our properties are located in
sought-after, walkable neighborhoods, combined with the
architectural details, modernized space, and best-in-class amenities
and service that today’s most discerning tenants seek out.
Dear Stockholders,
Columbia Property Trust is now
realizing the benefits of the strategic
steps we’ve taken over the past several
years, which have created one of the
best-positioned portfolios in the entire
office sector.
Our portfolio boasts modernized
properties with architectural character,
abundant space and natural light,
transit access, and attractive amenities.
These properties are located in some of
the most vibrant neighborhoods in four
high-barrier, gateway markets – New
York, San Francisco, Washington, D.C.
and Boston.
more than $4 billion in investment capital
over the past seven years. We sold out
of primarily suburban and single-tenant
assets with diminishing long-term return
potential, and reinvested into the 19
uniquely attractive assets that Columbia
owns today in our four key markets.
Our disciplined investment process
is designed to create value for our
shareholders, while balancing compelling
investment opportunities against market
and execution risk. This approach was
clearly demonstrated last year with our
fifth acquisition in San Francisco, 201
California Street, for $239 million.
Columbia’s portfolio was carefully
assembled to align with the growing
demand from forward-leaning
companies in these world-class cities
– companies that view exceptional
workspace as a critical tool for
attracting and retaining talent. With 97%
occupancy and growing rental rates,
we continue to demonstrate our ability
to capture this demand.
A Fully Repositioned Portfolio
This transformation didn’t happen
overnight – it took tireless dedication
to a vision and a well-defined strategy.
We’ve remained proactive, yet
disciplined, through the reallocation of
Columbia is delivering results today, and is better positioned
than ever before to deliver growth and performance for our
stockholders in the years ahead.
Well located in the city’s Financial
District, this 17-story, Class-A office
tower at the corner of California and
Front Streets was 99% leased at
acquisition, with an impressive roster
of tenants. However, the building will
provide an opportunity for us to capture
significant growth in cash flow in the
years ahead, as we replace these
existing leases, which average more
than 15% below current market rates.
Unless otherwise noted, all data herein is as of December 31, 2019, pro forma for the sale of the Cranberry Woods
and Pasadena Corporate Park properties.
Columbia Property Trust 2019 Annual Report | 1
Adding Growth to a Stable Foundation
With our core portfolio delivering strong
and steady cash flows, we are also
adding a layer of growth opportunity
through development and repositioning
projects. This growth strategy is
reflected in our other acquisition last
year – 101 Franklin Street in New York,
acquired for $206 million through a joint
venture partnership.
We are well down the road on the design
and planning for a full redevelopment of
this 16-story office tower in the high-end
Tribeca neighborhood. This submarket
has very little new office supply, and we
expect that this modernized, boutique
building will attract high-profile tenants
at impressive rental rates.
We have several other exciting projects
in process as well. Our ground-up
development, 799 Broadway near
Union Square Park in New York, is
rising quickly and on track for tenant
occupancy by early 2021. We’ve also
commenced a pioneering vertical
expansion at 80 M Street, our Class-A
building in the desirable Capitol
Riverfront District of Washington, D.C.
This innovative project, which will be the
first to utilize environmentally friendly
mass timber construction in D.C., will
add 105,000 square feet to the top of
the existing building, and over half of the
new space has already been leased.
Alongside these projects, we anticipate
making a $53 million capital investment
in Terminal Warehouse and will co-
manage this unique redevelopment
project with L&L Holding Company.
Together, we plan to turn this 125-year-
old industrial warehouse, which spans
a full city block just south of Hudson
Yards in Manhattan, into a vibrant, 1.2
million-square-foot Class-A office and
retail destination.
Capturing Tenant Demand
With every property we select for
acquisition or repositioning, meeting
tenant demand is our goal, and the
healthy appetite for our properties
drove more than 750,000 square feet of
leasing for us during 2019.
A highlight of our leasing success in
the past year was a 330,000-square-
foot lease renewal with Pershing, a
subsidiary of The Bank of New York
Mellon, to keep its global headquarters
at 95 Columbus in Jersey City. Not only
did this lease renewal ensure that we
retained a terrific anchor tenant through
2037, it also delivered a significant
increase in rental rate.
We also had a very productive leasing
year in San Francisco, where we
executed almost 190,000 square feet
of new and renewal leases. This kept
our Bay Area portfolio 98% leased
across all five of our properties.
NOI by Market1
42%
New York
39%
San Francisco
15%
Washington, D.C.
4%
Boston
2 | Columbia Property Trust 2019 Annual Report
1 Based on Q4 2019 Cash NOI, pro forma for the sales of the Pittsburgh and Pasadena assets and a full quarter of
ownership of 201 California Street; for the description and reconciliation of this non-GAAP financial measure, see
the Reconciliations page.
And of course, service to our tenants,
both new and existing, is paramount.
We strive to exceed industry best
practices across our operations at each
of our buildings, and work continually
to ensure that we can provide safe
and productive workplaces, building
access and business continuity through
challenges, such as with the recent
COVID-2019 outbreak.
Growing our Team and Capabilities
All of these accomplishments would
not be possible without a highly
experienced and capable team. As
we look to continue and grow our
success in our key markets, we took
another significant strategic step over
the past year to expand our market
presence, relationships, and capabilities
with the acquisition of Normandy Real
Estate Management.
Over the past two decades, Normandy
had built a highly respected record of
acquiring, developing, and repositioning
over 30 million square feet of office and
mixed-use space across New York,
New Jersey, Boston, and Washington,
D.C., providing attractive investment
returns for a number of respected
institutional investors. We previously
had the opportunity to work hand in
hand with the Normandy team as joint
venture partners on our two New York
development projects, 799 Broadway
and 101 Franklin, and recognized our
strong operational and cultural fit.
In January 2020, Columbia completed
the acquisition of Normandy’s operating
platform and real property interests, and
integrated dozens of talented former
Normandy employees with our existing
team, including several key senior
leadership appointments.
While this transaction was relatively
modest in size, it had a tremendous
impact in positioning our company for
long-term performance. The acquisition
further strengthened our deal sourcing,
development, construction, and
management capabilities, while also
providing a complementary private
capital management program to drive
additional revenues. Columbia is now
a full-service operating company, with
greater competitive advantage in New
York City, Washington, D.C. and Boston.
Positioned to Perform
In summary, 2019 was not only a
successful year for Columbia in terms
of financial performance for our
shareholders, but also a pivotal
Terrace at 201 California
milestone in our multi-year
transformation. Our strong leasing
success, which captured the embedded
cash flow growth in our properties,
enabled us to announce a dividend
increase in the fourth quarter of
2019, reflecting our confidence in
the company’s strength today and
expectations for continued growth.
All of these accomplishments
demonstrate the power of our unique
strategy, the exceptional quality of
the portfolio we’ve assembled, and
the dedication and capabilities of our
expanded team. Columbia is delivering
results today, and is better positioned
than ever before to deliver growth and
performance for our stockholders in the
years ahead.
Sincerely,
E. Nelson Mills
President, Chief Executive Officer
and Director
Columbia Property Trust 2019 Annual Report | 3
Our Leadership
In 2020, we added several new members to our leadership
team, further expanding Columbia’s expertise, capabilities, and
presence in our key markets.
Stephen P. Trapp
Senior Vice President,
Development and Construction
Elka L. Wilson
Senior Vice President,
Corporate Operations
Paul H. Teti
Senior Vice President,
Asset Management and Leasing
James A. Fleming
Executive Vice President and
Chief Financial Officer*
Wendy W. Gill
Senior Vice President,
Chief Accounting Officer
E. Nelson Mills
President and
Chief Executive Officer*
From left to right: Trapp, Teti, Wilson, Fleming, Cheikin,
Gill, Mills, Gronning, Evans, Hoover, Dowdney, Keeley,
Tabb, Smith, Feehan.
David T. Cheikin
Senior Vice President,
Asset Management and Leasing
Jeffrey K. Gronning
Executive Vice President and
Chief Investment Officer*
4 | Columbia Property Trust 2019 Annual Report
Property
Management
Acquisitions
and
Dispositions
Joint Venture
Management
+ Development
Finance and
Accounting
Leasing
and Asset
Management
+ Fund
Management
Construction
Patrick J. Keeley
Senior Vice President,
D.C. Region Lead
Amy C. Tabb
Senior Vice President,
Business Development*
Stephen K. Smith
Senior Vice President,
Property Management
Travis W. Feehan
Senior Vice President,
New York Transactions Lead
* Serves on Columbia’s Investment Committee.
Expansion in Capabilities
With the acquisition of the
Normandy platform and
subsequent integration, we
have strengthened our sourcing,
construction, and other key
capabilities, and added a full
development arm.
Gavin Evans
Executive Vice President,
Acquisitions*
Kevin A. Hoover
Executive Vice President,
Portfolio Management*
David S. Dowdney
Senior Vice President,
West Coast
Columbia Property Trust 2019 Annual Report | 5
Leasing
Our consistently strong leasing
performance is a testament
to the power of our strategy
to invest in space that directly
aligns with tenant demand,
and to the quality of the
portfolio we’ve assembled.
97%
Portfolio leased
779,000
SF Leased in 2019
95 Columbus
Market
New York City
Rentable SF
630,000
Leased
100%
Key Tenants
Pershing / Quality
Technology Services
6 | Columbia Property Trust 2019 Annual Report
Renewing an anchor tenant
while creating room for growth
With spectacular views to Manhattan’s
Financial District, 95 Columbus has
been home of Pershing LLC, a wholly
owned subsidiary of The Bank of New
York Mellon, for over two decades.
With the 2021 expiration of Pershing’s
lease approaching, Columbia
proactively secured a renewal at
the end of 2019 to retain this highly
creditworthy anchor tenant in the
majority of its prior space and remove
our largest near-term lease expiration.
This year, to maximize our opportunity
to re-lease the returning space
at current market rates, we have
commenced strategic enhancements to
the building’s lobby and other common
areas. These will make the most of
the building’s location in Jersey City’s
amenity-rich Grove Street corridor and
unparalleled transit access.
315 Park Avenue South
650 California
Market Square
Market
New York City
Rentable SF
332,000
Leased
100%
Market
San Francisco
Rentable SF
470,000
Leased
99%
Market
Washington, D.C.
Rentable SF
696,000
Leased
91%
Key Tenants
Gemini Trust / PitchBook /
BDG MediaServices
Key Tenants
Affirm / Credit Suisse
Key Tenants
Edison Electric Institute /
United Healthcare / Mintz Levin
After acquiring this Midtown South
building in 2015, we fully repositioned
it as best in its class, with thoughtful
renovations and luxury amenities.
Today, after leasing 300,000 square feet
– or 17 of 20 floors – at significant rate
roll-ups, 315 Park Avenue South is fully
leased and achieving premium rents.
This iconic 33-story office tower
continues to attract tech, creative, and
financial tenants alike with its mid-
century modern style and breathtaking
Bay and city views. Since 2016, we
have leased 400,000 square feet –
or 85% of the building – at substantial
roll-ups in rental rates.
To reposition this 25-year-old icon on
Pennsylvania Avenue, we commenced
strategic renovations and marketing
to establish it as the city’s hub for
government affairs. Following 400,000
square feet of leasing, we have
attracted over 35 Fortune 500 tenants
to give this property one of the best rent
rolls in the country.
Columbia Property Trust 2019 Annual Report | 7
Development
Through select development
and repositioning projects
in our core markets, we are
building an opportunity to
grow both net asset value and
future cash flows.
Development Pipeline: Delivery by SF
(at Columbia Share1)
400
350
300
250
200
150
100
50
2020
2021
2022
2023
2024+
799 Broadway
New York City
Submarket
Midtown South
Planned RSF
182,000
Expected Delivery
Early 2021
643,000
Total SF delivering
Columbia’s first ground-up development
project in Manhattan, 799 Broadway will
be a signature 12-story office building at
the convergence of Union Square and
Greenwich Village, a neighborhood with
almost no other newly developed office
buildings. Designed by Perkins+Will,
the building will feature uniquely angled
terraces inspired by the intersection of
11th Street and Broadway, where the
street breaks from the dominant grid
of Manhattan.
Commenced in 2019, the striking
structure is now rising quickly. When
completed, 799 Broadway will boast
15’ ceiling heights, with floor-to-ceiling
glass and private terraces on most
floors, all combining with great transit
access, modern efficiency, and the
neighborhood’s appeal to offer a uniquely
creative and collaborative environment.
8 | Columbia Property Trust 2019 Annual Report
1 Represents square feet at Columbia’s ownership share as of 2/29/2020 in the re/development projects at 80 M
Street in Washington, D.C., and 149 Madison, 799 Broadway, and 101 Franklin in New York, and pro forma for
Columbia’s anticipated investment in the Terminal Warehouse redevelopment project in New York.
101 Franklin
New York City
Submarket
Tribeca
Planned RSF
235,000
Expected Delivery
Early 2022
Known for its quiet luxury, the Tribeca
neighborhood is home to many of
Manhattan’s wealthiest residents
but almost no modernized, Class-A
office space. 101 Franklin will soon
become the rare exception, providing
premium boutique office space for
discerning tenants.
Columbia is working with acclaimed
architect Rafael Vinoly on a complete
transformation of the 1948 building into
an exquisitely designed workspace
set in the heart of this sought-after
neighborhood. Formerly known as 250
Church Street, the redeveloped 16-story
office building will be graced by a
reimagined exterior, a relocated lobby on
Franklin, and retail on Church, all within
walking distance to the World Trade
Center transit hub and steps from the
Franklin Street Station.
Columbia Property Trust 2019 Annual Report | 9
Development
80 M Street
Washington, D.C.
Planned RSF
391,000
Submarket
Capitol Riverfront
Expected Delivery
Mid 2022
Through a pioneering expansion project,
Columbia will add 105,000 square
feet of creative, boutique-style space
atop 80 M Street, making it the first
commercial office building in D.C. to
feature environmentally-friendly mass
timber new construction. Over half of
the expansion space has already been
pre-leased as the American Trucking
Associations’ new headquarters.
Terminal Warehouse
New York City
Planned RSF
1.2 million
Submarket
West Chelsea
Expected Delivery
2022 to 2024
Terminal Warehouse is an iconic brick-
and-beam property that takes up a full
block in West Chelsea, overlooking
the Highline Park and Hudson Yards
mega-development. Columbia is
working alongside L&L Holding
Company and Normandy Fund IV on
the comprehensive redevelopment of
the 125-year-old industrial warehouse,
which originally served as a terminal
for the New York Central Railroad. The
highly publicized project will create
a signature boutique office, retail,
and events destination in the heart of
Manhattan’s booming West Side.
10 | Columbia Property Trust 2019 Annual Report
Transactions
Dispositions: 2019 and 2020 YTD
Our portfolio has been
fully repositioned to attract
strong demand from today’s
top tenants.
Property
Location
Closed
Gross Sales Price
Glenlake Campus
Lindbergh Center
Atlanta
Atlanta
Apr. 2019
$227.5 million
Sept. 2019 $187 million
Cranberry Woods Campus Pittsburgh
Jan. 2020
$180 million
Pasadena Corporate Park
Los Angeles
(under
contract)
$78 million
Acquisitions: 2019
Property
Location
Closed
Gross Purchase Price
101 Franklin
New York City Dec. 2019 $205.5 million
201 California Street
San Francisco Dec. 2019 $238.9 million
201 California Street
San Francisco
Submarket
Financial District
Total SF
252,000
Leased
99%
Key Tenants
First Republic Bank / Dow Jones /
Cooper, White and Cooper
Columbia acquired this Class-A office
tower in San Francisco’s Financial
District in December 2019. Located
at the corner of California and Front
Streets, the 17-story building was
recently substantially renovated to
include attractive amenities and structural
attributes to complement its highly
desirable location. Though currently
very well leased to a strong roster of
tenants, the building has substantial roll
over the next five years, with in-place
rents estimated to be at least 15%
below market. This gives Columbia
an opportunity to take advantage of
continued demand in the market and
drive further growth in rental rates.
Columbia Property Trust 2019 Annual Report | 11
Our Commitment to Corporate Responsibility
At Columbia, we believe that environmentally and socially
responsible operating practices go hand in hand with
generating value for our stockholders, providing
efficiency and comfort for our tenants, being
good neighbors within our communities,
and being a good employer to
our employees.
Ethical and Socially-Conscious
Business Practices
Commitments detailed in
Human Rights Policy and
Vendor Code of Conduct,
available on our company
website
Company and its employees
actively support charities and
volunteer organizations in
our markets
Responsible Building
Management
75%
of our portfolio is certified by
the EPA’s ENERGY STAR®
benchmark program*
82%
of our portfolio has been certified
as meeting one of the exacting
standards of the USGBC’s
Leadership in Energy and
Environmental Design (LEED®)
green building program
Transparent and Investor-
Centered Governance
Board composed of
supermajority of independent
directors
Annual elections for all directors
Executive pay aligned with
performance
No legacy family issues among
shareholder base or board
No tax protection
agreements constraining
strategic decisions
In 2019, we created a sustainability
working group, consisting of dedicated
internal resources and external advisors,
to address environmental, social, and
governance (“ESG”) factors that are material
to our business. This group is producing
Columbia’s first comprehensive ESG Annual
Report this year, which will be released this
spring on our company website.
For more information, please visit our
website: www.columbia.reit
12 | Columbia Property Trust 2019 Annual Report
Data at 100% of all properties, including those held through joint venture partnerships.
*Reflects all properties that have met ENERGY STAR certification criteria and have received or applied for certification.
LEED and the related logos are trademarks owned by the U.S. Green Building Council and are used with permission.
Energy Star and the Energy Star mark are registered trademarks owned by the U.S. Environmental Protection Agency.
These logos are used herein to identify Columbia buildings that have been awarded these designations.
Form 10K
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, 2019
□ 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.)
Commission file number 333-175623 (Columbia Property Trust Operating Partnership, L.P.)
OR
COLUMBIA PROPERTY TRUST, INC.
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
Maryland (Columbia Property Trust, Inc.)
Delaware (Columbia Property Trust Operating Partnership, L.P.)
(State or other jurisdiction of incorporation or organization)
20-0068852
20-0068907
(I.R.S. Employer Identification Number)
315 Park Avenue South
New York, New York 10010
(Address of principal executive offices) (Zip Code)
(212) 687-0800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class
Common Stock, $0.01 par value
Trading Symbol
CXP
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
Columbia Property Trust, Inc.
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.
Columbia Property Trust Operating Partnership, L.P.
Yes ☒ No □
Yes ☒ No □
Yes □ No ☒
Columbia Property Trust, Inc.
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.
Columbia Property Trust Operating Partnership, L.P.
Yes □ No ☒
Yes ☒ No □
Yes ☒ No □
Columbia Property Trust, Inc.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No □
Yes ☒ No □
Columbia Property Trust, Inc.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of ‘‘large accelerated filer’’, ‘‘accelerated filer’’, ‘‘smaller reporting company’’, ‘‘emerging growth company’’ in Rule 12b-2 of the
Exchange Act.
Columbia Property Trust, Inc.:
Columbia Property Trust Operating Partnership, L.P.
Columbia Property Trust Operating Partnership, L.P.
Large accelerated filer ☒
Accelerated filer □
Non-accelerated filer □
Columbia Property Trust Operating Partnership, L.P.
Large accelerated filer □
Accelerated filer □
Non-accelerated filer ☒
Smaller reporting company □
Emerging Growth Company □
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.
Columbia Property Trust, Inc.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Columbia Property Trust, Inc.
As of June 30, 2019, the aggregate market value of the common stock of Columbia Property Trust, Inc. held by non-affiliates was
$1,744,911,617 based on the closing price as reported by the New York Stock Exchange.
As of January 31, 2020, 115,232,240 shares of common stock were outstanding.
Registrant incorporates by reference portions of the Columbia Property Trust, Inc. Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders (Items 10,
11, 12, 13, and 14 of Part III) to be filed prior to April 29, 2020.
Columbia Property Trust Operating Partnership, L.P.
Columbia Property Trust Operating Partnership, L.P.
Yes □ No ☒
Yes □ No ☒
□
□
FORM 10-K
COLUMBIA PROPERTY TRUST, INC.
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of
Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
PART I.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV.
Item 15.
Signatures
Page
6
9
25
25
27
27
28
31
32
49
50
50
51
55
56
56
56
56
56
57
60
2
EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2019 of Columbia Property
Trust, Inc. ("Columbia Property Trust") and Columbia Operating Partnership, L.P. ("Columbia OP"), using a separate
set of consolidated financial statements for each entity and a combined set of notes thereto. As of December 31,
2019 and December 31, 2018, and for the three-years ended December 31, 2019, Columbia Property Trust was the
sole owner and general partner of Columbia OP. On January 24, 2020, Columbia Property Trust acquired Normandy
Real Estate Management, LLC ("Normandy") for $100.0 million, which was comprised of a $13.5 million cash
payment and the issuance of 3,264,151 Series A Convertible, Perpetual Preferred Units of Columbia OP. Immediately
following the Normandy acquisition, Columbia Property Trust owned approximately 97.2% of Columbia OP. Unless
stated otherwise or the context otherwise requires, references to "Columbia Property Trust," "the Company," "we,"
"us," and "our" shall mean, collectively, Columbia Property Trust, Inc., Columbia OP, and the entities consolidated by
the Company; and references to "Columbia OP" shall mean Columbia OP and the entities consolidated by Columbia
OP.
Columbia Property Trust, Inc. guarantees certain debt issued by Columbia OP (see Note 6, Bonds Payable, to the
accompanying consolidated financial statements). The Company is including audited consolidated financial
statements for Columbia OP, the subsidiary issuer as defined in the bond indentures, in this report on Form 10-K to
comply with the requirements of SEC Rule 3-10(c).
in lieu of presenting separate financial
statements for Columbia OP, the Company opted to present condensed consolidating financial information in a
footnote to Columbia Property Trust's consolidated financial statements. Columbia OP is voluntarily co-filing its
annual report with that of Columbia Property Trust because, following the Normandy acquisition described above,
the Company will no longer be able to rely on Rule 3-10(c), and Columbia OP will become subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
In prior periods,
Columbia OP is the entity through which we conduct substantially all of our business and own, either directly or
through subsidiaries, substantially all of our assets. We believe that combining the two annual reports on Form 10-
K for Columbia Property Trust and Columbia OP provides the following benefits:
•
•
•
enhances investors' understanding of Columbia Property Trust and Columbia OP by enabling investors to
view the business as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a
substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate
reports.
The Company believes that it is important to understand the differences between Columbia Property Trust and
Columbia OP in the context of how Columbia Property Trust and Columbia OP operate as a consolidated company.
The financial results of Columbia OP are consolidated into the financial statements of Columbia Property Trust.
Columbia Property Trust does not have significant assets, liabilities, or operations, other than its investment in
Columbia OP. Columbia OP, not Columbia Property Trust, generally conducts all significant business relationships for
the Company other than transactions involving the securities of Columbia Property Trust. The primary differences
between Columbia Property Trust and Columbia OP involve the following:
•
•
•
Columbia Property Trust owned two properties directly during the periods presented;
Columbia Property Trust has made intercompany loans to certain of its consolidated subsidiaries;
Columbia Property Trust has issued common stock to investors and employees, and has repurchased its
common stock. The substantial majority of Columbia Property Trust's net common stock proceeds have
been contributed to Columbia OP.
To help investors better understand the differences between Columbia Property Trust and Columbia OP, the
following information has been presented separately for Columbia Property Trust and Columbia OP in this report:
•
•
consolidated financial statements;
certain accompanying notes to consolidated financial statements, including Note 5, Line of Credit and Notes
Payable; Note 6, Bonds Payable; and Note 8, Stockholders' Equity and Partner's Capital.
3
•
•
controls and procedures in Item 9A of Part II of this report; and
certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.2.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-K of Columbia Property Trust, Inc. and its subsidiaries, including
Columbia OP ("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 and the office sector, in particular (such as the inability to enter
into new leases, dependence on tenants' financial condition, and competition from other owners of
real estate);
risks relating to lease terminations, lease defaults, or changes in the financial condition of our tenants,
particularly by a significant tenant;
risks relating to our ability to maintain and increase property occupancy rates and rental rates;
adverse economic or real estate market developments in our target markets;
risks relating to the use of debt to fund acquisitions;
availability and terms of financing;
ability to refinance indebtedness as it comes due;
sensitivity of our operations and financing arrangements to fluctuations in interest rates;
reductions in asset valuations and related impairment charges;
risks relating to construction, development, and redevelopment activities;
risks associated with joint ventures, including disagreements with, or misconduct by, joint venture partners;
risks relating to repositioning our portfolio;
risks relating to reduced demand for, or over supply of, office space in our markets;
risks relating to acquisition and disposition activities;
ability to successfully integrate our operations and employees in connection with the acquisition of
Normandy Real Estate Management ("Normandy");
ability to realize anticipated benefits and synergies of the acquisition of Normandy;
amount of the costs, fees, expenses, and charges related to the acquisition of Normandy;
risks associated with our ability to continue to qualify as a real estate investment trust ("REIT");
risks associated with possible cybersecurity attacks against us or any of our tenants;
potential liability for uninsured losses and environmental contamination;
potential adverse impact of market interest rates on the market price for our securities; and
risks associated with our dependence on key personnel whose continued service is not guaranteed.
For further discussion of these and additional risks and uncertainties that may cause actual results to differ from
4
expectations, 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.
5
ITEM 1.
General
BUSINESS
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 conducts business primarily through Columbia Property Trust Operating
Partnership, L.P. ("Columbia OP"), a Delaware limited partnership of which Columbia Property Trust is the general
partner and sole owner as of December 31, 2019. Columbia Property Trust acquires, develops, redevelops, owns,
leases, and operates real properties directly and through wholly and partially owned subsidiaries and joint ventures.
Unless stated otherwise or the context otherwise requires, references to "Columbia Property Trust," "the Company,"
"we," "us," and "our" shall mean, collectively, Columbia Property Trust, Columbia OP, and the entities consolidated
by both Columbia Property Trust and Columbia OP; and references to "Columbia OP" shall mean Columbia OP and
the entities consolidated by Columbia OP.
As of December 31, 2019, the Company owned 17 operating properties and three properties under development or
redevelopment, of which 13 were wholly owned and seven were owned through joint ventures, located primarily in
New York, San Francisco, and Washington, D.C. As of December 31, 2019, the operating properties contained a total
of 7.3 million rentable square feet and were approximately 97.1% leased.
On January 24, 2020, we acquired Normandy Real Estate Management ("Normandy"), a leading developer, operator,
and investment manager of office and mixed-use assets in New York; Boston; and Washington, D.C., for
approximately $100.0 million, exclusive of transaction and closing costs (the "Normandy Acquisition"). The purchase
consideration for the Normandy Acquisition includes a $13.5 million cash payment and the issuance of 3,264,151
units of Columbia OP. After giving effect to this transaction, Columbia Property Trust owns approximately 97.2% of
Columbia OP.
Real Estate Investment Objectives
We seek to acquire, develop, or redevelop 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 total return
to our stockholders. Our primary strategic objective is to generate long-term stockholder 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 gateway 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, develop, or redevelop 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 CBDs 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
6
acquisitions, development and redevelopment projects, and other growth opportunities that will further our long-
term performance objectives.
Capital Recycling
To date, we have primarily sold non-strategic assets (generally defined as assets outside our target markets) 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 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 2019, 2018, and 2017. See Note 3, Real Estate Transactions,
of the accompanying consolidated financial statements for additional details.
Acquisitions
Property
Location
% Acquired
Square
Feet
Acquisition Date
Purchase Price
(in thousands)(1)
2019
201 California Street
101 Franklin Street
2018
Lindbergh Center – Retail
799 Broadway
2017
San Francisco, CA
100.0 %
252,000
December 9, 2019 $
238,900
New York, NY
92.5 %
235,000
December 2, 2019 $
205,500
Atlanta, GA
New York, NY
100.0 %
147,000
49.7 %
182,000
October 24, 2018 $
October 3, 2018 $
23,000
30,200 (2)
149 Madison Avenue
New York, NY
100.0 %
127,000
November 28, 2017 $
87,700
249 West 17th Street & 218 West
18th Street
1800 M Street
114 Fifth Avenue
New York, NY
Washington, D.C.
New York, NY
100.0 %
447,000
55.0 %
581,000
49.5 %
352,000
October 11, 2017 $
October 11, 2017 $
July 6, 2017 $
514,100
231,550 (2)
108,900 (2)
(1)
(2)
Exclusive of transaction costs and price adjustments.
Purchase price is for our partial interests in the properties. These properties are owned through unconsolidated joint
ventures. Refer to Note 3, Real Estate Transactions, and Note 4, Unconsolidated Joint Ventures, of the accompanying
consolidated financial statements for more information.
7
Dispositions
Property
Location
% Sold
Rentable
Square Feet
Disposition Date
Sale Price
(in thousands)
2019
Lindbergh Center
Atlanta, GA
100.0 %
1,105,000
September 26, 2019 $
187,000
One & Three Glenlake
Parkway
2018
Atlanta, GA
100.0 %
711,000
April 15, 2019 $
227,500
222 East 41st Street
New York, NY
263 Shuman Boulevard
Chicago, IL
100.0 %
100.0 %
390,000
354,000
May 29, 2018 $
April 13, 2018 $
332,500
49,000 (1)
University Circle & 333
Market Street Joint
Ventures
2017
University Circle
333 Market Street
Key Center Tower &
Marriott
San Francisco, CA
22.5 % (2)
1,108,000
February 1, 2018 $
235,300 (2)
San Francisco, CA
San Francisco, CA
22.5 % (2)
22.5 % (2)
451,000
657,000
July 6, 2017 $
July 6, 2017 $
121,500 (3)
112,500 (3)
Houston Property Sale
Houston, TX
Cleveland, OH
100.0 %
100.0 %
1,326,000
1,187,000
January 31, 2017 $
January 6, 2017 $
267,500
272,000
(1) On April 13, 2018, we returned 263 Shuman to the lender in settlement of the related $49 million mortgage note.
(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 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.
Segment Information
As of December 31, 2019, our reportable segments are determined based on high-barrier-to-entry markets and
other 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 15, Segment Information, to the accompanying consolidated financial statements.
Employees
As of December 31, 2019, we employed 93 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 improvement allowances, 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 tenants to pay their contractual rent amounts as they become due. The
inability of a tenant to pay future rental amounts could result in a material adverse impact on our results of
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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. Based on our 2019 annualized lease revenue, no single
tenant accounts for more than 6% of our portfolio. See Item 1A, Risk Factors, for additional discussion of how our
dependence on tenants for our revenue, and lease defaults or terminations, particularly by a significant tenant,
could negatively affect our financial condition and results of operations and limit our ability to make distributions to
our stockholders.
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, www.columbia.reit, or through a link to the
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 they become too expensive, we may not be able to achieve our
investment objectives, and the returns on our investments will be lower than they otherwise would be; if we are
unable to sell a property when we plan to do so, our operational and financial flexibility may become limited,
including our ability to pay cash distributions to our stockholders.
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
with financially attractive terms or that, if we make investments, our objectives will be achieved.
Because real estate investments are relatively illiquid, our ability to promptly sell 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, capitalization 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. Additionally, our properties'
market values depend principally upon the value of the properties' leases and the net operating income generated
by the 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.
Further, timing differences in our acquisitions and dispositions may create temporary fluctuations in our earnings
and cash available for distribution to stockholders.
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Economic and political 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 2019, several economic factors,
including potential increases in interest rates, may adversely affect the financial condition and liquidity of many
businesses, as well as the general demand for office space. Further, our tenants might be adversely impacted by the
specific consequences of, and the general market uncertainty associated with, geopolitical developments that could
negatively affect international trade, including the United Kingdom's withdrawal from the European Union, the
termination or threatened termination of existing international trade agreements, the outbreak or escalation of
armed hostilities or acts of terrorism, or the implementation of tariffs or retaliatory tariffs on imported or exported
goods. 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 97.1% leased at December 31, 2019, and amounts written off for
uncollectible tenant receivables, net of recoveries, were less than 0.1% of total revenues for the year then ended. As
a percentage of 2019 annualized lease revenue, approximately 3% of leases expire in 2020, 8% of leases expire in
2021, and 7% of leases expire in 2022 (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:
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changes in general or local economic conditions;
competition from other office buildings;
increased operating costs, including insurance expenses, utilities, real estate taxes, state and local taxes and
heightened security costs;
decreases in the underlying value of our real estate;
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 development 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 face risks associated with property development or redevelopment.
We may acquire and develop or redevelop properties, including unimproved real estate, upon which we will
construct improvements. Such activities present a number of risks for us, including risks that:
•
if we are unable to obtain all necessary zoning and other required governmental permits and authorizations
or cease development of the project for any other reason, the development opportunity may be abandoned
or postponed after expending significant resources, resulting in the loss of deposits or failure to recover
expenses already incurred;
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the development and construction costs of the project may exceed original estimates due to increased
interest rates and increased cost of materials, labor, leasing, or other expenditures, which could make the
completion of the project less profitable because market rents may not increase sufficiently to compensate
for the increase in construction costs;
construction and/or permanent financing may not be available on favorable terms or may not be available at
all, which may cause the cost of the project to increase and lower the expected return;
the project may not be completed on schedule, or at all, as a result of a variety of factors, many of which are
beyond our control, such as weather, labor conditions, economic conditions, and material shortages, which
would result in increases in construction costs and debt service expenses;
• we may encounter delays, refusals, and unforeseen cost increases resulting from third-party litigation or
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objections;
if a contractor's performance is affected or delayed by conditions beyond the contractor's control, we may
incur additional risks when we make periodic progress payments or other advances to contractors before
they complete construction;
the time between commencement of a development project and the stabilization of the completed property
exposes us to risks associated with fluctuations in local and regional economic conditions; and
leasing pace, occupancy rates and rents at the completed property may not meet the expected levels and
could be insufficient to make the property profitable in the expected time frames.
Properties developed or acquired for development or redevelopment may generate little or no cash flow from the
date of acquisition through the date of completion of development. In addition, new development activities,
regardless of whether or not they are ultimately successful, may require a substantial portion of management's time
and attention.
These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could
prevent completion of development activities once undertaken. Any of the foregoing could have an adverse effect
on our financial condition, results of operations, or ability to satisfy our debt service obligations.
We are dependent upon the economic environment of our primary markets – New York; San Francisco; Washington,
D.C.; Boston; and Los Angeles.
In addition, market and economic conditions in the metropolitan areas in which we derive a substantial portion of
our revenue such as New York, San Francisco, Washington, D.C., Boston, and Los Angeles, 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, particularly by a significant tenant, 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 debt payments and prevent a foreclosure if the property
is subject to a mortgage, could cause us to violate our bank debt covenants, or could 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.
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As of December 31, 2019, no more than 6% of our 2019 annualized lease revenue was attributable to any individual
tenant; however, we have several significant tenants who each account for 2% to 5% of our 2019 annualized lease
revenue, and accordingly, any event of bankruptcy, insolvency, or a general downturn in the business of such tenant
may result in the failure or delay of the tenant's rental payments, which may have a substantial adverse effect on
our operating performance.
We may be unable to integrate the business of Normandy successfully or realize the anticipated synergies and
related benefits of our Normandy transaction or do so within the anticipated time frame.
The ongoing integration of the Normandy business into our own will require significant management and resources.
We may encounter difficulties in the integration process or in realizing any of the expected benefits from the
acquisition, including the following:
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the inability to successfully combine our business and Normandy's business in a manner that permits us to
achieve the synergies anticipated to result from the acquisition, which would result in some anticipated
benefits of the acquisition not being realized in the time frame currently anticipated or at all;
the complexities associated with integrating personnel;
the additional complexities of combining two companies with different histories, cultures, regulatory
restrictions, markets, and customer bases;
lost revenues or tenants as a result of certain tenants' decisions not to do business with us;
our failure to retain key employees;
the difficulties associated with integrating information technology systems and intellectual property;
potential unknown liabilities and unforeseen increased expenses, delays, or regulatory conditions associated
with the acquisition; and
performance shortfalls as a result of the diversion of management's attention caused by completing the
acquisition.
For all these reasons, it is possible that the integration process could result in the distraction of our management;
the disruption of our ongoing business; or inconsistencies in our services, standards, controls, procedures, and
policies; any of which could adversely affect our ability to maintain relationships with tenants, customers, vendors,
and employees.
Future acquisitions may fail to perform in accordance with our expectations, may require renovation costs exceeding
our estimates or expose us to unknown liabilities.
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, develop, or redevelop additional properties. Our 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 to bring a 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, develop, or redevelop 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 our 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;
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.
We face possible risks associated with the physical effects of climate change.
12
The physical effects of climate change could have a material adverse effect on our properties, operations and
business. For example, many of our properties are located along the East and West coasts, particularly those in the
central business districts of New York, San Francisco, Washington, D.C., Boston and Los Angeles. To the extent
climate change causes changes in weather patterns, our markets could experience increases in storm intensity and
rising sea-levels. Over time, these conditions could result in declining demand for office space in our buildings or our
inability to operate the buildings at all. Climate change may also have indirect effects on our business by increasing
the cost of (or making unavailable) property insurance on terms we find acceptable and increasing the cost of energy
at our properties. There can be no assurance that climate change will not have a material adverse effect on our
properties, operations or business.
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 the San Francisco Bay Area of California, an area
especially susceptible to earthquakes, and, collectively, these properties represent approximately 34% of our 2019
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 of 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.
Our insurance providers may default on their obligations to pay claims.
If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy, or
otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of
operations. In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy,
or other proceedings and our insurance policies with the provider were terminated or canceled as a result of those
proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at
reasonable prices. In such case, we could experience a lapse in any or adequate insurance coverage with respect to
one or more properties and be exposed to potential losses relating to any claims that may arise during such period
of lapsed or inadequate coverage.
Actual or threatened terrorist attacks, armed hostilities, or contagious disease epidemics affecting our target
markets may adversely affect our ability to generate revenues and the value of our properties.
We have significant investments in densely populated metropolitan markets that have been, or may be in the future,
negatively impacted by actual or threatened acts of terrorism or contagious disease epidemics, including New York,
San Francisco, Washington, D.C., Boston, and Los Angeles. As a result, some tenants in these markets may choose to
relocate their businesses to other markets with less population density or to lower-profile office buildings within
these markets that may be perceived to be less-likely targets of future terrorist activity. This could result in an
overall decrease in the demand for office space in these markets generally or in our properties in particular, which
could increase vacancies in our properties or necessitate that we lease our properties on less favorable terms or
both. In addition, future terrorist attacks in these markets could directly or indirectly damage our properties, both
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physically and financially, or cause losses that materially exceed our insurance coverage. Attacks, armed conflicts, or
including building security, building systems maintenance,
diseases could result in increased operating costs,
property and casualty insurance, and property maintenance. As a result of terrorist activities and other market
conditions, the cost of insurance coverage for our properties could also increase. In addition, our insurance policies
may not recover all our property replacement costs and lost revenue resulting from the attack. As a result of the
foregoing, our ability to generate revenues and the value of our properties could decline materially.
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
to improve 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.
We have incurred and may continue to incur indebtedness, which may increase our business risks.
As of February 3, 2020, our total consolidated indebtedness was approximately $1.4 billion, which includes a $300.0
million term loan, a $150.0 million term loan, and $700.0 million of bonds with fixed interest rates, or with interest
rates that are effectively fixed when considered in connection with interest rate swap agreements; and $224.0
million in outstanding borrowings on our line of credit, with a variable interest rate. We may incur additional
indebtedness to acquire, develop, or redevelop 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 indebtedness contains 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 two 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 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, or to finance or refinance properties, which could reduce the number of properties
we can acquire, develop, or redevelop, our net income, and the amount of cash distributions we can make.
We expect to incur additional indebtedness in the future, which may include term loans, borrowings under a credit
facility, unsecured bonds, or mortgages. 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
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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 ability to refinance some or all of our existing indebtedness may be impacted and our cash flow may 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. Please refer to Item 7A, Quantitative
and Qualitative Disclosures about Market Risk, for additional information regarding interest rate risk.
Changes in the method pursuant to which the LIBOR rates are determined and potential phasing out of LIBOR after
2021 may adversely affect our results of operations.
Our variable-interest debt instruments may use London Interbank Offering Rate ("LIBOR") as a benchmark for
establishing the rate. LIBOR is expected to be discontinued at the end of 2021. The anticipated discontinuation of
LIBOR will require lenders and their borrowers to transition from LIBOR to an alternative benchmark interest rate,
which might increase the cost of our variable-interest debt instruments. At this time, no consensus exists as to what
rate or rates may become acceptable alternatives to LIBOR, and it is impossible to predict the effect of any such
alternatives on the value of LIBOR-based variable rate loans or other financial arrangements. Uncertainty as to the
nature of alternative reference rates and as to potential changes or other reforms to LIBOR may adversely affect
LIBOR rates and the value of LIBOR-based loans.
If LIBOR is discontinued as anticipated, or otherwise at our option, our Revolving Credit Facility and term loan
facilities provide for alternate interest rate calculations. Any such alternative interest rates may be calculated
differently than LIBOR and may increase the interest expense associated with our existing or future indebtedness.
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 S&P Global Ratings 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, joint venture activity, 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 S&P Global Ratings 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 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 loans, 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.
We face risks relating to the occurrence of cyber incidents, or a deficiency in our cybersecurity, which could negatively
impact our business by causing a disruption to our operations, a compromise of confidential information, and/or
damage to our business relationships.
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A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of
our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that
can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential
information. A breach of our privacy or information security systems or our tenants' privacy or information security
systems, particularly through cyber attacks or cyber intrusion, 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 of cyber attacks to our systems, both internal and those
we have outsourced. Cyber attacks can be both individual and highly organized attempts planned by very
sophisticated hacking organizations. 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, violations of loan covenants, inability to comply with laws and regulations 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.
We employ a number of measures to prevent, detect, and mitigate these threats, which include dual factor
authentication, frequent password change events, firewall detection systems, frequent backups, a redundant data
system for core applications, and annual breach testing. While, to date, we have not had a significant cyber breach
or attack that has had a material impact on our business or results of operations, there can be no assurance that our
efforts to maintain the security and integrity of our systems will be effective, or that we will be able to maintain our
systems free from security breaches or other operational interruptions.
A cybersecurity attack could compromise the confidential information of our employees, customers, and vendors. A
successful attack could disrupt and affect our business operations, damage our reputation, and result in significant
remediation and litigation costs. Further, one or more of our tenants could experience a cyber incident which could
impact their operations and ability to perform under the terms of their lease with us. While we maintain insurance
coverage that may, subject to policy terms and conditions including deductibles, cover specific aspects of cyber risks,
such insurance coverage may be insufficient to cover all losses. 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. Such claims could include personal injury claims, 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
In addition,
contaminated properties, regardless of fault or whether the acts causing the contamination were legal.
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.
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Compliance with new laws or regulations such as the New York Climate Mobilization Act, 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.
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
including asbestos-containing materials. Third parties may seek recovery from real
to hazardous substances,
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 seven joint venture arrangements and in the future may acquire, develop, or redevelop
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,
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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 the
following risks, the likelihood of which may be higher when our joint venture partner is an institutional owner and
required to aggregate approvals from multiple beneficial owners: (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, and competition for skilled personnel could increase our
compensation costs.
We rely on a small number of persons, particularly our executive officers, to carry out our business and investment
strategies. Any of our senior management, including our executive officers, 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. Further, we
compete with various other companies in attracting and retaining qualified and skilled personnel, which may require
us to enhance our pay and benefits packages to compete effectively for such personnel. 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.
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.
We may incur impairment charges.
We evaluate on a quarterly basis our real estate portfolios for indicators of impairment. Impairment charges reflect
management's judgment of the probability and severity of the decline in the value of real estate assets and
investments we own. These charges and provisions may be required in the future as a result of factors beyond our
control,
including, among other things, changes in our expected holding periods, changes in the economic
environment and market conditions affecting the value of real property assets, or natural or man-made disasters. If
we are required to take impairment charges, our results of operations could be adversely impacted.
Our entry into the investment advisory business subjects us to a variety of risks associated with investment
performance and advisory services.
On January 24, 2020, we completed the acquisition of Normandy Real Estate Management, LLC, which is a registered
investment advisor ("RIA") that provides investment management services, among other things. As a result, the
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newly acquired investment advisory business will continue to be registered as an RIA with the SEC under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"). Federally registered investment advisers are
regulated and subject to examination by the SEC. Additionally, the Advisers Act imposes numerous obligations on
RIAs,
including fiduciary duties, disclosure obligations, recordkeeping and reporting requirements, marketing
restrictions, and general anti-fraud prohibitions. Our failure to comply with the Advisers Act and associated rules and
regulations promulgated by the SEC could subject us to enforcement proceedings and sanctions for violations,
including censure or termination of SEC registration, litigation, and reputational harm. In addition, our investment
advisory business is subject to state laws and regulations.
Additionally, poor investment returns and declines in client assets in our investment advisory business, due to either
general market conditions or under-performance (relative to our competitors or to benchmarks) by investment
products, may affect our ability to retain existing assets, prevent clients from transferring their assets out of
products or their accounts, or inhibit our ability to attract new clients or additional assets from existing clients. Any
such poor performance could adversely affect our investment advisory business and the advisory fees that we earn
on client assets.
Conflicts of interest, or the appearance of conflicts of interest, may arise because certain of our directors and officers
are also affiliated with interests that may directly compete with us in the future.
Conflicts of interest, or the appearance of conflicts of interest, could arise between our interests and the interests of
the other entities and business activities in which our directors or officers are involved. For example, in connection
with our acquisition of Normandy, certain of our officers and directors retain interests in assets or funds that were
excluded from the acquisition that may in the future compete with our business in certain markets or in
complimentary business lines once they are no longer subject to non-compete obligations.
In such cases, the
interests of such directors and officers may not be aligned with our own in all respects. Furthermore, we are
involved in business arrangements in which both we, on the one hand, and entities or funds formerly affiliated with
Normandy, on the other hand, are joint venture partners. Conflicts of interests, or the appearance of conflicts of
interests, could arise in that context as we now control and have duties on behalf of both joint venture partners.
While our contractual arrangements place restrictions on the parties' conduct in certain situations, and related party
transactions are subject to independent review and approval in accordance with our related party transaction
approval procedures and applicable law, the potential for a conflict of interest exists and such persons may have
conflicts of interest, or the appearance of conflicts of interest, with respect to these matters.
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 ability to make distributions in the future will depend on several factors, many of which
may be beyond our control, including:
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the operational and financial performance of our properties;
capital expenditures with respect to existing, developed, and newly acquired properties;
general and administrative costs associated with our operation as a publicly held REIT;
the amount of, and the interest rates on, our debt; and
potential significant expenditures relating to environmental and other regulatory matters.
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.
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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.
Further issuances of equity securities may be dilutive to current stockholders.
The interests of our existing stockholders could be diluted if additional equity securities are issued to finance future
acquisitions, developments, or redevelopments, or to repay indebtedness. Our ability to execute our business
strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and
other forms of secured and unsecured debt, and equity financing.
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 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.
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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.
Corporate responsibility, specifically related to environmental, social and governance factors (“ESG”), may impose
additional costs and expose us to new risks.
The importance of sustainability evaluations is becoming more broadly accepted by investors and shareholders.
Certain organizations that provide corporate governance and other corporate risk information to investors and
shareholders have developed scores and ratings to evaluate companies and investment funds based upon
environmental, social and governance (“ESG”) or “sustainability” metrics. Many investment funds focus on positive
ESG business practices and sustainability scores when making investments and may consider a company’s
sustainability score as a reputational or other factor in making an investment decision. In addition, investors,
particularly institutional investors, use these scores to benchmark companies against their peers and if a company is
perceived as lagging, these investors may engage with companies to require improved ESG disclosure or
performance. We may face reputational damage in the event our corporate responsibility procedures or standards
do not meet the standards set by various constituencies. A low sustainability score could result in a negative
perception of the Company, or exclusion of our common stock from consideration by certain investors.
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
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imposed by the Internal Revenue Code (the "Code"). The fact that we hold a substantial amount of our assets
through Columbia OP and its subsidiaries and real estate ventures further complicates the application of the REIT
requirements for us. 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.
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.
Failure of Columbia OP to be treated as a disregarded entity or a partnership would have serious adverse
consequences to our stockholders.
If the IRS were to successfully challenge the tax status of the Columbia OP or any of its subsidiary partnerships or
real estate ventures for federal income tax purposes, the Columbia OP or the affected subsidiary partnership or real
estate venture would be taxable as a corporation. In such event, we would cease to qualify as a REIT and the
imposition of a corporate tax on the Columbia OP, subsidiary partnership, or real estate venture would reduce the
amount of cash available for distribution from the Columbia OP to us and ultimately to our stockholders.
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.
Legislation that modifies the rules applicable to partnership tax audits may affect us.
22
The Bipartisan Budget Act of 2015, effective for taxable years beginning after December 31, 2017, requires Columbia
OP (with respect to any period when it is classified as a partnership and not a disregarded entity for federal income
tax purposes) and any subsidiary partnership to pay the hypothetical increase in partner-level taxes (including
interest and penalties) resulting from an adjustment of partnership tax items on audit or in other tax proceedings,
unless the partnership elects an alternative method under which the taxes resulting from the adjustment (and
interest and penalties) are assessed at the partner level. Many uncertainties remain as to the application of these
rules, including the application of the alternative method to partners that are REITs, and the impact they will have on
us. However, it is possible that partnerships in which we invest may be subject to U.S. federal income tax, interest,
and penalties in the event of a U.S. federal income tax audit as a result of these law changes.
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, the
comprehensive tax reform legislation enacted in December 2017 and commonly known as the Tax Cuts and Jobs Act,
or TCJA, made 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 stockholders in various ways, some of which are
adverse or potentially adverse compared to prior law. Although the IRS has issued guidance with respect to many of
the new provisions, there are numerous interpretive issues that will require further guidance. Technical corrections
legislation may 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
TCJA 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
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. TCJA 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.
23
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
The maximum federal tax rate (not including the Medicare Contribution Tax on unearned income) applicable to
income from "qualified dividends" payable to U.S. stockholders that are individuals, trusts, and estates is 20%.
Dividends payable by REITs, however, generally are not eligible for the 20% rate. However, under the TCJA, for
taxable years beginning after December 31, 2017 and before January 1, 2026, individuals, trusts, and estates
generally may deduct up to 20% of ordinary REIT dividends. Although these rules do not adversely affect the taxation
of REITs or dividends payable by REITs, investors who are individuals, trusts, and estates may perceive investments
in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends.
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.
If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable, or if we are unable
to identify and complete the acquisition of suitable replacement property to effect a Section 1031 Exchange, we may
face adverse consequences.
From time to time we may seek to dispose of properties in transactions that are intended to qualify as tax-deferred
"like-kind exchanges" under Section 1031 of the Code (a "Section 1031 Exchange").
It is possible that the
qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be
currently taxable. It is also possible that we are unable to identify and complete the acquisition of suitable
replacement property to effect a Section 1031 Exchange. In any such case, our taxable income and earnings and
profits would increase. This could increase the dividend income to our stockholders by reducing any return of capital
they received. In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate
income tax, possibly including interest and penalties. As a result, we may be required to borrow funds in order to
pay additional dividends or taxes, and the payment of such taxes could cause us to have less cash available to
distribute to our stockholders. In addition, if a Section 1031 Exchange were later to be determined to be taxable, we
may be required to amend our tax returns for the applicable year in question, including any information reports we
sent our stockholders. Moreover, it is possible that legislation could be enacted that could modify or repeal the laws
with respect to Section 1031 Exchanges, which could make it more difficult or not possible for us to dispose of
properties on a tax deferred basis.
Further, as a result of changes made by the TCJA, like-kind exchanges are only permitted with respect to real
property. The changes generally apply to exchanges completed after December 31, 2017, unless the property was
disposed of or received in the exchange on or before such date. If a material amount of personal property is
associated with the real property that we have disposed of in a like-kind exchange, the like-kind exchange provisions
will be less beneficial than under prior law.
We face possible adverse state local tax audits and changes in state and local tax law.
Because Columbia Property Trust operates as a REIT, it is generally not subject to federal income taxes, but we are
subject to certain state and local taxes. From time to time, changes in state and local tax laws or regulations are
enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in
which we operate may lead to an increase in the frequency and size of such changes. If such changes occur, we may
be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our
financial condition and results of operations and the amount of cash available for the payment of dividends and
distributions to our security holders.
24
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTIES
Overview
As of December 31, 2019, we owned 17 operating properties and three properties under development or
redevelopment, of which 13 were wholly owned and seven were owned through joint ventures. These properties
are located primarily in New York, San Francisco, and Washington, D.C. and were approximately 97.1% leased as of
December 31, 2019.
Property Statistics
The tables below include statistics for the 12 consolidated operating properties, which we own directly, and our
proportional share of the annualized lease revenue and rentable square feet for the five operating properties we
own through consolidated and unconsolidated joint ventures. 2019 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, 2019, as well as leases
executed but not yet commenced for vacant space that will commence within 12 months, and (ii) annualized parking
revenues, payable either under the terms of an executed lease or vendor contract ("2019 Annualized Lease
Revenue"). 2019 Annualized Lease Revenue excludes rental payments for executed leases that have not yet
commenced for space covered by an existing lease.
The following table shows lease expirations of our office properties as of December 31, 2019, during each of the
next 10 years and thereafter. This table assumes no exercise of renewal options or termination rights.
Year of Lease Expiration
Vacant
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Thereafter
Rentable
Square Feet
(in thousands)
2019 Annualized
Lease Revenue
(in thousands)
Percentage of
2019 Annualized
Lease Revenue
179 $
129
517
445
456
322
704
818
203
92
238
1,985
6,088 $
—
10,012
31,033
25,534
36,818
27,703
52,922
44,024
16,292
7,445
18,833
97,884
368,500
— %
3 %
8 %
7 %
10 %
8 %
14 %
12 %
4 %
2 %
5 %
27 %
100 %
25
The following table shows the geographic locations of our office properties as of December 31, 2019. For more
information about our geographic locations, see Note 15, Segment Information, of the accompanying consolidated
financial statements.
Location
New York
San Francisco
Washington, D.C.
Boston
Los Angeles
All other markets
Leased
Square Feet
(in thousands)
2019 Annualized
Lease Revenue
(in thousands)
Percentage of
2019 Annualized
Lease Revenue
2,031 $
1,675
860
272
247
824
143,493
124,381
60,498
16,308
8,825
14,995
5,909 $
368,500
39 %
34 %
16 %
4 %
2 %
5 %
100 %
The following table shows the industry breakdown of our office tenants as of December 31, 2019.
Industry
Business Services
Depository Institutions
Engineering & Management Services
Nondepository Institutions
Legal Services
Security & Commodity Brokers
Electric, Gas & Sanitary Services
Real Estate
Holding and Other Investment Offices
Insurance Agents, Brokers & Service
Other(1)
Leased
Square Feet
(in thousands)
2019 Annualized
Lease Revenue
(in thousands)
Percentage of
2019 Annualized
Lease Revenue
1,212 $
889
481
392
269
201
841
237
118
121
1,148
5,909 $
97,067
39,542
29,417
26,363
24,222
16,642
16,470
15,114
8,260
7,399
88,004
368,500
26 %
11 %
8 %
7 %
7 %
5 %
4 %
4 %
2 %
2 %
24 %
100 %
(1) No more than 2% of 2019 Annualized Lease Revenue is attributable to any individual industry.
26
The following table shows the major tenants of our operating properties as of December 31, 2019.
Tenant
Pershing
Twitter
Wells Fargo
Yahoo!
Westinghouse Electric
DocuSign
Snap
WeWork
DLA Piper
Other(1)
2019 Annualized
Lease Revenue
(in thousands)
Percentage of
2019 Annualized
Lease Revenue
$
$
18,712
17,398
15,658
15,142
14,995
12,751
12,385
7,954
7,552
245,953
368,500
5 %
5 %
4 %
4 %
4 %
3 %
3 %
2 %
2 %
68 %
100 %
(1) No more than 2% of 2019 Annualized Lease Revenue 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 our financial condition, nor are we aware of any such legal proceedings
contemplated by governmental authorities.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
27
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." As of January 31, 2020, we
had approximately 115.2 million shares of common stock outstanding held by approximately 43,400 stockholders of
record.
Distributions
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, our
future capital needs, our future sources of liquidity, and the annual distribution requirements necessary to maintain
Investments in new property acquisitions and first-generation capital
our status as a REIT under the Code.
improvements, as well as equity repurchases, are generally funded with recycled capital proceeds from property
sales, debt, or cash on hand. Our board of directors maintained a $0.20 dividend for the first three quarters of 2019
and declared a $0.21 dividend for the fourth quarter of 2019, which was paid on January 7, 2020.
28
Performance Graph
The following graph compares the cumulative total return of our common stock with the S&P 500 Index, Morgan
Stanley REIT Index, the FTSE NAREIT US Real Estate Index, and the FTSE NAREIT Equity Office Index for the period
beginning on December 31, 2014 through December 31, 2019. The graph assumes a $100.00 investment in each of
the indices on December 31, 2014, 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
December 31,
2014
December 31,
2015
December 31,
2016
December 31,
2017
December 31,
2018
December 31,
2019
$
$
$
$
$
100.00 $
100.00 $
97.23 $
94.56 $
101.37 $
113.49 $
104.17 $
138.26 $
91.06 $
132.19 $
102.23
173.80
100.00 $
102.52 $
111.34 $
116.98 $
111.64 $
140.48
100.00 $
103.05 $
111.13 $
115.46 $
111.51 $
138.66
100.00 $
100.25 $
113.42 $
119.46 $
102.12 $
134.18
29
Index ValueTotal Return PerformanceColumbia Property TrustS&P 500 IndexMorgan Stanley REIT IndexFTSE NAREIT US Real Estate IndexFTSE NAREIT Equity Office IndexDecember 31,2014December 31,2015December 31,2016December 31,2017December 31,2018December 31,201980100120140160180 Share Repurchases
Our board of directors authorized a stock repurchase program to purchase up to an aggregate of $200.0 million of
our common stock from September 4, 2019 through September 4, 2021 (the "2019 Stock Repurchase Program").
During the quarter ended December 31, 2019, we repurchased and retired the following shares in accordance with
the 2019 Stock Repurchase Program:
Period
October 2019
November 2019
Total Number
of Shares
Purchased
Average
Price Paid
per Share
463,399 $
1,152,400 $
20.22
20.93
Total Number of
Shares Purchased
as Part of Publicly
Announced Plan
463,399 $
Maximum
Approximate
Dollar Value
Available for
Future Purchase(1)
190,631,582
1,152,400 $
166,515,922
December 2019
166,515,922
— $
(1) Amounts available for future purchase relate only to our 2019 Stock Repurchase Program and represent the remainder
— $
—
of the $200 million authorized by our board of directors for share repurchases.
30
ITEM 6.
SELECTED FINANCIAL DATA
The following selected financial data of Columbia Property Trust for 2019, 2018, 2017, 2016, and 2015 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).
Total assets
Total stockholders' equity
Outstanding debt(1)
Outstanding long-term debt(1)
Obligations under capital leases
Total revenues
Income (loss) from unconsolidated joint
venture
Net income attributable to common
stockholders of Columbia Property Trust
Net cash provided by operating activities
Net cash provided by (used in) investing
activities
Net cash provided by (used in) financing
activities
Investments in real estate (acquisitions,
earnest money deposits, capital projects)
Investments in unconsolidated joint ventures
Distributions paid(2)
Stock repurchases(2)(3)
Net debt and bond proceeds (repayments)(2)
Per Weighted-Average Common Share Data:
Net income attributable to common
stockholders – basic
Net income attributable to common
stockholders – diluted
Distributions declared
Weighted-average common shares
outstanding – basic
Weighted-average common shares
outstanding – diluted
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
As of December 31,
2019
4,244,945
2,628,617
1,484,000
1,484,000
$
$
$
$
2018
4,173,993 $
2017
4,511,539 $
2016
4,299,793 $ 4,678,118
2015
2,741,016 $
2,531,936 $
2,502,768 $ 2,614,194
1,332,000 $
1,674,176 $
1,424,602 $ 1,735,063
1,332,000 $
1,302,000 $
1,302,602 $ 1,577,063
— $
— $
120,000 $
120,000 $
120,000
2019
288,837
8,004
9,197
137,443
$
$
$
$
Years Ended December 31,
2018
2017
2016
297,943 $
289,000 $
473,543 $
2015
566,065
8,003 $
2,651 $
(7,561) $
(1,142)
9,491 $
176,041 $
84,821 $
44,619
97,625 $
61,924 $
193,091 $
223,080
(170,309) $
375,730 $
(347,723) $
525,613 $
(576,699)
28,051
$
(465,804) $
79,281 $
(535,264) $
263,474
(520,122) $
(17,134) $
(93,480) $
(35,917) $
$
152,000
(94,067) $
(691,574) $
(39,521) $ (1,145,402)
(38,763) $
(369,043) $
(16,212) $
(5,500)
(95,056) $
(109,561) $
(148,474) $
(112,570)
(72,495) $
(59,462) $
(53,986) $
(17,057)
(293,175) $
249,573 $
(311,769) $
378,995
0.08
0.08
0.81
$
$
$
116,261
116,458
0.08 $
1.45 $
0.68 $
0.36
0.08 $
0.80 $
1.45 $
0.80 $
0.68 $
1.20 $
0.36
1.20
117,888
120,795
123,130
124,757
118,311
121,159
123,228
124,847
(1)
Excludes discounts and deferred financing costs.
(2) Activity is presented on a cash basis. Please refer to our accompanying consolidated statements of cash flows.
(3)
Stock repurchases were made under board-approved stock repurchase plans or in settlement of taxes related to stock
compensation.
31
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
On January 24, 2020, we acquired Normandy, a vertically integrated real estate company focused in New York;
Boston; and Washington, D.C., and general partnership interests in three active real estate funds, for approximately
$100 million, exclusive of transaction and closing costs. We believe that the acquisition of Normandy will further our
strategic initiatives by strengthening our platform with additional development and redevelopment expertise, deal
sourcing, other key capabilities, and by increasing our access to capital through Normandy's investor relationships.
Our primary strategic objective is to generate long-term stockholder returns from a combination of growing cash
flows and appreciation in the values of our properties. We own and operate high-quality office properties located in
high-barrier-to-entry markets, primarily New York; San Francisco; Washington, D.C.; and Boston. Our approach is to
own office buildings that are competitive within the top tier of their markets or that will be repositioned as such
through value-add initiatives,
including development or redevelopment. Our investment objectives include
optimizing our portfolio allocation between stabilized investments and more growth-oriented, value-add
investments and development projects with an emphasis on central business districts and multi-tenant buildings.
Over the past several years, we have undertaken a capital recycling program that has involved selling more than 50
properties in geographically dispersed markets for aggregate proceeds of $4.4 billion, and reinvesting those
proceeds in our core markets. In December 2019, we acquired for $205.5 million, 101 Franklin Street, a 16-story,
235,000-square-foot office building in Manhattan that will be fully redeveloped; and we acquired for $238.9 million,
201 California Street, a 17-story, 252,000-square-foot office tower in San Francisco that is 99% leased to 34 tenants.
In January 2020, we sold Cranberry Woods Drive in Pittsburgh for a gross sale price of $180.0 million. We are
continuing to pursue additional strategic investment opportunities in our target markets.
Our portfolio is 97.1% leased, with less than 3% of our leases scheduled to expire in 2020. During 2019, we leased a
total of 779,000 square feet of space, including a renewal lease with Pershing for 330,000 square feet at 95
Columbus in Jersey City. We continue to maintain a strong and flexible balance sheet. As of December 31, 2019, our
debt-to-real-estate-asset ratio is 35.6%(1)(2); 91.5%(1) of our portfolio is unencumbered by mortgages; and our
weighted average cost of borrowing during the quarter is 3.48%(1) per annum. Our debt maturities are laddered,
coming due in two to seven years, and $784.0 million of our unsecured borrowings can be repaid prior to maturity
without penalty. From time to time when we believe our stock is undervalued, we may take advantage of market
opportunities by using our stock repurchase program to buy shares and return capital to our stockholders. During
the fourth quarter of 2019, we repurchased 1.6 million shares at an average price of $20.72 per share, for aggregate
purchases of $33.5 million. As of December 31, 2019, $166.5 million remains available under our current repurchase
program.
(1)
Statistics include 100% of all of our consolidated properties and 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.
(2) On a net basis (i.e., reduced for cash on hand), our debt-to-real-estate-asset ratio is 34.8%.
32
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 97.4% at December 31, 2018 to 97.1% at December 31, 2019. The following table sets forth
details related to the financial impact of our recent leasing activities for properties we consolidate and based on our
proportionate share of properties owned through unconsolidated joint ventures:
Total number of leases
Square feet of leasing – renewal
Square feet of leasing – new
Total square feet of leasing
Average lease term (months)
Tenant improvement allowances, per square foot – renewal
Tenant improvements allowances, per square foot – new
Tenant improvements allowances, per square foot – all leases
Leasing commissions, per square foot – renewal
Leasing commissions, per square foot – new
Leasing commissions, per square foot – all leases
$
$
$
$
$
$
Years Ended December 31,
2019
2018
46
547,673
175,167
722,840
144
54.95
81.93
61.87
35.99
44.19
38.10
$
$
$
$
$
$
59.7 %
61.2 %
59
505,612
567,288
1,072,900
122
28.53
82.29
66.29
24.04
27.56
26.51
11.6 %
34.4 %
Rent leasing spread – renewal(1)
Rent leasing spread – new(1)
Rent leasing spread – all leases(1)
23.1 %
(1) Rent leasing spreads are calculated based on the change in base rental income measured on a straight-line basis; and,
59.9 %
for new leases, only include space that has been vacant for less than one year.
In 2019, rent leasing spreads were positive (59.9%), primarily related to a 333,000-square-foot office lease renewal
with Pershing at 95 Columbus in Jersey City, a 46,000-square-foot renewal lease at 221 Main Street in San Francisco,
a 31,000-square-foot renewal lease at 650 California Street in San Francisco, and a 29,500-square-foot lease renewal
at 218 West 18th Street in New York City. In 2019, tenant improvements included $120.00 per square foot for the
31,000-square foot lease renewal at 650 California Street and $100.00 per square foot for a new 24,000-square-foot
lease at 221 Main Street. In 2018, rent leasing spreads were positive (23.1%), primarily due to a lease extension with
Twitter for 215,000 square feet at 249 West 17th Street and lease expansions for an aggregate of 199,000 square
feet with Arby's Restaurant Group, a subsidiary of Inspire Brands, at One & Three Glenlake Parkway in Atlanta. In
2018, tenant improvement allowances include $115.00 per square foot for a new, 16.5-year lease with WeWork for
115,000 square feet at 149 Madison Avenue, which will entail a full-scale redevelopment of the property.
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 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, 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 are generally funded with capital proceeds from property sales, debt, or
cash on hand. Our board of directors declared a dividend for the fourth quarter of 2019 at a rate of $0.21 per share,
33
which represents a $0.01 per share, or 5.0%, increase from the prior quarter. The fourth quarter dividend was paid
in January 2020. The board of directors declared a dividend for the first quarter of 2020 at the same rate, $0.21 per
share, which will be paid in March 2020 to stockholders of record as of March 2, 2020.
Short-Term Liquidity and Capital Resources
During 2019, we generated net cash flows from operating activities of $137.4 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 $93.5 million, which included dividend payments for four quarters ($23.3 million for the fourth
quarter of 2018 and an aggregate of $70.2 million for the first three quarters of 2019).
During 2019, we received $375.0 million in net sales proceeds from the sale of Lindbergh Center and One & Three
Glenlake Parkway and had $152.0 million in net borrowings on our line of credit and term loans. These proceeds,
along with cash on hand, were used to fund the acquisition of 201 California Street in San Francisco for $246.2
million; the acquisition of 101 Franklin Street in New York for $206.8 million; and leasing and capital projects,
including those at our joint ventures, of $106.4 million.
Over the short term, we expect our primary sources of capital and liquidity to be operating cash flows, select
property dispositions, and debt. We expect that our principal demands for funds will be property acquisitions,
capital improvements to our existing portfolio, stockholder distributions, stock repurchases, operating expenses, and
interest and principal payments. As of February 3, 2020, we have access to $426.0 million under our Revolving Credit
Facility. We believe that we will have adequate liquidity and capital resources to meet our current obligations as
they come due.
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 borrowing proceeds. We expect that our primary uses of capital will continue to include
stockholder distributions; acquisitions; capital expenditures, such as building improvements, tenant improvements,
and leasing costs; and repaying or refinancing debt.
Consistent with our operational strategy and financing objectives, over the long term we have generally maintained
debt levels at less than 40% of the undepreciated costs of our assets. As of December 31, 2019, our debt-to-real-
estate-asset ratio was approximately 35.6%. Our debt-to-real-estate-asset ratio includes 100% of all consolidated
assets and debt, and our proportional share of assets (including basis adjustments) and debt held by our
unconsolidated joint ventures.
As described below, our variable-rate indebtedness may use London Interbank Offering Rate ("LIBOR") as a
benchmark for establishing the rate. LIBOR is expected to be discontinued at the end of 2021. The anticipated
discontinuation of LIBOR will require lenders and their borrowers to transition from LIBOR to an alternative
benchmark interest rate, which might increase the cost of our variable-interest debt instruments. At this time, no
consensus exists as to what rate or rates may become acceptable alternatives to LIBOR, and it is impossible to
predict the effect of any such alternatives on the value of LIBOR-based variable-rate loans or other financial
arrangements. If LIBOR is discontinued as anticipated, or otherwise at our option, our Revolving Credit Facility and
term loan facilities provide for alternate interest rate calculations.
Unsecured Bank Debt
Our Revolving Credit Facility has a capacity of $650.0 million and matures in January 2023, with two six-month
extension options. As of December 31, 2019, we had $334.0 million in outstanding borrowings on the Revolving
Credit Facility. Amounts outstanding under the Revolving Credit Facility bear interest at LIBOR, plus an applicable
margin ranging from 0.775% to 1.45% for LIBOR borrowings, or an alternate base rate, plus an applicable margin
ranging from 0.00% to 0.45% 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, the Revolving Credit Facility, along with the $300 Million Term Loan, as
34
described below, provides for four accordion options for an aggregate additional amount of up to $500 million,
subject to certain limitations.
Our $300.0 million unsecured term loan matures in January 2024 (the "$300 Million Term Loan") and bears interest,
at our option, at either (i) LIBOR, plus an applicable margin ranging from 0.85% to 1.65% for LIBOR loans, or (ii) an
alternate base rate, plus an applicable margin ranging from 0.00% to 0.65% for base rate loans, based on our
applicable credit rating. The interest rate on the $300 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 $300 Million Term Loan is effectively fixed at 2.55%.
Our $150.0 million unsecured term loan matures in July 2022 (the "$150 Million Term Loan") and 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, based on our
applicable credit rating. 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
As of December 31, 2019, the $300 Million Term Loan, the $150 Million Term Loan, and the Revolving Credit Facility
contain the following restrictive covenants, which are defined in the debt agreements:
•
•
•
•
•
limit the ratio of secured debt to total asset value to 40% or less;
require the fixed charge coverage ratio to be at least 1.50:1.00;
limit the ratio of debt to total asset value to 60% or less, or 65% or less following a material transaction;
require the ratio of unencumbered interest coverage ratio to be at least 1.75:1.00;
limit the unencumbered leverage ratio to 60% or less, or 65% or less following a material transaction.
As of December 31, 2019, 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"). 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"). 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 1.50:1.00 on a pro forma basis;
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, 2019, we were in compliance with the restrictive covenants on the 2026 Bonds Payable and the
2025 Bonds Payable.
35
Debt Settlements and Interest Payments
During 2019, we made interest payments of approximately $17.9 million related to our term loans, line of credit, and
notes payable, and $27.3 million related to our bonds payable. There were no debt repayments in 2019. During
2018, we made the following debt repayments:
• On December 14, 2018, we terminated both the $120.0 million development authority bonds and the
corresponding obligations under capital leases related to One & Three Glenlake Parkway in Atlanta.
• On December 7, 2018, concurrent with closing on the amendment and restatement of our term loan and
revolving credit facility, we repaid the $300 million remaining balance on the $300 Million Term Loan, which
includes a delayed-draw feature, allowing up to 12 months to fully draw the term loan.
• On October 10, 2018, we paid the $20.7 million outstanding balance on the One Glenlake mortgage note
two months prior to its original maturity date.
• On April 13, 2018, we transferred 263 Shuman Boulevard to the lender in extinguishment of the $49.0
million loan principal, accrued interest expense, and accrued property operating expenses, which resulted in
a gain on extinguishment of debt of $24.0 million in the second quarter of 2018.
• On February 2, 2018, we repaid $120.0 million of the outstanding balance on a bridge loan with disposition
proceeds from the sale of a portion of University Circle and 333 Market Street. On May 30, 2018, we repaid
the remaining $180.0 million outstanding balance on this bridge loan with disposition proceeds from the
sale of 222 East 41st Street. The settlement of a $300 million bridge loan resulted in a $0.3 million loss on
extinguishment of debt to write off the related unamortized deferred financing costs.
Contractual Commitments and Contingencies
As of December 31, 2019, our contractual obligations will become payable in the following periods (in thousands):
Contractual Obligations
Debt obligations(1)
Interest obligations on debt(1)(2)
Operating lease obligations(3)
Total
2020
2021-2022
2023-2024
Thereafter
$ 1,706,010 $
— $
206,260 $
799,750 $
700,000
266,792
1,170,763
59,713
6,668
113,317
13,433
67,774
13,432
25,988
1,137,230
Total
$ 3,143,565 $
66,381 $
333,010 $
880,956 $
1,863,218
(1)
(2)
(3)
Includes our ownership share of the debt and interest obligations for the Market Square Joint Venture and the 799
Broadway Joint Venture, which we own through unconsolidated joint ventures. The Market Square Joint Venture has a
$325.0 million mortgage loan on the Market Square Buildings, which bears interest at 5.07% and matures on July 1,
2023. We own a 51% interest in the Market Square Joint Venture. The 799 Broadway Joint Venture has $113.2 million
outstanding on a construction loan, which has a total capacity of $187.0 million; bears interest at LIBOR, capped at
4.00%, plus 425 basis points; and matures on October 9, 2021. We own a 49.7% interest in the 799 Broadway Joint
Venture. As of December 31, 2019, we guarantee equity contributions of $15.8 million to be made to the joint venture,
under the 799 Broadway construction loan agreement (see Note 7, Commitments and Contingencies, to the
accompanying financial statements).
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, 2019. Interest obligations on all other
debt instruments are measured at the contractual rate. See Item 7A, Quantitative and Qualitative Disclosures about
Market Risk, for more information regarding our interest rate swaps.
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.
36
Results of Operations
Overview
As of December 31, 2019, we owned 17 operating properties and three properties under development or
redevelopment, of which 13 were wholly owned and seven were owned through joint ventures. These properties
are located primarily in New York, San Francisco, and Washington, D.C. and were approximately 97.1% leased as of
December 31, 2019. Our period-over-period operating results are 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 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, 2019 Versus the Year Ended December 31, 2018
Lease revenues were $276.1 million for 2019, which represents a modest decrease as compared with $283.3 million
for 2018, as the impact of dispositions ($21.6 million) was partially offset by additional revenues from lease
commencements ($13.1 million) and recent property acquisitions ($1.4 million). We expect future lease revenues to
vary based on recent and future investing and leasing activities.
Asset and property management fee income was relatively stable at $7.5 million and $7.4 million for 2019 and 2018,
respectively. We expect future asset and property management fee income to increase as a result of the Normandy
Acquisition.
Other property income was $5.1 million for 2019, and $7.3 million for 2018. The 2019 activity relates to
administrative reimbursements. We expect other property income to increase as a result of the Normandy
Acquisition.
Property operating costs were $93.3 million for 2019, which represents an increase from $88.8 million for 2018,
primarily due to increases in property taxes and other taxes. We expect property operating costs to vary based on
recent and future investing and leasing activities.
Asset and property management fee expenses were $0.6 million for 2019, which represents a decrease from $0.9
million for 2018, as a result of transitioning one of our properties from third-party to internal management. We
expect asset and property management fee expenses to vary in the future based on investing activities.
Depreciation was $78.3 million for 2019, which represents a modest decrease as compared with $81.8 million for
2018, as the impact of dispositions ($6.3 million) was partially offset by capital projects across the portfolio ($2.2
million) and recent property acquisitions ($0.4 million). We expect depreciation to vary based on recent and future
investing activities and capital projects.
Amortization was $27.9 million for 2019, which represents a decrease as compared with $32.6 million for 2018, as a
result of dispositions ($3.7 million) and lease terminations and extensions ($1.4 million), partially offset by recent
property acquisitions ($0.4 million). We expect future amortization to vary based on recent and future investing and
leasing activities.
For 2019, we recognized the following impairment losses: $23.4 million in connection with changing the holding period
expectations for Lindbergh Center; and $20.6 million in connection with exiting the Los Angeles market with the planned sale of
Pasadena Corporate Park. For 2018, we recognized an impairment loss of $30.8 million in connection with changing
our holding period expectations for 222 East 41st Street. We expect future impairment losses to depend primarily on
our holding period intentions and any disposition strategies evaluated for our other properties.
General and administrative – corporate expenses were relatively stable at $32.8 million for 2019 and $33.0 million
for 2018. We expect future general and administrative – corporate expenses to remain at similar or slightly
increased levels as a result of the Normandy Acquisition.
37
General and administrative – unconsolidated joint ventures expenses were $3.6 million for 2019, which represents
an increase as compared with $3.1 million for 2018, primarily due to expanding our team. We expect future general
and administrative – unconsolidated joint ventures expenses to vary as a result of future investing activities.
For 2019, we recognized pre-acquisition costs of $6.4 million related to the Normandy transaction described in Note
16, Subsequent Events, of the accompanying consolidated financial statements. We expect to incur additional
acquisition costs in connection with closing the transaction.
Interest expense was $43.2 million for 2019, which represents a decrease as compared with $56.5 million for 2018.
lease obligation using the corresponding development
The decrease results from the settlement of a capital
authority bonds in December 2018 ($6.9 million), prior-year debt repayments and settlements ($5.3 million), and
interest capitalization ($1.2 million). We expect interest expense to vary in the near term based on future financing
activities.
We recognized a gain on extinguishment of debt of $23.3 million for 2018. In April 2018, we transferred 263 Shuman
Boulevard to the lender in extinguishment of the related mortgage note, resulting in a $24.0 million gain on
extinguishment of debt.
In May 2018, we repaid the remaining outstanding balance on our bridge loan
approximately six months early, resulting in a $0.3 million loss due to the write-off of related deferred financing
costs; and in December 2018, we refinanced two of our debt facilities, resulting in a $0.3 million loss due to the
write-off of related deferred financing costs.We expect future gains or losses on extinguishments of debt to vary
with financing activities.
Interest and other income was $0.2 million for 2019, which represents a decrease as compared with $6.9 million for
2018. The majority of this income was earned on investments in development authority bonds, which were used to
settle a corresponding capital
lease obligation in December 2018. Interest income earned on investments in
development authority bonds was entirely offset by interest expense incurred on the corresponding capital leases.
We expect interest income to remain at similar levels in the near term.
We recognized a gain on sale of unconsolidated joint venture interests of $0.8 million for 2018, related to the sale of
an additional 22.5% interest in University Circle and 333 Market Street joint ventures in February 2018, as further
described in Note 3, Real Estate Transactions, to the accompanying consolidated financial statements. We expect
future gains or losses on sales of unconsolidated joint venture interests to vary with future joint venture disposition
activities.
Income from unconsolidated joint ventures was flat at $8.0 million for 2019 and 2018. We expect income from the
unconsolidated joint ventures to vary based on future joint venture investing activities and leasing activity at the
properties owned through unconsolidated joint ventures.
We recognized gains on sales of real estate assets of $42.0 million in 2019, as a result of selling One & Three
Glenlake Parkway in April 2019. See Note 3, Real Estate Transactions, of the accompanying consolidated financial
statements for additional details. We expect future gains on sales of real estate assets to vary with disposition
activity.
Net loss attributable to noncontrolling interests reflects the allocation of earnings from the 101 Franklin Street joint
venture to our joint venture partner.
Net income attributable to stockholders of Columbia Property Trust was $9.2 million, or $0.08 per basic and diluted
share, for 2019, which represents a slight decrease as compared with $9.5 million, or $0.08 per basic and diluted
share, for 2018. The decrease is primarily due to prior-period gain on extinguishment of debt ($23.3 million) and
year-over-year impairment activity ($13.1 million), partially offset by the current period gain on sale of One & Three
Glenlake Parkway ($42.0 million). See "Supplemental Performance Measures" below for our same-store results
compared with the prior year. We expect future earnings to vary primarily as a result of leasing activity at our
existing properties and future investing activity.
38
Comparison of the Year Ended December 31, 2018 Versus the Year Ended December 31, 2017
For a comparison of our operations between 2018 and 2017, see our 2018 Annual Report on Form 10-K (the "Results
of Operations" section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations), as filed with the SEC on February 13, 2019.
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, 2019, 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/or do not plan to make further investments. See Note 15, Segment Information,
to the accompanying consolidated financial statements.
The following table presents NOI by geographic segment (in thousands):
New York
San Francisco
Washington, D.C.
Boston
Los Angeles
All other office markets
Total office segments
Hotel
Corporate
Total
For the Years Ended December 31,
2019
2018
$
93,112
$
83,305
33,953
7,539
4,601
35,428
257,938
—
(904)
94,765
79,354
34,750
7,205
4,590
51,638
272,302
—
(803)
$
257,034
$
271,499
Comparison of the Year Ended December 31, 2019 Versus the Year Ended December 31, 2018
San Francisco
NOI has increased primarily due to leasing at 650 California Street and 221 Main Street. From December 31, 2018 to
December 31, 2019, 650 California Street's commenced occupancy increased from 93.9% to 97.1%, and 221 Main
Street's commenced occupancy increased from 87.9% to 99.2%.
Boston
NOI has increased as a result of leasing at 116 Huntington Avenue. From December 31, 2018 to December 31, 2019,
116 Huntington Avenue's commenced occupancy increased from 89.0% to 96.5%.
All Other Office Markets
NOI decreased primarily as a result of selling our remaining Atlanta properties during 2019.
Supplemental Performance Measures
In addition to net income, we measure our performance using certain non-GAAP metrics, including: (i) Funds from
Operations ("FFO"), (ii) Net Operating Income ("NOI"), and (iii) Same Store Net Operating Income ("Same Store
NOI"). These supplemental performance measures are commonly used by REIT industry analysts and investors, and
are viewed by management to be useful indicators of operating performance principally because they exclude the
effects of certain income and expenses that do not reflect the cash-generating capability of our operations.
Management believes that the use of FFO, NOI, and Same Store NOI, combined with net income, improves the
39
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 excludes expenses that materially impact our overall results of operations and, therefore,
should not be considered as a substitute for net income, 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, 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, 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 may not be comparable to those presentations. We calculate FFO based on amounts attributable to
our common stockholders, which includes earnings from investments owned directly; and our proportional share of
earnings from investments owned through consolidated and unconsolidated subsidiaries.
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, principally because it
excludes the effects of depreciation and amortization of real estate assets. GAAP depreciation and amortization
reflect a systematic reduction in the carrying value of real estate assets and, therefore, are not indicative of the
actual increase or decrease in the realizable value of real estate assets. 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 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.
40
Net income attributable to common stockholders of Columbia Property Trust reconciles to FFO as follows (in
thousands):
Years Ended December 31,
2019
2018
2017
Reconciliation of Net Income to Funds from Operations:
Net income attributable to common stockholders
$
9,197
$
9,491 $
176,041
Adjustments:
Depreciation of real estate assets
Amortization of lease-related costs
Depreciation and amortization attributable to our interest in
unconsolidated joint ventures(1)
Impairment loss on real estate assets
Gain on sale of unconsolidated joint venture interests
Gains on sales of real estate assets
Funds from Operations
78,292
27,908
50,617
43,941
—
(42,030)
81,795
32,554
51,377
30,812
(762)
—
80,394
32,403
21,288
—
—
(175,518)
$
167,925
$
205,267 $
134,608
(1) Depreciation and amortization related to properties in unconsolidated joint ventures is recorded as equity in earnings
from unconsolidated joint ventures.
The following significant non-cash revenues and expenses are included in our FFO:
•
income, net: To recognize rent on a straight-line basis over the lease term, we
Straight-line rental
recognized net straight-line rental income for our wholly owned properties of $12.4 million, $25.9 million,
and $31.9 million in 2019, 2018, and 2017, respectively. Income (loss) from unconsolidated joint ventures
includes additional net straight-line rental income of $1.3 million, $(0.7) million, and $(0.7) million in 2019,
2018, and 2017, respectively.
• Amortization of intangible lease assets and liabilities: To amortize above- and below-market, in-place lease
intangible assets (liabilities), we recognized net increases to rental revenues (or decreases to operating
expenses) for our wholly owned properties of $4.4 million, $3.2 million, and $0.5 million in 2019, 2018, and
2017, respectively. Income (loss) from unconsolidated joint ventures includes additional net operating
income for amortization of intangible lease assets and liabilities of $9.8 million, $11.5 million, and $2.3
million in 2019, 2018, and 2017, respectively.
• Gain (loss) on extinguishment of debt: We recognized gains or losses on the repayment of debt before
maturity of $23.3 million and $(0.3) million in 2018 and 2017, respectively.
• Amortization of deferred financing costs and debt premiums (discounts): To amortize costs associated with
securing debt from third-party lenders over the terms of the respective debt facilities, we recognized net
interest expense of $2.6 million, $3.1 million, and $3.0 million for 2019, 2018, and 2017, respectively.
Income (loss) from unconsolidated joint ventures includes additional net interest expense of $(1.6) million in
2019 and 2018.
41
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, 2018. NOI and Same Store NOI are calculated as follows for the
years ended December 31, 2019 and 2018 (in thousands):
Same-Store NOI – wholly owned properties:
Revenues:
Lease revenues
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,
2019
2018
$
249,423
$
4,933
254,356
(87,808)
166,548
69,957
236,505
529
20,000
$
257,034
$
236,353
5,097
241,450
(82,048)
159,402
69,350
228,752
(66)
42,813
271,499
(1) Reflects NOI from properties that were wholly owned for the entirety of the periods presented.
(2) Reflects NOI earned from properties owned through unconsolidated joint ventures based on our ownership interest as
of December 31, 2019, for the entirety of the periods presented. 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, 2018, for all periods presented: 201 California
Street acquired on December 9, 2019, 92.5% of 101 Franklin Street acquired on December 2, 2019, and 49.7% of 799
Broadway acquired on October 3, 2018.
(4) Reflects activity for the following properties sold since January 1, 2018, for all periods presented: Lindbergh Center sold
on September 26, 2019, One & Three Glenlake sold on April 15, 2019, 222 East 41st Street sold on May 29, 2018, and
22.5% of both University Circle and 333 Market Street sold on February 1, 2018.
Same Store NOI increased from $228.8 million for 2018 to $236.5 million for 2019, primarily as a result of leasing at
650 California Street in San Francisco and at 315 Park Avenue South in New York.
42
A reconciliation of Net Income to NOI and Same Store NOI is presented below (in thousands):
Net income attributable to stockholders of Columbia Property Trust
$
9,197
$
Years Ended December 31,
2019
2018
Depreciation
Amortization
Impairment of real estate assets
General and administrative – corporate
General and administrative – joint venture
Pre-acquisition costs
Net interest expense
Interest income from development authority bonds
(Gain) loss on extinguishment of debt
Income tax expense
Asset and property management fee income
Adjustment included in income from unconsolidated joint ventures
Gain on sale of unconsolidated joint venture interest
Gains on sales of real estate assets
Amounts attributable to noncontrolling interest
Net operating income
Same Store NOI – joint venture owned properties(1)
NOI from acquisitions(2)
NOI from dispositions(3)
78,292
27,908
43,941
32,779
3,567
6,398
42,997
—
—
21
(7,544)
61,634
—
(42,030)
(126)
257,034
(69,957)
(529)
(20,000)
Same Store NOI – wholly owned properties(4)
$
166,548
$
9,491
81,795
32,554
30,812
32,979
3,108
—
56,477
(6,871)
(23,340)
37
(7,384)
62,603
(762)
—
—
271,499
(69,350)
66
(42,813)
159,402
(1)
For all periods presented, reflects our ownership interest in NOI for properties owned through unconsolidated joint
ventures as of December 31, 2019, for the entirety of the periods presented. The NOI for properties held through
unconsolidated joint ventures is included in income 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, 2018, for all periods presented: 201 California
Street acquired on December 9, 2019, 92.5% of 101 Franklin Street acquired on December 2, 2019, and 49.7% of 799
Broadway acquired on October 3, 2018.
(3) Reflects activity for the following properties sold since January 1, 2018, for all periods presented: Lindbergh Center sold
on September 26, 2019, One & Three Glenlake sold on April 15, 2019, 222 East 41st Street sold on May 29, 2018, and
22.5% of both University Circle and 333 Market Street sold on February 1, 2018.
(4) Reflects NOI from properties that were wholly owned for the entirety of the periods presented.
43
Portfolio Information
As of December 31, 2019, we owned 17 operating properties and three properties under development or
redevelopment, of which 13 were wholly owned and seven were owned through joint ventures. These properties
are located primarily in New York, San Francisco, and Washington, D.C., contain a total of 7.3 million rentable square
feet, and were approximately 97.1% leased as of December 31, 2019.
As of December 31, 2019, our five highest geographic reportable segments, based on 2019 Annualized Lease
Revenue, were as follows. For more information about our reportable segments, see Note 15, Segment Information,
to the accompanying consolidated financial statements.
Location
New York
San Francisco
Washington, D.C.
Boston
Los Angeles
Leased
Square Feet
(in thousands)
2019 Annualized
Lease Revenue
(in thousands)
Percentage of
2019 Annualized
Lease Revenue
2,031 $
1,675
860
272
247
143,493
124,381
60,498
16,308
8,825
5,085 $
353,505
39 %
34 %
16 %
4 %
2 %
95 %
As of December 31, 2019, our five highest tenant industry concentrations, based on 2019 Annualized Lease Revenue,
were as follows:
Industry
Business Services
Depository Institutions
Engineering & Management Services
Nondepository Institutions
Legal Services
Leased
Square Feet
(in thousands)
2019 Annualized
Lease Revenue
(in thousands)
Percentage of
2019 Annualized
Lease Revenue
1,212 $
889
481
392
269
97,067
39,542
29,417
26,363
24,222
3,243 $
216,611
26 %
11 %
8 %
7 %
7 %
59 %
As of December 31, 2019, our five highest tenant concentrations, based on 2019 Annualized Lease Revenue, were as
follows:
Pershing
Twitter
Wells Fargo
Yahoo!
Westinghouse Electric
For more information on our portfolio, see Item 2, Properties.
44
2019 Annualized
Lease Revenue
(in thousands)
Percentage of
2019 Annualized
Lease Revenue
$
$
18,712
17,398
15,658
15,142
14,995
81,905
5 %
5 %
4 %
4 %
4 %
22 %
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. To the
extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we
would be subject to federal and state corporate income tax on the undistributed income. 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.
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 we, 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 20% 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.
45
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 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 transaction. We have determined that the
carrying values of its real estate assets and related intangible assets are recoverable as of December 31, 2019.
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.
In the fourth quarter of 2019, we recorded an impairment loss of $20.6 million on Pasadena Corporate Park. Upon
deciding to exit the Los Angeles market, we began to market for sale our only asset therein, Pasadena Corporate
Park, in the fourth quarter of 2019. In January 2020, we entered into a contract to sell Pasadena Corporate Park, and
anticipate closing on the sale in the first quarter of 2020. As a result, as of December 31,2019, we reduced the
carrying value of Pasadena Corporate Park to reflect its estimated fair value of $74.5 million, determined based on
estimated net sale proceeds (Level 1), by recording an impairment loss of $20.6 million.
In the third quarter of 2019, we recognized an impairment loss of $23.4 million as a result of changing the holding
period expectations for Lindbergh Center in Atlanta, Georgia. We entered a contract to sell Lindbergh Center in the
third quarter of 2019, and closed the sale on September 26, 2019. As a result, we reduced the carrying value of
Lindbergh Center to reflect its estimated fair value, based on the estimated net sale proceeds of $181.0 million
(Level 1), by recording an impairment loss of $23.4 million in the third quarter of 2019.
In the second quarter of 2018, we recognized an impairment loss of $30.8 million in connection with changing the
holding period expectations for 222 East 41st Street in New York. We widely marketed this property for sale during
the second quarter and, as a result, entered into an agreement to sell this property on May 25, 2018 and closed on
the sale on May 29, 2018. Upon entering into the sale agreement, we reduced 222 East 41st Street's carrying value
to reflect its fair value, estimated based on the net contract price of $284.6 million (Level 1), by recording an
impairment loss of $30.8 million in the second quarter of 2018.
46
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 that are avoided for in-place leases, 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:
tenant
•
•
• Direct costs associated with obtaining a new tenant that are avoided for in-place leases,
including
commissions,
improvement allowances, 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 that 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
those in-place lease components, such as lease commissions and tenant
term with the exception of
47
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.
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 positive or negative value associated with effective
contractual rental rates that are above or below market at the time of acquisition 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 costs over the remaining term of the respective ground leases.
Revenue Recognition
The majority of our revenues are derived from leases and are reflected as lease revenues on the accompanying
consolidated statements of operations. Lease revenues includes base rental income, tenant reimbursements, and
lease termination fees. All of the leases on our assets are considered operating leases. Therefore, base rental income
is generally recognized on a straight-line basis over the lease term, and tenant reimbursements are generally
recognized in the period in which reimbursements for operating costs are billable to the tenant. Rents and tenant
reimbursements collected in advance are recorded as deferred income on the accompanying consolidated balance
sheets.
In determining when to begin recognizing rental revenues, we consider a number of factors, including the nature of
the physical improvements made in connection with the lease. When we own the improvements for accounting
purposes, revenue recognition generally begins once the improvements are substantially complete and the lessee
has taken possession of the improved space. When we do not own the improvements for accounting purposes (the
lessee is the owner), revenue recognition generally begins once the lessee takes possession of the unimproved
space; in these instances, the tenant allowance is accounted for as a lease incentive, which reduces rental revenues
over the lease term. When evaluating which party (lessee or lessor) owns the improvements for accounting
purposes, we consider a number of factors, including, among other things: whether the lease stipulates what the
tenant allowance may be used for; whether the lessee or lessor retains legal title to the improvements; the expected
economic life of the improvements relative to the lease term; and who directs the construction of the
improvements. The determination of who owns the improvements for accounting purposes is subject to significant
judgement and is not based on any one factor.
Related-Party Transactions and Agreements
During 2019, 2018, and 2017, we did not have any related party transactions, except as described in Note 4,
Unconsolidated Joint Ventures, 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 and Contingencies, to the accompanying consolidated financial statements for further explanation.
Examples of such commitments and contingencies include:
•
•
•
•
•
guaranties related to the debt of unconsolidated joint ventures;
obligations under operating leases;
obligations under capital leases;
commitments under existing lease agreements; and
litigation.
48
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 January 24, 2020, Columbia Property Trust acquired Normandy Real Estate Management, LLC, a developer,
operator, and investment manager of office and mixed-use assets in New York, Boston, and Washington, D.C. for
approximately $100.0 million, exclusive of transaction and closing costs (the "Normandy Acquisition"). The purchase
price for the Normandy Acquisition is comprised of two components: an approximately $13.5 million cash payment,
and the issuance of 3,264,151 Series A Convertible, Perpetual Preferred Units of Columbia OP with a liquidation
preference of $26.50 per unit (the "Preferred OP Units"). The Preferred OP Units are convertible into common units
of Columbia OP, which are convertible into shares of Columbia Property Trust's common stock, subject to certain
terms and conditions. After giving effect to the Preferred OP Units issued in the Normandy Acquisition, Columbia
Property Trust owns approximately 97.2% of the limited partnership interests in Columbia OP.
We also note the following other subsequent events:
• On February 7, 2020, the board of directors declared dividends for the first quarter of 2020 of $0.21 per
share, payable on March 17, 2020, to stockholders of record on March 2, 2020.
• On January 24, 2020, in connection with the Normandy Acquisition, we issued 128,399 of time-based award
shares and 104,968 of performance-based award restricted stock units to Normandy employees that
became employees of Columbia Property Trust.
• On January 16, 2020, we closed on the sale of Cranberry Woods Drive for $180.0 million and anticipate
recognizing a gain on sale of real estate assets in the first quarter of 2020.
• On January 7, 2020, Columbia Property Trust paid an aggregate amount of $24.2 million in dividends for the
fourth quarter of 2019 to stockholders of record on December 16, 2019.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a result of certain of our outstanding 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 low to moderate level of overall borrowings. We manage our ratio of fixed- to floating-rate debt with the
objective of achieving a mix that we believe is appropriate in light of anticipated changes. 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 risk of increasing interest rates in future periods. Fluctuations
in LIBOR may affect the amount of interest expense we incur on borrowings indexed to LIBOR, such as borrowings
under the Revolving Credit Facility, which currently bears interest at the applicable LIBOR rate, as defined in the
credit agreements, plus an applicable margin that is subject to adjustment based on our credit ratings.
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, 2019
and 2018, the estimated fair value of our consolidated line of credit and notes payable and bonds was $1.5 billion
and $1.3 billion, respectively.
49
Our financial instruments, including bonds payable, consist of both fixed- and variable-rate debt. As of December 31,
2019, our debt consisted of the following, which includes our ownership share of debt at unconsolidated joint
ventures, in thousands:
Maturing Debt:
Effectively variable-rate debt
Effectively fixed-rate debt
$
$
Average Interest Rate:
Effectively variable-rate debt
Effectively fixed-rate debt
2020
2021
2022
2023
2024
Thereafter
Total
— $
56,259 $
— $ 334,000 $
— $
— $ 390,259
— $
— $ 150,000 $ 165,750 $ 300,000 $ 700,000 $1,315,750
— %
— %
5.96 %
— %
— %
3.07 %
2.52 %
5.07 %
— %
2.55 %
— %
3.90 %
3.02 %
3.64 %
Our consolidated, variable-rate borrowings consist of the Revolving Credit Facility, the $300 Million Term Loan, and
the $150 Million Term Loan. However, only the Revolving Credit Facility bears interest at effectively variable rates, as
the variable rates on the $300 Million Term Loan and the $150 Million Term Loan have been effectively fixed
through the interest rate swap agreements described herein.
As of December 31, 2019, our consolidated debt consisted of $334.0 million outstanding borrowings under the
Revolving Credit Facility, $300.0 million outstanding on the $300 Million Term Loan, $150.0 million outstanding on
the $150 Million Term Loan, $349.1 million in 2026 Bonds Payable outstanding, and $349.7 million in 2025 Bonds
Payable outstanding. The amounts outstanding on our Revolving Credit Facility in the future will largely depend
upon future acquisition and disposition activities. The weighted-average interest rate on all of our consolidated debt
instruments was 3.23% as of December 31, 2019.
Approximately $1,148.9 million of our consolidated debt outstanding as of December 31, 2019, is subject to fixed
rates, either directly or when coupled with an interest rate swap agreement. As of December 31, 2019, these
balances incurred interest expense at an average interest rate of 3.44% and have expirations ranging from 2022
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.
Approximately $334.0 million of our consolidated debt outstanding as of December 31, 2019, is subject to variable
rates. As of December 31, 2019, this balance incurred interest expense at an interest rate of 2.52% and expires in
2023. An increase or decrease of 100 basis points would have a $3.3 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 unconsolidated borrowings consist of a fixed-rate mortgage note and a variable-rate construction note. Our
Market Square Joint Venture holds a $325 million mortgage note, which bears interest at a fixed rate of 5.07%; and
our 799 Broadway Joint Venture holds a $113.2 million construction note, which bears interest at a floating rate of
5.96% as of December 31, 2019. Adjusting for our ownership share of the debt at these unconsolidated joint
ventures, our weighted-average interest rate of all of our debt instruments is 3.50%.
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 2019, 2018, or 2017.
50
ITEM 9A.
CONTROLS AND PROCEDURES
Columbia Property Trust, Inc.
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
Columbia Property Trust's 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, the Principal Executive Officer and
Principal Financial Officer concluded that Columbia Property Trust's 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
Management of Columbia Property Trust 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.
Management of Columbia Property Trust has assessed the effectiveness of Columbia Property Trust's internal
control over financial reporting at December 31, 2019. 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 Columbia Property Trust's 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, 2019.
The report of Columbia Property Trust's independent registered public accounting firm on internal control over
financial reporting for Columbia Property Trust is included in Part IV, Item 15, of this annual report on Form 10-K and
is incorporated herein by reference.
51
Changes in Internal Control Over Financial Reporting
There have been no changes in Columbia Property Trust’s internal control over financial reporting during the quarter
ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Columbia Property Trust Operating Partnership, L.P.
Management's Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
Columbia Property Trust, the general partner and sole owner of Columbia OP, 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 Columbia OP's 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, the Principal Executive Officer and Principal Financial Officer concluded that Columbia
OP's 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
Management of Columbia Property Trust, as the general partner and sole owner of Columbia OP, is responsible for
establishing and maintaining adequate internal control over financial reporting for Columbia OP, as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act. The Principal Executive Officer and Principal Financial Officer of
Columbia Property Trust, along with management and other personnel, have designed and supervised the financial
reporting process 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.
Management has assessed the effectiveness of Columbia OP's internal control over financial reporting at
December 31, 2019. 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 Columbia OP's
52
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, 2019.
The report of Columbia OP's independent registered public accounting firm on internal control over financial
reporting for Columbia OP 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 Columbia OP's internal control over financial reporting during the quarter ended
December 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders 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, 2019, 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, 2019, 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, 2019, of the Company and our report dated February 13, 2020, expressed an unqualified
opinion on those financial statements.
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.
its inherent limitations,
internal control over financial reporting may not prevent or detect
Because of
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 13, 2020
54
ITEM 9B.
OTHER INFORMATION
During the fourth quarter of 2019, 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.
55
PART III
We will file a definitive Proxy Statement for our 2020 Annual Meeting of Stockholders (the "2020 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 2020 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
www.columbia.reit. Any amendments to, or waivers of, the Code of Ethics for our principal executive officer,
principal financial officer, principal accounting officer, 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 2020 Proxy Statement.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from our 2020 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,
2019. The other information required by this Item is incorporated by reference from our 2020 Proxy Statement.
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 LTI
Plan
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
— $
—
— $
—
—
—
2,130,296
2,669,704
—
2,130,296
—
2,669,704
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference from our 2020 Proxy Statement.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference from our 2020 Proxy Statement.
56
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
2019 FORM 10-K OF
COLUMBIA PROPERTY TRUST, INC.
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
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
3.8
4.1
4.2
4.3
4.4
4.5
4.6
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).
Fourth 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 March 7, 2019).
Amended and Restated Agreement of Limited Partnership of Columbia Property Trust Operating Partnership, L.P.
(incorporated by reference to the Company's Current Report on Form 8-K filed with the Commission on January 27, 2020)
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).
4.7*
Description of Registrant's securities.
57
Ex.
10.1
10.2
10.3+
10.4+
10.5+
10.6+
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
21.1*
23.1*
31.1*
31.2*
Description
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).
Form of 2018 Restricted Stock Award (Time-Based) under the Columbia Property Trust Inc. Amended and Restated 2013 Long-
Term Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on From 10-K filed with the
Commission on February 15, 2018).
Form of 2018 Restricted Stock Award (Performance-Based) under the Columbia Property Trust Inc. Amended and Restated
2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on From 10-K filed
with the Commission on February 15, 2018).
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 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 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.
Amended and Restated Revolving Credit and Term Loan Agreement, dated as of December 7, 2018, by and among Columbia
Property Trust Operating Partnership, L.P., as borrower; JPMorgan Chase Bank, N.A., as administrative agent; PNC Bank,
National Association as syndication agent for the Revolving Credit Facility; U.S. Bank National Association and Wells Fargo
Bank, N.A. as co-documentation agents for the Revolving Credit Facility; BMO Harris Bank, N.A., Regions Bank, and SunTrust
Bank, as syndication agents for the Term Loan Facility; JPMorgan Chase Bank, N.A., PNC Capital Markets LLC, U.S. Bank
National Association, and Wells Fargo Securities LLC as joint lead arrangers and joint bookrunners for the Revolving Credit
Facility; and SunTrust Robinson Humphrey, Inc., Regions Capital Markets, and Bank of Montreal as joint lead arrangers and
joint bookrunners for the Term Loan Facility.
Registration Rights Agreement, dated January 24, 2020, by and among Columbia Property Trust, Inc. and each of the parties
listed on the signature pages thereto (incorporated by reference to the Company's Current Report on Form 8-K filed with the
Commission on January 27, 2020)
Subsidiaries of Columbia Property Trust, Inc.
Consent of Deloitte & Touche LLP – Columbia Property Trust, Inc. and Columbia Property Trust Operating Partnership, L.P.
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 – Columbia Property Trust, Inc.
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 – Columbia Property Trust, Inc.
58
Ex.
31.3*
31.4*
32.1*
32.2*
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104.1
*
+
Description
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 – Columbia Property Trust Operating Partnership, L.P.
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 – Columbia Property Trust Operating Partnership, L.P.
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 – Columbia Property Trust, Inc.
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 – Columbia Property Trust Operating Partnership,
L.P.
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.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101
Filed herewith.
Identifies each management contract or compensatory plan required to be filed.
59
Pursuant to the requirements of Section 13 or 15 (b) of the Securities Exchange Act of 1934, as amended, each
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 13, 2020 By:
/s/ James A. Fleming
JAMES A. FLEMING
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated:
February 13, 2020
/s/ Wendy W. Gill
WENDY W. GILL
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
(Registrant)
By: Columbia Property Trust, its sole general partner
Dated:
February 13, 2020 By:
/s/ James A. Fleming
JAMES A. FLEMING
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated:
February 13, 2020
/s/ Wendy W. Gill
WENDY W. GILL
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
60
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below
by the following persons on behalf of each registrant and in the capacities and on the dates indicated.
Signature
Capacity*
Date
/s/ Carmen M. Bowser
Carmen M. Bowser
/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
/s/ Constance B. Moore
Constance B. Moore
/s/ Michael S. Robb
Michael S. Robb
/s/ George W. Sands
George W. Sands
/s/ Thomas G. Wattles
Thomas G. Wattles
Independent Director
February 13, 2020
Independent Director
February 13, 2020
Independent Director
Independent Director
President, Chief Executive Officer and
Director
(Principal Executive Officer)
February 13, 2020
February 13, 2020
February 13, 2020
Independent Director
February 13, 2020
Independent Director
February 13, 2020
Independent Director
February 13, 2020
Independent Director
February 13, 2020
*
Each person is signing in his or her capacity as an officer and/or director of Columbia Property Trust, Inc., which is the
sole general partner of Columbia Property Trust Operating Partnership, L.P.
61
This page intentionally left blank.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Columbia Property Trust, Inc. Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018, and 2017
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018, and 2017
Consolidated Statements of Equity for the Years Ended December 31, 2019, 2018, and 2017
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018, and 2017
Columbia Property Trust Operating Partnership, L.P. Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018, and 2017
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018, and 2017
Consolidated Statements of Equity for the Years Ended December 31, 2019, 2018, and 2017
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018, and 2017
Columbia Property Trust, Inc. & Columbia Property Trust Operating Partnership, L.P.
Notes to Consolidated Financial Statements
Schedule III Real Estate and Accumulated Depreciation
Page
F-2
F-4
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
S-1
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, 2019 and 2018, the related consolidated statements of operations,
comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2019,
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, 2019 and 2018, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2019, 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, 2019, 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 13, 2020, 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.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the Audit Committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Lease Revenues – Refer to Note 2 (Revenue Recognition) to the financial statements
Critical Audit Matter Description
Lease revenues includes base rental income, tenant reimbursements, and lease termination fees. Base rental income
is generally recognized on a straight-line basis over the lease term. The timing of revenue recognition is impacted by
whether the Company or the lessee owns the physical improvements made in connection with each lease. In
F-2
determining whether the Company or the lessee is the owner of such improvements, the Company considers several
factors based on each lease arrangement, including whether the lease stipulates what the tenant allowance may be
used for; whether the lessee or lessor retains legal title to the improvements; the expected economic life of the
improvements relative to the lease term; and which party directs the construction of the improvements.
The determination of whether the Company or the lessee owns the improvements for accounting purposes is
subject to significant judgment and is not based on any one factor. Auditing management’s determination of these
matters often is complex and requires subjective judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s determination of the owner of the tenant improvements, and the
related impact on the timing and amount of revenue recognition, included the following, among others:
• We tested the effectiveness of controls over revenue recognition,
including those controls over the
evaluation of the ownership of tenant improvements, and the timing and amounts of rental revenues to be
recognized over the term of the related lease.
• We selected a sample of lease agreements and performed the following to evaluate the appropriateness of
the determination of the ownership of the tenant improvements and the related impact on the timing and
amount of revenue recognition:
◦
◦
◦
Evaluated the reasonableness and consistency of the factors considered by management to
determine the owner of the tenant improvements and compared such factors to the terms in the
lease agreement or other supporting documents.
Tested tenant improvement costs, including the amounts funded by the Company or the tenant, by
reconciling the amounts recorded by the Company to invoices or other supporting documents and
evaluated whether the costs were consistent with the terms of the lease agreement and the
Company’s ownership determination.
Tested the timing of and amounts recognized as base rental income by independently calculating
such rental income amounts to be recognized and comparing it to the amounts recorded by the
Company.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 13, 2020
We have served as the Company's auditor since 2008.
F-3
COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per-share amounts)
Assets:
Real Estate Assets, at Cost:
Land
Buildings and improvements, less accumulated depreciation of $281,248 and $403,355, as of
December 31, 2019 and 2018, respectively
Intangible lease assets, less accumulated amortization of $58,659 and $84,881, as of
December 31, 2019 and 2018, respectively
Construction in progress
Real estate assets held for sale, less accumulated depreciation and amortization of $80,543 as
of December 31, 2019
Total real estate assets
Operating lease assets
Investments in unconsolidated joint ventures
Cash and cash equivalents
Tenant receivables, net of allowance for doubtful accounts of $4 as of December 31, 2018
Straight-line rent receivable
Prepaid expenses and other assets
Intangible lease origination costs, less accumulated amortization of $33,731 and $65,348, as of
December 31, 2019 and 2018, respectively
Deferred lease costs, less accumulated amortization of $16,732 and $27,735, as of December 31,
2019 and 2018, respectively
Other assets held for sale, less accumulated amortization of $10,222 as of December 31, 2019
Total assets
Liabilities:
Line of credit and notes payable, net of deferred financing costs of $2,084 and $2,692, as of
December 31, 2019 and 2018, respectively
Bonds payable, net of discount of $1,124 and $1,304 and deferred financing costs of $3,552 and
$4,158, as of December 31, 2019 and 2018, respectively
Operating lease liabilities
Accounts payable, accrued expenses, and accrued capital expenditures
Dividends payable
Deferred income
Intangible lease liabilities, less accumulated amortization of $15,127 and $21,766, as of
December 31, 2019 and 2018, respectively
Liabilities held for sale
Total liabilities
Commitments and Contingencies (Note 7)
Equity:
Common stock, $0.01 par value, 225,000,000 shares authorized, 115,280,597 and 116,698,033
shares issued and outstanding as of December 31, 2019 and 2018, respectively
Additional paid-in capital
Cumulative distributions in excess of earnings
Accumulated other comprehensive income (loss)
Total stockholders' equity attributable to Columbia Property Trust
Noncontrolling interest in consolidated joint venture
Total equity
Total liabilities and equity
December 31,
2019
2018
$
870,352
$
817,975
1,719,207
1,910,041
61,025
53,621
214,956
2,919,161
29,470
1,054,460
12,303
2,464
77,330
21,484
27,971
76,385
23,917
98,540
33,800
—
2,860,356
—
1,071,353
17,118
3,258
87,159
23,218
34,092
77,439
—
$
$
4,244,945
$
4,173,993
781,916
$
629,308
695,324
694,538
2,186
70,845
24,209
16,955
21,839
3,054
—
49,117
23,340
15,593
21,081
—
1,616,328
1,432,977
—
—
1,153
4,392,322
(1,769,234)
(1,101)
2,623,140
5,477
2,628,617
1,167
4,421,587
(1,684,082)
2,344
2,741,016
—
2,741,016
4,173,993
See accompanying notes.
$
4,244,945
$
F-4
COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
Revenues:
Lease revenues
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
Impairment loss on real estate assets
General and administrative – corporate
General and administrative – joint venture
Pre-acquisition costs (Note 16)
Other Income (Expense):
Interest expense
Gain (loss) on extinguishment of debt
Interest and other income
Gain on sale of unconsolidated joint venture interests
Income tax benefit (expense)
Income from unconsolidated joint ventures
Gains on sales of real estate assets
Net income
Less: net loss attributable to non-controlling interest in consolidated joint venture
Net income attributable to common stockholders
Per-Share Information – Basic:
Net income attributable to common stockholders
Weighted-average common shares outstanding
Per-Share Information – Diluted:
Net income attributable to common stockholders
Weighted-average common shares outstanding
See accompanying notes.
Years Ended December 31,
2019
2018
2017
$
276,149
$
283,252
$
280,570
—
7,544
5,144
—
7,384
7,307
1,339
3,782
3,309
288,837
297,943
289,000
93,275
—
629
78,292
27,908
43,941
32,779
3,567
6,398
88,813
—
854
81,795
32,554
30,812
32,979
3,108
—
87,805
2,089
918
80,394
32,403
—
34,966
1,454
—
286,789
270,915
240,029
(43,170)
—
173
—
(21)
8,004
42,030
7,016
9,064
133
9,197
0.08
116,261
(56,499)
23,340
6,894
762
(37)
8,003
—
(17,537)
9,491
—
(60,516)
(325)
9,529
—
213
2,651
175,518
127,070
176,041
—
$
$
9,491
$
176,041
0.08
$
117,888
1.45
120,795
0.08
$
0.08
$
116,458
118,311
1.45
121,159
$
$
$
F-5
COLUMBIA PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Years Ended December 31,
2019
2018
2017
9,064
$
9,491
$
(3,445)
5,619
133
5,752
$
1,441
10,932
—
176,041
1,786
177,827
—
10,932
$
177,827
Net income
Market value adjustment to interest rate swaps
Comprehensive income
Less: net loss attributable to non-controlling interest in consolidated joint
venture
Comprehensive income attributable to common stockholders
$
$
See accompanying notes.
F-6
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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
Noncash operating lease expense
Depreciation
Amortization
Impairment loss on real estate assets
Noncash interest expense
(Gain) loss on extinguishment of debt
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Gain on sale of unconsolidated joint venture interest
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
Decrease (increase) 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
Net proceeds from the sale of investments in unconsolidated joint ventures
Real estate acquisitions and prepaid transaction costs
Capital improvements and development costs
Deferred lease costs paid
Investments in unconsolidated joint ventures
Distributions in excess of earnings from unconsolidated joint ventures
Net cash provided by (used in) investing activities
Cash Flows From Financing Activities:
Financing costs paid
Proceeds from lines of credit and notes payable
Repayments of lines of credit and notes payable
Distributions paid to stockholders
Redemptions of common stock
Contribution from noncontrolling interest in consolidated joint venture
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
Years Ended December 31,
2019
2018
2017
$
9,064
$
9,491
$
176,041
(13,230)
(25,952)
(32,737)
720
78,292
23,546
43,941
2,562
—
(42,030)
(8,004)
27,977
—
6,622
697
(1,539)
5,560
3,265
137,443
375,004
—
(453,128)
(66,994)
(22,307)
(17,134)
14,250
(170,309)
(162)
802,000
(650,000)
(93,480)
(35,917)
5,610
28,051
(4,815)
17,118
—
81,795
29,401
30,812
3,103
(23,340)
—
80,394
31,907
—
3,009
325
—
(175,518)
(8,003)
28,802
(762)
6,966
(2,947)
7,871
(36,724)
(2,888)
97,625
284,608
235,083
(23,034)
(71,033)
(24,816)
(38,763)
13,685
375,730
(5,078)
579,000
(872,175)
(95,056)
(72,495)
—
(465,804)
7,551
9,567
(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
(347,723)
(1,269)
783,000
(533,427)
(109,561)
(59,462)
—
79,281
(206,518)
216,085
$
12,303
$
17,118
$
9,567
See accompanying notes.
F-8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Unit Holders and the General Partner of Columbia Property Trust Operating Partnership, L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Columbia Property Trust Operating Partnership,
L.P. and subsidiaries (the "Partnership") as of December 31, 2019 and 2018, the related consolidated statements of
operations, comprehensive income, equity, and cash flows, for each of the three years in the period ended
December 31, 2019, 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 Partnership as of December 31, 2019 and 2018, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express
an opinion on the Partnership's financial statements based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Partnership 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. The Partnership is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
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 13, 2020
We have served as the Partnership's auditor since 2019.
F-9
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per-share amounts)
Assets:
Real Estate Assets, at Cost:
Land
Buildings and improvements, less accumulated depreciation of $252,034 and $324,426, as of
December 31, 2019 and 2018, respectively
Intangible lease assets, less accumulated amortization of $58,658 and $84,881, as of
December 31, 2019 and 2018, respectively
Construction in progress
Real estate assets held for sale, less accumulated depreciation and amortization of $22,464 as
of December 31, 2019
Total real estate assets
Operating lease assets
Investments in unconsolidated joint ventures
Cash and cash equivalents
Tenant receivables, net of allowance for doubtful accounts of $4 as of December 31, 2018
Straight-line rent receivable
Prepaid expenses and other assets
Intangible lease origination costs, less accumulated amortization of $33,731 and $65,348, as of
December 31, 2019 and 2018, respectively
Deferred lease costs, less accumulated amortization of $14,272 and $19,342, as of December 31,
2019 and 2018, respectively
Other assets held for sale, less accumulated amortization of $3,971 as of December 31, 2019
Total assets
Liabilities:
Line of credit and notes payable, net of deferred financing costs of $2,084 and $2,692, as of
December 31, 2019 and 2018, respectively
Bonds payable, net of discount of $1,124 and $1,304 and deferred financing costs of $3,552 and
$4,158, as of December 31, 2019 and 2018, respectively
Accounts payable, accrued expenses, and accrued capital expenditures
Due to affiliates
Deferred income
Intangible lease liabilities, less accumulated amortization of $15,127 and $21,766, as of
December 31, 2019 and 2018, respectively
Liabilities held for sale as of December 31, 2019
Total liabilities
Commitments and Contingencies (Note 7)
Partners' Capital:
Columbia Property Trust, Inc.
Noncontrolling interest in consolidated joint venture
Total capital
Total liabilities and capital
December 31,
2019
2018
$
843,546
$
775,656
1,668,358
1,720,271
61,025
51,240
69,274
2,693,443
27,843
1,054,460
9,522
2,039
70,985
21,044
27,971
73,699
5,573
98,540
32,526
—
2,626,993
—
1,071,353
10,931
2,956
71,675
21,680
34,092
65,484
—
$
$
3,986,579
$
3,905,164
781,916
695,324
68,535
140,444
16,299
21,839
1,809
629,308
694,538
36,133
141,145
13,245
21,081
—
1,726,166
1,535,450
—
—
2,254,936
5,477
2,260,413
$
3,986,579
$
2,369,714
—
2,369,714
3,905,164
See accompanying notes.
F-10
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
Revenues:
Lease revenues
Other property income
Expenses:
Property operating costs
Asset and property management fee expenses
Depreciation
Amortization
Impairment loss on real estate assets
General and administrative – corporate
General and administrative – joint venture
Pre-acquisition expenses
Other Income (Expense):
Interest expense
Gain (loss) on extinguishment of debt
Interest and other income
Gain on sale of unconsolidated joint venture interests
Income tax benefit (expense)
Income from unconsolidated joint ventures
Gains on sales of real estate assets
Net income
Less: net loss attributable to non-controlling interest in consolidated joint venture
Net income attributable to Columbia Property Trust, Inc.
See accompanying notes.
Years Ended December 31,
2019
2018
2017
$
248,838
$
254,988
$
252,149
99
248,937
1,323
256,311
(609)
251,540
82,205
3,952
67,773
26,663
43,941
7,927
43
4,160
77,526
3,856
71,934
31,451
30,812
9,469
—
—
77,719
3,977
72,010
31,035
—
9,232
—
—
236,664
225,048
193,973
(49,470)
—
64
—
—
8,004
42,030
628
12,901
133
13,034
(66,046)
23,340
6,894
762
—
8,003
—
(27,047)
4,216
—
4,216
(73,877)
(325)
6,784
—
(3)
2,651
170,733
105,963
163,530
—
163,530
F-11
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Market value adjustment to interest rate swap
Comprehensive income
Less: net loss attributable to non-controlling interest in consolidated joint
venture
Comprehensive income attributable to Columbia Property Trust, Inc.
$
See accompanying notes.
Years Ended December 31,
2019
2018
2017
12,901
(3,445)
9,456
133
9,589
$
4,216
1,441
5,657
—
163,530
1,786
165,316
—
5,657
$
165,316
F-12
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(in thousands, except per-share amounts)
Balance, December 31, 2016
Contributions
Distributions
Net income
Market value adjustment to interest rate swap
Balance, December 31, 2017
Cumulative-effect adjustment for the adoption of ASU 2017-05
Contributions
Distributions
Net income
Market value adjustment to interest rate swap
Balance, December 31, 2018
Contributions
Distributions
Net income
Market value adjustment to interest rate swap
Balance, December 31, 2019
Columbia
Property Trust,
Inc.
Noncontrolling
Interest
Total Capital
$
1,768,862 $
— $
1,768,862
296,083
(234,241)
163,530
1,786
1,996,020
357,755
177,833
(167,551)
4,216
1,441
2,369,714
12,053
(136,420)
13,034
(3,445)
—
—
—
—
—
—
—
—
—
—
—
5,610
—
(133)
—
296,083
(234,241)
163,530
1,786
1,996,020
357,755
177,833
(167,551)
4,216
1,441
2,369,714
17,663
(136,420)
12,901
(3,445)
$
2,254,936
$
5,477
$
2,260,413
See accompanying notes.
F-13
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
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
Noncash operating lease expense
Depreciation
Amortization
Impairment loss on real estate assets
Noncash interest expense
(Gain) loss on extinguishment of debt
Gains on sales of real estate assets
(Income) loss from unconsolidated joint ventures
Distributions of earnings from unconsolidated joint ventures
Gain on sale of unconsolidated joint venture interest
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
Net proceeds from the sale of investments in unconsolidated joint ventures
Real estate acquisitions
Capital improvements and development costs
Deferred lease costs paid
Investments in unconsolidated joint ventures
Distributions in excess of earnings from unconsolidated joint ventures
Net cash provided by (used in) investing activities
Cash Flows From Financing Activities:
Financing costs paid
Proceeds from lines of credit and notes payable
Repayments of lines of credit and notes payable
Contributions from Columbia Property Trust
Distributions to Columbia Property Trust
Contributions from noncontrolling interest in consolidated joint venture
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
Years Ended December 31,
2019
2018
2017
$
12,901
$
4,216
$
163,530
(12,077)
(22,654)
(29,790)
836
67,773
22,177
43,941
2,562
—
(42,030)
(8,004)
27,977
—
918
(1,662)
3,489
3,712
122,513
375,004
—
(453,128)
(65,961)
(22,667)
(17,134)
14,250
(169,636)
(162)
802,000
(650,000)
17,663
(129,397)
5,610
45,714
(1,409)
10,931
—
71,934
28,185
30,812
3,103
(23,340)
—
72,010
30,376
—
3,009
325
—
(170,733)
(8,003)
28,802
(762)
(2,842)
7,341
(35,708)
(1,919)
79,165
284,608
235,083
(23,034)
(65,810)
(25,364)
(38,763)
13,685
380,405
(5,078)
579,000
(2,651)
3,681
—
4,111
(1,001)
(29,032)
(4,056)
39,779
618,199
—
(604,769)
(53,480)
(26,710)
(369,043)
1,985
(433,818)
(1,269)
783,000
(872,175)
(533,427)
11,912
296,083
(167,551)
(169,023)
—
(453,892)
5,678
5,253
—
375,364
(18,675)
23,928
5,253
See accompanying notes.
$
9,522
$
10,931
$
F-14
COLUMBIA PROPERTY TRUST, INC.
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019, 2018, AND 2017
1.
Organization
Columbia Property Trust, Inc. ("Columbia Property Trust") (NYSE: CXP) is a Maryland corporation that operates as a
real estate investment trust ("REIT") for federal income tax purposes and owns and operates commercial real estate
properties. Columbia Property Trust conducts business primarily through Columbia Property Trust Operating
Partnership, L.P. ("Columbia OP"), a Delaware limited partnership in which Columbia Property Trust is the general
partner and sole owner as of December 31, 2019. Columbia Property Trust acquires, develops, redevelops, owns,
leases, and operates real properties directly and through wholly and partially owned subsidiaries and joint ventures.
Unless stated otherwise or the context otherwise requires, references to "Columbia Property Trust," "the Company,"
"we," "us," and "our" shall mean, collectively, Columbia Property Trust, Columbia OP, and the entities consolidated
by both Columbia Property Trust and Columbia OP; and references to "Columbia OP" shall mean Columbia OP and
the entities consolidated by Columbia OP.
As of December 31, 2019, the Company owned 17 operating properties and three properties under development or
redevelopment, of which 13 were wholly owned and seven were owned through joint ventures, located primarily in
New York, San Francisco, and Washington, D.C. As of December 31, 2019 the operating properties contained a total
of 7.3 million rentable square feet and were approximately 97.1% leased.
2.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America ("GAAP"), which require us to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
Columbia Property Trust's consolidated financial statements include the accounts of Columbia Property Trust,
Columbia OP, and their consolidated subsidiaries. Columbia OP's consolidated financial statements include the
accounts of Columbia OP, and its consolidated subsidiaries. We consolidate any variable interest entity ("VIE") in
which we are deemed the primary beneficiary. With respect to entities that are not VIEs, our consolidated financial
statements also include the accounts of any entity in which we own a controlling financial interest, and any limited
partnership in which we own a controlling general partnership interest. In determining whether Columbia Property
Trust or Columbia OP owns 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
F-15
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.
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 that extend the useful life of the related asset. All repairs and maintenance costs are expensed as
incurred.
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 years
5-25 years
Shorter of economic life or lease term
Lease term
As further described in Note 5, Line of Credit and Notes Payable, Columbia Property Trust capitalizes interest
incurred on outstanding debt balances as well as joint venture investments, as appropriate, during development or
redevelopment of real estate held directly or in joint ventures. During 2019 and 2018, $5.1 million and $3.8 million
of interest was capitalized to construction in progress, respectively; and $1.3 million and $0.2 million of interest was
capitalized to investments in unconsolidated joint ventures, respectively.
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 and transfer of the property is expected to qualify for recognition as a
completed sale, within one year.
F-16
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 to be classified as held for sale on the accompanying consolidated balance sheet.
As of December 31, 2019, Cranberry Woods Drive and Pasadena Corporate Park met the aforementioned criteria;
thus, these properties are classified as held for sale in the accompanying consolidated balance sheets. The sale of
Cranberry Woods closed on January 16, 2020. As of December 31, 2018, none of Columbia Property Trust's
properties met the criteria to be classified as held for sale in the accompanying consolidated balance sheet.
The major classes of assets and liabilities classified as held for sale are provided below (in thousands):
Real Estate Assets Held for Sale:
Real estate assets, at cost:
Land
Buildings and improvements, less accumulated depreciation of $80,543
Construction in progress
Total real estate assets held for sale, net
Other Assets Held for Sale:
Tenant receivables
Straight-line rent receivable
Prepaid expenses and other assets
Deferred lease costs, less accumulated amortization of $10,222
Total other assets held for sale, net
Liabilities Held for Sale:
Accounts payable, accrued expenses, and accrued capital expenditures
Deferred income
Total liabilities held for sale
Evaluating the Recoverability of Real Estate Assets
December 31, 2019
$
$
$
$
$
$
57,117
157,701
138
214,956
156
12,591
334
10,836
23,917
1,151
1,903
3,054
Columbia Property Trust continually monitors events and changes in circumstances that could indicate that the net
carrying amounts of its real estate and related intangible assets and liabilities, of both operating properties and
properties under redevelopment, may not be recoverable. When indicators of potential impairment are present that
suggest that the net carrying amounts of real estate assets and related intangible assets and liabilities may not be
recoverable, Columbia Property Trust assesses the recoverability of these net assets by determining whether the
respective carrying values will be recovered through the estimated undiscounted future cash flows expected from
the use of the net assets and their eventual disposition. In the event that such expected undiscounted future cash
flows do not exceed the carrying values, Columbia Property Trust adjusts the carrying values of the real estate assets
and related intangible assets and liabilities to the estimated fair values, pursuant to the property, plant, and
equipment accounting standard for the impairment or disposal of long-lived assets, and recognizes an impairment
loss. At such time that a property is required to be classified as held for sale, its net carrying amount is adjusted to
the lower of its depreciated book value or its estimated fair value, less costs to sell, and depreciation is no longer
recognized.
Estimated fair values are calculated based on the following hierarchy of information: (i) recently quoted market
prices, (ii) market prices for comparable properties, or (iii) the present value of future cash flows, including
estimated residual value. Projections of expected future operating cash flows require that Columbia Property Trust
estimate future market rental income amounts subsequent to the expiration of current lease agreements, property
operating expenses, the number of months it takes to re-lease the property, and the number of years the property is
held for investment, among other factors. Due to the inherent subjectivity of the assumptions used to project future
cash flows, estimated fair values may differ from the values that would be realized in market transactions. Certain of
F-17
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, 2019.
In the fourth quarter of 2019, Columbia Property Trust recorded an impairment loss of $20.6 million on Pasadena
Corporate Park. Upon deciding to exit the Los Angeles market, Columbia Property Trust began to market for sale its
only asset therein, Pasadena Corporate Park, in the fourth quarter of 2019. In January 2020, Columbia Property Trust
entered into a contract to sell Pasadena Corporate Park, and anticipates closing on the sale in the first quarter of
2020. As a result, as of December 31,2019, Columbia Property Trust reduced the carrying value of Pasadena
Corporate Park to reflect its estimated fair value of $74.5 million, determined based on estimated net sale proceeds
(Level 1), by recording an impairment loss of $20.6 million.
In the third quarter of 2019, Columbia Property Trust recognized an impairment loss of $23.4 million as a result of
changing its holding period expectations for Lindbergh Center in Atlanta, Georgia. Columbia Property Trust entered
into a contract to sell Lindbergh Center in the third quarter of 2019, and closed the sale on September 26, 2019. As a
result, Columbia Property Trust reduced the carrying value of Lindbergh Center to reflect its estimated fair value,
based on the estimated net sale proceeds of $181.0 million (Level 1), by recording an impairment loss of $23.4
million in the third quarter of 2019.
In the second quarter of 2018, Columbia Property Trust recognized an impairment loss of $30.8 million in connection
with changing the holding period expectations for 222 East 41st Street in New York. Columbia Property Trust widely
marketed this property for sale during the second quarter and, as a result, entered into an agreement to sell this
property on May 25, 2018 and closed on the sale on May 29, 2018. Upon entering into the sale agreement, Columbia
Property Trust reduced 222 East 41st Street's carrying value to reflect its fair value, estimated based on the net
contract price of $284.6 million (Level 1), by recording an impairment loss of $30.8 million in the second quarter of
2018.
Allocation of Purchase Price of Acquired Assets
Upon the acquisition of real properties, Columbia Property Trust allocates the purchase price of properties and
related transaction costs 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).
In conjunction with certain acquisitions, Columbia Property Trust has entered into master lease agreements, which
obligate the seller to pay rent pertaining to certain nonrevenue-producing spaces to mitigate the negative effects of
lower rental revenues. Columbia Property Trust records payments receivable under such master lease agreements
as a reduction of the property basis rather than income. Columbia Property Trust received no proceeds for master
leases during 2019, 2018, or 2017.
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 that are avoided for in-place leases, 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:
F-18
tenant
•
•
• Direct costs associated with obtaining a new tenant that are avoided for in-place leases,
including
improvement allowances, and other direct costs, are estimated based on
commissions,
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, 2019 and 2018, Columbia Property Trust had the following gross intangible in-place lease assets
and liabilities (in thousands):
December 31, 2019
Gross
Accumulated Amortization
December 31, 2018
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
$
117,203
$
61,702
$
36,966
(1,202)
(57,457)
(33,731)
1,279
$
3,174 $
59,746
$
147,668 $
27,971
$
99,440 $
(1,060)
(81,220)
(65,348)
2,114 $
66,448 $
34,092 $
(15,127)
21,839
42,847
(21,766)
21,081
During 2019, 2018, and 2017, Columbia Property Trust recognized the following amortization of intangible lease
assets and liabilities (in thousands):
For the Years Ended December 31,
2019
2018
2017
Intangible Lease Assets
Above-
Market
In-Place
Lease Assets
Absorption
Period Costs
Intangible
Lease
Origination
Costs
Intangible
Below-Market
In-Place Lease
Liabilities
$
$
$
$
288
228 $
519 $
$
13,511
17,137 $
16,807 $
$
7,398
9,660 $
10,124 $
5,395
6,851
6,883
F-19
The remaining net intangible assets and liabilities as of December 31, 2019, will be amortized as follows (in
thousands):
For the Years Ending December 31,
2020
2021
2022
2023
2024
Thereafter
Intangible Lease Assets
Above-
Market
In-Place
Lease Assets
Absorption
Period Costs
Intangible
Lease
Origination
Costs
Intangible
Below-Market
In-Place Lease
Liabilities
$
172 $
12,871 $
5,866 $
172
172
172
172
419
9,328
7,959
6,455
5,594
17,539
4,516
3,429
2,903
2,586
8,671
5,483
3,191
2,910
2,336
1,990
5,929
$
1,279 $
59,746 $
27,971 $
21,839
Weighted-average amortization period
6.6 years
5.0 years
4.9 years
5.3 years
Intangible Assets and Liabilities Arising From In-Place Leases Where Columbia Property Trust Is the Lessee
As of December 31, 2018, Columbia Property Trust had gross below-market lease assets of approximately $32.6
million, net of accumulated amortization of $2.6 million. These below-market lease assets were reclassified to
operating lease assets upon adoption of ASC 842, effective January 1, 2019, as described in the "Recent Accounting
Pronouncements" section below (see Note 10, Leases, for additional information).
Cash and Cash Equivalents
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, 2019 and 2018.
Tenant Receivables
Tenant receivables consist of rental and reimbursement billings due from tenants. Tenant receivables are recorded
at the original amount earned, which approximates fair value. Management assesses the realizability of tenant
receivables on an ongoing basis, and, if at any point during the term of a lease it is determined that the collectability
of a tenant receivable is not probable, such receivable is written off against lease revenues. During 2019, $22,000 in
receivables were written off against lease revenues. Prior to the adoption of ASC 842 on January 1, 2019, Columbia
Property Trust recorded an allowance for doubtful accounts when a tenant receivable became uncollectible by
recording a provision for doubtful accounts, net of recoveries, in general and administrative – corporate expenses.
For 2018, $63,000 of such expenses were recorded to general and administrative – corporate expenses.
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 rental 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 billed 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.
F-20
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, 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, 2019, 2018, and 2017 of approximately $2.4 million, $2.9 million,
and $2.8 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 2019, 2018, and 2017,
Columbia Property Trust recognized amortization expense for deferred lease costs of $6.3 million, $5.5 million, and
$5.2 million, respectively. During 2019, 2018, and 2017, Columbia Property Trust recognized adjustments to rental
income for amortization of deferred lease costs of $0.7 million, $2.1 million, and $3.3 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.
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).
Line of Credit and Notes Payable
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 $2.1 million
and $2.7 million as of December 31, 2019 and December 31, 2018, respectively.
Bonds Payable
Columbia OP has two series of bonds outstanding as of December 31, 2019 and 2018: $350 million of its 10-year
unsecured 3.650% senior notes issued at 99.626% of their face value (the "2026 Bonds Payable"); and $350.0 million
of its 10-year unsecured 4.150% senior notes issued 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 $3.6 million and $4.2 million
as of December 31, 2019 and December 31, 2018, respectively.
F-21
Common Stock Repurchase Program
Columbia Property Trust is authorized to repurchase shares of its common stock, par value $0.01 per share, subject
to certain limitations. As of December 31, 2019, $166.5 million remains available for repurchases under the current
stock repurchase program. See Note 8, Stockholders' Equity and Partner's Capital, for additional details. Common
stock repurchases are charged against equity as incurred, and the repurchased shares are retired.
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"). To the extent that Columbia Property Trust satisfies the
distribution requirement but distributes less than 100% of its REIT taxable income, Columbia Property Trust would
be subject to federal and state corporate income tax on the undistributed income. 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.
Noncontrolling Interests
Noncontrolling interests represent the equity interests of a consolidated joint venture that are not owned by
Columbia Property Trust. Noncontrolling interests are adjusted for contributions, distributions, and earnings
attributable to the noncontrolling interest holders of the consolidated joint venture. Earnings are allocated to joint
venture partners using the hypothetical liquidation at book value method, based on the terms of the respective joint
venture agreements, and are recorded as net income (loss) attributable to noncontrolling interests in the
accompanying consolidated statements of operations. For 2019, all of Columbia Property Trust's noncontrolling
interests relate to 101 Franklin Street, which was acquired on December 2, 2019. For additional information, see
Note 3, Real Estate Transactions.
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 and currently does not have any derivatives that are not designated as hedges; however,
certain of its derivatives may, at times, not qualify for hedge accounting treatment. Columbia Property Trust records
the fair value of its interest rate swaps on its consolidated balance sheet either as prepaid expenses and other assets
or as accounts payable, accrued expenses, and accrued capital expenditures. Changes in the fair value of interest
rate swaps that are designated as cash flow hedges are recorded as other comprehensive income (loss). 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
F-22
that do not qualify for hedge accounting treatment. As of December 31, 2019, Columbia Property Trust has two
interest rate swaps, with an aggregate notional amount of $450.0 million. The following tables provide additional
information related to Columbia Property Trust's interest rate swaps as of December 31, 2019 and 2018 (in
thousands):
Instrument Type
Derivatives Designated as Hedging Instruments:
Balance Sheet Classification
2019
2018
Estimated Fair Value as of
December 31,
Interest rate contracts
Interest rate contracts
Prepaid expenses and other
assets
Accounts payable
$
$
551
1,652
$
$
2,344
—
As a result of the interest rate contract in the above table, Columbia Property Trust estimates recognizing a
reduction in interest expense of approximately $0.9 million over the next 12 months.
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,
2019
2018
2017
Market value adjustment to interest rate swaps designated as hedging
instruments and included in other comprehensive income (loss)
$
(3,445) $
1,441 $
1,786
Revenue Recognition
The majority of Columbia Property Trust’s revenues are derived from leases and are reflected as lease revenues on
the accompanying consolidated statements of operations. For more information about Columbia Property Trust's
lease revenue streams see Note 10, Leases.
In determining when to begin recognizing rental revenues, Columbia Property Trust considers a number of factors,
including the nature of the physical improvements made in connection with the lease. When Columbia Property
Trust owns the improvements for accounting purposes,
revenue recognition generally begins once the
improvements are substantially complete and the lessee has taken possession of the improved space. When
Columbia Property Trust does not own the improvements for accounting purposes (the lessee is the owner),
revenue recognition generally begins once the lessee takes possession of the unimproved space; in these instances,
the tenant allowance is accounted for as a lease incentive, which reduces rental revenues over the lease term. When
evaluating which party (lessee or lessor) owns the improvements for accounting purposes, Columbia Property Trust
considers a number of factors, including, among other things: whether the lease stipulates what the tenant
allowance may be used for; whether the lessee or lessor retains legal title to the improvements; the expected
economic life of the improvements relative to the lease term; and who directs the construction of the
improvements. The determination of who owns the improvements for accounting purposes is subject to significant
judgement and is not based on any one factor.
For information about Columbia Property Trust's other revenue streams, please see Note 11, Non-Lease Revenues.
Income Taxes
Columbia Property Trust has elected to be taxed as a REIT under the Code, as amended (the "Code") and has
operated as such beginning with its taxable year ended December 31, 2003. To qualify as a REIT, Columbia Property
Trust must meet certain organizational and operational requirements, including a requirement to distribute at least
90% of its REIT taxable income, as defined by the Code, to its stockholders. To the extent that Columbia Property
Trust satisfies the distribution requirement but distributes less than 100% of its REIT taxable income, Columbia
F-23
Property Trust would be subject to federal and state corporate income tax on the undistributed income. Generally,
Columbia Property Trust does not incur federal income taxes, other than as described in the following paragraph,
because its stockholder distributions typically exceed its taxable income due to noncash expenses such as
depreciation. Columbia Property Trust is, however, subject to certain state and local taxes related to the operations
of properties in certain locations, which have been provided for in the accompanying consolidated financial
statements.
Columbia Property Trust TRS, LLC, Columbia KCP TRS, LLC, and Columbia Energy TRS, LLC (collectively, the "TRS
Entities") are wholly owned subsidiaries of Columbia Property Trust and are organized as Delaware limited liability
companies. The TRS Entities, among other things, provide tenant services that Columbia Property Trust, as a REIT,
cannot otherwise provide. Columbia Property Trust has elected to treat the TRS Entities as taxable REIT subsidiaries.
Columbia Property Trust may perform certain additional, noncustomary services for tenants of its buildings through
the TRS Entities; however, any earnings related to such services are subject to federal and state income taxes. In
addition, for Columbia Property Trust to continue to qualify as a REIT, Columbia Property Trust must limit its
investments in taxable REIT subsidiaries to 20% of the value of the total assets. The TRS Entities' deferred tax assets
and liabilities represent temporary differences between the financial reporting basis and the tax basis of assets and
liabilities based on the enacted rates expected to be in effect when the temporary differences reverse. If applicable,
Columbia Property Trust records interest and penalties related to uncertain tax positions as general and
administrative expense in the accompanying consolidated statements of operations.
Segment Information
As of December 31, 2019, 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 15, Segment Information).
Reclassification
In accordance with Accounting Standard Codification 360, Property, Plant, and Equipment ("ASC 360"), and in
response to the Securities and Exchange Commission's Disclosure Update and Simplification release effective
November 5, 2018, gains on sales of real estate assets have been moved to other income (expense) on the
consolidated statements of operations for all periods presented.
Recent Accounting Pronouncements
Effective January 1, 2019, Columbia Property Trust adopted Accounting Standard Codification 842, Leases ("ASC
842"), which amends the lease accounting rules with the following key changes:
•
•
Lessees are required to record a right-of-use asset and a lease liability for all leases, as defined, with a term
of greater than 12 months, and to classify such leases as either finance or operating leases based on the
principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee, or
not. This classification will determine whether the lease expense is recognized using the effective interest
method (finance leases) or on a straight-line basis over the term of the lease (operating leases).
Lessors are required to account for leases using an approach that is substantially similar to the pre-existing
rules for operating leases, sales-type leases, and direct financing leases, with a few targeted changes,
including that: (i) lessors are no longer permitted to capitalize and amortize initial indirect costs incurred to
obtain a lease, and (ii) provisions for uncollectible tenant receivables are reflected as a reduction to lease
revenues, instead of as general and administrative expense.
In connection with transitioning to ASC 842, Columbia Property Trust elected to use certain practical expedients
which impact Columbia Property Trust as follows:
•
Prospective implementation. In-place contracts retain their character as to whether they meet the definition
of a lease or not; in-place leases retain their classification as an operating, sales-type, or direct financing
lease; and prior-period accounting and presentation is unchanged.
F-24
•
•
income and tenant reimbursements for operating leases are combined in a single line on the
Rental
statements of operations for all periods presented.
Leases with a term of 12 months or less are expensed as incurred, as provided for in a practical expedient
elected by Columbia Property Trust.
See Note 10, Leases, for additional information.
Accounting Standard Update 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure
Requirements for Fair Value Measurement ("ASU 2018-13"), which will be effective for Columbia Property Trust on
January 1, 2020, expands the disclosure requirements related to a change in fair value technique hierarchy. ASU
2018-13 is not expected to have a material impact on Columbia Property Trust's consolidated financial statements or
disclosures.
3.
Real Estate Transactions
Acquisitions
During 2019, 2018, and 2017, Columbia Property Trust acquired the following properties:
Property
2019
201 California Street
101 Franklin Street(2)
2018
Lindbergh Center – Retail
799 Broadway
2017
149 Madison Avenue
1800 M Street
249 West 17th Street & 218 West 18th
Street
114 Fifth Avenue
(1)
Location
Date
Percent
Acquired
Purchase Price
(in thousands)(1)
San Francisco, CA
December 9, 2019
New York, NY
December 2, 2019
100.0 % $
92.5 % $
238,900
205,500
Atlanta, GA
New York, NY
October 24, 2018
October 3, 2018
100.0 % $
49.7 % $
23,000
30,200 (3)
New York, NY
November 28, 2017
Washington, D.C.
October 11, 2017
100.0 % $
55.0 % $
87,700
231,550 (3)
New York, NY
New York, NY
October 11, 2017
July 6, 2017
100.0 % $
49.5 % $
514,100
108,900 (3)
(2)
(3)
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.
Property is owned through a consolidated joint venture.
These properties are owned through unconsolidated joint ventures. Purchase price is for Columbia Property Trust's partial interests
in the properties.
F-25
201 California Street
On December 9, 2019, Columbia Property Trust acquired 201 California Street, a 17-story, 252,000-square-foot
office tower in San Francisco. As of the acquisition date, 201 California Street was 99% leased to 34 tenants,
including First Republic Bank (13%), Dow Jones & Company, Inc. (12%), and Cooper, White & Cooper, LLP (12%). For
the period from December 9, 2019 to December 31, 2019, Columbia Property Trust recognized revenues of
$1.4 million and net income of $0.1 million from 201 California Street.
101 Franklin Street
On December 2, 2019, Columbia Property Trust acquired a 92.5% controlling financial interest in 101 Franklin Street
(formerly 250 Church Street), a 16-story, 235,000-square-foot office building in Manhattan that will be fully
redeveloped through a consolidated joint venture with an affiliate of Normandy (see Note 16, Subsequent Event).
During 2019, Columbia Property Trust earned $37,000 from its investment in 101 Franklin Street.
Lindbergh Center – Retail
On October 24, 2018, Columbia Property Trust acquired the 147,000 square feet of ancillary retail and office space
surrounding its existing property, Lindbergh Center, for a gross purchase price of $23.0 million. Lindbergh Center –
Retail was sold in the Lindbergh Center disposition, as described below.
799 Broadway Joint Venture
On October 3, 2018, Columbia Property Trust formed a joint venture with an affiliate of Normandy (see Note 16,
Subsequent Event) for the purpose of developing a 12-story, 182,000-square-foot office building at 799 Broadway in
New York (the "799 Broadway Joint Venture"). Columbia Property Trust made an initial equity contribution of $30.2
million in the 799 Broadway Joint Venture for a 49.7% interest therein. At inception, the 799 Broadway Joint Venture
acquired the property located at 799 Broadway for $145.5 million, exclusive of transaction costs and development
costs, and borrowed $97.0 million under a construction loan with total capacity of $187.0 million.
149 Madison Avenue
149 Madison Avenue is a 12-story, 127,000-square-foot office building, which was vacant at the time of acquisition.
Columbia Property Trust acquired 149 Madison Avenue subject to a ground lease which expired in January 2018.
Columbia Property Trust is redeveloping this property. 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. All of the office space at 149 Madison Avenue is leased to WeWork.
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%.
249 West 17th Street & 218 West 18th Street
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, 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 net
income of $1.8 million from 249 West 17th Street, and revenues of $3.0 million and net income of $0.8 million from
218 West 18th Street.
F-26
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%).
Purchase Price Allocations for Consolidated Property Acquisitions
Location
Date Acquired
Purchase Price:
Land
Building and
improvements
Intangible lease
assets
Intangible lease
origination costs
Intangible below
market lease liability
201 California
Street
San Francisco, CA
101 Franklin
Street(1)
New York, NY
149 Madison
Avenue
249 West 17th
Street
218 West 18th
Street
New York, NY
New York, NY
New York, NY
December 9, 2019 December 2, 2019 November 28, 2017 October 11, 2017 October 11, 2017
$
77,833 $
57,145 $
59,112 $
113,149 $
43,836
157,513
149,500
28,989
194,109
126,957
13,241
5,785
(8,064)
—
—
—
206,645 $
—
—
—
27,408
13,062
(7,131)
88,101 $
340,597 $
12,120
4,168
(11,757)
175,324
Total purchase price $
246,308 $
(1) Owned through a consolidated joint venture, in which Columbia Property Trust owns a 92.5% interest.
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 2019, 2018, and 2017, have been
prepared for Columbia Property Trust to give effect to the acquisitions of 201 California Street and 101 Franklin
Street as if the acquisitions had occurred on January 1, 2018; and 249 West 17th Street, 218 West 18th Street, and
149 Madison Avenue as if the acquisitions had occurred on January 1, 2016. The following unaudited pro forma
financial results for Columbia Property Trust have been prepared for informational purposes only and are not
necessarily indicative of future results or of actual results that would have been achieved had these acquisitions
been consummated as of January 1, 2018 and January 1, 2016 (in thousands):
Revenues
$
304,756
Net income attributable to common stockholders of Columbia Property Trust $
17,600
$
$
312,003 $
16,822 $
319,064
183,318
2019
2018
2017
F-27
Dispositions
During 2019, 2018, and 2017, Columbia Property Trust sold the following properties and partial interest in properties
of unconsolidated joint ventures. Additional information for certain of the dispositions is provided below the table.
Property
2019
Location
Date
% Sold
Sale Price(1)
(in thousands)
Gain on Sale
(in thousands)
Lindbergh Center
Atlanta, GA
September 26, 2019
100.0 % $ 187,000
One & Three Glenlake Parkway
Atlanta, GA
April 15, 2019
100.0 % $ 227,500
2018
222 East 41st Street
263 Shuman Boulevard
New York, NY
Chicago, IL
May 29, 2018
100.0 % $ 332,500
April 13, 2018
100.0 % $
49,000
University Circle &
333 Market Street Joint Ventures
San Francisco, CA
February 1, 2018
22.5 % $ 235,300 (2)
2017
University Circle & 333 Market
Street
San Francisco, CA
July 6, 2017
Key Center Tower & Marriott
Cleveland, OH
January 31, 2017
22.5 % $ 234,000 (2)
100.0 % $ 267,500
Houston Properties
(1)
Exclusive of transaction costs and price adjustments.
Houston, TX
January 6, 2017
100.0 % $ 272,000
$
$
$
$
$
$
$
$
—
42,030
—
24,039
762
102,365
9,466
63,688
(2)
Sales price is for the partial interests in the properties or joint ventures that were sold.
Lindbergh Center
On September 26, 2019, Columbia Property Trust closed on the sale of Lindbergh Center, including Lindbergh Center
– Retail, for a gross sales price of $187.0 million, exclusive of transaction costs. Columbia Property Trust recognized
an impairment loss of $23.4 million related to this property in the third quarter of 2019, as further described in Note
2, Summary of Significant Accounting Policies. $46.0 million of the proceeds from this transaction were used to pay
down the Revolving Credit Facility, as described in Note 5, Line of Credit and Notes Payable.
One & Three Glenlake Parkway
On April 15, 2019, Columbia Property Trust closed on the sale of One & Three Glenlake Parkway in Atlanta, for a
gross sale price of $227.5 million, exclusive of $33.6 million of adjustments for tenant improvement allowances and
rent abatements funded at closing. The proceeds from this transaction were used to pay down the Revolving Credit
Facility, as described in Note 5, Line of Credit and Notes Payable.
222 East 41st Street
On May 29, 2018, Columbia Property Trust closed on the sale of 222 East 41st Street in New York, for $332.5 million,
exclusive of transaction costs. Columbia Property Trust recognized an impairment loss of $30.8 million related to this
property in the second quarter of 2018, as further described in Note 2, Summary of Significant Accounting Policies.
The proceeds from this transaction were used to fully repay the $180.0 million remaining balance on a $300 million
bridge loan, as described in Note 5, Line of Credit and Notes Payable.
263 Shuman Boulevard
On April 13, 2018, Columbia Property Trust transferred 263 Shuman Boulevard to the lender in extinguishment of
the loan principal of $49.0 million, accrued interest expense, and accrued property operating costs, which resulted in
a gain on extinguishment of debt of $24.0 million in the second quarter of 2018.
F-28
University Circle & 333 Market Street
On July 6, 2017, Columbia Property Trust contributed 333 Market Street and the University Circle 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").
On February 1, 2018, as agreed at the time of the initial San Francisco Joint Ventures formation, 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 a $300 million bridge loan and the Revolving Credit Facility, as described in Note 5, Line of
Credit and Notes Payable.
Key Center Tower & Marriott
Key Center Tower & Marriott were sold in one transaction for $254.5 million of gross proceeds at closing 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.
Houston Property Sale
5 Houston Center, Energy Center I, and 515 Post Oak were sold in one transaction for $272.0 million of gross
proceeds, which resulted in a $63.7 million gain on sale.
4.
Unconsolidated Joint Ventures
As of December 31, 2019 and December 31, 2018, Columbia OP owns interests in the following properties through
joint ventures, which are accounted for using the equity method of accounting:
Joint Venture
Property Name
Geographic
Market
Ownership
Interest
December 31,
2019
December 31,
2018
Carrying Value of Investment(1)
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
799 Broadway Joint Venture(2)
1800 M Street
Washington, D.C.
799 Broadway
New York
51.0 % $
55.0 %
55.0 %
49.5 %
55.0 %
49.7 %
$
135,557
283,633
269,638
87,750
233,196
44,686 (4)
134,250
292,951
273,783
99,283
237,333
33,753
$
1,054,460
$
1,071,353
(1)
(2)
Includes basis differences. Columbia Property Trust's investments in unconsolidated joint ventures were greater than
the historical costs recorded at the underlying joint venture level by $279.2 million and $282.0 million as of December
31, 2019 and December 31, 2018, respectively. Such basis differences result from the timing of each partner's joint
venture interest acquisition; and formation costs incurred by Columbia Property Trust. Basis differences are amortized
to income (loss) from unconsolidated joint ventures over the lives of the underlying assets or liabilities.
Columbia Property Trust capitalized interest of $1.3 million and $0.2 million on its investment in the 799 Broadway
Joint Venture in 2019 and 2018, respectively.
Columbia Property Trust has determined that none of its unconsolidated joint ventures are variable interest
entities. However, Columbia Property Trust and its unconsolidated joint venture 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.
F-29
Columbia Property Trust evaluates the recoverability of its investments in unconsolidated joint ventures in
accordance with accounting standards for equity investments by first reviewing the investment for any indicators of
impairment. If indicators are present, Columbia Property Trust estimates the fair value of the investment. If the
carrying value of the investment is greater than the estimated fair value, management makes an assessment of
whether the impairment is "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, 2019.
Condensed Combined Financial Information
Summarized balance sheet information for each of the unconsolidated joint ventures is as follows (in thousands):
Market Square Joint
Venture
University Circle Joint
Venture
333 Market Street
Joint Venture
114 Fifth Avenue
Joint Venture
1800 M Street Joint
Venture
799 Broadway Joint
Venture
Total Assets
Total Debt
Total Equity(1)
December 31,
2019
December 31,
2018
December 31,
2019
December 31,
2018
December 31,
2019
December 31,
2018
$
582,747
$
582,176 $ 324,815 (2)
$
324,762 $
241,719
$
241,581
216,546
224,746
367,652
375,884
485,442
377,970
437,439
447,585
—
—
—
—
—
—
—
—
212,656
219,390
352,385
360,915
127,554
149,243
421,588
429,016
201,210
168,390
109,735 (3)
95,630
85,316
67,189
$
2,291,036
$
2,176,751 $ 434,550
$
420,392 $
1,441,218
$
1,467,334
(1)
(2)
Excludes basis differences (see footnote (1) to the Carrying Value of Investment table above).
The Market Square Joint Venture has a mortgage note with an outstanding balance of $325.0 million as of
December 31, 2019 and December 31, 2018. The Market Square mortgage note bears interest at 5.07% and matures on
July 1, 2023.
(3) Reflects $113.2 million outstanding, net of $3.5 million of net unamortized deferred financing costs, on the 799
Broadway construction loan. The 799 Broadway construction loan is being used to finance a portion of the 799
Broadway development project, has total capacity of $187.0 million, and bears interest at LIBOR, capped at 4.00%, plus
a spread of 425 basis points (the "Construction Loan"). A portion of the monthly interest payments accrue into the
balance of the loan. The Construction Loan matures on October 9, 2021, with two one-year extension options. For a
discussion of Columbia Property Trust's equity guaranty related to the Construction Loan, see Note 7, Commitments
and Contingencies.
F-30
Summarized income statement information for the unconsolidated joint ventures for the years ended December 31,
2019, 2018, and 2017 is as follows (in thousands):
Total Revenues
Net Income (Loss)
2019
2018
2017
2019
2018
2017
Columbia Property Trust's
Share of Net Income (Loss)(1)
2017
2018
2019
$ 47,737
$ 44,815 $ 41,749 $(11,515) $(12,304) $(15,192) $ (5,873) $ (6,275) $ (7,747)
44,427
43,581
19,386
24,251
23,776
9,826
13,338
13,478
7,561
28,170
27,006
12,971
14,929
14,620
6,948
8,211
8,312
5,331
42,921
41,169
20,133
(10,674)
(10,256)
(4,885)
(5,283)
(5,077)
(2,820)
38,377
37,486
8,005
4,887
4,239
619
2,688
2,332
326
—
Market Square Joint
Venture
University Circle Joint
Venture
333 Market Street Joint
Venture
114 Fifth Avenue Joint
Venture
1800 M Street Joint
Venture
799 Broadway Joint
Venture
(1)
—
(882)
$201,632 $194,057 $102,244 $ 20,996
—
—
(132)
(439)
$ 19,943 $ (2,684) $ 12,642
—
$ 12,704 $ 2,651
Excludes amortization of basis differences, as described in footnote (1) to the carrying value of investment table above,
which are recorded as income (loss) from unconsolidated joint ventures in the accompanying consolidated statements
of operations.
(66)
Asset and Property Management Fees
Columbia Property Trust provides property and asset management services to the Market Square Joint Venture, the
University Circle Joint Venture, the 333 Market Street Joint Venture, and the 1800 M Street Joint Venture. Under
these agreements, Columbia Property Trust oversees the day-to-day operations of these joint ventures and their
properties, including property management, property accounting, and other administrative services. During the
years ended December 31, 2019, 2018, and 2017, Columbia Property Trust earned the following fees from these
unconsolidated joint ventures (in thousands):
Market Square Joint Venture
University Circle Joint Venture
333 Market Street Joint Venture
1800 M Street Joint Venture
2019
2018
2017
$
$
2,256
2,313
819
2,156
7,544
$
2,156 $
2,283
784
2,161
1,998
1,000
367
417
$
7,384 $
3,782
Columbia Property Trust also received reimbursements of property operating costs of $4.3 million, $4.2 million, and
$2.0 million for the years ended December 31, 2019, 2018, and 2017, respectively, which are included in other
property income revenues in the accompanying consolidated statements of operations. Property management fees
of $0.6 million and $0.7 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,
2019 and December 31, 2018, respectively.
F-31
5.
Line of Credit and Notes Payable
Columbia OP is the borrower on all of Columbia Property Trust's outstanding debt. As of December 31, 2019 and
2018, Columbia Property Trust had the following line of credit and notes payable indebtedness outstanding
(excluding bonds payable; see Note 6, Bonds Payable) in thousands:
Rate as of
December 31,
2019
LIBOR + 90 bp (1)
LIBOR + 100 bp (2)
LIBOR + 110 bp (3)
Facility
Revolving Credit Facility
$300 Million Term Loan
$150 Million Term Loan
Less: Deferred financing costs related
to term loans
Total indebtedness
Outstanding Balance as of
December 31,
Term Debt
or Interest
Only
Maturity
2019
Interest only
January 31, 2023 $
334,000
$
Interest only
January 31, 2024
Interest only
July 29, 2022
300,000
150,000
2018
482,000
—
150,000
(2,084)
(2,692)
$
781,916
$
629,308
(1) As of December 31, 2019, borrowings under the Revolving Credit Facility, as described below, bear interest at the
option of Columbia Property Trust at an alternate base rate, plus an applicable margin ranging from 0.00% to 0.45% for
base-rate borrowings, or at LIBOR, as defined in the credit agreement, plus an applicable margin ranging from 0.775%
to 1.45% for LIBOR-based borrowings, based on Columbia Property Trust's applicable credit rating.
(2)
(3)
Columbia Property Trust is party to an interest rate swap agreement with a notional amount of $300.0 million, which
effectively fixes its interest rate on the $300 Million Term Loan, as further described below, at 2.55% and terminates on
August 13, 2024. 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.
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 fair
value are recorded as a market value adjustment to interest rate swap in the accompanying consolidated statement of
other comprehensive income.
Term Loan and Line of Credit Amendment and Restatement
On December 7, 2018, Columbia Property Trust amended and restated its $500.0 million revolving credit facility and
$300.0 million unsecured term loan (together, the "Credit Agreement"). The Credit Agreement provides for (i) a
$650.0 million unsecured revolving credit facility (the "Revolving Credit Facility"), with an initial term ending January
31, 2023 and two six-month extension options (for a total possible extension option of one year to January 31,
2024), subject to the paying of certain fees and the satisfaction of certain other conditions, and (ii) a 12-month,
delayed-draw, $300.0 million unsecured term loan, with a term ending January 31, 2024 (the "$300 Million Term
Loan"). The $300 Million Term Loan was fully drawn during 2019.
At Columbia Property Trust's option, borrowings under the Credit Agreement bear interest at either (i) the alternate
base rate plus an applicable margin based on five stated pricing levels ranging from 0.00% to 0.45% for the Revolving
Credit Facility and 0.00% to 0.65% for the $300 Million Term Loan, or (ii) the LIBOR rate, as defined in the credit
agreement, plus an applicable margin based on five stated pricing levels ranging from 0.775% to 1.45% for the
Revolving Credit Facility and 0.85% to 1.65% for the $300 Million Term Loan, in each case based on Columbia
Property Trust's credit rating. As described above, the interest rate on the $300 Million Term Loan has been
effectively fixed at 2.55% with an interest rate swap agreement.
Debt Covenants
As of December 31, 2019, the $300 Million Term Loan, the $150 Million Term Loan, and the Revolving Credit Facility
(collectively, the "Debt Facilities") contain representations and warranties, financial and other affirmative and
F-32
negative covenants, events of defaults, and remedies typical for these types of facilities. The financial covenants as
defined in the Debt Facilities:
•
•
•
•
•
limit the ratio of secured debt to total asset value to 40% or less;
require the fixed charge coverage ratio to be at least 1.50:1.00;
limit the ratio of debt to total asset value to 60% or less, or 65% or less following a material transaction;
require the unencumbered interest coverage ratio to be at least 1.75:1.00; and
limit the unencumbered leverage ratio to 60% or less, or 65% or less following a material transaction.
As of December 31, 2019, Columbia Property Trust 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, 2019 and 2018, was approximately $784.1 million and $632.1 million, respectively. The related
carrying value of the line of credit and notes payable as of December 31, 2019 and 2018, was $784.0 million and
$632.0 million, respectively. Columbia Property Trust estimated the fair value of its Revolving Credit Facility and
term loans 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).
Interest Paid and Capitalized
As of December 31, 2019 and 2018, Columbia Property Trust's weighted-average interest rate on its consolidated
line of credit and notes payable was approximately 2.63% and 3.26%, respectively. Columbia Property Trust made
interest payments of approximately $17.9 million, $22.1 million, and $21.5 million during 2019, 2018, and 2017,
respectively.
Columbia Property Trust capitalizes interest on development, redevelopment, and improvement projects owned
directly and through joint ventures, using the weighted-average interest rate of its consolidated borrowings for the
period. During 2019, 2018, and 2017, Columbia Property Trust capitalized interest of $5.1 million, $4.0 million, and
$0.3 million, respectively. For 2019, the weighted average interest rate on Columbia Property Trust's outstanding
borrowings was 3.55%.
Debt Repayments and Extinguishment
There were no debt repayments in 2019. During 2018 Columbia Property Trust made the following debt repayments:
• On December 7, 2018, concurrent with closing on the Credit Agreement, Columbia Property Trust repaid the
$300.0 million remaining balance on the $300 Million Term Loan, which, as described above, includes a
delayed-draw feature, allowing up to 12 months to fully draw the term loan.
• On October 10, 2018, Columbia Property Trust repaid the $20.7 million outstanding balance on the One
Glenlake mortgage note two months prior to its original maturity date.
• On April 13, 2018, Columbia Property Trust transferred 263 Shuman Boulevard to the lender in
extinguishment of the $49.0 million loan principal, accrued interest expense, and accrued property
operating expenses, which resulted in a gain on extinguishment of debt of $24.0 million in the second
quarter of 2018.
• On February 2, 2018, Columbia Property Trust repaid $120.0 million of the outstanding balance on a $300.0
million bridge loan, using a portion of the proceeds from the sale of an interest in the San Francisco Joint
Ventures, as described in Note 3, Real Estate Transactions. On May 30, 2018, Columbia Property Trust repaid
the remaining $180.0 million outstanding balance on the bridge loan, using a portion of the proceeds from
the sale of 222 East 41st Street, as described in Note 3, Real Estate Transactions. As a result, Columbia
Property Trust has recognized a loss on extinguishment of debt of $0.3 million related to unamortized
deferred financing costs.
F-33
The following table summarizes the aggregate maturities of Columbia Property Trust's line of credit and notes
payable as of December 31, 2019 (in thousands):
2020
2021
2022
2023
2024
Thereafter
Total
6.
Bonds Payable
$
—
—
150,000
334,000
300,000
—
$
784,000
Columbia OP has two series of bonds outstanding as of December 31, 2019 and 2018: $350 million of 10-year,
unsecured 3.650% senior notes issued at 99.626% of their face value (the "2026 Bonds Payable"); and $350.0 million
of 10-year, unsecured 4.150% senior notes issued at 99.859% of their face value (the "2025 Bonds Payable"). Both
series of bonds are guaranteed by Columbia Property Trust and require semi-annual interest payments. Upon
issuance, a portion of the 2026 Bonds Payable was used to redeem $250.0 million of bonds payable, due in April
2018. During the years ended December 31, 2019 and 2018, Columbia Property Trust made interest payments of
$27.3 million on its bonds payable. The principal amount of the 2026 Bonds Payable is due and payable on August
15, 2026, and the principal amount of the 2025 Bonds Payable is due and payable on April 1, 2025.
The 2026 Bonds Payable and the 2025 Bonds Payable contain certain restrictive covenants. These covenants, as
defined, pursuant to an indenture:
•
•
•
•
limit the ratio of debt to total assets to 60%;
limit Columbia Property Trust's ability to incur debt if the consolidated income available for debt service to
annual debt service charge for four previous consecutive fiscal quarters is less than 1.50:1.00 on a pro forma
basis;
limit 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
require that the ratio of unencumbered asset value, as defined, to total unsecured debt be at least 150% at
all times.
As of December 31, 2019, Columbia Property Trust 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, 2019 and 2018,
was approximately $734.4 million and $685.0 million, respectively. The related carrying value of the bonds payable,
net of discounts, as of December 31, 2019 and 2018, was $698.9 million and $698.7 million, respectively. Columbia
Property Trust estimated the fair value of the bonds payable based on a discounted cash flow analysis, using
observable market data for its bonds payable and similar instruments (Level 2). The discounted cash flow method of
assessing fair value results in a general approximation of value, which may differ from the price that could be
achieved in a market transaction.
F-34
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, 2019, Columbia Property Trust had the following material tenant obligations which have arisen in the
normal course of business: $17.5 million related to the WeWork lease at 149 Madison and $17.9 million related to
the Pershing lease at 95 Columbus. Such amounts are payable as incurred, and therefore no accrual is booked as of
December 31, 2019. Additionally, in January 2020, Columbia Property Trust preleased space to be added to 80 M
Street in a vertical expansion project. Columbia is required to fund approximately $70.0 million related to
construction and tenant improvement allowances for the new space.
Commitments Under Unconsolidated Joint Venture Agreements
Columbia Property Trust's joint venture agreements, including those that are developing or redeveloping properties,
provide for capital contributions to be made to the joint ventures by the joint venture partners. As of December 31,
2019, Columbia Property Trust holds seven properties through consolidated and unconsolidated joint ventures,
including three that are under development or redevelopment. Capital contributions are payable when a capital call
is made by the joint venture, and there are no unfunded capital calls as of December 31, 2019.
Columbia Property Trust guarantees a portion of the debt held by the 799 Broadway Joint Venture. As of
December 31, 2019, the 799 Broadway Joint Venture has $113.2 million in outstanding borrowings on the
Construction Loan, as further described in Note 4, Unconsolidated Joint Ventures. Pursuant to a joint and several
guaranty agreement with the Construction Loan lender, Columbia Property Trust and Normandy are required to
make aggregate additional equity contributions to the joint venture based on the initial expected project costs, less
the amount of equity contributions made to date. As of December 31, 2019, the remaining equity contribution
requirement is $31.9 million, of which $15.8 million reflects Columbia Property Trust's allocated share. Equity
contributions become payable by Columbia Property Trust to the joint venture when a capital call is received. As of
December 31, 2018, no capital calls remain unpaid; therefore, no liability has been recorded related to this guaranty.
Litigation
Columbia Property Trust is subject to various legal proceedings, claims, and administrative proceedings arising in the
ordinary course of business, some of which are expected to be covered by liability insurance. Management makes
assumptions and estimates concerning the likelihood and amount of any reasonably possible loss relating to these
matters using the latest information available. Columbia Property Trust records a liability for litigation if an
unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an
unfavorable outcome is probable and a reasonable estimate of the loss is a range, Columbia Property Trust accrues
the best estimate within the range. If no amount within the range is a better estimate than any other amount,
Columbia Property Trust accrues the minimum amount within the range. If an unfavorable outcome is probable but
the amount of the loss cannot be reasonably estimated, Columbia Property Trust discloses the nature of the
litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is
reasonably possible and the estimated loss is material, Columbia Property Trust discloses the nature and estimate of
the possible loss of the litigation. Columbia Property Trust does not disclose information with respect to litigation
where the possibility of an unfavorable outcome is considered to be remote. Based on current expectations, such
matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity,
results of operations, business, or financial condition of Columbia Property Trust. Columbia Property Trust is not
currently involved in any legal proceedings of which management would consider the outcome to be reasonably
likely to have a material adverse effect on the results of operations or financial condition of Columbia Property Trust.
F-35
8.
Stockholders' Equity and Partner's Capital
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, 2019 through September 4, 2021 (the "2019 Stock
Repurchase Program"). Under the 2019 Stock Repurchase Program, Columbia Property Trust acquired 1.6 million
shares at an average price of $20.72 per share, for aggregate purchases of $33.5 million during 2019. As of
December 31, 2019, $166.5 million remains available for repurchases under the 2019 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
Employee Awards
Columbia Property Trust maintains a stockholder-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 "LTI Plan"). In May 2017, Columbia Property Trust's stockholders approved the LTI Plan, and 4.8 million
shares are authorized and reserved for issuance under the LTI Plan.
Columbia Property Trust's LTI Plan includes both time-based awards and performance-based awards for all
participants. Time-based awards vest ratably on each anniversary of the grant date over the next four years.
Performance-based restricted stock units
(the "Performance-Based RSUs") will vest 75% at the conclusion of a
three-year performance period, and the remaining 25% will vest one year later. For 2019, 2018, and 2017 time-
based awards, Columbia Property Trust issued 176,122, 128,486, and 139,825 shares of common stock to
employees, respectively; and for 2019, 2018, and 2017 performance-based awards Columbia Property Trust granted
256,384, 176,702, and 193,219 restricted stock units, respectively. In addition, in 2017, as a result of transitioning
from a one- to three-year performance period, Columbia Property Trust granted 45,076 and 92,585 one-time
transitional Performance-Based RSUs, which vested at the conclusion of the 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.
The 2020 LTI Plan awards are consistent with the LTI Plan awards granted in the three prior years. On January 1,
2020, Columbia Property Trust granted 165,233 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, 2020, Columbia Property Trust also
granted 246,387 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 prior-year awards, the payout of the
2020 Performance-Based RSUs will be determined based on Columbia Property Trust's total stockholder return
relative to the FTSE NAREIT Equity Office Index.
F-36
Below is a summary of the employee awards issued under the LTI Plan for 2019, 2018, and 2017:
Unvested as of January 1, 2017
Granted
Vested
Forfeited
Unvested as of December 31, 2017
Granted
Vested
Forfeited
Unvested as of December 31, 2018
Granted
Vested
Forfeited
Unvested as of December 31, 2019
Restricted Shares
RSUs
Shares
(in thousands)
256
Estimated
Fair Value(1)
22.62
$
Units
(in thousands)
—
Estimated
Fair Value(2)
—
$
333
(193)
(7)
389
139
(153)
—
375
176
(165)
$
$
$
$
$
$
$
$
$
$
(12)
$
374 (3) $
21.59
22.42
21.81
21.85
22.97
22.13
—
22.15
19.36
21.99
20.66
20.96
331
—
(2)
329
206
(70)
(11)
454
257
(121)
$
$
$
$
$
$
$
$
$
$
(6)
$
584 (3) $
18.78
—
19.01
—
20.55
19.47
18.60
19.37
17.66
19.08
18.67
18.86
(1) Reflects the weighted-average grant-date fair value using the market closing price on the date of the grant.
(2) Reflects the weighted-average grant-date fair value using a Monte Carlo valuation.
(3) As of December 31, 2019, Columbia Property Trust expects approximately 360,000 of the 374,000 unvested restricted
shares to ultimately vest and approximately 562,000 of the 584,000 unvested RSUs to ultimately vest, assuming a
forfeiture rate of 4%, which was determined based on peer company data, adjusted for the specifics of the LTI Plan.
Director Stock Grants
Columbia Property Trust grants equity retainers to its directors under the LTI Plan. Such grants vest immediately.
Beginning in May 2017, these grants are made annually for the following year and vest immediately. Prior to this
time, the independent directors' equity retainers were paid quarterly. During 2019, 2018, and 2017, Columbia
Property Trust granted the following equity retainers:
Date of Grant
2019 Director Grants:
May 14, 2019
2018 Director Grants:
May 14, 2018
2017 Director Grants:
January 3, 2017
May 2, 2017
November 27, 2017(2)
Shares
Grant-Date Fair Value(1)
28,000
$
31,743 $
8,279 $
33,581 $
1,596 $
22.13
22.20
21.58
22.57
23.07
(1)
(2)
Columbia Property Trust determined the grant-date fair value using the market closing price on the date of the grant.
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.
F-37
Stock-Based Compensation Expense
Columbia Property Trust incurred stock-based compensation expense related to the following events (in thousands):
Amortization of unvested LTI Plan awards
Future employee awards(1)
Issuance of shares to independent directors
Total stock-based compensation expense
2019
2018
2017
$
$
3,282
2,720
620
$
3,800 $
2,461
705
6,622
$
6,966 $
4,098
2,509
973
7,580
(1) Reflects amortization of LTI Plan 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 – corporate in the accompanying consolidated
statements of operations. There were $9.5 million and $8.6 million of unrecognized compensation costs related to
unvested awards under the LTI Plan as of December 31, 2019 and December 31, 2018, respectively. This amount will
be amortized over the respective vesting period, ranging from one year to four years at the time of grant.
Independent Director Stock Option Plan
Columbia Property Trust previously maintained an independent director stock option plan that provided 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. As
of January 1, 2017, Columbia Property Trust had 1,375 options outstanding under this plan, all of which expired in
2017. There are no remaining options outstanding under the Director Plan.
Columbia OP Partner's Capital
Columbia Property Trust is the general partner and was the sole owner of Columbia OP for all periods presented.
F-38
9.
Supplemental Disclosures of Noncash Investing and Financing Activities
Outlined below are significant noncash investing and financing activities for Columbia Property Trust, Inc. for the
years ended December 31, 2019, 2018, and 2017 (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
Other assets transferred to unconsolidated joint venture
Other liabilities transferred to unconsolidated joint venture
Extinguishment of 263 Shuman Boulevard mortgage note by
transferring property to lender
Settlement of capital lease obligation with related development
authority bonds
Amortization of net discounts on debt
Accrued investments in unconsolidated joint ventures
Accrued capital expenditures and deferred lease costs
Operating lease liability recorded at adoption of ASC 842
Accrued dividends payable
Cumulative-effect adjustment to equity for the adoption of ASU
2017-05 and 2014-09
Market value adjustment to interest rate swaps that qualify for
hedge accounting treatment
Common stock issued to employees and directors, and amortized
(net of income tax witholdings)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Years Ended December 31,
2019
2018
2017
— $
— $
$
6
137
$
— $
— $
— $
— $
— $
$
180
198
12,944
34,791
24,209
$
$
$
$
617 $
— $
259 $
664 $
— $
— $
— $
49,000 $
120,000 $
180 $
386 $
15,145 $
— $
23,340 $
— $
358,098 $
(3,445) $
1,441 $
6,622
$
6,966 $
311
10,000
1,014
268
558,122
43,700
21,347
—
—
180
—
25,069
—
23,961
—
1,786
7,580
During 2019, 2018, and 2017, Columbia OP recorded non-cash contributions (distributions) from (to) Columbia
Property Trust of $(7.0) million, $165.9 million, and $(65.2) million, respectively, to settle due from (to) affiliate
account balances.
F-39
10.
Leases
Columbia Property Trust as Lessee
Columbia Property Trust is a lessee with respect to ground leases at certain of its investment properties, office space
leases, and various information technology equipment leases. Operating lease assets represent Columbia Property
Trust's right to use the underlying asset over the lease term, and operating lease liabilities represent Columbia
Property Trust's obligation to make lease payments over the lease term. Operating lease liabilities are measured as
the present value of lease payments over the lease term. As most of Columbia Property Trust's leases do not provide
an implicit rate, Columbia Property Trust uses its incremental borrowing rate, based on information available at
commencement, to calculate the present value of lease payments. Lease term extensions are included in the
operating lease liability when it is reasonably certain that they will be exercised. Any variable payments for non-
lease services provided under leases are expensed as incurred. Operating lease assets are measured based on the
corresponding operating lease liability amount, reduced for lease incentives. At adoption of ASC 842, straight-line
rent payable (receivable) balances and intangible lease asset (liability) balances were reclassified to the
corresponding right of use assets. Operating lease expense is recognized on a straight-line basis over the lease term,
and is recorded as property operating costs for ground leases and as general and administrative – corporate for all
other operating leases. Contracts are evaluated at commencement to determine if the contract contains a lease, and
the appropriate classification for such leases.
As of December 31, 2019, Columbia Property Trust has one ground lease with a remaining lease term of 58.0 years,
inclusive of renewal options, which is included in operating lease assets of $29.5 million. Payments for all future
periods under this ground lease have already been made. Thus, as of December 31, 2019, operating lease liabilities
of $2.2 million include only the present value of future payments due under an office lease, which has a remaining
lease term of 3.0 years.
As of December 31, 2019, the future minimum lease payments to be made by Columbia Property Trust under its
operating lease are as follows (in thousands):
2020
2021
2022
2023
2024
Thereafter
Total lease payments
Less: interest expense
Present value of lease liabilities
Weighted-average remaining lease term (years)
Weighted-average discount rate
$
$
728
760
793
67
—
—
2,348
(162)
2,186
3.1 years
4.5 %
Columbia Property Trust's operating leases had the following impacts on the consolidated balance sheet as of
December 31, 2019 (in thousands):
Ground Leases
Office Lease
Total Operating
Leases
Assets:
Total operating lease assets
Liabilities:
Total operating lease liabilities
27,843
$
1,627
$
29,470
— $
2,186
$
2,186
$
$
F-40
Columbia Property Trust's operating leases had the following impacts on the consolidated statements of operations
for 2019 (in thousands):
Property operating costs
General and administrative – corporate
Total operating lease expenses
Ground Leases
Office Lease
Total Operating
Leases
$
$
2,165
$
—
2,165
$
— $
580
580
$
2,165
580
2,745
Columbia Property Trust's operating leases had the following impacts on the consolidated statements of cash flows
for the 2019 (in thousands):
Ground Leases
Office Lease
Total Operating
Leases
Cash paid for operating lease liabilities included in cash
flows from operations
$
(1,329) $
(697) $
(2,026)
Columbia Property Trust as Lessor
Columbia Property Trust owns and leases commercial real estate, primarily office space, to tenants under operating
leases for specified periods of time. Some of Columbia Property Trust's leases contain extension and/or termination
options; however, the exercise of these extensions or terminations is at the discretion of the tenant and subject to
negotiations. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the
time the option is exercised. Rental income related to such leases is recognized on a straight-line basis over the
remaining lease period, and is included in lease revenues on the consolidated statements of operations. If at any
point during the term of a lease, it is determined that the collectability of a tenant receivable is not probable, such
receivable is written off against lease revenues. Contracts are evaluated at commencement to determine if the
contract contains a lease, as defined by ASC 842, and the appropriate classification for such leases. In making this
determination, Columbia Property Trust evaluates, among other things, whether the customer has the right to
control the use of the identified asset. As of December 31, 2019, the weighted-average remaining term for such
leases is approximately 7.4 years.
Lease revenues include fixed and variable payments. Fixed payments primarily relate to base rent and include
payments related to lease termination fees; and variable payments primarily relate to tenant reimbursements for
certain property operating costs. Lease termination fees are recognized on a straight-line basis from the point at
which Columbia Property Trust receives notification of termination until the date the tenant loses the right to lease
the space and Columbia Property Trust has satisfied all obligations under the lease or termination agreement. During
2019, 2018, and 2017, Columbia Property Trust earned lease termination fees of $0.4 million, $2.2 million, and $0.4
million, respectively. Fixed and variable payments for 2019 are as follows (in thousands):
Fixed payments
Variable payments
Total lease revenues
$
$
250,077
26,072
276,149
F-41
As of December 31, 2019, the future minimum fixed lease payments due to Columbia Property Trust under non-
cancelable operating leases are as follows (thousands):
2020
2021
2022
2023
2024
Thereafter
Total
$
$
223,249
224,999
216,210
205,955
197,846
1,028,119
2,096,378
11.
Non-Lease Revenues
Columbia Property Trust applies Accounting Standard Codification 606, Revenues from Contracts with Customers
("ASC 606"), to its non-lease revenue streams outlined below. ASC 606 requires companies to perform a five-step
analysis of transactions to determine when and how revenue is recognized. See Note 10, Leases, for information
about revenues earned under leases.
Asset and Property Management Fee Income
Under asset and property management agreements in place with certain of its unconsolidated joint ventures,
Columbia Property Trust earns revenue for performing asset and property management functions for properties
owned through its joint ventures, as further described in Note 4, Unconsolidated Joint Ventures. During 2019, 2018,
and 2017, Columbia Property Trust earned revenues of $7.5 million, $7.4 million, and $3.8 million, respectively,
under these agreements. Asset and property management services are ongoing and routine, and are provided on a
recurring basis. Therefore such fees are recognized ratably over the service period, usually a period of three months.
Columbia Property Trust receives payments quarterly for asset management fees and monthly for property
management fees.
Leasing Override Fees
Under the asset management agreements for certain properties owned through unconsolidated joint ventures,
Columbia Property Trust is eligible to earn leasing override fees equal to a percentage of the total rental payments
to be made by the tenant over the term of the lease. Such fees are required to be recognized when Columbia
Property Trust's obligation to perform is complete, typically upon execution of the lease. Prior to January 1, 2018,
such fees were not recognized until billable to the applicable joint venture, typically upon commencement of the
lease. Upon implementing ASC 606, effective January 1, 2018, Columbia Property Trust accelerated the recognition
of lease override fees related to a lease that had been executed but not yet commenced, by recording $0.3 million of
lease override fees receivable as prepaid expenses and other assets and a cumulative-effect adjustment to increase
equity by the same amount. During 2019 and 2018, Columbia Property Trust earned leasing override fees of $0.1
million and $0.2 million, respectively, which are included in asset and property management fee income on the
accompanying consolidated statements of operations. During 2017, Columbia Property Trust did not earn any
leasing override fees.
Salary and Other Reimbursement Revenue
Under the property management agreements for certain properties owned through unconsolidated joint ventures,
Columbia Property Trust receives reimbursements for salaries and property operating costs for ongoing and routine
services that are provided by Columbia Property Trust employees on a recurring basis. Such revenues are recognized
ratably over the service period, usually a period of one month, three months, or one year. During 2019, 2018, and
2017, Columbia Property Trust earned salary and other reimbursement revenue of $4.5 million, $4.4 million, and
$2.3 million, respectively. These amounts are included in other property income on the accompanying consolidated
statements of income.
F-42
Miscellaneous Revenue
Columbia Property Trust also receives revenues for services provided to its tenants through the TRS Entities,
including fitness centers, shuttles, and cafeterias, which are included in other property income on the accompanying
consolidated statements of income. Such services are ongoing and routine, and are provided on a recurring basis.
These revenues are recognized ratably over the service period, usually a period of one month or one quarter. During
2019, 2018, and 2017, Columbia Property Trust earned miscellaneous revenue of $0.3 million, $0.7 million, and $0.6
million, respectively. These amounts are included in other property income on the accompanying consolidated
statements of income.
12.
Income Taxes
Columbia Property Trust's income tax basis net income during 2019, 2018, and 2017 (in thousands) follows:
GAAP basis financial statement net income attributable to common
stockholders
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 (less
than) amounts for income tax purposes
Net amortization of above-/below-market lease intangibles for financial
reporting purposes less than amounts for income tax purposes
Interest expense for financial reporting purposes in excess of amounts for
income tax purposes
Bad debt expense for financial reporting purposes less than (in excess of)
amounts for income tax purposes
Income from unconsolidated joint ventures for financial reporting
purposes in excess of amount for income tax purposes
2019
2018
2017
$
9,197
$
9,491 $
176,041
41,648
43,753
33,918
(10,373)
7,145
(38,426)
(5,107)
5,852
1
(5,990)
(6,091)
—
4
—
(31)
15,224
16,654
13,902
Gains or losses on disposition of real property for financial reporting
purposes that are more favorable than amounts for income tax purposes
(57,284)
79,376
(126,770)
Other expenses or revenues for financial reporting purposes in excess
(less than) of amounts for income tax purposes
37,912
(32,342)
Income tax basis net income, prior to dividends-paid deduction
$
37,070
$
118,091 $
11,331
63,874
As of December 31, 2019, the tax basis carrying value of Columbia Property Trust's total assets was approximately
$4.4 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
2019
2018
2017
53.1 %
— %
46.9 %
100.0 %
100.0 %
— %
— %
100.0 %
58.5 %
— %
41.5 %
100.0 %
As of December 31, 2019, returns for the calendar years 2015 through 2019 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
F-43
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, 2019, 2018,
and 2017, are as follows:
Federal income tax
State income tax
Total income tax
Years Ended December 31,
2019
2018
2017
$
$
14
6
20
$
$
63
$
(26)
37
$
188
38
226
As of December 31, 2019 and 2018, Columbia Property Trust had deferred tax assets of $0.2 million, which are
included in prepaid expenses and other assets in the accompanying consolidated balance sheets.
13.
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 LTI Plan grants, as described in Note 8, Stockholders' Equity and Partner's Capital. 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 attributable to common stockholders
Distributions paid on unvested shares
Net income attributable to common stockholders used to calculate
basic and diluted earnings per share
2019
2018
2017
9,197
$
(310)
9,491 $
176,041
(296)
(337)
8,887
$
9,195 $
175,704
$
$
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 LTI Plan awards, unvested
Future LTI Plan awards
Weighted-average common shares – diluted
2019
2018
2017
116,261
117,888
120,795
114
83
104
319
116
248
116,458
118,311
121,159
F-44
14.
Quarterly Results (Unaudited)
Presented below is a summary of the unaudited quarterly financial information for the years ended December 31,
2019 and 2018 (in thousands, except per-share data):
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Revenues
Net income (loss) attributable to common stockholders
Net income (loss) attributable to common stockholders per
share – basic(4)
Net income (loss) attributable to common stockholders per
share – diluted(4)
Dividends declared per share
Revenues
Net income (loss) attributable to common stockholders
Net income (loss) attributable to common stockholders –
basic(4)
Net income (loss) attributable to common stockholders –
diluted(4)
$
$
$
$
$
$
$
$
$
75,433
3,513
$ 72,730
$ 47,747 (1) $ (20,286) (2) $ (21,777) (3)
$ 68,725
$ 71,949
0.03
0.03
0.20
$
$
$
0.41
0.41
0.20
$
$
$
(0.17)
(0.17)
0.20
$
$
$
(0.19)
(0.19)
0.21
2018
First
Quarter
Second
Quarter
$
73,710 $ 75,370
1,498 $ (3,439) (5) $
Third
Quarter
Fourth
Quarter
73,340 $
75,523
6,429 $
5,003
0.01 $
(0.03)
0.01 $
(0.03)
$
$
0.05 $
0.05 $
0.04
0.04
Dividends declared per share
$
0.20
(1) Net income attributable to common stockholders for the second quarter of 2019 includes a gain on sale of real estate
0.20 $
0.20 $
0.20
$
assets of $41.9 million, as described in Note 3, Real Estate Transactions.
(2) Net loss attributable to common stockholders for the third quarter of 2019 includes an impairment loss on real estate
of $23.4 million related to sales of real estate assets, as described in Note 3, Real Estate Transactions.
(3) Net loss attributable to common stockholders for the third quarter of 2019 includes an impairment loss on real estate
of $20.6 million related to sales of real estate assets, as described in Note 2, Summary of Significant Accounting
Policies.
(4) Quarterly net income (loss) per share – basic and diluted is calculated based on quarterly basic and diluted weighted-
average shares outstanding, respectively.
(5) Net loss attributable to common stockholders for the second quarter of 2018 includes an impairment loss on real
estate of $30.8 million related to sales of real estate assets, as described in Note 3, Real Estate Transactions, and a
gain on extinguishment of debt of $24.0 million, related to the settlement of a mortgage note, as described in Note 5,
Line of Credit and Notes Payable.
F-45
15.
Segment Information
Columbia Property Trust establishes operating segments at the property level, and aggregates individual properties
into reportable segments for high-barrier-to-entry markets and other geographic locations in which Columbia
Property Trust has significant investments. Columbia Property Trust considers geographic location when evaluating
its portfolio composition, and in assessing the ongoing operations and performance of its properties. As of
December 31, 2019, Columbia Property Trust had the following reportable segments: New York, San Francisco,
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/or does not plan to make further investments. Upon selling its remaining properties
in Atlanta, Columbia Property Trust has combined Atlanta and the all other office markets reportable segment for all
periods presented. During the periods presented, there have been no material intersegment 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 lease revenues, 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)
Washington, D.C.(3)
Boston
Los Angeles
All other office markets
Total office segments
Hotel
Corporate
Total
For the Years Ended December 31,
2019
2018
2017
$
157,244
$
114,295
158,077 $
105,947
58,200
14,285
7,754
41,321
393,099
—
3,137
57,274
13,441
7,783
57,395
399,917
—
3,165
$
396,236
$
403,082 $
123,280
105,550
36,934
11,559
7,462
59,263
344,048
1,328
579
345,955
(1)
(2)
(3)
Includes operating revenues for 101 Franklin Street from December 2, 2019 through December 31, 2019; and for one
unconsolidated property, 114 Fifth Avenue, based on Columbia Property Trust's ownership interest (49.5%) from July 6,
2017 (acquisition date) through December 31, 2019.
Includes operating revenues for two unconsolidated properties, 333 Market Street and University Circle, based on
Columbia Property Trust's ownership interests: 100.0% from January 1, 2017 through July 5, 2017; 77.5% from July 6,
2017 through January 31, 2018; and 55.0% from February 1, 2018 through December 31, 2019.
Includes operating revenues for two unconsolidated properties, Market Square and 1800 M Street, based on Columbia
Property Trust's ownership interests: 51.0% for the Market Square for all periods presented; 55.0% for 1800 M Street
from October 11, 2017 (acquisition date) through December 31, 2019.
F-46
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)
Less: asset and property management fee income(2)
Total property operating revenues
$
$
For the Years Ended December 31,
2019
2018
2017
288,837
$
297,943 $
289,000
114,943
(7,544)
112,523
(7,384)
396,236
$
403,082 $
60,737
(3,782)
345,955
(1)
(2)
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.
See Note 11, Non-Lease Revenues, 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)
Washington, D.C.(3)
Boston
Los Angeles
All other office markets
Total office segments
Hotel
Corporate
Total
For the Years Ended December 31,
2019
2018
2017
$
93,112
$
94,765 $
83,305
33,953
7,539
4,601
35,428
257,938
—
(904)
79,354
34,750
7,205
4,590
51,638
272,302
—
(803)
73,893
76,163
18,496
5,380
4,529
52,153
230,614
(913)
(826)
$
257,034
$
271,499 $
228,875
(1)
(2)
(3)
Includes NOI for the following unconsolidated properties based on Columbia Property Trust's ownership interest:
•
•
114 Fifth Avenue: (49.5%) from July 6, 2017 (acquisition date) through December 31, 2019
799 Broadway: (49.7%) from October 3, 2018 (acquisition date) through December 31, 2019
Includes NOI for the following unconsolidated properties based on Columbia Property Trust's ownership interests:
•
•
•
333 Market Street and University Circle: (100.0%) from January 1, 2017 through July 5, 2017
333 Market Street and University Circle: (77.5%) from July 6, 2017 through January 31, 2018
333 Market Street and University Circle: (55.0%) from February 1, 2018 through December, 2019
Includes NOI for the following unconsolidated properties based on Columbia Property Trust's ownership interest:
• Market Square: (51.0%) for all periods presented
•
1800 M Street: (55.0%) from October 11, 2017 (acquisition date) through December 31, 2019
F-47
A reconciliation of GAAP net income to NOI is presented below (in thousands):
For the Years Ended December 31,
2019
2018
2017
Net income attributable to common stockholders
$
9,197
$
9,491 $
Depreciation
Amortization
Impairment loss on real estate assets
General and administrative – corporate
General and administrative – joint venture
Pre-acquisition costs
Net interest expense
Interest income from development authority bonds
(Gain) loss on extinguishment of debt
Income tax expense
Asset and property management fee income
Adjustments included in loss from unconsolidated joint
venture
Gain on sale of unconsolidated joint venture interest
Gains on sales of real estate assets
Adjustment attributable to noncontrolling interests
78,292
27,908
43,941
32,779
3,567
6,398
42,997
—
—
21
(7,544)
61,634
—
(42,030)
(126)
81,795
32,554
30,812
32,979
3,108
—
56,477
(6,871)
(23,340)
37
(7,384)
62,603
(762)
—
—
176,041
80,394
32,403
—
34,966
1,454
—
58,187
(7,200)
325
(213)
(3,782)
31,818
—
(175,518)
—
Net operating income
$
257,034
$
271,499 $
228,875
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 January 24, 2020, Columbia Property Trust acquired Normandy Real Estate Management, LLC, a developer,
operator, and investment manager of office and mixed-use assets in New York, Boston, and Washington, D.C. for
approximately $100.0 million, exclusive of transaction and closing costs (the "Normandy Acquisition"). The purchase
price for the Normandy Acquisition is comprised of two components: an approximately $13.5 million cash payment,
and the issuance of 3,264,151 Series A Convertible, Perpetual Preferred Units of Columbia OP with a liquidation
preference of $26.50 per unit (the "Preferred OP Units"). The Preferred OP Units are convertible into common units
of Columbia OP, which are convertible into shares of Columbia Property Trust's common stock, subject to certain
terms and conditions. After giving effect to the Preferred OP Units issued in the Normandy Acquisition, Columbia
Property Trust owns approximately 97.2% of the limited partnership interests in Columbia OP.
Columbia Property Trust also notes the following other subsequent events:
• On February 7, 2020, the board of directors declared dividends for the first quarter of 2020 of $0.21 per
share, payable on March 17, 2020, to stockholders of record on March 2, 2020.
• On January 24, 2020, in connection with the Normandy Acquisition, Columbia Property Trust issued 128,399
of time-based award shares of Columbia Property Trust stock and 104,968 of performance-based award
restricted stock units to Normandy employees that became employees of Columbia Property Trust.
• On January 16, 2020, Columbia Property Trust closed on the sale of Cranberry Woods Drive for
$180.0 million and anticipates recognizing a gain on sale of real estate assets in the first quarter of 2020.
• On January 7, 2020, Columbia Property Trust paid an aggregate amount of $24.2 million in dividends for the
fourth quarter of 2019 to stockholders of record on December 16, 2019.
F-48
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Columbia Property Trust, Inc.
Columbia Property Trust Operating Partnership, L.P.
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
Impairment of real estate
Write-offs of building and tenant improvements
Write-offs of intangible assets(2)
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(2)
Write-offs of fully depreciated assets
For the Years Ended December 31,
2019
2018
2017
$
3,345,301
$
3,612,294
$ 4,243,531
531,336
(456,331)
(43,941)
(270)
(34,039)
(5,608)
3,336,448
487,485
90,926
(149,708)
(228)
(3,888)
(5,608)
$
$
87,398
(313,683)
(30,812)
(1,464)
(6,131)
(2,301)
698,567
(1,285,915) (1)
—
(3,087)
(14,432)
(26,370)
3,345,301
$ 3,612,294
482,627
$
729,025
98,858
(84,965)
(603)
(6,131)
(2,301)
97,732
(302,157) (1)
(1,406)
(14,197)
(26,370)
$
$
Balance at end of year
$
418,979
$
487,485
$
482,627
(1)
(2)
Includes the transfer of 100% of both University Circle and 333 Market Street to unconsolidated joint ventures, in which Columbia
Property Trust currently owned a 55.0% interest as of December 31, 2019.
Consists of write-offs of intangible lease assets related to lease restructurings, amendments, and terminations.
S-2
Exhibit 23.1
COLUMBIA PROPERTY TRUST, INC.
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-3 No 333-223062) of Columbia Property Trust, Inc. and Columbia Property Trust
Operating Partnership, L.P.;
(2) Registration Statement (Form S-8 No 333-188409) pertaining to the Columbia Property Trust, Inc. 2013 Long-term
Incentive Plan;
(3) Registration Statement (Form S-8 No 333-217720) pertaining to the Columbia Property Trust, Inc. Amended and
Restated 2013 Long-term Incentive Plan;
of our reports dated February 13, 2020, relating to the consolidated financial statements and financial statement schedule of
Columbia Property Trust, Inc. and subsidiaries (the “Company”), and Columbia Property Trust Operating Partnership, L.P. and
subsidiaries (“the Partnership”), and the effectiveness of the Company’s internal control over financial reporting of the
Company, appearing in this Annual Report on Form 10-K of the Company and the Partnership for the year ended December
31, 2019.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 13, 2020
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.2
We consent to the incorporation by reference in Registration Statement No. 333-223062 on Form S-3 and Registration
Statement Nos. 333-217720 and 333-188409 on Form S-8, of our reports dated February 13, 2019, 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 the Company for the year ended December 31, 2018.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 13, 2020
EXHIBIT 31.1
COLUMBIA PROPERTY TRUST, INC.
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.
5.
I have reviewed this annual report on Form 10-K of Columbia Property Trust, Inc. for the year ended
December 31, 2019;
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
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.
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.
b.
Dated: February 13, 2020
By:
/s/ E. Nelson Mills
E. Nelson Mills
Principal Executive Officer
EXHIBIT 31.2
COLUMBIA PROPERTY TRUST, INC.
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.
5.
I have reviewed this annual report on Form 10-K of Columbia Property Trust, Inc. for the year ended
December 31, 2019;
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
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.
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.
b.
Dated: February 13, 2020
By:
/s/ James A. Fleming
James A. Fleming
Principal Financial Officer
EXHIBIT 31.3
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
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.
5.
I have reviewed this annual report on Form 10-K of Columbia Property Trust Operating Partnership, L.P. for
the year ended December 31, 2019;
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
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.
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.
b.
Dated: February 13, 2020
By:
/s/ E. Nelson Mills
E. Nelson Mills
Principal Executive Officer
EXHIBIT 31.4
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
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.
5.
I have reviewed this annual report on Form 10-K of Columbia Property Trust, Inc. for the year ended
December 31, 2019;
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
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.
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.
b.
Dated: February 13, 2020
By:
/s/ James A. Fleming
James A. Fleming
Principal Financial Officer
EXHIBIT 32.1
COLUMBIA PROPERTY TRUST, INC.
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, 2019, 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 13, 2020
/s/ JAMES A. FLEMING
James A. Fleming
Principal Financial Officer
February 13, 2020
EXHIBIT 32.2
COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.
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, 2019, 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 13, 2020
/s/ JAMES A. FLEMING
James A. Fleming
Principal Financial Officer
February 13, 2020
DISCLOSURES RELATED TO NON-GAAP FINANCIAL MEASURES
The following sets forth reconciliations of certain non-GAAP financial measures used in the Annual Report to what
we consider the most directly comparable financial measures calculated and presented in accordance with GAAP.
Additional details can be found in our most recent Supplemental Information package for the quarter and year
ended December 31, 2019, which was included as Exhibit 99.2 to the Company’s Form 8-K furnished to the Securities
and Exchange Commission on February 13, 2020.
Reconciliation of Net Income to Same Store NOI (based on cash rents)
Net income
Depreciation
Amortization
Impairment loss on real estate assets
General and administrative - corporate
General and administrative - joint ventures
Preacquisition costs
Net interest expense
Interest income from development authority bonds
Gain on extinguishment of debt
Income tax expense
Asset & property management fee income
Straight line rental income (net)
Above/below lease market amortization
Adjustments included in income from unconsolidated joint
ventures
Gain on sale of real estate assets
Gain on sale of unconsolidated joint venture interests
Amounts attributable to noncontrolling interests
2019
2018
$
9,197 $
78,292
27,908
43,941
32,779
3,567
6,398
42,997
—
—
21
(7,544)
(12,395)
(4,362)
53,104
(42,030)
—
(126)
9,491
81,795
32,554
30,812
32,979
3,108
—
56,477
(6,871)
(23,340)
37
(7,384)
(25,984)
(3,152)
51,841
—
(762)
—
NOI (based on cash rents)
$
231,747 $
231,601
Company Information
Inquiries
Columbia Property Trust
315 Park Avenue South
New York, NY 10010
Independent Accountants
Deloitte & Touche LLP
Atlanta, Georgia
Corporate Counsel
King & Spalding LLP
Atlanta, Georgia
Annual Meeting
As of the printing of this report, the 2020 Annual Meeting of Stockholders of
Columbia Property Trust is scheduled to be held at The New York EDITION Hotel
- Madison Square Park, 5 Madison Avenue, New York, New York 10010, at 9:30
a.m. on May 12, 2020. In the event that this in-person meeting is changed to a
meeting via remote communication, this change and meeting access information
will be made available on our annual meeting website (www.columbia.reit.proxy).
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, 2019, 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.
Board of Directors
John L. Dixon
Independent Director and Chairman
of the Board
Former President and Director,
Pacific Select Group, LLC
Carmen M. Bowser
Independent Director
Former Managing Vice President,
Capital One Bank, N.A.
David B. Henry
Independent Director
Chairman and Co-Founder, Peaceable
Street Capital; Former Chief Executive
Officer, Kimco Realty Corporation
Murray J. McCabe
Independent Director
Managing Partner, Blum Capital
Partners, L.P.
E. Nelson Mills
Executive Director, President and
Chief Executive Officer
Constance B. Moore
Independent Director
Former Chief Executive Officer,
BRE Properties, Inc.
Michael S. Robb
Independent Director
Former Executive Vice President,
Real Estate Division, Pacific Life
Insurance Company
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George W. Sands*
Independent Director
Former Partner, KPMG LLP
Senior Management
E. Nelson Mills
President and Chief Executive Officer
James A. Fleming
Executive Vice President and
Chief Financial Officer
Jeffrey K. Gronning
Executive Vice President and
Chief Investment Officer
Gavin Evans
Executive Vice President, Acquisitions
Kevin A. Hoover
Executive Vice President,
Portfolio Management
David T. Cheikin
Senior Vice President,
Asset Management and Leasing
David S. Dowdney
Senior Vice President, West Coast
Travis W. Feehan
Senior Vice President,
New York Transactions Lead
Wendy W. Gill
Senior Vice President,
Chief Accounting Officer
Patrick J. Keeley
Senior Vice President, D.C. Region Lead
Stephen K. Smith
Senior Vice President,
Property Management
Amy C. Tabb
Senior Vice President,
Business Development
Paul H. Teti
Senior Vice President,
Asset Management and Leasing
Stephen P. Trapp
Senior Vice President, Construction
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Thomas G. Wattles
Independent Director
Former Executive Chairman,
DCT Industrial Trust, Inc.
Francis (“Finn”) X. Wentworth
Non-executive Director
Founder and Former Partner,
Normandy Real Estate Partners
Elka L. Wilson
Senior Vice President,
Corporate Operations
*Mr. Sands will retire from the board as of our 2020 annual meeting. We are grateful for his service to Columbia.
NYSC: CXP | www.columbia.reit
001-CORPRPRT-0120