##### 



UNITED
STATES  SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period ended June 30, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to .
 Commission File Number 1-31824
 FIRST POTOMAC REALTY TRUST
  MARYLAND
    
    37-1470730(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 7600 Wisconsin Avenue, 11 th Floor, Bethesda, MD 20814
  (301) 986-9200
  þ o
  þ o o
 o þ




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##### 



FIRST POTOMAC REALTY TRUST
 FORM 10-Q
 INDEX
 PagePart I:
    
    Financial InformationItem 1.
    
    Financial Statements
Consolidated balance sheets as of June 30, 2007 (unaudited) and December 31, 2006
    
    
    3Consolidated statements of operations (unaudited) for the three and six months ended June 30, 2007 and2006
    
    
    4Consolidated statements of cash flows (unaudited) for the six months ended June 30, 2007 and 2006
    
    
    5Notes to consolidated financial statements (unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    35Item 4.
    
    Controls and Procedures
    
    
    35Part II:
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    36Item 1A.
    
    Risk Factors
    
    
    36Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3.
    
    Defaults Upon Senior Securities
    
    
    36Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    36Item 5.
    
    Other Information
    
    
    36Item 6.
    
    Exhibits
    
    
    36Signatures
 2




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##### 



FIRST POTOMAC REALTY TRUST
 June 30, 2007
    
    
    December 31, 2006(unaudited)Assets:Rental property, net
    
    $
    969,357
    
    
    $
    884,882Cash and cash equivalents
    
    
    5,463
    
    
    
    41,367Escrows and reserves
    
    
    13,174
    
    
    
    11,139Accounts and other receivables, net of allowance for
doubtful accounts of $596 and $334, respectively
    
    
    4,107
    
    
    
    4,212Accrued straight-line rents, net of allowance for doubtful
accounts of $24 and $41, respectively
    
    
    5,872
    
    
    
    4,973Deferred costs, net
    
    
    10,376
    
    
    
    9,006Prepaid expenses and other assets
    
    
    4,683
    
    
    
    6,191Intangible assets, net
    
    
    33,394
    
    
    
    32,797Total assets
    
    $
    1,046,426
    
    
    $
    994,567Liabilities:Mortgage loans
    
    $
    394,284
    
    
    $
    391,393Exchangeable senior notes, net of discount
    
    
    122,516
    
    
    
    122,234Senior notes
    
    
    75,000
    
    
    
    75,000Unsecured revolving credit facility
    
    
    64,000
    
    
    
    Accounts payable and accrued expenses
    
    
    11,488
    
    
    
    8,898Accrued interest
    
    
    2,450
    
    
    
    2,420Rents received in advance
    
    
    3,135
    
    
    
    3,196Tenant security deposits
    
    
    5,460
    
    
    
    4,965Deferred market rent
    
    
    10,385
    
    
    
    8,883Total liabilities
    
    
    688,718
    
    
    
    616,989Minority interests
    
    
    12,252
    
    
    
    13,992Shareholders equity:Common shares, $0.001 par value, 100,000,000 common
shares authorized: 24,223,066 and 24,126,886 shares issued
and outstanding, respectively
    
    
    24
    
    
    
    24Additional paid-in capital
    
    
    428,773
    
    
    
    430,271Dividends in excess of accumulated earnings
    
    
    (83,341
    )
    
    
    (66,709
    )Total shareholders equity
    
    
    345,456
    
    
    
    363,586Total liabilities and shareholders equity
    
    $
    1,046,426
    
    
    $
    994,567
  3




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##### 



FIRST POTOMAC REALTY TRUST
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Rental
    
    $
    25,794
    
    
    $
    21,093
    
    
    $
    50,714
    
    
    $
    41,412Tenant reimbursements and other
    
    
    4,895
    
    
    
    4,131
    
    
    
    9,951
    
    
    
    8,186Total revenues
    
    
    30,689
    
    
    
    25,224
    
    
    
    60,665
    
    
    
    49,598Operating expenses:Property operating
    
    
    6,168
    
    
    
    4,413
    
    
    
    12,725
    
    
    
    9,115Real estate taxes and insurance
    
    
    2,829
    
    
    
    2,149
    
    
    
    5,464
    
    
    
    4,321General and administrative
    
    
    2,621
    
    
    
    2,530
    
    
    
    5,587
    
    
    
    5,064Depreciation and amortization
    
    
    10,392
    
    
    
    7,957
    
    
    
    20,341
    
    
    
    15,820Total operating expenses
    
    
    22,010
    
    
    
    17,049
    
    
    
    44,117
    
    
    
    34,320Operating income
    
    
    8,679
    
    
    
    8,175
    
    
    
    16,548
    
    
    
    15,278Other expenses (income):Interest expense
    
    
    8,835
    
    
    
    7,253
    
    
    
    17,124
    
    
    
    13,843Interest and other income
    
    
    (172
    )
    
    
    (165
    )
    
    
    (366
    )
    
    
    (568
    )Loss on interest rate lock agreement
    
    
    
    
    
    
    671
    
    
    
    
    
    
    
    671Loss on early retirement of debt
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    121Total other expenses
    
    
    8,663
    
    
    
    7,880
    
    
    
    16,758
    
    
    
    14,067Income (loss) from continuing operations before
minority interests
    
    
    16
    
    
    
    295
    
    
    
    (210
    )
    
    
    1,211Minority interests
    
    
    
    
    
    
    (15
    )
    
    
    5
    
    
    
    (67
    )Income (loss) from continuing operations
    
    
    16
    
    
    
    280
    
    
    
    (205
    )
    
    
    1,144Discontinued operations:Income from operations of disposed property
    
    
    
    
    
    
    116
    
    
    
    
    
    
    
    376Gain on sale of disposed property
    
    
    
    
    
    
    7,475
    
    
    
    
    
    
    
    7,475Minority interests in discontinued operations
    
    
    
    
    
    
    (370
    )
    
    
    
    
    
    
    (386
    )Income from discontinued operations
    
    
    
    
    
    
    7,221
    
    
    
    
    
    
    
    7,465Net income (loss)
    
    $
    16
    
    
    $
    7,501
    
    
    $
    (205
    )
    
    $
    8,609Basic net income (loss) per share:Income (loss) from continuing operations
    
    $
    
    
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.06Income from discontinued operations
    
    
    
    
    
    
    0.36
    
    
    
    
    
    
    
    0.36Net income (loss) per share
    
    $
    
    
    
    $
    0.37
    
    
    $
    (0.01
    )
    
    $
    0.42Weighted average common shares outstanding
basic
    
    
    24,040
    
    
    
    20,401
    
    
    
    24,033
    
    
    
    20,285Diluted net income (loss) per share:Income (loss) from continuing operations
    
    $
    
    
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.06Income from discontinued operations
    
    
    
    
    
    
    0.35
    
    
    
    
    
    
    
    0.36Net income (loss) per share
    
    $
    
    
    
    $
    0.36
    
    
    $
    (0.01
    )
    
    $
    0.42Weighted average common shares outstanding
diluted
    
    
    24,241
    
    
    
    20,639
    
    
    
    24,033
    
    
    
    20,512
  4




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##### 



FIRST POTOMAC REALTY TRUST
 Six Months Ended June 30,2007
    
    
    2006Cash flows from operating activitiesNet income (loss)
    
    $
    (205
    )
    
    $
    8,609Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Discontinued operations:Gain on sale of property disposed
    
    
    
    
    
    
    (7,475
    )Depreciation and amortization
    
    
    
    
    
    
    3Minority interests
    
    
    
    
    
    
    386Depreciation and amortization
    
    
    20,714
    
    
    
    15,985Bad debt expense (recovery)
    
    
    315
    
    
    
    (73
    )Stock based compensation
    
    
    715
    
    
    
    761Amortization of deferred market rent
    
    
    (886
    )
    
    
    (1,029
    )Amortization of deferred financing costs and bond discount
    
    
    774
    
    
    
    453Amortization of rent abatement
    
    
    517
    
    
    
    92Minority interests
    
    
    (5
    )
    
    
    67Loss from early retirement of debt
    
    
    
    
    
    
    121Changes in assets and liabilities:Escrows and reserves
    
    
    (2,035
    )
    
    
    (702
    )Accounts and other receivables
    
    
    (189
    )
    
    
    41Accrued straight-line rents
    
    
    (919
    )
    
    
    (323
    )Prepaid expenses and other assets
    
    
    1,235
    
    
    
    (180
    )Tenant security deposits
    
    
    495
    
    
    
    324Accounts payable and accrued expenses
    
    
    3,257
    
    
    
    378Accrued interest
    
    
    30
    
    
    
    615Rent received in advance
    
    
    (61
    )
    
    
    (361
    )Deferred costs
    
    
    (1,908
    )
    
    
    (885
    )Total adjustments
    
    
    22,049
    
    
    
    8,198Net cash provided by operating activities
    
    
    21,844
    
    
    
    16,807Cash flows from investing activitiesPurchase deposit on future acquisitions
    
    
    (50
    )
    
    
    (600
    )Proceeds from sale of real estate assets
    
    
    
    
    
    
    14,939Additions to rental property
    
    
    (9,294
    )
    
    
    (3,160
    )Additions to construction in process
    
    
    (5,226
    )
    
    
    (668
    )Acquisition of land parcels
    
    
    (4,650
    )
    
    
    (716
    )Acquisition of rental property and associated intangible assets
    
    
    (73,196
    )
    
    
    (110,554
    )Net cash used in investing activities
    
    
    (92,416
    )
    
    
    (100,759
    )Cash flows from financing activitiesFinancing costs
    
    
    (1,264
    )
    
    
    (1,582
    )Proceeds from debt
    
    
    64,000
    
    
    
    139,500Repayments of debt
    
    
    (5,992
    )
    
    
    (39,774
    )Dividends to shareholders
    
    
    (16,427
    )
    
    
    (12,584
    )Distributions to minority interests
    
    
    (521
    )
    
    
    (761
    )Redemption of partnership units
    
    
    (5,170
    )
    
    
    Stock option exercises
    
    
    42
    
    
    
    149Net cash provided by financing activities
    
    
    34,668
    
    
    
    84,948Net increase (decrease) in cash and cash equivalents
    
    
    (35,904
    )
    
    
    996Cash and cash equivalents, beginning of period
    
    
    41,367
    
    
    
    3,356Cash and cash equivalents, end of period
    
    $
    5,463
    
    
    $
    4,352
  5




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##### 



FIRST POTOMAC REALTY TRUST
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Description of Business
    (2) Summary of Significant Accounting Policies
 (a) Principles of Consolidation
    (b) Use of Estimates
  6




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##### 



(c) Revenue Recognition
 Accounting for Leases
  (d) Cash and Cash Equivalents
  (e) Escrows and Reserves
  (f) Rental Property
  Buildings
    
    39 yearsBuilding improvements
    
    5 to 15 yearsFurniture, fixtures and equipment
    
    5 to 15 yearsTenant improvements
    
    Shorter of the useful lives of the
assets or the terms of the related
leases
    7




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##### 



Capitalization of Interest Cost
 (g) Purchase Accounting
  §
    
    value of leases based on the leasing origination costs at the date of the acquisition,
which approximates the market value of the lease origination costs had the in-place leases
been originated on the date of acquisition; the value of in-place leases represents
absorption costs for the estimated lease-up period in which vacancy and foregone revenue
are incurred;§
    
    the value of above and below market in-place leases based on the present values (using a
discount rate that reflects the risks associated with the leases acquired) of the
difference between the contractual rent amounts and market rents over the remaining
non-cancelable lease terms, ranging from one to twenty years; and§
    
    the intangible value of tenant or customer relationships.
  (h) Intangible Assets
 Business Combinations
  8




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##### 



Goodwill and Other Intangibles
 (i) Derivatives and Hedging
    (j) Income Taxes
  (k) Minority Interests
   9




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##### 



(l) Earnings Per Share
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator
for basic and diluted per share calculations:Income (loss) from continuing operations
    
    $
    16
    
    
    $
    280
    
    
    $
    (205
    )
    
    $
    1,144Income from discontinued operations
    
    
    
    
    
    
    7,221
    
    
    
    
    
    
    
    7,465Net income (loss)
    
    $
    16
    
    
    $
    7,501
    
    
    $
    (205
    )
    
    $
    8,609Denominator
for basic and diluted per share calculations:Weighted average shares outstanding  basic:
    
    
    24,040
    
    
    
    20,401
    
    
    
    24,033
    
    
    
    20,285Effect of dilutive shares:Employee stock options and non-vested shares
    
    
    201
    
    
    
    238
    
    
    
    
    
    
    
    227Denominator for diluted per share amounts
    
    
    24,241
    
    
    
    20,639
    
    
    
    24,033
    
    
    
    20,512Basic net income (loss) per share:Continuing operations
    
    $
    
    
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.06Discontinued operations
    
    
    
    
    
    
    0.36
    
    
    
    
    
    
    
    0.36Net income (loss)
    
    $
    
    
    
    $
    0.37
    
    
    $
    (0.01
    )
    
    $
    0.42Diluted net income (loss) per share:Continuing operations
    
    $
    
    
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.06Discontinued operations
    
    
    
    
    
    
    0.35
    
    
    
    
    
    
    
    0.36Net income (loss)
    
    $
    
    
    
    $
    0.36
    
    
    $
    (0.01
    )
    
    $
    0.42
 (m) Share-Based Compensation
 Share-Based Payment,
  10




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##### 



Stock Options Summary
   Weighted AverageWeighted Average
    
    
    Remaining
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    ValueOutstanding, December 31, 2006
    
    
    588,283
    
    
    $
    17.73
    
    
    7.2 years
    
    $
    6,693,254Granted
    
    
    86,850
    
    
    
    29.12Exercised
    
    
    (938
    )
    
    
    21.36Forfeited
    
    
    (8,519
    )
    
    
    26.37Outstanding, March 31, 2007
    
    
    665,676
    
    
    $
    19.10
    
    
    7.3 years
    
    $
    6,347,994Granted
    
    
    
    
    
    
    Exercised
    
    
    (1,262
    )
    
    
    17.14Forfeited
    
    
    (4,189
    )
    
    
    26.55Outstanding, June 30, 2007
    
    
    660,225
    
    
    $
    19.06
    
    
    7.1 years
    
    $
    3,445,267Exercisable, June 30, 2007
    
    
    456,675
    
    
    $
    16.63
    
    
    6.5 years
    
    $
    3,097,113Options expected to vest,
June 30, 2007
    
    
    186,539
    
    
    $
    24.20
    
    
    8.2 years
    
    $
    346,371
 Option Exercises
    2007Weighted average risk-free interest rate
    
    
    4.70
    %Expected volatility
    
    
    21.0
    %Expected dividend yield
    
    
    4.71
    %Weighted average expected life of options
    
    5 years
 11




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##### 



Non-vested share awards
    Weighted AverageGrant Date FairNon-vested Shares
    
    ValueNon-vested at December 31, 2006
    
    
    102,111
    
    
    $
    
    23.31Granted
    
    
    
    
    
    
    
    Vested
    
    
    (3,000
    )
    
    
    
    26.84Non-vested at March 31, 2007
    
    
    99,111
    
    
    
    
    23.20Granted
    
    
    78,980
    
    
    
    
    21.85Vested
    
    
    (3,000
    )
    
    
    
    26.84Non-vested at June 30, 2007
    
    
    175,091
    
    
    $
    
    22.53
  2007
    
    2006Risk-free interest rate (twenty year)
    
    
    4.74
    %
    
    
    5.28
    %Volatility
    
    
    23
    %
    
    
    21
    %Market
average return (fifty-seven years of S&P 500)
    
    
    9.05
    %
    
    
    8.94
    %Total expected return
    
    
    6.3
    %
    
    
    6.6
    %
  (n) Application of New Accounting Standards
 Accounting for Uncertainty in
Income Taxes, an Interpretation of FASB Statement No. 109 Accounting for Income Taxes
 12




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##### 



Fair Value Measurements
  (3) Rental Property
  June 30, 2007
    
    
    December 31, 2006Land
    
    $
    236,253
    
    
    $
    215,004Buildings and improvements
    
    
    759,851
    
    
    
    687,901Construction in process
    
    
    4,435
    
    
    
    6,980Tenant improvements
    
    
    34,888
    
    
    
    27,958Furniture, fixtures and equipment
    
    
    9,883
    
    
    
    9,8801,045,310
    
    
    
    947,723Less: accumulated depreciation
    
    
    (75,953
    )
    
    
    (62,841
    )$
    969,357
    
    
    $
    884,882
 Development and Redevelopment Activity
    Acquisitions
  Occupied at
    
    
    Aggregate PurchaseLocation
    
    
    Acquisition Date
    
    
    Property Type
    
    
    Square Feet
    
    
    June 30, 2007
    
    
    PriceGreenbrier Circle Corporate Center
    
    Chesapeake, VA
    
    
    1/9/2007
    
    
    Business Park
    
    
    229,163
    
    
    
    93
    %
    
    $
    25,539Greenbrier Technology Center I
    
    Chesapeake, VA
    
    
    1/9/2007
    
    
    Business Park
    
    
    95,843
    
    
    
    83
    %
    
    
    10,669Pine Glen
    
    Richmond, VA
    
    
    2/20/2007
    
    
    Business Park
    
    
    86,720
    
    
    
    100
    %
    
    
    5,398Ammendale Commerce Center 1
    
    Beltsville, MD
    
    
    3/28/2007
    
    
    Business Park
    
    
    129,358
    
    
    
    100
    %
    
    
    10,410Rivers Bend Center II
    
    Chester, VA
    
    
    5/1/2007
    
    
    Business Park
    
    
    302,400
    
    
    
    92
    %
    
    
    17,544Annapolis Commerce Park East
    
    Annapolis, MD
    
    
    6/18/2007
    
    
    Business Park
    
    
    101,302
    
    
    
    99
    %
    
    
    18,869944,786
    
    
    
    
    
    
    $
    88,429
 
 1
    
    Excludes a 75,747 square foot vacant building, which was taken out of service upon
acquisition. The building is currently being redeveloped. 13




---



##### 



Land
    
    $
    20,940Acquired tenant improvements
    
    
    2,487Building and improvements
    
    
    60,553In-place leases intangible
    
    
    5,321Acquired leasing commissions
    
    
    1,085Customer relations intangible
    
    
    3Above-market leases acquired
    
    
    840Total assets acquired
    
    
    91,229Below-market leases acquired
    
    
    (2,800
    )Debt assumed
    
    
    (8,883
    )Net assets acquired
    
    $
    79,546
   Three Months Ended
    
    Six Months EndedJune 30, 2007
    
    June 30, 2006
    
    June 30, 2007
    
    June 30, 2006Pro forma total revenues
    
    $
    31,150
    
    
    $
    31,285
    
    
    $
    62,530
    
    
    $
    62,414Pro forma income from
continuing operations
    
    
    69
    
    
    
    386
    
    
    
    27
    
    
    
    285Pro forma basic and
diluted income from
continuing
operations per share
    
    $
    
    
    
    $
    0.02
    
    
    $
    
    
    
    $
    0.01
 (4) Discontinued Operations
   Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2006
    
    2006Revenue
    
    $
    136
    
    
    $
    443Income from operations of disposed property
    
    
    116
    
    
    
    376Gain on sale of disposed property
    
    
    7,475
    
    
    
    7,475
 14




---



##### 



(5) Debt
  June 30,
    
    
    December 31,2007
    
    
    2006Mortgage debt, effective interest rates ranging from 5.13% to 8.53%
maturing at various dates through June 2021
    
    $
    394,284
    
    
    $
    391,393Exchangeable senior notes, net of discount, effective interest rate of
4.45%, matures December 2011
    
    
    122,516
    
    
    
    122,234Series A senior notes, effective interest rate of 6.41%, matures June 2013
    
    
    37,500
    
    
    
    37,500Series B senior notes, effective interest rate of 6.55%, matures June 2016
    
    
    37,500
    
    
    
    37,500Credit facility, with a variable interest rate of LIBOR + 1.20%, matures
April 2010
    
    
    64,000
    
    
    
    $
    655,800
    
    
    $
    588,627
 (a) Mortgage Debt
  EarliestContractual
    
    Effective
    
    Maturity
    
    Contractual Maturity
    
    June 30,
    
     December 31,Property
    
    Interest Rate
    
    Interest Rate
    
    Date
    
    Date
    
    2007
    
    2006Hanover Business Center Building
B1
    
    
    4.00
    %
    
    
    8.00
    %
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    1,941Herndon Corporate Center
    
    
    5.11
    %
    
    
    5.66
    %
    
    April 2008
    
    April 2008
    
    
    8,597
    
    
    
    8,654Norfolk Commerce Park II
    
    
    6.90
    %
    
    
    5.28
    %
    
    August 2008
    
    August 2008
    
    
    7,324
    
    
    
    7,453Suburban Maryland Portfolio2
    
    
    6.71
    %
    
    
    5.54
    %
    
    September 2008
    
    September 2028
    
    
    74,723
    
    
    
    75,841Glenn Dale Business Center
    
    
    7.83
    %
    
    
    5.13
    %
    
    May 2009
    
    May 2009
    
    
    8,663
    
    
    
    8,8254200 Tech Court
    
    
    8.07
    %
    
    
    8.07
    %
    
    October 2009
    
    October 2029
    
    
    1,764
    
    
    
    1,776Park Central I
    
    
    8.00
    %
    
    
    5.66
    %
    
    November 2009
    
    November 2009
    
    
    5,104
    
    
    
    5,2164212 Tech Court
    
    
    8.53
    %
    
    
    8.53
    %
    
    June 2010
    
    June 2010
    
    
    1,720
    
    
    
    1,730Park Central II
    
    
    8.32
    %
    
    
    5.66
    %
    
    November 2010
    
    November 2010
    
    
    6,337
    
    
    
    6,474Enterprise Center
    
    
    8.03
    %
    
    
    5.20
    %
    
    December 2010
    
    December 2030
    
    
    19,095
    
    
    
    19,410Indian Creek Court
    
    
    7.80
    %
    
    
    5.90
    %
    
    January 2011
    
    January 2031
    
    
    13,381
    
    
    
    13,559403 and 405 Glenn Drive
    
    
    7.60
    %
    
    
    5.50
    %
    
    July 2011
    
    July 2011
    
    
    8,915
    
    
    
    9,0374612 Navistar Drive
    
    
    7.48
    %
    
    
    5.20
    %
    
    July 2011
    
    July 2031
    
    
    13,777
    
    
    
    13,978Campus at Metro Park North
    
    
    7.11
    %
    
    
    5.25
    %
    
    February 2012
    
    February 2032
    
    
    25,253
    
    
    
    25,5941434 Crossways Bldg. Building II
    
    
    7.05
    %
    
    
    5.38
    %
    
    August 2012
    
    August 2012
    
    
    10,694
    
    
    
    10,854Crossways Commerce Center
    
    
    6.70
    %
    
    
    6.70
    %
    
    October 2012
    
    October 2012
    
    
    25,553
    
    
    
    25,727Newington Business Park Center
    
    
    6.70
    %
    
    
    6.70
    %
    
    October 2012
    
    October 2012
    
    
    16,119
    
    
    
    16,229Prosperity Business Center
    
    
    6.25
    %
    
    
    5.75
    %
    
    January 2013
    
    January 2013
    
    
    3,914
    
    
    
    3,966Aquia Commerce Center I
    
    
    7.28
    %
    
    
    7.28
    %
    
    February 2013
    
    February 2013
    
    
    779
    
    
    
    8311434 Crossways Bldg. Building I
    
    
    6.25
    %
    
    
    5.38
    %
    
    March 2013
    
    March 2013
    
    
    9,107
    
    
    
    9,225Linden Business Center
    
    
    6.01
    %
    
    
    5.58
    %
    
    October 2013
    
    October 2013
    
    
    7,580
    
    
    
    7,645Owings Mills Business Center
    
    
    5.85
    %
    
    
    5.75
    %
    
    March 2014
    
    March 2014
    
    
    5,785
    
    
    
    5,829Annapolis Commerce Park East
    
    
    5.74
    %
    
    
    6.25
    %
    
    June 2014
    
    June 2014
    
    
    8,873
    
    
    
    Plaza 500, Van Buren Business Park,
Rumsey Center, Snowden Center, Greenbrier
Technology Center II, Norfolk Business
Center and Alexandria Corporate Park
    
    
    5.19
    %
    
    
    5.19
    %
    
    August 2015
    
    August 2015
    
    
    100,000
    
    
    
    100,000Hanover Business Center:Building D
    
    
    8.88
    %
    
    
    6.63
    %
    
    August 2015
    
    August 2015
    
    
    1,009
    
    
    
    1,055Building C
    
    
    7.88
    %
    
    
    6.63
    %
    
    December 2017
    
    December 2017
    
    
    1,407
    
    
    
    1,452Chesterfield Business CenterBuildings C,D,G and H
    
    
    8.50
    %
    
    
    6.63
    %
    
    August 2015
    
    August 2015
    
    
    2,622
    
    
    
    2,740Buildings A,B,E and F
    
    
    7.45
    %
    
    
    6.63
    %
    
    June 2021
    
    June 2021
    
    
    2,893
    
    
    
    2,954Gateway Centre Building I
    
    
    7.35
    %
    
    
    5.88
    %
    
    November 2016
    
    November 2016
    
    
    1,718
    
    
    
    1,786Airpark Business Center
    
    
    7.45
    %
    
    
    6.63
    %
    
    June 2021
    
    June 2021
    
    
    1,578
    
    
    
    1,612Total Mortgage Debt
    
    
    
    
    
    
    5.60
    %  3
    
    
    
    
    
    
    
    
    
    $
    394,284
    
    
    $
    391,393
 
 1
    
    During the second quarter, the Company prepaid the outstanding mortgage encumbering
Hanover Business Center  Building B for $1.9 million of available cash. The mortgage was due to
mature on June 15, 2016 and had a fixed interest rate of 4.0% at the time of prepayment, which was
scheduled to convert to a variable interest rate on the date of prepayment. Deferred financing
costs associated with the mortgage were inconsequential and no prepayment penalties were incurred
on the transaction.2
    
    The Suburban Maryland Portfolio consists of the following properties: Deer Park
Center, 6900 English Muffin Way, Gateway Center, Gateway West, 4451 Georgia Pacific, 20270
Goldenrod Lane, 15 Wormans Mill Court, Girard Business Center, Girard Place, Old Courthouse
Square, Patrick Center, 7561 Lindbergh Drive, West Park and Woodlands Business Center.3
    
    Weighted average interest on total mortgage debt. 15




---



##### 



(b) Credit Facility
   (6) Segment Information
    Three Months Ended June 30, 2007Maryland
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedNumber of properties
    
    
    26
    
    
    
    19
    
    
    
    26
    
    
    
    71Number of buildings
    
    
    63
    
    
    
    48
    
    
    
    53
    
    
    
    164Square feet
    
    
    3,288,182
    
    
    
    2,978,996
    
    
    
    5,100,823
    
    
    
    11,368,001Total revenues
    
    $
    9,843
    
    
    $
    10,307
    
    
    $
    10,539
    
    
    $
    30,689Property operating expense
    
    
    (1,758
    )
    
    
    (2,042
    )
    
    
    (2,368
    )
    
    
    (6,168
    )Real estate taxes and insurance
    
    
    (886
    )
    
    
    (951
    )
    
    
    (992
    )
    
    
    (2,829
    )Total property operating income
    
    $
    7,199
    
    
    $
    7,314
    
    
    $
    7,179
    
    
    
    21,692Depreciation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,392
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,835
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,621
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    16Total assets
    
    $
    385,754
    
    
    $
    321,026
    
    
    $
    302,382
    
    
    $
    1,046,426
 16




---



##### 



Three Months Ended June 30, 2006Maryland
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedNumber of properties
    
    
    20
    
    
    
    19
    
    
    
    20
    
    
    
    59Number of buildings
    
    
    46
    
    
    
    48
    
    
    
    43
    
    
    
    137Square feet
    
    
    2,359,135
    
    
    
    3,017,571
    
    
    
    4,140,709
    
    
    
    9,517,415Total revenues
    
    $
    7,927
    
    
    $
    9,900
    
    
    $
    7,397
    
    
    $
    25,224Property operating expense
    
    
    (1,157
    )
    
    
    (1,730
    )
    
    
    (1,526
    )
    
    
    (4,413
    )Real estate taxes and insurance
    
    
    (651
    )
    
    
    (813
    )
    
    
    (685
    )
    
    
    (2,149
    )Total property operating income
    
    $
    6,119
    
    
    $
    7,357
    
    
    $
    5,186
    
    
    
    18,662Depreciation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,957
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,253
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,530
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (642
    )Income from discontinued
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,221Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,501Total assets
    
    $
    268,118
    
    
    $
    304,490
    
    
    $
    207,835
    
    
    $
    839,743Six Months Ended June 30, 2007Maryland
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedTotal revenues
    
    $
    19,687
    
    
    $
    20,421
    
    
    $
    20,557
    
    
    $
    60,665Property operating expense
    
    
    (3,908
    )
    
    
    (4,334
    )
    
    
    (4,483
    )
    
    
    (12,725
    )Real estate taxes and insurance
    
    
    (1,748
    )
    
    
    (1,774
    )
    
    
    (1,942
    )
    
    
    (5,464
    )Total property operating income
    
    $
    14,031
    
    
    $
    14,313
    
    
    $
    14,132
    
    
    
    42,476Depreciation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,341
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,124
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,587
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    371Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (205
    )
 17




---



##### 



Six Months Ended June 30, 2006Maryland
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedTotal revenues
    
    $
    15,691
    
    
    $
    19,530
    
    
    $
    14,377
    
    
    $
    49,598Property operating expense
    
    
    (2,689
    )
    
    
    (3,598
    )
    
    
    (2,828
    )
    
    
    (9,115
    )Real estate taxes and insurance
    
    
    (1,320
    )
    
    
    (1,650
    )
    
    
    (1,351
    )
    
    
    (4,321
    )Total property operating income
    
    $
    11,682
    
    
    $
    14,282
    
    
    $
    10,198
    
    
    
    36,162Depreciation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,820
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,843
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,064
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (291
    )Income from discontinued
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,465Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,609
 (7) Supplemental Disclosure of Cash Flow Information
  2007
    
    
    2006Cash paid for interest
    
    $
    17,848
    
    
    $
    13,763Non-cash investing and financing activities:Issuance of common shares to trustees
    
    
    
    
    
    
    137Debt assumed in connection with acquisitions
of real estate
    
    
    8,883
    
    
    
    13,400Conversion of Operating Partnership units
into common shares
    
    
    219
    
    
    
    5,265Issuance of Operating Partnership units in
exchange for limited partnership interests
    
    
    1,701
    
    
    
    
     (8) Subsequent Events
  18




---



##### 



The following discussion and analysis of the Companys financial condition and results of
operations should be read in conjunction with the financial statements and notes thereto appearing
elsewhere in this Form 10-Q . The discussion and analysis is derived from the consolidated
operating results and activities of First Potomac Realty Trust.
   Executive Summary
   Significant Second Quarter Transactions
 Acquisition Activity
  
    
    Rivers Bend Center II, a two-building, 302,400 square-foot business park/office
property and 102 acres of vacant development land parcels in Chester, Virginia, for
$17.7 million in cash.
    
    Annapolis Commerce Park East, a two-building, 101,302 square-foot business
park/office property in Annapolis, Maryland, for $19.2 million. The acquisition was
financed, in part, through the assumption of a $9.1 million mortgage loan, fair
valued at $8.9 million, with a contractual fixed interest rate of 5.7%. The balance
of the purchase price was funded by the issuance of 72,159 Operating Partnership
units valued at $24.45 per unit and approximately $8.3 million in cash.
 19




---



##### 



Development and Redevelopment Activity
    
    
    Crossways Commerce Center I  a 45,000 square foot two-story building addition is
under construction. The development costs incurred to date include architectural design,
building engineering site work, steel, masonry, mechanical, fire protection, electrical
plumbing and concrete operations;
    
    Snowden Center  a 4,500 square foot new retail building is planned. Development
costs incurred include architectural design, site and building engineering and permit
processing;
    
    Sterling Park Business Center  The Company began development efforts on approximately
25% of the total developable land at the property. Site planning for two 60,000
square-foot business park buildings is underway, although only one building is currently
designed. Development costs incurred to date include overall master and site planning,
geotechnical and wetland studies, and architectural, mechanical, structural and
engineering design for one building and permit processing. Additional development costs
are being incurred on several access roads required for the overall project acceptance
and completion;
    
    1400 Cavalier Boulevard  a 96,000 square foot warehouse building is under
construction. The development costs incurred to date include site engineering, building
design, site work, concrete, steel and masonry development; and
    
    Ammendale Commerce Center  redevelopment of a 75,000 square foot business park
building. Development costs incurred through June 30, 2007 include architectural master
planning.
  Other Activity
 
    
    On April 16, 2007, the Company filed a shelf registration statement with the
Securities and Exchange Commission that permits the Company to offer
and sell common shares, preferred shares and debt securities from time to time on a continuous basis
under Rule 415 of the Securities Act of 1933;
    
    On April 4, 2007, the Company entered into a first amendment to its unsecured
revolving credit facility, which extended the facilitys maturity
by one year to April 26, 2010, with the ability to further extend the facility to April
26, 2011. Also, the first amendment lowered the Companys permitted maximum total
indebtedness from 65% to 60% (the Company has a one-time right to increase its maximum
total indebtedness to 65% for three consecutive quarters); and lowered the interest rate
spread from 120 to 160 basis points over LIBOR to 80 to 135 basis points over LIBOR;
    
    The Company executed new leases for 210,083 square feet, which include 25,220 square
feet at 1400 Cavalier Boulevard, 25,148 square feet at Girard Business Center and 25,000
square feet at Alexandria Corporate Park. Rent will commence under the terms of these
new leases over the next two quarters;
    
    The Company renewed leases for 432,274 square feet, to existing tenants, which include
169,573 square feet at 1400 Cavalier Boulevard, 54,530 square feet at Enterprise Center
and 40,820 square feet at Norfolk Business Center; and
    
    On August 7, 2007, the Company entered into a $50.0 million Senior Secured Term Loan
Facility with Key Bank, N.A. The facility, which matures in August 2010,
has a one-year extension option and can be expanded to
$100 million. Borrowings on the facility bear interest at
70 to 125 basis points over LIBOR, depending on the Companys
overall leverage. Proceeds from the loan were used to partially pay down the Companys unsecured
revolving credit facility and for general corporate purposes.
 20




---



##### 



Critical Accounting Policies and Estimates
   Revenue Recognition
   Investments in Real Estate and Real Estate Entities
   Buildings 
Building improvements
    
    39 years
5 to 15 yearsFurniture, fixtures and equipment
    
    5 to 15 yearsTenant improvements 
Lease related intangible assets
    
    Shorter of the useful lives of
the assets or the terms of the
related leases
Term of related lease
  21




---



##### 



Purchase Accounting
  §
    
    value of leases based on the leasing origination costs at the date of the acquisition,
which approximates the market value of the lease origination costs had the in-place leases
been originated on the date of acquisition; the value of in-place leases represents
absorption costs for the estimated lease-up period in which vacancy and foregone revenue
are incurred and leasing commissions;§
    
    the value of above and below market in-place leases based on the present values (using a
discount rate that reflects the risks associated with the leases acquired) of the
difference between the contractual rent amounts and market rents over the remaining
non-cancelable lease terms, ranging from one to twenty years; and§
    
    the intangible value of tenant or customer relationships.
  Stock Compensation
 Share-Based Payment
 Results of Operations
 Comparison of the Three and Six Months Ended June 30, 2007 to the Three and Six Months Ended
June 30, 2006
  22




---



##### 



2007 Acquisitions
  2006 Acquisitions
   Total Revenues
  Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Increase
    
    
    Change
    
    
    Increase
    
    
    ChangeRental
    
    $
    25,794
    
    
    $
    21,093
    
    
    $
    50,714
    
    
    $
    41,412
    
    
    $
    4,701
    
    
    
    22
    %
    
    $
    9,302
    
    
    
    22
    %Tenant reimbursements & other
    
    $
    4,895
    
    
    $
    4,131
    
    
    $
    9,951
    
    
    $
    8,186
    
    
    $
    764
    
    
    
    18
    %
    
    $
    1,765
    
    
    
    22
    %
 Rental Revenue
   Tenant Reimbursements and Other Revenues
   23




---



##### 



Total Expenses
 Property Operating Expenses
  Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Increase
    
    
    Change
    
    
    Increase
    
    
    ChangeProperty operating
    
    $
    6,168
    
    
    $
    4,413
    
    
    $
    12,725
    
    
    $
    9,115
    
    
    $
    1,755
    
    
    
    40
    %
    
    $
    3,610
    
    
    
    40
    %Real estate taxes & insurance
    
    $
    2,829
    
    
    $
    2,149
    
    
    $
    5,464
    
    
    $
    4,321
    
    
    $
    680
    
    
    
    32
    %
    
    $
    1,143
    
    
    
    26
    %
   Other Operating Expenses
  Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Increase
    
    
    Change
    
    
    Increase
    
    
    ChangeGeneral and
administrative
    
    $
    2,621
    
    
    $
    2,530
    
    
    $
    5,587
    
    
    $
    5,064
    
    
    $
    91
    
    
    
    4
    %
    
    $
    523
    
    
    
    10
    %
  24




---



##### 



Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Increase
    
    
    Change
    
    
    Increase
    
    
    ChangeDepreciation and amortization
    
    $
    10,392
    
    
    $
    7,957
    
    
    $
    20,341
    
    
    $
    15,820
    
    
    $
    2,435
    
    
    
    31
    %
    
    $
    4,521
    
    
    
    29
    %
  Other Expense
  Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Increase
    
    
    Change
    
    
    Increase
    
    
    ChangeInterest expense
    
    $
    8,835
    
    
    $
    7,253
    
    
    $
    17,124
    
    
    $
    13,843
    
    
    $
    1,582
    
    
    
    22
    %
    
    $
    3,281
    
    
    
    24
    %
   Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Increase
    
    
    Change
    
    
    Decrease
    
    
    ChangeInterest and
other income
    
    $
    172
    
    
    $
    165
    
    
    $
    366
    
    
    $
    568
    
    
    $
    7
    
    
    
    4
    %
    
    $
    202
    
    
    
    36
    %
 25




---



##### 



Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Decrease
    
    
    Change
    
    
    Decrease
    
    
    ChangeLoss on
interest-rate lock
agreement
    
    $
    
    
    
    $
    671
    
    
    $
    
    
    
    $
    671
    
    
    $
    671
    
    
    
    100
    %
    
    $
    671
    
    
    
    100
    %
   Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Decrease
    
    
    Change
    
    
    Decrease
    
    
    ChangeLoss on early
retirement of debt
    
    $
    
    
    
    $
    121
    
    
    $
    
    
    
    $
    121
    
    
    $
    121
    
    
    
    100
    %
    
    $
    121
    
    
    
    100
    %
  Minority Interests
  Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Increase
    
    
    Change
    
    
    Increase
    
    
    ChangeMinority interests
    
    $
    
    
    
    $
    (15
    )
    
    $
    5
    
    
    $
    (67
    )
    
    $
    15
    
    
    
    100
    %
    
    $
    72
    
    
    
    107
    %
  26




---



##### 



Income from Discontinued Operations
  Three Months
    
    
    Six MonthsThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Decrease
    
    
    Change
    
    
    Decrease
    
    
    ChangeIncome from
discontinued
operations
    
    $
    
    
    
    $
    7,221
    
    
    $
    
    
    
    $
    7,465
    
    
    $
    7,221
    
    
    
    100
    %
    
    $
    7,465
    
    
    
    100
    %
  Liquidity and Capital Resources
     Cash Flows
  Six Months Ended June 30,(amounts in thousands)
    
    2007
    
    
    2006
    
    
    ChangeCash provided by operating activities
    
    $
    21,844
    
    
    $
    16,807
    
    
    $
    5,037Cash used in investing activities
    
    $
    (92,416
    )
    
    $
    (100,759
    )
    
    $
    8,343Cash provided by financing activities
    
    $
    34,668
    
    
    $
    84,948
    
    
    $
    (50,280
    )
 27




---



##### 



Same Property Net Operating Income
  Comparison of the Three and Six months Ended June 30, 2007 to June 30, 2006
  28




---



##### 



Total Same Property Portfolio
 Three Months Ended June 30,
    
    
    
    
    
    
    
    
    
    
    Six Months Ended June 30,(dollars in thousands)
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeNumber of properties (1)
    
    
    55
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    51
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    21,067
    
    
    $
    21,052
    
    
    $
    15
    
    
    
    
    
    
    $
    38,710
    
    
    $
    38,612
    
    
    $
    98
    
    
    
    0.3Tenant reimbursements
    
    
    3,962
    
    
    
    3,996
    
    
    
    (34
    )
    
    
    (0.9
    )
    
    
    7,647
    
    
    
    7,431
    
    
    
    216
    
    
    
    2.9Other
    
    
    92
    
    
    
    133
    
    
    
    (41
    )
    
    
    (30.8
    )
    
    
    102
    
    
    
    300
    
    
    
    (198
    )
    
    
    (66.0
    )Total same property revenue
    
    
    25,121
    
    
    
    25,181
    
    
    
    (60
    )
    
    
    (0.2
    )
    
    
    46,459
    
    
    
    46,343
    
    
    
    116
    
    
    
    (0.3
    )Same property operating expensesProperty
    
    
    4,809
    
    
    
    4,433
    
    
    
    376
    
    
    
    8.5
    
    
    
    9,644
    
    
    
    8,714
    
    
    
    930
    
    
    
    10.7Real estate taxes and insurance
    
    
    2,317
    
    
    
    2,140
    
    
    
    177
    
    
    
    8.3
    
    
    
    4,057
    
    
    
    4,000
    
    
    
    57
    
    
    
    1.4Total same property operating
expenses
    
    
    7,126
    
    
    
    6,573
    
    
    
    553
    
    
    
    8.4
    
    
    
    13,701
    
    
    
    12,714
    
    
    
    987
    
    
    
    7.8Same property net operating income
    
    $
    17,995
    
    
    $
    18,608
    
    
    $
    (613
    )
    
    
    (3.3
    )
    
    $
    32,758
    
    
    $
    33,629
    
    
    $
    (871
    )
    
    
    (2.6
    )Reconciliation to net income (loss)
Same property net operating income
    
    $
    17,995
    
    
    $
    18,608
    
    
    
    
    
    
    
    
    
    
    $
    32,758
    
    
    $
    33,629Non-comparable net operating income
    
    
    3,697
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    9,718
    
    
    
    2,533General and administrative expenses
    
    
    (2,621
    )
    
    
    (2,530
    )
    
    
    
    
    
    
    
    
    
    
    (5,587
    )
    
    
    (5,064
    )Depreciation and amortization
    
    
    (10,392
    )
    
    
    (7,957
    )
    
    
    
    
    
    
    
    
    
    
    (20,341
    )
    
    
    (15,820
    )Other expenses, net
    
    
    (8,663
    )
    
    
    (7,880
    )
    
    
    
    
    
    
    
    
    
    
    (16,758
    )
    
    
    (14,067
    )Minority interests
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    (67
    )Discontinued operations (2)
    
    
    
    
    
    
    7,221
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,465Net income (loss)
    
    $
    16
    
    
    $
    7,501
    
    
    
    
    
    
    
    
    
    
    $
    (205
    )
    
    $
    8,609
 Occupied at June 30,
    
    
    
    
    
    
    
    
    
    
    Occupied at June 30,2007
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2007
    
    
    2006Same Properties
    
    
    87.7
    %
    
    
    88.4
    %
    
    
    
    
    
    
    
    
    
    
    88.2
    %
    
    
    88.1
    %Non-comparable Properties(3)
    
    
    84.6
    %
    
    
    84.3
    %
    
    
    
    
    
    
    
    
    
    
    84.2
    %
    
    
    88.8
    %Total
    
    
    87.1
    %
    
    
    88.2
    %
    
    
    
    
    
    
    
    
    
    
    87.1
    %
    
    
    88.2
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Discontinued operations represent income from 6600 Business Parkway, which was sold in May 2006.(3)
    
    Non-comparable Properties include: 1408 Stephanie Way, Airpark Business Center, Chesterfield Business Center, Hanover Business Center, Gateway 270 West, Davis
Drive, Indian Creek Court, Gateway II, Owings Mills Commerce Center, Park Central, Greenbrier Circle Corporate Center, Greenbrier Technology Center I, Pine Glen,
Ammendale Commerce Center, Rivers Bend Center II and Annapolis Commerce Park East. In addition, non-comparable properties for the six months ended June 30, 2007 also
include: Rivers Bend Center, Northridge I & II, Crossways I, Sterling Park Business Center and John Marshall Highway (Building II).  29




---



##### 



MarylandThree Months Ended June 30,
    
    
    
    
    
    
    
    
    
    
    Six Months Ended June 30,(dollars in thousands)
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeNumber of properties (1)
    
    
    21
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    21
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    6,579
    
    
    $
    6,514
    
    
    $
    65
    
    
    
    1.0
    
    
    $
    13,179
    
    
    $
    12,994
    
    
    $
    185
    
    
    
    1.4Tenant reimbursements
    
    
    1,291
    
    
    
    1,326
    
    
    
    (35
    )
    
    
    (2.6
    )
    
    
    2,775
    
    
    
    2,580
    
    
    
    195
    
    
    
    7.6Other
    
    
    18
    
    
    
    87
    
    
    
    (69
    )
    
    
    (79.3
    )
    
    
    94
    
    
    
    117
    
    
    
    (23
    )
    
    
    (19.7
    )Total same property revenue
    
    
    7,888
    
    
    
    7,927
    
    
    
    (39
    )
    
    
    (0.5
    )
    
    
    16,048
    
    
    
    15,691
    
    
    
    357
    
    
    
    2.3Same property operating expensesProperty
    
    
    1,403
    
    
    
    1,170
    
    
    
    233
    
    
    
    19.9
    
    
    
    3,244
    
    
    
    2,722
    
    
    
    522
    
    
    
    19.2Real estate taxes and insurance
    
    
    671
    
    
    
    651
    
    
    
    20
    
    
    
    3.1
    
    
    
    1,347
    
    
    
    1,320
    
    
    
    27
    
    
    
    2.0Total same property operating
expenses
    
    
    2,074
    
    
    
    1,821
    
    
    
    253
    
    
    
    13.9
    
    
    
    4,591
    
    
    
    4,042
    
    
    
    549
    
    
    
    13.6Same property net operating income
    
    $
    5,814
    
    
    $
    6,106
    
    
    $
    (292
    )
    
    
    (4.8
    )
    
    $
    11,457
    
    
    $
    11,649
    
    
    $
    (192
    )
    
    
    (1.6
    )Reconciliation to total property operating income:Same property net operating income
    
    $
    5,814
    
    
    $
    6,106
    
    
    
    
    
    
    
    
    
    
    $
    11,457
    
    
    $
    11,649Non-comparable net operating income
    
    
    1,385
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    2,574
    
    
    
    33Total property operating income
    
    $
    7,199
    
    
    $
    6,119
    
    
    
    
    
    
    
    
    
    
    $
    14,031
    
    
    $
    11,682
 Occupied at June 30,
    
    
    
    
    
    
    
    
    
    
    Occupied at June 30,2007
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2007
    
    
    2006Same Properties
    
    
    92.1
    %
    
    
    92.3
    %
    
    
    
    
    
    
    
    
    
    
    92.1
    %
    
    
    92.3
    %Non-comparable Properties (2)
    
    
    75.4
    %
    
    
    
    %
    
    
    
    
    
    
    
    
    
    
    75.4
    %
    
    
    
    %Total
    
    
    88.4
    %
    
    
    92.3
    %
    
    
    
    
    
    
    
    
    
    
    88.4
    %
    
    
    92.3
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Non-comparable Properties include: Gateway 270 West, Indian Creek Court, Owings Mills Commerce Center, Ammendale Commerce Center and Annapolis Commerce Park East.  30




---



##### 



Northern Virginia
 Three Months Ended June 30,
    
    
    
    
    
    
    
    
    
    
    Six Months Ended June 30,(dollars in thousands)
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeNumber of properties (1)
    
    
    18
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    17
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    8,528
    
    
    $
    8,411
    
    
    $
    117
    
    
    
    1.4
    
    
    $
    16,321
    
    
    $
    16,222
    
    
    $
    99
    
    
    
    0.6Tenant reimbursements
    
    
    1,326
    
    
    
    1,470
    
    
    
    (144
    )
    
    
    (9.8
    )
    
    
    2,707
    
    
    
    2,754
    
    
    
    (47
    )
    
    
    (1.7
    )Other
    
    
    5
    
    
    
    18
    
    
    
    (13
    )
    
    
    (72.2
    )
    
    
    (42
    )
    
    
    134
    
    
    
    (176
    )
    
    
    (131.3
    )Total same property revenue
    
    
    9,859
    
    
    
    9,899
    
    
    
    (40
    )
    
    
    (0.4
    )
    
    
    18,986
    
    
    
    19,110
    
    
    
    (124
    )
    
    
    (0.6
    )Same property operating expensesProperty
    
    
    1,848
    
    
    
    1,741
    
    
    
    107
    
    
    
    6.1
    
    
    
    3,897
    
    
    
    3,564
    
    
    
    333
    
    
    
    9.3Real estate taxes and insurance
    
    
    929
    
    
    
    813
    
    
    
    116
    
    
    
    14.3
    
    
    
    1,576
    
    
    
    1,569
    
    
    
    7
    
    
    
    0.4Total same property operating
expenses
    
    
    2,777
    
    
    
    2,554
    
    
    
    223
    
    
    
    8.7
    
    
    
    5,473
    
    
    
    5,133
    
    
    
    340
    
    
    
    6.6Same property net operating income
    
    $
    7,082
    
    
    $
    7,345
    
    
    $
    (263
    )
    
    
    (3.6
    )
    
    $
    13,513
    
    
    $
    13,977
    
    
    $
    (464
    )
    
    
    (3.3
    )Reconciliation to total property operating income
Same property net operating income
    
    $
    7,082
    
    
    $
    7,345
    
    
    
    
    
    
    
    
    
    
    $
    13,513
    
    
    $
    13,977Non-comparable net operating income
    
    
    232
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    800
    
    
    
    305Total property operating income
    
    $
    7,314
    
    
    $
    7,357
    
    
    
    
    
    
    
    
    
    
    $
    14,313
    
    
    $
    14,282
 Occupied at June 30,
    
    
    
    
    
    
    
    
    
    
    Occupied at June 30,2007
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2007
    
    
    2006Same Properties
    
    
    90.6
    %
    
    
    90.9
    %
    
    
    
    
    
    
    
    
    
    
    90.4
    %
    
    
    91.4
    %Non-comparable Properties(2)
    
    
    85.0
    %
    
    
    96.9
    %
    
    
    
    
    
    
    
    
    
    
    92.0
    %
    
    
    90.5
    %Total
    
    
    90.5
    %
    
    
    91.3
    %
    
    
    
    
    
    
    
    
    
    
    90.5
    %
    
    
    91.3
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Non-comparable Properties include: Davis Drive and John Marshall Highway (Building II) for the three months ended June 30, 2007 and Sterling Park
Business Center, Davis Drive and John Marshall Highway (Building II) for the six months ended June 30, 2007.  31




---



##### 



Southern Virginia
 Three Months Ended June 30,
    
    
    
    
    
    
    
    
    
    
    Six Months Ended June 30,(dollars in thousands)
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeNumber of properties (1)
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    5,960
    
    
    $
    6,127
    
    
    $
    (167
    )
    
    
    (2.7
    )
    
    $
    9,210
    
    
    $
    9,396
    
    
    $
    (186
    )
    
    
    (2.0
    )Tenant reimbursements
    
    
    1,345
    
    
    
    1,200
    
    
    
    145
    
    
    
    12.1
    
    
    
    2,165
    
    
    
    2,097
    
    
    
    68
    
    
    
    3.2Other
    
    
    69
    
    
    
    28
    
    
    
    41
    
    
    
    146.4
    
    
    
    50
    
    
    
    49
    
    
    
    1
    
    
    
    2.0Total same property revenue
    
    
    7,374
    
    
    
    7,355
    
    
    
    19
    
    
    
    0.3
    
    
    
    11,425
    
    
    
    11,542
    
    
    
    (117
    )
    
    
    (1.0
    )Same property operating expensesProperty
    
    
    1,558
    
    
    
    1,522
    
    
    
    36
    
    
    
    2.4
    
    
    
    2,503
    
    
    
    2,428
    
    
    
    75
    
    
    
    3.1Real estate taxes and insurance
    
    
    717
    
    
    
    676
    
    
    
    41
    
    
    
    6.1
    
    
    
    1,134
    
    
    
    1,111
    
    
    
    23
    
    
    
    2.1Total same property operating
expenses
    
    
    2,275
    
    
    
    2,198
    
    
    
    77
    
    
    
    3.5
    
    
    
    3,637
    
    
    
    3,539
    
    
    
    98
    
    
    
    2.8Same property net operating income
    
    $
    5,099
    
    
    $
    5,157
    
    
    $
    (58
    )
    
    
    (1.1
    )
    
    $
    7,788
    
    
    $
    8,003
    
    
    $
    (215
    )
    
    
    (2.7
    )Reconciliation to total property operating income
Same property net operating income
    
    $
    5,099
    
    
    $
    5,157
    
    
    
    
    
    
    
    
    
    
    $
    7,788
    
    
    $
    8,003Non-comparable net operating income
    
    
    2,080
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    6,344
    
    
    
    2,195Total property operating income
    
    $
    7,179
    
    
    $
    5,186
    
    
    
    
    
    
    
    
    
    
    $
    14,132
    
    
    $
    10,198
 Occupied at June 30,
    
    
    
    
    
    
    
    
    
    
    Occupied at June 30,2007
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2007
    
    
    2006Same Properties
    
    
    82.3
    %
    
    
    83.7
    %
    
    
    
    
    
    
    
    
    
    
    82.6
    %
    
    
    81.2
    %Non-comparable Properties(2)
    
    
    89.8
    %
    
    
    86.4
    %
    
    
    
    
    
    
    
    
    
    
    86.8
    %
    
    
    90.5
    %Total
    
    
    84.4
    %
    
    
    84.0
    %
    
    
    
    
    
    
    
    
    
    
    84.4
    %
    
    
    84.0
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Non-comparable Properties include: Rivers Bend Center, Northridge I & II, Crossways I, 1408 Stephanie Way, Airpark Business Center, Chesterfield Business
Center, Hanover Business Center, Gateway II, Park Central, Greenbrier Circle Corporate Center, Greenbrier Technology Center I, Pine Glen and Rivers Bend Center II.
In addition, non-comparable properties for the six months ended June 30, 2007 also include: Rivers Bend Center, Northridge I & II and Crossways I.  32




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##### 



Contractual Obligations
  Dividends and Distributions
   Funds From Operations
    33




---



##### 



Three Months Ended June 30,
    
    
    Six Months Ended June 30,(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    16
    
    
    $
    7,501
    
    
    $
    (205
    )
    
    $
    8,609Add: Depreciation and
amortization of real
estate assets
    
    
    10,392
    
    
    
    7,957
    
    
    
    20,341
    
    
    
    15,820Add: Discontinued
operations depreciation
and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Add: Minority interests
    
    
    
    
    
    
    385
    
    
    
    (5
    )
    
    
    452Less: Gain on sale of
disposed property
    
    
    
    
    
    
    (7,475
    )
    
    
    
    
    
    
    (7,475
    )FFO available to common
shareholders and
unitholders
    
    $
    10,408
    
    
    $
    8,368
    
    
    $
    20,131
    
    
    $
    17,409Weighted average number
of diluted common shares
and Operating
Partnership units
outstanding
    
    
    25,004
    
    
    
    21,660
    
    
    
    25,049
    
    
    
    21,671
 Forward Looking Statements
  34




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##### 



35




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##### 



PART II: OTHER INFORMATION
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of Security Holders
  Item 5. Other Information
  Item 6. Exhibits
 No.
    
    Description3.1
    
    Amended and Restated Declaration of Trust of the Registrant (incorporated by reference to Exhibit
3.1 to the Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed
with the SEC on October 1, 2003.3.2
    
    Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the
Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the
SEC on October 1, 2003.4.1
    
    Amended and Restated Agreement of Limited Partnership of First Potomac Realty Investment, L.P. dated
September 15, 2003 (incorporated by reference to Exhibit 3.3 to the Registrants Registration
Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003.4.2
    
    Form of First Potomac Realty Investment Limited Partnership 6.41% Senior Notes, Series A, due 2013
(incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K as filed
with the SEC on June 23, 2006).4.3
    
    Form of First Potomac Realty Investment Limited Partnership 6.55% Senior Notes, Series B, due 2016
(incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K as filed
with the SEC on June 23, 2006).4.4
    
    Note Purchase Agreement by and among the Registrant, First Potomac Realty Investment Limited
Partnership and the several Purchasers listed on the signature pages thereto, dated as of June 22,
2006 (incorporated by reference to Exhibit 4.3 to the Registrants Current Report on Form 8-K filed
on June 23, 2006).4.5
    
    Trust Guaranty, entered into by the Registrant, dated as of June 22, 2006 (incorporated by reference
to Exhibit 4.4 to the Registrants Current Report on Form 8-K filed on June 23, 2006).4.6
    
    Subsidiary Guaranty, dated as of June 22, 2006 (incorporated by reference to Exhibit 4.5 to the
Registrants Current Report on Form 8-K filed on June 23, 2006).4.7
    
    Indenture, dated as of December 11, 2006, by and among First Potomac Realty Investment Limited
Partnership, the Registrant, as Guarantor, and Wells Fargo Bank, National Association, as Trustee
(incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K filed on
December 12, 2006).4.8
    
    Form of First Potomac Realty Investment Limited Partnership
4.0% Exchangeable Senior Note due 2011 (incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K filed on December 12, 2006).
 36




---



##### 



No.
    
    Description10.1
    
    Amendment No. 1, dated April 4, 2007, to Amended and Restated Revolving Credit Agreement, dated as of
April 26, 2006 (incorporated by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed on April 10, 2007).10.2
    
    Form of Restricted Common Share Award Agreement for Trustees (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on May 30, 2007).10.3
    
    Amendment No. 2 to the Companys 2003 Equity Compensation Plan (incorporated by reference to Exhibit A to
the Companys definitive proxy statement on Schedule 14A filed on April 11, 2007).31.1
    
    Certification of Chief Executive
Officer pursuant to Rule
13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial
Officer pursuant to Rule
13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive
Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002 (This exhibit shall not
be deemed filed for purposes of
Section 18 of the Securities
Exchange Act of 1934, as amended, or
otherwise subject to the liability
of that section. Further, this
exhibit shall not be deemed to be
incorporated by reference into any
filing under the Securities Act of
1933, as amended, or the Securities
Exchange Act of 1934, as amended.)32.2
    
    Certification of Chief Financial
Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002 (This exhibit shall not
be deemed filed for purposes of
Section 18 of the Securities
Exchange Act of 1934, as amended, or
otherwise subject to the liability
of that section. Further, this
exhibit shall not be deemed to be
incorporated by reference into any
filing under the Securities Act of
1933, as amended, or the Securities
Exchange Act of 1934, as amended.)
 37




---



##### 



FIRST POTOMAC REALTY TRUSTDate: August 9, 2007
    /s/ Douglas J. DonatelliDouglas J. DonatelliChairman of the Board and Chief Executive Officer Date: August 9, 2007
    /s/ Barry H. BassBarry H. BassExecutive Vice President and Chief Financial Officer 38




---



##### 



EXHIBIT INDEX
 No.
    
    Description3.1
    
    Amended and Restated Declaration of Trust of the Registrant (incorporated by reference to Exhibit
3.1 to the Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed
with the SEC on October 1, 2003.3.2
    
    Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the
Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the
SEC on October 1, 2003.4.1
    
    Amended and Restated Agreement of Limited Partnership of First Potomac Realty Investment, L.P. dated
September 15, 2003 (incorporated by reference to Exhibit 3.3 to the Registrants Registration
Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003.4.2
    
    Form of First Potomac Realty Investment Limited Partnership 6.41% Senior Notes, Series A, due 2013
(incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K as filed
with the SEC on June 23, 2006).4.3
    
    Form of First Potomac Realty Investment Limited Partnership 6.55% Senior Notes, Series B, due 2016
(incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K as filed
with the SEC on June 23, 2006).4.4
    
    Note Purchase Agreement by and among the Registrant, First Potomac Realty Investment Limited
Partnership and the several Purchasers listed on the signature pages thereto, dated as of June 22,
2006 (incorporated by reference to Exhibit 4.3 to the Registrants Current Report on Form 8-K filed
on June 23, 2006).4.5
    
    Trust Guaranty, entered into by the Registrant, dated as of June 22, 2006 (incorporated by reference
to Exhibit 4.4 to the Registrants Current Report on Form 8-K filed on June 23, 2006).4.6
    
    Subsidiary Guaranty, dated as of June 22, 2006 (incorporated by reference to Exhibit 4.5 to the
Registrants Current Report on Form 8-K filed on June 23, 2006).4.7
    
    Indenture, dated as of December 11, 2006, by and among First Potomac Realty Investment Limited
Partnership, the Registrant, as Guarantor, and Wells Fargo Bank, National Association, as Trustee
(incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K filed on
December 12, 2006).4.8
    
    Form of First Potomac Realty
Investment Limited Partnership
4.0% Exchangeable Senior Note due
2011 (incorporated by reference
to Exhibit 4.2 to the
Registrants Current Report on
Form 8-K filed on December 12,
2006).10.1
    
    Amendment No. 1, dated April 4, 2007, to Amended and Restated Revolving Credit Agreement, dated as of
April 26, 2006 (incorporated by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed on April 10, 2007).10.2
    
    Form of Restricted Common Share Award Agreement for Trustees (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on May 30, 2007).10.3
    
    Amendment No. 2 to the Companys 2003 Equity Compensation Plan (incorporated by reference to Exhibit A to
the Companys definitive proxy statement on Schedule 14A filed on April 11, 2007).31.1
    
    Certification of Chief Executive
Officer pursuant to Rule
13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial
Officer pursuant to Rule
13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive
Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002 (This exhibit shall not
be deemed filed for purposes of
Section 18 of the Securities
Exchange Act of 1934, as amended, or
otherwise subject to the liability
of that section. Further, this
exhibit shall not be deemed to be
incorporated by reference into any
filing under the Securities Act of
1933, as amended, or the Securities
Exchange Act of 1934, as amended.)32.2
    
    Certification of Chief Financial
Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002 (This exhibit shall not
be deemed filed for purposes of
Section 18 of the Securities
Exchange Act of 1934, as amended, or
otherwise subject to the liability
of that section. Further, this
exhibit shall not be deemed to be
incorporated by reference into any
filing under the Securities Act of
1933, as amended, or the Securities
Exchange Act of 1934, as amended.)