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, 2009.
 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
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 o þ




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##### 



FIRST POTOMAC REALTY TRUST
FORM 10-Q
 INDEX
 PagePart I: Financial InformationItem 1. Financial StatementsConsolidated balance sheets as of June 30, 2009 (unaudited) and December 31,
2008 (as adjusted  
see footnote 2 (q))
    
    
    3Consolidated statements of operations (unaudited) for the three and six months
ended June 30, 2009 and 2008 
(as adjusted  see footnote 2 (q))
    
    
    4Consolidated statements of cash flows (unaudited) for the six months ended June
30, 2009 and 2008 
(as adjusted  see footnote 2 (q))
    
    
    5Notes to consolidated financial statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    40Item 4. Controls and Procedures
    
    
    41Part II: Other InformationItem 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    42Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    42Item 3. Defaults Upon Senior Securities
    
    
    42Item 4. Submission of Matters to a Vote of Security Holders
    
    
    42Item 5. Other Information
    
    
    43Item 6. Exhibits
    
    
    43Signatures
    
    
    45
  2




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##### 



FIRST POTOMAC REALTY TRUST
 
 
 June 30, 2009
    
    
    December 31, 2008(unaudited)
    
    
    (as adjusted  seefootnote 2 (q))Assets:Rental property, net
    
    $
    965,811
    
    
    $
    994,913Cash and cash equivalents
    
    
    5,879
    
    
    
    16,352Escrows and reserves
    
    
    9,451
    
    
    
    8,808Accounts and other receivables, net of
allowance for doubtful accounts of $1,841
and $935, respectively
    
    
    8,414
    
    
    
    6,872Accrued straight-line rents, net of
allowance for doubtful accounts of $973
and $575, respectively
    
    
    9,574
    
    
    
    8,727Investment in affiliate
    
    
    1,963
    
    
    
    Deferred costs, net
    
    
    17,950
    
    
    
    17,165Prepaid expenses and other assets
    
    
    4,294
    
    
    
    6,365Intangible assets, net
    
    
    16,122
    
    
    
    21,047Total assets
    
    $
    1,039,458
    
    
    $
    1,080,249Liabilities:Mortgage loans
    
    $
    293,606
    
    
    $
    322,846Exchangeable senior notes, net
    
    
    56,374
    
    
    
    80,435Senior notes
    
    
    75,000
    
    
    
    75,000Secured term loans
    
    
    100,000
    
    
    
    100,000Unsecured revolving credit facility
    
    
    99,400
    
    
    
    75,500Financing obligation
    
    
    4,227
    
    
    
    11,491Accounts payable and other liabilities
    
    
    15,310
    
    
    
    18,022Accrued interest
    
    
    2,125
    
    
    
    2,491Rents received in advance
    
    
    6,109
    
    
    
    4,812Tenant security deposits
    
    
    5,086
    
    
    
    5,243Deferred market rent, net
    
    
    6,775
    
    
    
    8,489Total liabilities
    
    
    664,012
    
    
    
    704,329Noncontrolling interests in the Operating
Partnership (redemption value of $7,534 and
$7,186, respectively)
    
    
    10,435
    
    
    
    10,627Shareholders equity:Common shares, $0.001 par value, 100,000 common
shares authorized: 28,299 and 27,353 shares
issued and outstanding, respectively
    
    
    28
    
    
    
    27Additional paid-in capital
    
    
    491,442
    
    
    
    484,825Accumulated other comprehensive loss
    
    
    (2,537
    )
    
    
    (3,823
    )Dividends in excess of accumulated earnings
    
    
    (123,922
    )
    
    
    (115,736
    )Total shareholders equity
    
    
    365,011
    
    
    
    365,293Total liabilities, noncontrolling interests
and shareholders equity
    
    $
    1,039,458
    
    
    $
    1,080,249
  3




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##### 



FIRST POTOMAC REALTY TRUST
 
 
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Rental
    
    $
    26,709
    
    
    $
    25,160
    
    
    $
    53,736
    
    
    $
    49,826Tenant reimbursements and other
    
    
    5,810
    
    
    
    5,252
    
    
    
    12,409
    
    
    
    10,727Total revenues
    
    
    32,519
    
    
    
    30,412
    
    
    
    66,145
    
    
    
    60,553Operating expenses:Property operating
    
    
    8,052
    
    
    
    6,227
    
    
    
    16,369
    
    
    
    12,931Real estate taxes and insurance
    
    
    3,213
    
    
    
    3,032
    
    
    
    6,526
    
    
    
    5,949General and administrative
    
    
    2,922
    
    
    
    2,838
    
    
    
    5,879
    
    
    
    5,539Depreciation and amortization
    
    
    10,005
    
    
    
    9,022
    
    
    
    20,051
    
    
    
    18,261Total operating expenses
    
    
    24,192
    
    
    
    21,119
    
    
    
    48,825
    
    
    
    42,680Operating income
    
    
    8,327
    
    
    
    9,293
    
    
    
    17,320
    
    
    
    17,873Other expenses (income):Interest expense
    
    
    8,113
    
    
    
    9,117
    
    
    
    16,439
    
    
    
    18,667Interest and other income
    
    
    (118
    )
    
    
    (104
    )
    
    
    (257
    )
    
    
    (235
    )Equity in losses of affiliate
    
    
    47
    
    
    
    
    
    
    
    54
    
    
    
    Gain on early retirement of debt
    
    
    (1,367
    )
    
    
    (1,611
    )
    
    
    (5,706
    )
    
    
    (3,006
    )Total other expenses
    
    
    6,675
    
    
    
    7,402
    
    
    
    10,530
    
    
    
    15,426Income from continuing operations
    
    
    1,652
    
    
    
    1,891
    
    
    
    6,790
    
    
    
    2,447Discontinued operations:Income from operations of disposed property
    
    
    
    
    
    
    651
    
    
    
    
    
    
    
    1,335Gain on sale of disposed property
    
    
    
    
    
    
    14,274
    
    
    
    
    
    
    
    14,274Income from discontinued operations
    
    
    
    
    
    
    14,925
    
    
    
    
    
    
    
    15,609Net income
    
    
    1,652
    
    
    
    16,816
    
    
    
    6,790
    
    
    
    18,056Less: Net income attributable to
noncontrolling interests in the Operating
Partnership
    
    
    (45
    )
    
    
    (518
    )
    
    
    (186
    )
    
    
    (557
    )Net income attributable to common shareholders
    
    $
    1,607
    
    
    $
    16,298
    
    
    $
    6,604
    
    
    $
    17,499Net income attributable to common shareholders
per share  basic:Income from continuing operations
    
    $
    0.06
    
    
    $
    0.08
    
    
    $
    0.24
    
    
    $
    0.10Income from discontinued operations
    
    
    
    
    
    
    0.60
    
    
    
    
    
    
    
    0.63Net income
    
    $
    0.06
    
    
    $
    0.68
    
    
    $
    0.24
    
    
    $
    0.73Net income attributable to common shareholders
per share  diluted:Income from continuing operations
    
    $
    0.06
    
    
    $
    0.07
    
    
    $
    0.24
    
    
    $
    0.10Income from discontinued operations
    
    
    
    
    
    
    0.60
    
    
    
    
    
    
    
    0.62Net income
    
    $
    0.06
    
    
    $
    0.67
    
    
    $
    0.24
    
    
    $
    0.72Weighted average common shares outstanding 
basic
    
    
    27,157
    
    
    
    24,115
    
    
    
    27,079
    
    
    
    24,106Weighted
average common shares outstanding 
diluted
    
    
    27,230
    
    
    
    24,173
    
    
    
    27,132
    
    
    
    24,154
  4




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##### 



FIRST POTOMAC REALTY TRUST
 
 
 Six Months Ended June 30,2009
    
    
    2008(as adjusted  seefootnote 2 (q))Cash flows from operating activities:Net income
    
    $
    6,790
    
    
    $
    18,056Adjustments to reconcile net income to net cash provided by operating activities:Discontinued operations:Gain on sale of property
    
    
    
    
    
    
    (14,274
    )Depreciation and amortization
    
    
    
    
    
    
    478Depreciation and amortization
    
    
    20,482
    
    
    
    18,993Stock based compensation
    
    
    1,291
    
    
    
    919Bad debt expense (recovery)
    
    
    1,406
    
    
    
    (12
    )Amortization of deferred market rent
    
    
    (861
    )
    
    
    (903
    )Amortization of deferred financing costs and bond discount
    
    
    1,411
    
    
    
    1,635Amortization of rent abatement
    
    
    854
    
    
    
    1,233Equity in losses of affiliate
    
    
    54
    
    
    
    Change in financing obligation
    
    
    (250
    )
    
    
    Gain on early retirement of debt
    
    
    (5,706
    )
    
    
    (3,006
    )Changes in assets and liabilities:Escrows and reserves
    
    
    (1,891
    )
    
    
    (425
    )Accounts and other receivables
    
    
    (2,798
    )
    
    
    88Accrued straight-line rents
    
    
    (1,227
    )
    
    
    (1,086
    )Prepaid expenses and other assets
    
    
    1,582
    
    
    
    1,172Tenant security deposits
    
    
    (121
    )
    
    
    (194
    )Accounts payable and accrued expenses
    
    
    1,929
    
    
    
    892Accrued interest
    
    
    (281
    )
    
    
    (296
    )Rents received in advance
    
    
    1,385
    
    
    
    (945
    )Deferred costs
    
    
    (3,536
    )
    
    
    (4,102
    )Total adjustments
    
    
    13,723
    
    
    
    167Net cash provided by operating activities
    
    
    20,513
    
    
    
    18,223Cash flows from investing activities:Proceeds from sale of real estate assets
    
    
    
    
    
    
    50,573Additions to rental property
    
    
    (14,218
    )
    
    
    (9,819
    )Additions to construction in progress
    
    
    (742
    )
    
    
    (7,685
    )Net cash (used in) provided by investing activities
    
    
    (14,960
    )
    
    
    33,069Cash flows from financing activities:Financing costs
    
    
    (1
    )
    
    
    (328
    )Proceeds from debt
    
    
    25,500
    
    
    
    58,300Proceeds from the issuance of stock, net
    
    
    5,350
    
    
    
    Repayments of debt
    
    
    (31,667
    )
    
    
    (90,921
    )Dividends to shareholders
    
    
    (14,791
    )
    
    
    (16,570
    )Distributions to noncontrolling interests
    
    
    (417
    )
    
    
    (531
    )Redemption of partnership units
    
    
    
    
    
    
    (80
    )Stock option exercises
    
    
    
    
    
    
    38Net cash used in financing activities
    
    
    (16,026
    )
    
    
    (50,092
    )Net (decrease) increase in cash and cash equivalents
    
    
    (10,473
    )
    
    
    1,200Cash and cash equivalents, beginning of period
    
    
    16,352
    
    
    
    5,198Cash and cash equivalents, end of period
    
    $
    5,879
    
    
    $
    6,398
  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
    (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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##### 



(g) Purchase Accounting
  §
    
    the value of leases in-place on the date of acquisition 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 value (using a
discount rate that reflects the risks associated with the acquired leases) of the
difference between the contractual rent amounts to be paid under the lease and the
estimated fair market lease rates for the corresponding spaces over the remaining
non-cancelable terms of the related leases, which range from one to eighteen years; and§
    
    the intangible value of tenant or customer relationships.
  8




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##### 



(h) Investment in Affiliate
 .
  ( i) Sales of Real Estate
    (j) Intangible Assets
  9




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##### 



(k) Derivatives and Hedging
   (l) Income Taxes
  10




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##### 



(m) Noncontrolling Interests
   (n) Earnings Per Share
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator for basic and diluted earnings per
share calculations:Income from continuing operations
    
    $
    1,652
    
    
    $
    1,891
    
    
    $
    6,790
    
    
    $
    2,447Income from discontinued operations
    
    
    
    
    
    
    14,925
    
    
    
    
    
    
    
    15,609Net income
    
    
    1,652
    
    
    
    16,816
    
    
    
    6,790
    
    
    
    18,056Less: Net income attributable to
noncontrolling interests in the
Operating Partnership
    
    
    (45
    )
    
    
    (518
    )
    
    
    (186
    )
    
    
    (557
    )Net income attributable to common
shareholders
    
    
    1,607
    
    
    
    16,298
    
    
    
    6,604
    
    
    
    17,499Less: Allocation to participating securities
    
    
    (89
    )
    
    
    
    
    
    
    (209
    )
    
    
    Income available to common shareholders
    
    $
    1,518
    
    
    $
    16,298
    
    
    $
    6,395
    
    
    $
    17,499Denominator for basic and diluted earnings per
share calculations:Weighted average shares outstanding  basic
    
    
    27,157
    
    
    
    24,115
    
    
    
    27,079
    
    
    
    24,106Effect of dilutive shares:Employee stock options and non-vested shares
    
    
    73
    
    
    
    58
    
    
    
    53
    
    
    
    48Weighted average shares outstanding  diluted
    
    
    27,230
    
    
    
    24,173
    
    
    
    27,132
    
    
    
    24,154
 11




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##### 



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income attributable to common shareholders
per share  basic:Income from continuing operations
    
    $
    0.06
    
    
    $
    0.08
    
    
    $
    0.24
    
    
    $
    0.10Income from discontinued operations
    
    
    
    
    
    
    0.60
    
    
    
    
    
    
    
    0.63Net income
    
    $
    0.06
    
    
    $
    0.68
    
    
    $
    0.24
    
    
    $
    0.73Net income attributable to common shareholders
per share  diluted:Income from continuing operations
    
    $
    0.06
    
    
    $
    0.07
    
    
    $
    0.24
    
    
    $
    0.10Income from discontinued operations
    
    
    
    
    
    
    0.60
    
    
    
    
    
    
    
    0.62Net income
    
    $
    0.06
    
    
    $
    0.67
    
    
    $
    0.24
    
    
    $
    0.72Amounts available to common shareholders:Income from continuing operations
    
    $
    1,607
    
    
    $
    1,833
    
    
    $
    6,604
    
    
    $
    2,371Income from discontinued operations
    
    
    
    
    
    
    14,465
    
    
    
    
    
    
    
    15,128Net income
    
    $
    1,607
    
    
    $
    16,298
    
    
    $
    6,604
    
    
    $
    17,499
  Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008Stock option awards
    
    
    778
    
    
    
    680
    
    
    
    781
    
    
    
    693Non-vested share awards
    
    
    244
    
    
    
    85
    
    
    
    272
    
    
    
    961,022
    
    
    
    765
    
    
    
    1,053
    
    
    
    789
  (o) Share-Based Compensation
  Stock Options Summary
  Non-vested share awards
  12




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##### 



Risk-free interest rate
    
    
    3.3
    %Volatility
    
    
    43.5
    %
    WeightedNon-vested
    
    
    Average GrantShares
    
    
    Date Fair ValueNon-vested at December 31, 2008
    
    
    354,398
    
    
    $
    15.35Granted
    
    
    102,714
    
    
    
    6.45Vested
    
    
    (2,500
    )
    
    
    17.05Non-vested at March 31, 2009
    
    
    454,612
    
    
    
    13.33Granted
    
    
    335,262
    
    
    
    9.51Vested
    
    
    (23,560
    )
    
    
    21.34Non-vested at June 30, 2009
    
    
    766,314
    
    
    $
    11.41
  (p) Reclassifications
  (q) Application of New Accounting Standards
  13




---



##### 




    
    Contractual cash interest expense includes $0.6 million and $1.0 million for the
three months ended June 30, 2009 and 2008, respectively, and $1.4 million and $2.2
million for the six months ended June 30, 2009 and 2008, respectively. Non-cash
interest expense related to the amortization of discounts includes $0.3 million and
$0.4 million for the three months ended June 30, 2009 and 2008, respectively, and $0.7
million and $1.0 million for the six months ended June 30, 2009 and 2008, respectively;
    
    Additional paid in capital increased by the total discount recorded of $8.7 million,
with a shareholders equity increase of $3.4 million at December 31, 2008;
    
    The gain on the early retirement of debt previously reported was reduced by $1.0
million and $1.7 million for the three and six months ended June 30, 2008,
respectively;
    
    The unamortized discount was $2.0 million and $3.4 million at June 30, 2009 and
December 31, 2008, respectively; and
    
    The total impact of adoption of these new requirements was a reduction in net income
attributable to common shareholders of $0.5 million, or $0.02 per diluted share, and
$1.5 million, or $0.05 per diluted share, for the three and six months ended June 30,
2009, respectively, and $1.3 million, or $0.06 per diluted share, and $2.5 million, or
$0.10 per diluted share, for the three and six months ended June 30, 2008,
respectively.
 Fair Value of Financial
 Summary of Significant Account Policies
  .
 (3) Rental Property
  14




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##### 



June 30, 2009
    
    
    December 31, 2008Land
    
    $
    225,354
    
    
    $
    235,911Buildings and improvements
    
    
    771,500
    
    
    
    786,401Construction in process
    
    
    13,344
    
    
    
    12,687Tenant improvements
    
    
    71,613
    
    
    
    61,674Furniture, fixtures and equipment
    
    
    9,898
    
    
    
    9,8981,091,709
    
    
    
    1,106,571Less: accumulated depreciation
    
    
    (125,898
    )
    
    
    (111,658
    )$
    965,811
    
    
    $
    994,913
 (a) Development and Redevelopment Activity
   (b) Acquisitions
 Investment in Affiliate
 (4) Investment in Affiliate
  15




---



##### 



June 30, 2009Assets:Rental property, net
    
    $
    25,391Cash and cash equivalents
    
    
    686Other assets
    
    
    2,036Total assets
    
    $
    28,113Liabilities:Mortgage loan
    
    $
    18,147Other liabilities
    
    
    1,703Total liabilities
    
    
    19,850Total equity
    
    
    8,263Total liabilities and equity
    
    $
    28,113
  The period March 17,Three Months Ended
    
    
    2009 throughJune 30, 2009
    
    
    June 30, 2009Total revenues
    
    $
    615
    
    
    $
    723Total operating expenses
    
    
    (112
    )
    
    
    (141
    )Net operating income
    
    
    503
    
    
    
    582Depreciation and amortization
    
    
    (391
    )
    
    
    (449
    )Interest expense
    
    
    (301
    )
    
    
    (350
    )Net loss
    
    $
    (189
    )
    
    $
    (217
    )
 (5) Discontinued Operations
   Three Months Ended
    
    Six Months EndedJune 30, 2008
    
    June 30, 2008Revenue
    
    $
    1,028
    
    
    $
    2,473Income from operations of
disposed property
    
    
    651
    
    
    
    1,335Gain on sale of disposed property
    
    
    14,274
    
    
    
    14,274
 16




---



##### 



(6) Debt
  June 30,
    
    
    December 31,2009
    
    
    2008(as adjusted see footnote2 (q))Mortgage loans, effective interest rates ranging from 5.19% to 8.53%,
maturing at various dates through June 2021(1)
    
    $
    293,606
    
    
    $
    322,846Exchangeable senior notes, net of discounts, effective interest rate of
5.84%, maturing December 2011(2)
    
    
    56,374
    
    
    
    80,435Series A senior notes, effective interest rate of 6.41%, maturing June 2013
    
    
    37,500
    
    
    
    37,500Series B senior notes, effective interest rate of 6.55%, maturing June 2016
    
    
    37,500
    
    
    
    37,500Secured term loan, effective interest rate of 3.81%, maturing August
2011(3)(4)
    
    
    50,000
    
    
    
    50,000Secured term loan, effective interest rate of 5.83%, maturing August
2011(4)(5)
    
    
    35,000
    
    
    
    35,000Secured term loan, effective interest rate of LIBOR plus 2.50%, maturing
August 2011(4)(5)
    
    
    15,000
    
    
    
    15,000Unsecured revolving credit facility, effective interest rate of LIBOR plus
1.20%, maturing April 2011(4)(6)
    
    
    99,400
    
    
    
    75,500$
    624,380
    
    
    $
    653,781
 
 (1)
    
    Mortgage loans include a variable interest rate mortgage of $9.9 million
for RiversPark I, which has an interest rate of LIBOR plus 2.50%. In September 2008, the
Company entered into an interest rate swap agreement that fixed the underlying interest
rate on the loan at 5.97%.(2)
    
    The principal balance of the Exchangeable Senior Notes was $59.0 million and
$85.0 million at June 30, 2009 and December 31, 2008, respectively.(3)
    
    The term loan has a contractual interest rate of LIBOR plus 1.10%. In
January 2008, the Company entered into an interest rate swap agreement that fixed the
underlying interest rate on the loan at 2.71% plus a spread of 70 to 125 basis points.(4)
    
    The unsecured revolving credit facility and secured term loans mature
in April 2010 and August 2010, respectively, and provide for a one-year extension of the
maturity date at the Companys option, which the Company intends to exercise. The table
above assumes the exercise by the Company of the one-year extension, which is conditioned
upon the payment of an extension fee, the absence of an existing default under the loan
agreement and the continued accuracy of the representations and warranties contained in the
loan agreement.(5)
    
    In August 2008, the Company entered into a $35.0 million variable-rate secured
term loan and an interest rate swap agreement that fixed the underlying interest rate on
the loan. In December 2008, the Company borrowed an additional $15.0 million under an
amendment to the loan, which increased its total obligation to $50.0 million. The
transaction increased the contractual interest rate on the entire loan balance by 0.25% to
LIBOR plus 250 basis points. As of June 30, 2009, the initial term loan balance is fixed at
5.83%.(6)
    
    The unsecured revolving credit facility has a contractual interest rate of LIBOR
plus a spread of 80 to 135 basis points. 17




---



##### 



(a) Mortgage Loans
  Contractual
    
    Effective
    
    Maturity
    
    June 30,
    
    
    December 31,Property
    
    Interest Rate
    
    Interest Rate
    
    Date
    
    2009
    
    
    2008Glenn Dale Business Center(1)
    
    
    7.83
    %
    
    
    5.13
    %
    
    May2009
    
    $
    
    
    
    $
    8,1524200 Tech Court (2)
    
    
    8.07
    %
    
    
    8.07
    %
    
    October2009
    
    
    1,712
    
    
    
    1,726Park Central I
    
    
    8.00
    %
    
    
    5.66
    %
    
    November2009
    
    
    4,628
    
    
    
    4,7544212 Tech Court
    
    
    8.53
    %
    
    
    8.53
    %
    
    June2010
    
    
    1,677
    
    
    
    1,689Park Central II
    
    
    8.32
    %
    
    
    5.66
    %
    
    November2010
    
    
    5,748
    
    
    
    5,902Enterprise Center (2)
    
    
    8.03
    %
    
    
    5.20
    %
    
    December2010
    
    
    17,752
    
    
    
    18,102Indian Creek Court (2)
    
    
    7.80
    %
    
    
    5.90
    %
    
    January2011
    
    
    12,618
    
    
    
    12,818403/405 Glenn Drive
    
    
    7.60
    %
    
    
    5.50
    %
    
    July2011
    
    
    8,393
    
    
    
    8,5294612 Navistar Drive (2)
    
    
    7.48
    %
    
    
    5.20
    %
    
    July2011
    
    
    12,907
    
    
    
    13,130RiversPark I and II (3)
    
    LIBOR+2.50%
    
    
    5.97
    %
    
    September2011
    
    
    9,856
    
    
    
    28,000Campus at Metro Park (2)
    
    
    7.11
    %
    
    
    5.25
    %
    
    February2012
    
    
    23,775
    
    
    
    24,1541434 Crossways Blvd Building II
    
    
    7.05
    %
    
    
    5.38
    %
    
    August2012
    
    
    10,027
    
    
    
    10,202Crossways Commerce Center
    
    
    6.70
    %
    
    
    6.70
    %
    
    October2012
    
    
    24,809
    
    
    
    25,008Newington Business Park Center
    
    
    6.70
    %
    
    
    6.70
    %
    
    October2012
    
    
    15,649
    
    
    
    15,775Prosperity Business Center
    
    
    6.25
    %
    
    
    5.75
    %
    
    January2013
    
    
    3,694
    
    
    
    3,752Aquia Commerce Center I
    
    
    7.28
    %
    
    
    7.28
    %
    
    February2013
    
    
    549
    
    
    
    6101434 Crossways Blvd Building I
    
    
    6.25
    %
    
    
    5.38
    %
    
    March2013
    
    
    8,621
    
    
    
    8,749Linden Business Center
    
    
    6.01
    %
    
    
    5.58
    %
    
    October2013
    
    
    7,307
    
    
    
    7,379Owings Mills Business Center
    
    
    5.85
    %
    
    
    5.75
    %
    
    March2014
    
    
    5,601
    
    
    
    5,650Annapolis Commerce Park East
    
    
    5.74
    %
    
    
    6.25
    %
    
    June2014
    
    
    8,671
    
    
    
    8,728Plaza 500, Van Buren Business Park,
Rumsey Center, Snowden Center,
Greenbrier Technology Center II,
Norfolk Business Center, Northridge I &
II and 15395 John Marshall Highway
    
    
    5.19
    %
    
    
    5.19
    %
    
    August2015
    
    
    100,000
    
    
    
    100,000Hanover Business Center:Building D
    
    
    8.88
    %
    
    
    6.63
    %
    
    August2015
    
    
    809
    
    
    
    862Building C
    
    
    7.88
    %
    
    
    6.63
    %
    
    December2017
    
    
    1,208
    
    
    
    1,260Chesterfield Business Center:Buildings C,D,G and H
    
    
    8.50
    %
    
    
    6.63
    %
    
    August2015
    
    
    2,111
    
    
    
    2,245Buildings A,B,E and F
    
    
    7.45
    %
    
    
    6.63
    %
    
    June2021
    
    
    2,624
    
    
    
    2,695Gateway Centre Building I
    
    
    7.35
    %
    
    
    5.88
    %
    
    November2016
    
    
    1,429
    
    
    
    1,505Airpark Business Center
    
    
    7.45
    %
    
    
    6.63
    %
    
    June2021
    
    
    1,431
    
    
    
    1,470Total Mortgage Debt
    
    
    
    
    
    
    5.64
    %(4)
    
    
    
    
    
    $
    293,606
    
    
    $
    322,846
 
 (1)
    
    The loan was repaid in May 2009.(2)
    
    The maturity date on these loans represents the anticipated repayment date of the
loans, after which date the interest rates on the loans will increase to a predetermined
amount identified in the debt agreement. The Company calculates interest expense using the
effective interest method over the anticipated period during which it expects the debt to be
outstanding.(3)
    
    On March 17, 2009, the Company deconsolidated RiversPark II and, therefore, the
assets, liabilities and operating results of RiversPark II are no longer consolidated on the
Companys financial statements, which include $18.1 million of mortgage debt. For more
information, see footnote 4, Investment in Affiliate.(4)
    
    Weighted average interest rate on total mortgage debt.  (b) Exchangeable Senior Notes
  18




---



##### 



(c) Unsecured Revolving Credit Facility
  (7) Derivative Instruments and Comprehensive Income
  
    
    available interest rate hedging may not correspond directly with the interest rate risk
for which we seek protection;
    
    the duration of the hedge may not match the duration of the related liability;
    
    the party owing money in the hedging transaction may default on its obligation to pay;
and
    
    the credit quality of the party owing money on the hedge may be downgraded to such an
extent that it impairs our ability to sell or assign our side of the hedging transaction.
  Transaction Date
    
    Instrument
    
    
    Amount
    
    
    Contractual Interest Rate
    
    
    Effective Interest RateJanuary 2008
    
    Term Loan
    
    $
    50,000
    
    
    LIBOR plus variable spread(1)
    
    2.71% plus a variable spread(1)August 2008
    
    Term Loan
    
    
    35,000
    
    
    LIBOR plus 250 basis points
    
    5.83%September 2008
    
    Mortgage Loan(2)
    
    
    9,856
    
    
    LIBOR plus 250 basis points
    
    5.97%$
    94,856
 
 (1)
    
    At June 30, 2009, the contractual interest rate on the Companys $50 million term
loan was LIBOR plus 1.10% and the effective interest rate was 3.81%.(2)
    
    Excludes the $18.1 million mortgage loan for RiversPark II, which was deconsolidated
with the assets, liabilities and operating results of RiversPark II on March 17, 2009. The
swap agreement associated with the $18.1 million deconsolidated mortgage loan remains in
effect and under the same terms as the consolidated mortgage loan.  Three Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008Net income
    
    $
    1,652
    
    
    $
    16,816
    
    
    $
    6,790
    
    
    $
    18,056Unrealized gain on derivative instruments
    
    
    12
    
    
    
    978
    
    
    
    631
    
    
    
    682Total comprehensive income
    
    
    1,664
    
    
    
    17,794
    
    
    
    7,421
    
    
    
    18,738Comprehensive income attributable to
noncontrolling interests in the Operating
Partnership
    
    
    (45
    )
    
    
    (549
    )
    
    
    (203
    )
    
    
    (579
    )Comprehensive income attributable to
common
shareholders
    
    $
    1,619
    
    
    $
    17,245
    
    
    $
    7,218
    
    
    $
    18,159
 19




---



##### 



(8) Fair Value of Financial Instruments
        Balance atJune 30, 2009
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Liabilities:Derivative instrument-swap agreements
    
    $
    2,423
    
    
    $
    
    
    
    $
    2,423
    
    
    $
    
   June 30, 2009
    
    
    December 31, 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueMortgage debt
    
    $

293,606
    
    
    $

278,944
    
    
    $

322,846
    
    
    $

307,247Exchangeable senior notes(1)
    
    
    56,374
    
    
    
    48,354
    
    
    
    80,435
    
    
    
    60,350Series A senior notes
    
    
    37,500
    
    
    
    34,613
    
    
    
    37,500
    
    
    
    28,199Series B senior notes
    
    
    37,500
    
    
    
    32,500
    
    
    
    37,500
    
    
    
    24,239Secured term
loans
    
    
    100,000
    
    
    
    96,691
    
    
    
    100,000
    
    
    
    101,691Unsecured
revolving credit facility
    
    
    99,400
    
    
    
    96,042
    
    
    
    75,500
    
    
    
    76,739Total
    
    $

624,380
    
    
    $

587,144
    
    
    $

653,781
    
    
    $

598,465
 
 (1)
    
    During the second quarter of 2009, the Company repurchased $9.0 million
of its Exchangeable Senior Notes at a discount. 20




---



##### 



(9) Shareholders Equity
   RedeemableFirst Potomac
    
    
    noncontrollingRealty Trust
    
    
    interestsBalance, December 31, 2008
    
    $
    365,293
    
    
    $
    10,627Net income
    
    
    6,604
    
    
    
    186Changes in ownership
    
    
    7,291
    
    
    
    22Distributions to owners
    
    
    (14,791
    )
    
    
    (417
    )Other comprehensive income
    
    
    614
    
    
    
    17Balance, June 30, 2009
    
    $
    365,011
    
    
    $
    10,435
 (10) Segment Information
    Three Months Ended June 30, 2009Maryland(1)
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedNumber of buildings
    
    
    72
    
    
    
    47
    
    
    
    54
    
    
    
    173Square feet
    
    
    3,608,755
    
    
    
    2,818,676
    
    
    
    5,258,232
    
    
    
    11,685,663Total revenues
    
    $
    10,838
    
    
    $
    9,731
    
    
    $
    11,950
    
    
    $
    32,519Property operating expense
    
    
    (2,939
    )
    
    
    (2,122
    )
    
    
    (2,991
    )
    
    
    (8,052
    )Real estate taxes and insurance
    
    
    (1,070
    )
    
    
    (1,111
    )
    
    
    (1,032
    )
    
    
    (3,213
    )Total property operating income
    
    $
    6,829
    
    
    $
    6,498
    
    
    $
    7,927
    
    
    
    21,254Depreciation and amortization expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,005
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,922
    )Other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,675
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,652Total assets(2)
    
    $
    394,561
    
    
    $
    293,106
    
    
    $
    316,685
    
    
    $
    1,039,458Capital expenditures(3)
    
    $
    3,677
    
    
    $
    5,532
    
    
    $
    5,587
    
    
    $
    14,960
 21




---



##### 



Three Months Ended June 30, 2008Maryland
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedNumber of buildings
    
    
    63
    
    
    
    47
    
    
    
    53
    
    
    
    163Square feet
    
    
    3,362,270
    
    
    
    2,759,654
    
    
    
    5,241,891
    
    
    
    11,363,815Total revenues
    
    $
    10,374
    
    
    $
    9,111
    
    
    $
    10,927
    
    
    $
    30,412Property operating expense
    
    
    (1,884
    )
    
    
    (1,861
    )
    
    
    (2,482
    )
    
    
    (6,227
    )Real estate taxes and insurance
    
    
    (923
    )
    
    
    (1,074
    )
    
    
    (1,035
    )
    
    
    (3,032
    )Total property operating income
    
    $
    7,567
    
    
    $
    6,176
    
    
    $
    7,410
    
    
    
    21,153Depreciation and amortization expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,022
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,838
    )Other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,402
    )Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,925Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    16,816Total assets(2)
    
    $
    384,289
    
    
    $
    279,744
    
    
    $
    312,691
    
    
    $
    1,020,231Capital expenditures(3)
    
    $
    5,647
    
    
    $
    7,019
    
    
    $
    4,720
    
    
    $
    17,504
 Six Months Ended June 30, 2009Maryland(1)
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedTotal revenues
    
    $
    22,596
    
    
    $
    19,626
    
    
    $
    23,923
    
    
    $
    66,145Property operating expense
    
    
    (6,104
    )
    
    
    (4,540
    )
    
    
    (5,725
    )
    
    
    (16,369
    )Real estate taxes and insurance
    
    
    (2,177
    )
    
    
    (2,233
    )
    
    
    (2,116
    )
    
    
    (6,526
    )Total property operating income
    
    $
    14,315
    
    
    $
    12,853
    
    
    $
    16,082
    
    
    
    43,250Depreciation and amortization expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,051
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,879
    )Other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,530
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,790
 Six Months Ended June 30, 2008Maryland
    
    
    Northern Virginia
    
    
    Southern Virginia
    
    
    ConsolidatedTotal revenues
    
    $
    20,666
    
    
    $
    17,868
    
    
    $
    22,019
    
    
    $
    60,553Property operating expense
    
    
    (4,175
    )
    
    
    (3,790
    )
    
    
    (4,966
    )
    
    
    (12,931
    )Real estate taxes and insurance
    
    
    (1,886
    )
    
    
    (2,003
    )
    
    
    (2,060
    )
    
    
    (5,949
    )Total property operating income
    
    $
    14,605
    
    
    $
    12,075
    
    
    $
    14,993
    
    
    
    41,673Depreciation and amortization expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,261
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,539
    )Other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,426
    )Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,609Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    18,056
 
 (1)
    
    Includes the results of a three-building, 160,470 square foot property
that is owned by the Company through a consolidated joint venture.(2)
    
    Corporate assets not allocated to any of our reportable segments totaled $35,106 and
$43,507 at June 30, 2009 and 2008, respectively.(3)
    
    Capital expenditures for corporate assets not allocated to any of our reportable
segments totaled $164 and $118 for the six months ended June 30, 2009 and 2008, respectively. 22




---



##### 



(11) Supplemental Disclosure of Cash Flow Information
  2009
    
    2008Cash paid for interest, net
    
    $
    16,950
    
    
    $
    17,829Non-cash investing and financing activities:Conversion of Operating Partnership units
into common shares
    
    
    
    
    
    
    358
   Investment in Affiliate.
 23




---



##### 



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.
     
    
    maintain and increase occupancy rates and/or increase rental rates at its
properties;
    
    sell assets to third parties or contribute properties to joint ventures; and
    
    continue to grow its portfolio through acquisition of new properties, potentially
through joint ventures.
  Executive Summary
   24




---



##### 



Significant Second Quarter Transactions
 
    
    During May and June 2009, the Company issued 508,100 common shares through its
controlled equity offering agreement at a weighted average price of $10.86 per share. The
offerings generated net proceeds of $5.4 million, which were used to retire a portion of
the Companys Exchangeable Senior Notes and to pay down a portion of the outstanding
balance on the Companys unsecured revolving credit facility. In July 2009, the Company
issued an additional 344,300 common shares through its controlled equity offering
agreement for net proceeds of $3.3 million;
    
    The Company retired $9.0 million of its Exchangeable Senior Notes, at a 20% discount,
resulting in a gain of $1.4 million, or $0.05 per diluted share;
    
    The Company executed 108,000 square feet of new leases, including 45,000 square feet
at 1400 Cavalier Boulevard and 22,000 square feet at Greenbrier Business Center, which
are located in Southern Virginia. Rent is expected to commence for all new leases by the
end of the fourth quarter of 2009; and
    
    The Company executed 288,000 square feet of renewal leases, representing an 88%
retention rate. Renewal leases in the quarter include 65,000 square feet at Norfolk
Commerce Park, 21,000 square feet at Reston Business Campus and 20,000 square feet at
1400 Cavalier Boulevard.
 Development and Redevelopment Activity
   Development
 
    
    Greenbrier Technology Center III  a 48,000 square foot three-story office building has
been designed, all permits have been processed and construction is set to commence. Costs
to date include civil, architectural, mechanical, electrical and plumbing design, as well
as permit fees; and
    
    Sterling Park Business Center, Lot 7  a 57,000 square foot office building, adjacent to
a recently completed building, has been designed, all permits have been processed and
construction is pending further leasing activity. Costs to date include civil site
preparation work, architectural, mechanical, electrical and plumbing design as well as
permit fees.
 Redevelopment
 
    
    Enterprise Parkway  a 71,000 square foot multi-tenanted office redevelopment. Costs
incurred to date include building, lobby and common corridor renovations; design documents
and permit fees for major common area bathroom renovations as well as schematic
architectural and engineering design for future tenant layouts;
    
    Gateway 270  a 42,000 square foot business park redevelopment. The majority of the
costs incurred to date include architectural and engineering design work; and
    
    Interstate Plaza  a 57,000 square foot multi-tenanted office and warehouse
redevelopment. Costs incurred to date include architectural, engineering design and
permitting, demolition, metal framing, plumbing, mechanical and electrical rough-in work.
  25




---



##### 



Critical Accounting Policies and Estimates
   Revenue Recognition
   Investments in Real Estate and Real Estate Entities
   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 leasesLease related intangible assets
    
    Term of related lease
   26




---



##### 



Purchase Accounting
  §
    
    the value of leases in-place on the date of acquisition 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 value (using a
discount rate that reflects the risks associated with the acquired leases) of the
difference between the contractual rent amounts to be paid under the lease and the
estimated fair market lease rates for the corresponding spaces over the remaining
non-cancelable terms of the related leases, which range from one to eighteen years; and§
    
    the intangible value of tenant or customer relationships.
  Goodwill and Impairment Analysis
  Investment in Affiliate
 .
  27




---



##### 



Derivative Instruments
   Share-Based Compensation
  Results of Operations
 Comparison of the Three and Six Months Ended June 30, 2009 to the Three and Six Months Ended June 30, 2008
 2008 Acquisitions
   Total Revenues
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Increase
    
    Change
    
    Increase
    
    ChangeRental
    
    $
    26,709
    
    
    $
    25,160
    
    
    $
    53,736
    
    
    $
    49,826
    
    
    $
    1,549
    
    
    
    6
    %
    
    $
    3,910
    
    
    
    8
    %Tenant reimbursements & other
    
    $
    5,810
    
    
    $
    5,252
    
    
    $
    12,409
    
    
    $
    10,727
    
    
    $
    558
    
    
    
    11
    %
    
    $
    1,682
    
    
    
    16
    %
 28




---



##### 



Rental Revenue
   Tenant Reimbursements and Other Revenues
   Total Expenses
 Property Operating Expenses
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Increase
    
    Change
    
    Increase
    
    ChangeProperty operating
    
    $
    8,052
    
    
    $
    6,227
    
    
    $
    16,369
    
    
    $
    12,931
    
    
    $
    1,825
    
    
    
    29
    %
    
    $
    3,438
    
    
    
    27
    %Real estate taxes & insurance
    
    $
    3,213
    
    
    $
    3,032
    
    
    $
    6,526
    
    
    $
    5,949
    
    
    $
    181
    
    
    
    6
    %
    
    $
    577
    
    
    
    10
    %
  29




---



##### 



Other Operating Expenses
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Increase
    
    Change
    
    Increase
    
    ChangeGeneral and
administrative
    
    $
    2,922
    
    
    $
    2,838
    
    
    $
    5,879
    
    
    $
    5,539
    
    
    $
    84
    
    
    
    3
    %
    
    $
    340
    
    
    
    6
    %
   Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Increase
    
    Change
    
    Increase
    
    ChangeDepreciation and amortization
    
    $
    10,005
    
    
    $
    9,022
    
    
    $
    20,051
    
    
    $
    18,261
    
    
    $
    983
    
    
    
    11
    %
    
    $
    1,790
    
    
    
    10
    %
  Other Expenses (Income)
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Decrease
    
    Change
    
    Decrease
    
    ChangeInterest expense
    
    $
    8,113
    
    
    $
    9,117
    
    
    $
    16,439
    
    
    $
    18,667
    
    
    $
    1,004
    
    
    
    11
    %
    
    $
    2,228
    
    
    
    12
    %
 30




---



##### 



Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Increase
    
    Change
    
    Increase
    
    ChangeInterest and other
income
    
    $
    118
    
    
    $
    104
    
    
    $
    257
    
    
    $
    235
    
    
    $
    14
    
    
    
    13
    %
    
    $
    22
    
    
    
    9
    %
   Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Increase
    
    Change
    
    Increase
    
    ChangeEquity in losses of affiliate
    
    $
    47
    
    
    $
    
    
    
    $
    54
    
    
    $
    
    
    
    $
    47
    
    
    
    
    
    
    $
    54
    
    
    
    
 31




---



##### 



Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Decrease
    
    Change
    
    Increase
    
    ChangeGain on early
retirement of debt
    
    $
    1,367
    
    
    $
    1,611
    
    
    $
    5,706
    
    
    $
    3,006
    
    
    $
    244
    
    
    
    15
    %
    
    $
    2,700
    
    
    
    90
    %
   Noncontrolling Interests
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Decrease
    
    Change
    
    Decrease
    
    ChangeNoncontrolling
interests
    
    $
    45
    
    
    $
    518
    
    
    $
    186
    
    
    $
    557
    
    
    $
    473
    
    
    
    91
    %
    
    $
    371
    
    
    
    67
    %
  32




---



##### 



Income from Discontinued Operations
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2009
    
    2008
    
    2009
    
    2008
    
    Decrease
    
    Change
    
    Decrease
    
    ChangeIncome from
discontinued
operations
    
    $
    
    
    
    $
    14,925
    
    
    $
    
    
    
    $
    15,609
    
    
    $
    14,925
    
    
    
    100
    %
    
    $
    15,609
    
    
    
    100
    %
  Liquidity and Capital Resources
     33




---



##### 



Cash Flows
  Six Months EndedJune 30,(amounts in thousands)
    
    2009
    
    2008
    
    ChangeCash provided by operating activities
    
    $
    20,513
    
    
    $
    18,223
    
    
    $
    2,290Cash (used in) provided by investing activities
    
    
    (14,960
    )
    
    
    33,069
    
    
    
    (48,029
    )Cash used in financing activities
    
    
    (16,026
    )
    
    
    (50,092
    )
    
    
    34,066
    Same Property Net Operating Income
  34




---



##### 



Comparison of the Three and Six Months Ended June 30, 2009 to the Three and Six Months Ended June
30, 2008
  Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedJune 30,
    
    
    
    
    
    
    
    
    
    
    June 30,$
    
    
    %
    
    
    
    
    
    
    
    
    
    
    $
    
    
    %(dollars in thousands)
    
    2009
    
    
    2008
    
    
    Change
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    Change
    
    
    ChangeNumber of buildings (1)
    
    
    165
    
    
    
    165
    
    
    
    
    
    
    
    
    
    
    
    165
    
    
    
    165
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    26,001
    
    
    $
    25,160
    
    
    $
    841
    
    
    
    3.3
    
    
    $
    51,880
    
    
    $
    49,826
    
    
    $
    2,054
    
    
    
    4.1Tenant reimbursements
    
    
    5,635
    
    
    
    4,922
    
    
    
    713
    
    
    
    14.5
    
    
    
    11,684
    
    
    
    9,820
    
    
    
    1,864
    
    
    
    19.0Total same property revenue
    
    
    31,636
    
    
    
    30,082
    
    
    
    1,554
    
    
    
    5.2
    
    
    
    63,564
    
    
    
    59,646
    
    
    
    3,918
    
    
    
    6.6Same property operating expensesProperty
    
    
    7,477
    
    
    
    5,846
    
    
    
    1,631
    
    
    
    27.9
    
    
    
    15,030
    
    
    
    12,244
    
    
    
    2,786
    
    
    
    22.8Real estate taxes and insurance
    
    
    3,137
    
    
    
    3,029
    
    
    
    108
    
    
    
    3.6
    
    
    
    6,358
    
    
    
    5,942
    
    
    
    416
    
    
    
    7.0Total same property operating
expenses
    
    
    10,614
    
    
    
    8,875
    
    
    
    1,739
    
    
    
    19.6
    
    
    
    21,388
    
    
    
    18,186
    
    
    
    3,202
    
    
    
    17.6Same property net operating income
    
    $
    21,022
    
    
    $
    21,207
    
    
    $
    (185
    )
    
    
    (0.9
    )
    
    $
    42,176
    
    
    $
    41,460
    
    
    $
    716
    
    
    
    1.7Reconciliation to net incomeSame property net operating income
    
    $
    21,022
    
    
    $
    21,207
    
    
    
    
    
    
    
    
    
    
    $
    42,176
    
    
    $
    41,460Non-comparable net operating income
(loss) (2) (3)
    
    
    232
    
    
    
    (54
    )
    
    
    
    
    
    
    
    
    
    
    1,074
    
    
    
    213General and administrative expenses
    
    
    (2,922
    )
    
    
    (2,838
    )
    
    
    
    
    
    
    
    
    
    
    (5,879
    )
    
    
    (5,539
    )Depreciation and amortization
    
    
    (10,005
    )
    
    
    (9,022
    )
    
    
    
    
    
    
    
    
    
    
    (20,051
    )
    
    
    (18,261
    )Other expenses, net
    
    
    (6,675
    )
    
    
    (7,402
    )
    
    
    
    
    
    
    
    
    
    
    (10,530
    )
    
    
    (15,426
    )Discontinued operations (5)
    
    
    
    
    
    
    14,925
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,609Net income
    
    $
    1,652
    
    
    $
    16,816
    
    
    
    
    
    
    
    
    
    
    $
    6,790
    
    
    $
    18,056
 Weighted Average
    
    
    
    
    
    
    
    
    

    Weighted AverageOccupancy at June 30,
    
    
    
    
    
    
    
    
    

    Occupancy at June 30,2009
    
    2008
    
    
    
    
    
    
    
    
    

    2009
    
    2008Same Properties
    
    
    86.6
    %
    
    
    86.4
    %
    
    
    
    
    
    
    
    
    

    
    86.7
    %
    
    
    86.5
    %Total
    
    
    86.5
    %
    
    
    86.1
    %
    
    
    
    
    
    
    
    
    

    
    86.6
    %
    
    
    86.2
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Non-comparable Properties include: Alexandria Corporate Park, Triangle Business Center and Rivers Park I and II.(3)
    
    Non-comparable net operating income has been adjusted to reflect a normalized management fee percentage in lieu of an
administrative overhead allocation for comparative purposes.(4)
    
    Excludes a 76,000 square foot redevelopment building at Ammendale Commerce Center, which was placed in-service during the
fourth quarter of 2008, and a 57,000 square foot space at Interstate Plaza that is currently under redevelopment.(5)
    
    Discontinued operations represent income and the gain on sale related to Alexandria Corporate Park, which was sold in June 2008. 35




---



##### 



Maryland
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedJune 30,
    
    
    
    
    
    
    
    
    
    
    June 30,$
    
    
    %
    
    
    
    
    
    
    
    
    
    
    $
    
    
    %(dollars in thousands)
    
    2009
    
    
    2008
    
    
    Change
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    Change
    
    
    ChangeNumber of buildings (1)
    
    
    64
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    64
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    8,345
    
    
    $
    8,618
    
    
    $
    (273
    )
    
    
    (3.2
    )
    
    $
    16,727
    
    
    $
    17,163
    
    
    $
    (436
    )
    
    
    (2.5
    )Tenant reimbursements
    
    
    1,572
    
    
    
    1,512
    
    
    
    60
    
    
    
    4.0
    
    
    
    3,448
    
    
    
    3,258
    
    
    
    190
    
    
    
    5.8Total same property revenue
    
    
    9,917
    
    
    
    10,130
    
    
    
    (213
    )
    
    
    (2.1
    )
    
    
    20,175
    
    
    
    20,421
    
    
    
    (246
    )
    
    
    (1.2
    )Same property operating expensesProperty
    
    
    2,584
    
    
    
    1,764
    
    
    
    820
    
    
    
    46.5
    
    
    
    5,181
    
    
    
    3,964
    
    
    
    1,217
    
    
    
    30.7Real estate taxes and insurance
    
    
    1,015
    
    
    
    943
    
    
    
    72
    
    
    
    7.6
    
    
    
    2,031
    
    
    
    1,924
    
    
    
    107
    
    
    
    5.6Total same property operating expenses
    
    
    3,599
    
    
    
    2,707
    
    
    
    892
    
    
    
    33.0
    
    
    
    7,212
    
    
    
    5,888
    
    
    
    1,324
    
    
    
    22.5Same property net operating income
    
    $
    6,318
    
    
    $
    7,423
    
    
    $
    (1,105
    )
    
    
    (14.9
    )
    
    $
    12,963
    
    
    $
    14,533
    
    
    $
    (1,570
    )
    
    
    (10.8
    )Reconciliation to total property operating income:Same property net operating income
    
    $
    6,318
    
    
    $
    7,423
    
    
    
    
    
    
    
    
    
    
    $
    12,963
    
    
    $
    14,533Non-comparable net operating income(2) (3)
    
    
    511
    
    
    
    144
    
    
    
    
    
    
    
    
    
    
    
    1,352
    
    
    
    72Total property operating income
    
    $
    6,829
    
    
    $
    7,567
    
    
    
    
    
    
    
    
    
    
    $
    14,315
    
    
    $
    14,605
 Weighted Average
    








    Weighted AverageOccupancy at June 30,
    









    Occupancy at June 30,2009
    
    2008
    









    2009
    
    2008Same Properties
    
    
    84.0
    %
    
    
    89.2
    %
    









    
    85.2
    %
    
    
    89.3
    %Total
    
    
    84.1
    %
    
    
    89.2
    %
    









    
    85.1
    %
    
    
    89.3
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Non-comparable net operating income has been adjusted to reflect a normalized management fee percentage in lieu of an administrative
overhead allocation for comparative purposes.(3)
    
    Non-comparable Properties include: Triangle Business Center, Rivers Park I and II, and a 76,000 square foot redevelopment building at
Ammendale Commerce Center.  36




---



##### 



Northern Virginia
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedJune 30,
    
    
    
    
    
    
    
    
    
    
    June 30,$
    
    
    %
    
    
    
    
    
    
    
    
    
    
    $
    
    
    %(dollars in thousands)
    
    2009
    
    
    2008
    
    
    Change
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    Change
    
    
    ChangeNumber of buildings (1)
    
    
    47
    
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    47
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    7,931
    
    
    $
    7,509
    
    
    $
    422
    
    
    
    5.6
    
    
    $
    15,847
    
    
    $
    14,805
    
    
    $
    1,042
    
    
    
    7.0Tenant reimbursements
    
    
    1,800
    
    
    
    1,579
    
    
    
    221
    
    
    
    14.0
    
    
    
    3,779
    
    
    
    3,040
    
    
    
    739
    
    
    
    24.3Total same property revenue
    
    
    9,731
    
    
    
    9,088
    
    
    
    643
    
    
    
    7.1
    
    
    
    19,626
    
    
    
    17,845
    
    
    
    1,781
    
    
    
    10.0Same property operating expensesProperty
    
    
    2,055
    
    
    
    1,768
    
    
    
    287
    
    
    
    16.2
    
    
    
    4,402
    
    
    
    3,619
    
    
    
    783
    
    
    
    21.6Real estate taxes and insurance
    
    
    1,097
    
    
    
    1,053
    
    
    
    44
    
    
    
    4.2
    
    
    
    2,220
    
    
    
    1,961
    
    
    
    259
    
    
    
    13.2Total same property operating
expenses
    
    
    3,152
    
    
    
    2,821
    
    
    
    331
    
    
    
    11.7
    
    
    
    6,622
    
    
    
    5,580
    
    
    
    1,042
    
    
    
    18.7Same property net operating income
    
    $
    6,579
    
    
    $
    6,267
    
    
    $
    312
    
    
    
    5.0
    
    
    $
    13,004
    
    
    $
    12,265
    
    
    $
    739
    
    
    
    6.0Reconciliation to total property
operating incomeSame property net operating income
    
    $
    6,579
    
    
    $
    6,267
    
    
    
    
    
    
    
    
    
    
    $
    13,004
    
    
    $
    12,265Non-comparable net operating
loss(2) (3)
    
    
    (81
    )
    
    
    (91
    )
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    (190
    )Total property operating income
    
    $
    6,498
    
    
    $
    6,176
    
    
    
    
    
    
    
    
    
    
    $
    12,853
    
    
    $
    12,075
 Weighted Average
    









    Weighted AverageOccupancy at June 30,
    








    Occupancy at June 30,2009
    
    2008









    
    2009
    
    2008Same Properties
    
    
    88.9
    %
    
    
    87.6
    %
    
    
    
    
    
    
    
    
    
    
    89.4
    %
    
    
    87.5
    %Total
    
    
    88.9
    %
    
    
    86.2
    %
    
    
    
    
    
    
    
    
    
    
    89.4
    %
    
    
    86.1
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Non-comparable net operating income has been adjusted to reflect a normalized management fee percentage in lieu of an
administrative overhead allocation for comparative purposes.(3)
    
    Non-comparable Properties include: Alexandria Corporate Park and a 57,000 square foot space at Interstate Plaza that is currently under
redevelopment.  37




---



##### 



Southern Virginia
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedJune 30,
    
    
    
    
    
    
    
    
    
    
    June 30,$
    
    
    %
    
    
    
    
    
    
    
    
    
    
    $
    
    
    %(dollars in thousands)
    
    2009
    
    
    2008
    
    
    Change
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    Change
    
    
    ChangeNumber of buildings (1)
    
    
    54
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    54
    
    
    
    
    
    
    
    Same property revenueRental
    
    $
    9,725
    
    
    $
    9,033
    
    
    $
    692
    
    
    
    7.7
    
    
    $
    19,306
    
    
    $
    17,858
    
    
    $
    1,448
    
    
    
    8.1Tenant reimbursements
    
    
    2,263
    
    
    
    1,831
    
    
    
    432
    
    
    
    23.6
    
    
    
    4,457
    
    
    
    3,522
    
    
    
    935
    
    
    
    26.5Total same property revenue
    
    
    11,988
    
    
    
    10,864
    
    
    
    1,124
    
    
    
    10.3
    
    
    
    23,763
    
    
    
    21,380
    
    
    
    2,383
    
    
    
    11.1Same property operating expensesProperty
    
    
    2,838
    
    
    
    2,314
    
    
    
    524
    
    
    
    22.6
    
    
    
    5,447
    
    
    
    4,661
    
    
    
    786
    
    
    
    16.9Real estate taxes and insurance
    
    
    1,025
    
    
    
    1,033
    
    
    
    (8
    )
    
    
    (0.8
    )
    
    
    2,107
    
    
    
    2,057
    
    
    
    50
    
    
    
    2.4Total same property operating
expenses
    
    
    3,863
    
    
    
    3,347
    
    
    
    516
    
    
    
    15.4
    
    
    
    7,554
    
    
    
    6,718
    
    
    
    836
    
    
    
    12.4Same property net operating income
    
    $
    8,125
    
    
    $
    7,517
    
    
    $
    608
    
    
    
    8.1
    
    
    $
    16,209
    
    
    $
    14,662
    
    
    $
    1,547
    
    
    
    10.6Reconciliation to total
property operating incomeSame property net operating income
    
    $
    8,125
    
    
    $
    7,517
    
    
    
    
    
    
    
    
    
    
    $
    16,209
    
    
    $
    14,662Non-comparable net operating
(loss)income (2)
    
    
    (198
    )
    
    
    (107
    )
    
    
    
    
    
    
    
    
    
    
    (127
    )
    
    
    331Total property operating income
    
    $
    7,927
    
    
    $
    7,410
    
    
    
    
    
    
    
    
    
    
    $
    16,082
    
    
    $
    14,993
 Weighted Average
    









    Weighted AverageOccupancy at June 30,
    








    Occupancy at June 30,2009
    
    2008









    
    2009
    
    2008Same Properties
    
    
    86.9
    %
    
    
    84.0
    %
    









    
    86.2
    %
    
    
    84.2
    %Total
    
    
    86.9
    %
    
    
    84.0
    %
    









    
    86.2
    %
    
    
    84.2
    %
 
 (1)
    
    Represents properties owned for the entirety of the periods presented.(2)
    
    Non-Comparable net operating income has been adjusted to reflect a normalized management fee
percentage in lieu of an administrative overhead allocation for
comparative purposes  Contractual Obligations
  38




---



##### 



Dividends and Distributions
   Funds From Operations
    39




---



##### 



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income attributable to common
shareholders
    
    $
    1,607
    
    
    $
    16,298
    
    
    $
    6,604
    
    
    $
    17,499Add: Depreciation and amortization:Real estate assets
    
    
    10,005
    
    
    
    9,022
    
    
    
    20,051
    
    
    
    18,261Discontinued operations
    
    
    
    
    
    
    197
    
    
    
    
    
    
    
    478Unconsolidated joint venture
    
    
    96
    
    
    
    
    
    
    
    111
    
    
    
    Consolidated joint venture
    
    
    (129
    )
    
    
    
    
    
    
    (503
    )
    
    
    Gain on sale of disposed property
    
    
    
    
    
    
    (14,274
    )
    
    
    
    
    
    
    (14,274
    )Net income attributable to
noncontrolling interests
    
    
    45
    
    
    
    518
    
    
    
    186
    
    
    
    557FFO available to common shareholders and
unitholders
    
    $
    11,624
    
    
    $
    11,761
    
    
    $
    26,449
    
    
    $
    22,521Weighted average common shares and
Operating Partnership units outstanding
 diluted
    
    
    28,002
    
    
    
    24,953
    
    
    
    27,904
    
    
    
    24,937
 Off-Balance Sheet Arrangements
 Investment in Affiliate
 Forward Looking Statements
  
    40




---



##### 



Fair Value of Financial Instruments
  Financial Covenants
  Unsecured Revolving Credit Facility and Term Loans
 UnsecuredRevolving CreditFacility and 2007
    
    2008 SecuredSecured Term Loan
    
    Term Loan
    
    CovenantUnencumbered Pool Leverage(1)
    
    
    52.8
    %
    
    
    
    
    
    
    £ 65
    %Unencumbered
Pool Debt Service Coverage Ratio(1)
    
    
    3.19
    x
    
    
    
    
    
    
    3 1.75
    xMaximum Consolidated Total Indebtedness
    
    
    56.6
    %
    
    
    57.1
    %
    
    
    £ 60
    %(2)Minimum Tangible Net Worth
    
    $
    490,438
    
    
    $
    480,643
    
    
    
    3 $359,685Fixed Charge Coverage Ratio
    
    
    1.90
    x
    
    
    1.88
    x
    
    
    3 1.50
    xMaximum Dividend Payout Ratio(1)
    
    
    60.3
    %
    
    
    
    
    
    
    £ 95
    %
 
 (1)
    
    Covenant does not apply to the Companys 2007 secured term loan.(2)
    
    Company has a one time right to increase indebtedness to 65% for three
consecutive quarters. Senior Notes
 Senior Notes
    
    CovenantMaximum Consolidated Total Indebtedness
    
    
    58.3
    %
    
    
    £ 65
    %Minimum Tangible Net Worth
    
    $
    457,516
    
    
    
    3 $359,685Fixed Charge Coverage Ratio
    
    
    1.90
    x
    
    
    3 1.50
    xMaximum Dividend Payout Ratio
    
    
    60.3
    %
    
    
    £ 95
    %
 
    41




---



##### 



PART II:  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Recent disruptions in the financial markets could affect our ability to obtain financing on
reasonable terms and have other adverse effects on us and the market price of our common shares.
  
 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
 Results of 2009 Annual Meeting of Shareholders
  Election of Trustees
  VotesName
    
    Votes For
    
    WithheldRobert H. Arnold
    
    
    24,209,436
    
    
    
    285,179Richard B. Chess
    
    
    17,309,769
    
    
    
    7,184,846Douglas J. Donatelli
    
    
    24,131,375
    
    
    
    363,239J. Roderick Heller
    
    
    24,199,490
    
    
    
    295,125R. Michael McCullough
    
    
    17,302,318
    
    
    
    7,192,297Alan G. Merten
    
    
    17,295,674
    
    
    
    7,198,941Terry L. Stevens
    
    
    24,226,437
    
    
    
    268,178
 42




---



##### 



Other Business
  BrokerProposal
    
    Votes For
    
    Against
    
    Abstentions
    
    Non-Votes2009 Equity Compensation Plan
    
    
    17,979,997
    
    
    
    1,082,824
    
    
    
    319,480
    
    
    
    5,112,3132009 Employee Share Purchase Plan
    
    
    19,109,801
    
    
    
    184,674
    
    
    
    88,094
    
    
    
    5,112,045Ratification of Accountants
for 2009
    
    
    24,154,927
    
    
    
    300,790
    
    
    
    38,897
    
    
    
    
 
 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).10.1
    
    2009 Short-Term Incentive Award Plan.10.2
    
    2009 Equity Compensation Plan (incorporated by reference to Exhibit A to the Registrants Definitive
Proxy Statement filed on April 8, 2009).10.3
    
    2009 Employee Share Purchase Plan (incorporated by reference to Exhibit B to the Registrants
Definitive Proxy Statement filed on April 8, 2009).10.4
    
    Form of Restricted Common Share Award Agreement for Officers (Time-Vesting) (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on May 27, 2009).10.5
    
    Form of Restricted Common Share Award Agreement for Officers (Performance-Based) (incorporated by
reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on May 27, 2009).
 43




---



##### 



No.
    
    Description10.6
    
    Form of Restricted Common Share Award Agreement for Trustees (Time-Vesting) (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on May 28, 2008).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.)
 44




---



##### 



FIRST POTOMAC REALTY TRUSTDate: August 7, 2009
    /s/ Douglas J. DonatelliDouglas J. DonatelliChairman of the Board and Chief Executive OfficerDate: August 7, 2009
    /s/ Barry H. BassBarry H. BassExecutive Vice President and Chief Financial Officer 45




---



##### 



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
    
    2009 Short-Term Incentive Award Plan.10.2
    
    2009 Equity Compensation Plan (incorporated by reference to Exhibit A to the Registrants Definitive
Proxy Statement filed on April 8, 2009).10.3
    
    2009 Employee Share Purchase Plan (incorporated by reference to Exhibit B to the Registrants
Definitive Proxy Statement filed on April 8, 2009).10.4
    
    Form of Restricted Common Share Award Agreement for Officers (Time-Vesting) (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on May 27, 2009).10.5
    
    Form of Restricted Common Share Award Agreement for Officers (Performance-Based) (incorporated by
reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on May 27, 2009).10.6
    
    Form of Restricted Common Share Award Agreement for Trustees (Time-Vesting) (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on May 28, 2008).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.)