##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 2005
 COMMISSION
FILE NUMBER 001-31962
 
 GOVERNMENT PROPERTIES TRUST, INC.
  MARYLAND
(State or other jurisdiction of
incorporation or organization)
    
    20-0611663
(I.R.S. Employer
Identification No.)10250 REGENCY CIRCLE, SUITE 100
OMAHA, NEBRASKA 68114
(Address of principal executive
offices, including zip code)
    
    (402) 391-0010
(Registrants telephone number,
including area code)
  þ o
  o þ




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PAGEPART I  FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2005 (unaudited) and December 31, 2004
    
    
    3Consolidated Statements of Operations for the three months and six months ended June 30, 2005 and
2004 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004 (unaudited).
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20PART II  OTHER INFORMATIONItem 1. Not applicableItem 2. Changes in Securities and Use of Proceeds
    
    
    21Item 3. Not applicableItem 4. Submission of matters to a vote of Security Holders
    
    
    21Item 5. Not applicableItem 6. Exhibits and Reports on Form 8-K
    
    
    22Signatures
    
    
    23302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer
  2




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##### Table of Contents



GOVERNMENT PROPERTIES TRUST, INC.
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    December 31,2005
    
    2004(UNAUDITED)ASSETSReal estate at costLand
    
    $
    26,493,237
    
    
    $
    13,713,237Buildings and improvements
    
    
    231,651,712
    
    
    
    117,069,518Tenant origination costs
    
    
    47,599,844
    
    
    
    26,628,718Real estate under development
    
    
    3,751,181
    
    
    
    1,180,523Furniture and equipment
    
    
    196,916
    
    
    
    185,818309,692,890
    
    
    
    158,777,814Accumulated depreciation
    
    
    (7,071,984
    )
    
    
    (3,407,147
    )302,620,906
    
    
    
    155,370,667Cash and cash equivalents
    
    
    24,524,349
    
    
    
    93,814,813Restricted cash escrows
    
    
    19,632,475
    
    
    
    2,103,338Tenant receivables
    
    
    3,182,770
    
    
    
    1,501,850Notes receivable from tenant
    
    
    634,512
    
    
    
    665,216Deferred costs, net
    
    
    2,226,325
    
    
    
    937,156Real estate deposits
    
    
    3,514,581
    
    
    
    685,993Other assets
    
    
    1,928,585
    
    
    
    1,241,554Total assets
    
    $
    358,264,503
    
    
    $
    256,320,587LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesAccounts payable and accrued expenses
    
    $
    4,743,087
    
    
    $
    3,226,655Dividends payable
    
    
    3,108,242
    
    
    
    3,104,340Mortgage notes payable (including premium of $1,482,178 and $0, respectively)
    
    
    185,863,352
    
    
    
    77,584,897Total liabilities
    
    
    193,714,681
    
    
    
    83,915,892Stockholders equityCommon stock ($0.01 par value; 50,000,000 shares authorized, 20,721,796 and
20,695,567 shares issued and outstanding at June 30, 2005 and December 31, 2004,
respectively)
    
    
    205,771
    
    
    
    205,223Additional paid-in capital
    
    
    188,760,833
    
    
    
    188,259,230Accumulated deficit
    
    
    (23,048,517
    )
    
    
    (16,059,758
    )Accumulated other comprehensive loss
    
    
    (1,368,265
    )
    
    
    Total stockholders equity
    
    
    164,549,822
    
    
    
    172,404,695Total liabilities and stockholders equity
    
    $
    358,264,503
    
    
    $
    256,320,587
  3




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GOVERNMENT PROPERTIES TRUST, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
    
    (UNAUDITED)THREE MONTHS ENDED
    
    SIX MONTHS ENDEDJUNE 30,
    
    JUNE 30,2005
    
    2004
    
    2005
    
    2004RevenueRental income
    
    $
    6,140,991
    
    
    $
    1,677,748
    
    
    $
    10,465,101
    
    
    $
    2,721,741Tenant reimbursements and other
    
    
    132,119
    
    
    
    164,195
    
    
    
    311,773
    
    
    
    164,195Total revenue
    
    
    6,273,110
    

    
    
    1,841,943
    
    
    
    10,776,874
    
    
    
    2,885,936ExpensesProperty operations
    
    
    1,123,448
    
    
    
    335,772
    
    
    
    1,978,450
    
    
    
    583,550Real estate taxes
    
    
    568,865
    
    
    
    172,928
    
    
    
    1,025,069
    
    
    
    321,025Depreciation and amortization
    
    
    2,342,620
    
    
    
    483,486
    
    
    
    3,664,837
    
    
    
    763,594General and administrative
    
    
    1,200,637
    
    
    
    958,641
    
    
    
    2,340,909
    
    
    
    1,989,186Total expenses
    
    
    5,235,570
    
    
    
    1,950,827
    
    
    
    9,009,265
    
    
    
    3,657,355Operating income (loss)
    
    
    1,037,540
    
    
    
    (108,884
    )
    
    
    1,767,609
    
    
    
    (771,419
    )Other income (expense)Interest income
    
    
    440,741
    
    
    
    387,264
    
    
    
    1,098,934
    
    
    
    630,533Interest expense
    
    
    (2,132,950
    )
    
    
    (367,319
    )
    
    
    (3,470,677
    )
    
    
    (766,148
    )Expense from issuance and exercise of warrant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,097,900
    )Amortization of deferred financing fees
    
    
    (57,687
    )
    
    
    (74,900
    )
    
    
    (168,113
    )
    
    
    (78,514
    )Loss from continuing operations
    
    
    (712,356
    )
    
    
    (163,839
    )
    
    
    (772,247
    )
    
    
    (3,083,448
    )Discontinued operations:Income from operations of disposed property
    
    
    
    
    
    
    42,497
    
    
    
    
    
    
    
    46,368Net loss
    
    $
    (712,356
    )
    
    $
    (121,342
    )
    
    $
    (772,247
    )
    
    $
    (3,037,080
    )Earnings per share (basic and diluted):Loss from continuing operations
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    (0.17
    )Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    (0.17
    )Distributions declared per share
    
    $
    0.15
    
    
    $
    0.15
    
    
    $
    0.30
    
    
    $
    0.30Weighted average shares outstanding (basic and diluted)
    
    
    20,572,833
    
    
    
    20,509,303
    
    
    
    20,556,391
    
    
    
    17,610,800
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GOVERNMENT PROPERTIES TRUST, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)SIX MONTHS ENDEDJUNE 30,2005
    
    2004Operating activitiesNet loss
    
    $
    (772,247
    )
    
    $
    (3,037,080
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    3,664,837
    
    
    
    763,594Amortization of deferred financing fees
    
    
    168,113
    
    
    
    78,514Compensation expense
    
    
    362,148
    
    
    
    260,725Expense from issuance and exercise of warrant
    
    
    
    
    
    
    2,097,900Changes in assets and liabilities:Tenant receivables
    
    
    (1,680,920
    )
    
    
    (426,882
    )Other assets
    
    
    (698,129
    )
    
    
    (903,802
    )Accounts payable and accrued expenses
    
    
    288,169
    
    
    
    681,783Net cash provided by (used in) operating activities
    
    
    1,331,971
    
    
    
    (485,248
    )Investing activitiesExpenditures for real estate
    
    
    (131,097,833
    )
    
    
    (43,744,334
    )Deposits on future real estate purchases
    
    
    (2,828,588
    )
    
    
    (1,400,000
    )Development of real estate assets
    
    
    (2,570,658
    )
    
    
    Restricted cash escrows
    
    
    (17,529,137
    )
    
    
    (388,747
    )Note receivable from tenant
    
    
    30,704
    
    
    
    (684,818
    )Restricted cash for letter of credit
    
    
    
    
    
    
    (17,373,393
    )Cash used in investing activities
    
    
    (153,995,512
    )
    
    
    (63,591,292
    )Financing activitiesFinancing fees
    
    
    (1,457,282
    )
    
    
    (286,261
    )Net (repayment) borrowing under lines of credit
    
    
    
    
    
    
    (3,047,655
    )Proceeds from mortgage notes payable
    
    
    91,732,219
    
    
    
    Payments on mortgage notes payable  affiliate
    
    
    
    
    
    
    (1,639,219
    )Repayments of advances from affiliate
    
    
    
    
    
    
    (102,873
    )Principal payments on mortgage notes payable
    
    
    (689,251
    )
    
    
    (153,421
    )Proceeds from sale of common stock
    
    
    
    
    
    
    193,202,100Offering costs paid
    
    
    
    
    
    
    (16,242,443
    )Dividends paid
    
    
    (6,212,609
    )
    
    
    (3,249,611
    )Net cash provided by financing activities
    
    
    83,373,077
    
    
    
    168,480,617Net (decrease) increase in cash and cash equivalents
    
    
    (69,290,464
    )
    
    
    104,404,077Cash and cash equivalents, beginning of period
    
    
    93,814,813
    
    
    
    760,859Cash and cash equivalents, end of period
    
    $
    24,524,349
    
    
    $
    105,164,936Non-Cash Financing ActivityAssumption of mortgage note payable included in real estate, net
    
    $
    15,753,309
    
    
    $
    
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GOVERNMENT PROPERTIES TRUST, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Basis of Presentation
   Nature of Business and Operations
    Common Stock and Earnings Per Share
  Deferred Costs
  JUNE 30,
    
    DECEMBER 31,2005
    
    2004Financing costs
    
    $
    2,675,263
    
    
    $
    1,217,981Accumulated amortization
    
    
    (448,938
    )
    
    
    (280,825
    )$
    2,226,325
    
    
    $
    937,156
 6




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##### Table of Contents



Equity Incentive Plan
   Mortgage Notes Payable and Line-of-Credit
  JUNE 30,
    
    DECEMBER 31,2005
    
    2004MORTGAGE NOTES PAYABLE(A),(B), (C)Mortgage notes payable to various financial institutions, collateralized by
various properties, interest at fixed rates ranging from 5.13% to 8.23% per
annum, with principal and interest payable monthly through 2026. The weighted
average interest rate at June 30, 2005 and December 31, 2004 was 5.90%
and 5.87%, respectively
    
    $
    184,381,174
    
    
    $
    77,584,897LINE-OF-CREDIT(D)Revolving line-of-credit with a financial institution (maximum borrowing $50,000,000 and
available through July 27, 2005), interest at the financial institutions prime rate.
There were no advances made on the line-of-credit. Interest, if any, is due monthly.
Any advances are secured by a mortgage on the acquired property and are due upon the
earlier of permanent financing or termination of the line-of-credit
    
    $
    
    
    
    $
    
 
 (A)
    
    The mortgages notes payable are subject to various operating covenants. In addition, the
Company must periodically fund and maintain escrow accounts for future real estate taxes,
repairs and maintenance and insurance payments, as well as to fund certain tenant releasing
costs. These are included in restricted cash escrows.(B)
    
    A portion of the Companys real estate assets have been pledged as collateral for its
mortgage notes payable. The amount of gross assets that have been encumbered is $227,577,042
and $105,174,043 for June 30, 2005 and December 31, 2004.(C)
    
    Amounts exclude a premium of $1,482,178 and $0, respectively, related to the above market
interest rate on a mortgage assumed.(D)
    
    On July 21, 2005, the Company entered into an amendment to extend the expiration of the
revolving line-of-credit to December 27, 2005. The amended line-of-credit has a maximum of up
to $50,000,000 of which $25,000,000 may be in unsecured borrowings.  Derivative Instruments and Hedging Activities
  7




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##### Table of Contents



Concentration of Credit Risk
  Related Party Transactions
    Property Acquisitions
 8




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##### Table of Contents



Acquisition
    
    MonthProperty
    
    Location
    
    Cost
    
    Acquired2004 acquisitions(A):Bureau of Public Debt (Mineral Wells BPD
Property)(B)
    
    Mineral Wells, WV
    
    $
    5,109,486
    
    
    MarchFederal Bureau of Investigation (Pittsburgh FBI
Property)
    
    Pittsburgh, PA
    
    
    28,682,675
    
    
    MayUSDA District Offices (Lenexa FDA Property)
    
    Lenexa, KS
    
    
    10,525,293
    
    
    JuneVeterans Administration Outpatient Clinic
(Baton Rouge VA Property)
    
    Baton Rouge, LA
    
    
    5,931,242
    
    
    SeptemberFederal Courthouse (Charleston Fed Court Property)
    
    Charleston, SC
    
    
    19,277,829
    
    
    SeptemberFood & Drug Administration (College Park FDA
Property)(C)
    
    College Park, MD
    
    
    22,895,421
    
    
    OctoberImmigration Services (Pittsburgh USCIS Property)
    
    Pittsburgh, PA
    
    
    10,582,553
    
    
    OctoberBureau of Public Debt (Parkersburg BPD
Property)(D)
    
    Parkersburg, WV
    
    
    20,227,362
    
    
    November$
    123,231,8612005 acquisitions(A):1201 Lloyd Boulevard (Portland Property)(E)
    
    Portland, OR
    
    $
    50,015,337
    
    
    MarchNiagara Center (Buffalo Niagara Center Property)
    
    Buffalo, NY
    
    
    71,672,611
    
    
    MaySocial Security Administration (Buffalo SSA
Property)
    
    Buffalo, NY
    
    
    5,434,681
    
    
    MayDrug Enforcement Administration (Sterling DEA
Property)(F)
    
    Sterling, VA
    
    
    21,210,690
    
    
    June$
    148,333,319
 
 (A)
    
    In accordance with SFAS 141, the Company allocated the purchase price for these properties to
net tangible and identified intangible assets acquired based on their fair values (including
land, buildings, tenant improvements, acquired above and below market leases and the
origination cost of acquired in-place leases) and acquired liabilities, and allocated the
purchase price based on these assessments, including land at appraised value and buildings at
replacement costs. The Company assessed fair value based on estimated cash flow projections
that utilize discount and capitalization rates deemed appropriate by management and available
market information. The value of tenant origination costs are amortized over the remaining
term of the respective leases.(B)
    
    Included in the acquisition cost amount is a note receivable from tenant in the amount of
$694,293 which the Company assumed with the purchase of this property. The interest on the
note receivable is fixed at 8% per annum with principal and interest payable monthly through
2012.(C)
    
    In connection with the purchase of this property, the Company assumed a first mortgage note
in the amount of $16,650,000. Acquisition cost includes $1,200,000 which was paid to the
seller in April 2005.(D)
    
    The federal government has exercised a consolidation option whereby the Company will expand
the Parkersburg Property by an additional 102,000 rentable square feet. The cost of the
expansion to the Property will total approximately $22.5 million and will be paid over the
term of the expansion scheduled for completion in 2006. At June 30, 2005 the Company held
$11.1 million of restricted cash escrows to fund, in part, the cost of the expansion. Costs
capitalized as of June 30, 2005 and December 31, 2004 totaled $3,354,735 and $1,180,523,
respectively and is reflected in real estate under development in the accompanying Balance
Sheets.(E)
    
    Excluded from the acquisition cost amount is $1.1 million of restricted cash escrows paid by
the Company and held in escrow pending the final determination of the base rent amount for
certain tenants held under signed tenant leases. The final determination of the base rent
amount and the receipt of cash held in escrow, if any, are expected to be completed prior to
the end of 2005. 9




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##### Table of Contents



(F)
    
    In connection with the purchase of this property, the Company assumed a first mortgage note
in the amount of $15,753,309. Also included in the acquisition cost is an amount of
$1,482,178 related to the premium recognized on the above market interest rate on the assumed
mortgage. Issuance and Exercise of Warrant
  Discontinued Operations
  Three MonthsEnded June 30,
    
    Six Months Ended2004
    
    June 30, 2004Rental income
    
    $
    90,860
    
    
    $
    181,720Property operations
    
    
    3,206
    
    
    
    9,618Depreciation and amortization
    
    
    
    
    
    
    29,359Total expense
    
    
    3,206
    
    
    
    38,977Operating income
    
    
    87,654
    
    
    
    142,743Amortization of deferred financing fees
    
    
    
    
    
    
    (421
    )Interest expense
    
    
    (45,157
    )
    
    
    (95,954
    )Income from property held for sale
    
    $
    42,497
    
    
    $
    46,368
 Unaudited Pro Forma Condensed Consolidated Financial Information
  Date Property Began OperationPittsburgh USCIS Property
    
    March 2004Baton Rouge VA Property
    
    June 2004College Park FDA Property
    
    September 2004Parkersburg BPD Property
    
    September 2004Buffalo Niagara Center Property
    
    December 2004Buffalo SSA Property
    
    June 2005
  10




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##### Table of Contents



Pro Forma Condensed Consolidated Financial Information  (Unaudited)
 Six MonthsEnded June 30,2005
    
    2004Total Revenue
    
    $
    13,469,741
    
    
    $
    7,778,348Loss from continuing operations
(A)
    
    $
    (2,528,777
    )
    
    $
    (5,064,256
    )Loss per diluted common
share
    
    $
    (0.12
    )
    
    $
    (0.24
    )
 
 (A)
    
    Includes expense of approximately $2.1 million in 2004 for the issuance and exercise of
warrants  See Note 11. Subsequent Events
   11




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
    
    our estimated general and administrative expense;
    
    our risk mitigation strategy;
    
    our policy to reserve for operating expenses and capital costs;
    
    our distribution policy;
    
    our operating expenses;
    
    the adequacy of our available capital for future capital requirements;
    
    our capital expenditures; and
    
    the impact of changes in interest rates.
      12




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Increase2005
    
    2004
    
    (Decrease)Revenue:Rental income
    
    $
    6,140,991
    
    
    $
    1,677,748
    
    
    $
    4,463,243Tenant reimbursements and other
    
    
    132,119
    
    
    
    164,195
    
    
    
    (32,076
    )Total revenue
    
    
    6,273,110
    
    
    
    1,841,943
    
    
    
    4,431,167Expenses:Property Operations
    
    
    1,123,448
    
    
    
    335,772
    
    
    
    787,676Real estate taxes
    
    
    568,865
    
    
    
    172,928
    
    
    
    395,937Depreciation and Amortization
    
    
    2,342,620
    
    
    
    483,486
    
    
    
    1,859,134General and administrative
    
    
    1,200,637
    
    
    
    958,641
    
    
    
    241,996Total expenses
    
    
    5,235,570
    
    
    
    1,950,827
    
    
    
    3,284,743Operating income (loss)
    
    
    1,037,540
    
    
    
    (108,884
    )
    
    
    1,146,424Interest income
    
    
    440,741
    
    
    
    387,264
    
    
    
    53,477Interest expense
    
    
    (2,132,950
    )
    
    
    (367,319
    )
    
    
    (1,765,631
    )Amortization of deferred financing fees
    
    
    (57,687
    )
    
    
    (74,900
    )
    
    
    17,213Loss from continuing operations
    
    
    (712,356
    )
    
    
    (163,839
    )
    
    
    (548,517
    )Discontinued operations: Income from
operations of disposed property
    
    
    
    
    
    
    42,497
    
    
    
    (42,497
    )Net loss
    
    $
    (712,356
    )
    
    $
    (121,342
    )
    
    $
    (591,014
    )
 Comparison of three months ended June 30, 2005 to June 30, 2004
  13




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i ii iii iv v vi vii
    Increase2005
    
    2004
    
    (Decrease)Revenue:Rental income
    
    $
    10,465,101
    
    
    $
    2,721,741
    
    
    $
    7,743,360Tenant reimbursements and other
    
    
    311,773
    
    
    
    164,195
    
    
    
    147,578Total revenue
    
    
    10,776,874
    
    
    
    2,885,936
    
    
    
    7,890,938Expenses:Property Operations
    
    
    1,978,450
    
    
    
    583,550
    
    
    
    1,394,900Real estate taxes
    
    
    1,025,069
    
    
    
    321,025
    
    
    
    704,044Depreciation and Amortization
    
    
    3,664,837
    
    
    
    763,594
    
    
    
    2,901,243General and administrative
    
    
    2,340,909
    
    
    
    1,989,186
    
    
    
    351,723Total expenses
    
    
    9,009,265
    
    
    
    3,657,355
    
    
    
    5,351,910Operating income (loss)
    
    
    1,767,609
    
    
    
    (771,419
    )
    
    
    2,539,028Interest income
    
    
    1,098,934
    
    
    
    630,533
    
    
    
    468,401Interest expense
    
    
    (3,470,677
    )
    
    
    (766,148
    )
    
    
    (2,704,529
    )
 14




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##### Table of Contents



Increase2005
    
    2004
    
    (Decrease)Expense from issuance and exercise of warrant
    
    
    
    
    
    
    (2,097,900
    )
    
    
    2,097,900Amortization of deferred financing fees
    
    
    (168,113
    )
    
    
    (78,514
    )
    
    
    (89,599
    )Loss from continuing operations
    
    
    (772,247
    )
    
    
    (3,083,448
    )
    
    
    2,311,201Discontinued operations: Income from
operations of disposed property
    
    
    
    
    
    
    46,368
    
    
    
    (46,368
    )Net loss
    
    $
    (772,247
    )
    
    $
    (3,037,080
    )
    
    $
    2,264,833
 Comparison of six months ended June 30, 2005 to June 30, 2004
        i ii iii iv v vi vii
     
    
    acquisition costs, deposits on properties and purchases of properties;
 15




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
    
    recurring maintenance, repairs and other operating expenses necessary to maintain our properties;
    
    property taxes, state and local tax assessments, and insurance expenses;
    
    interest expense and scheduled principal payments on outstanding indebtedness;
    
    capital expenditures incurred to facilitate the leasing of space at our
properties, including tenant improvements and leasing commissions;
    
    general and administrative expenses; and
    
    future distributions paid to our stockholders.
   BALANCE AS OFLENDER
    
    COLLATERAL
    
    JUNE 30,2005(IN MILLIONS)CW Capital
    
    Bakersfield DEA property
    
    $
    1.4CW Capital
    
    Baton Rouge VA property
    
    
    4.8LaSalle Bank/GEMSA
    
    Charleston SSA property
    
    
    13.7LaSalle Bank/GEMSA
    
    Clarksburg GSA property
    
    
    8.2CW Capital
    
    Charleston Federal Courthouse
property
    
    
    14.6Capital Realty
    
    College Park FDA property
    
    
    16.5Bank of America
    
    Kingsport SSA property
    
    
    2.2Wachovia Bank
    
    Lenexa FDA property
    
    
    7.8Bank of New York
    
    Parkersburg BPD property
    
    
    31.8PNC Bank
    
    Pittsburgh FBI property
    
    
    20.7Nomura Credit
    
    Pittsburgh USCIS property
    
    
    7.9Wachovia Bank
    
    Portland property
    
    
    39.1Northwestern Mutual
    
    Sterling DEA property
    
    
    15.7184.4Premium on mortgage
debt
    
    
    
    
    1.5Total  Mortgage
Notes Payable
    
    
    
    $
    185.9
     16




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18




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THREE MONTHS
    
    SIX MONTHSENDED
    
    ENDEDJUNE 30,
    
    JUNE 30,2005
    
    2004
    
    2005
    
    2004Net loss
    
    $
    (712,356
    )
    
    $
    (121,342
    )
    
    $
    (772,247
    )
    
    $
    (3,037,080
    )Adjustments to reconcile to funds from
Operations:Real estate depreciation and amortization (a)
    
    
    2,335,204
    
    
    
    476,775
    
    
    
    3,650,021
    
    
    
    754,515Funds from Operations
    
    $
    1,622,848
    
    
    $
    355,433
    
    
    $
    2,877,774
    
    
    $
    (2,282,565
    )Funds from Operations per common share
    
    $
    0.08
    
    
    $
    0.02
    
    
    $
    0.14
    
    
    $
    (0.13
    )Weighted average common shares outstanding
    
    
    20,572,833
    
    
    
    20,509,303
    
    
    
    20,556,391
    
    
    
    17,610,800
 
 (a)
    
    Excludes depreciation of non-real estate assets of $7,416 and $6,711 for the three months
ended June 30, 2005 and 2004, respectively and $14,816 and $9,079 for the six months ended
June 30, 2005 and 2004, respectively. 19




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##### Table of Contents



2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    THEREAFTER
    
    TOTALMORTGAGE NOTES PAYABLE:Fixed rate amount
    
    $
    2,365,229
    
    
    $
    3,802,765
    
    
    $
    4,267,068
    
    
    $
    4,545,307
    
    
    $
    30,472,536
    
    
    $
    138,928,269
    
    
    $
    184,381,174Weighted-average interest rate
    
    
    6.25
    %
    
    
    5.98
    %
    
    
    5.96
    %
    
    
    5.97
    %
    
    
    5.56
    %
    
    
    5.96
    %
    
    
    5.90
    %
 
    20




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
    
    approximately $5.0 million to repay outstanding indebtedness;
    
    approximately $142.0 million, net of related mortgages, to complete acquisitions;
    
    approximately $18.6 million for dividend payments.
  
    NOMINEE
    
    FOR
    
    WITHHELDJerry D. Bringard
    
    
    19,304,984
    
    
    
    240,888Robert M. Ames
    
    
    19,318,574
    
    
    
    227,298Philip S. Cottone
    
    
    19,345,984
    
    
    
    199,888Robert A. Peck
    
    
    19,360,784
    
    
    
    185,088Thomas D. Peschio
    
    
    19,321,924
    
    
    
    223,948Richard H. Schwachter
    
    
    19,241,122
    
    
    
    304,750
    21




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##### Table of Contents



31.1
    
    Certification of Chief Executive Officer pursuant to SEC Rule
13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to SEC Rule
13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    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 200232.2
    
    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
      22




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GOVERNMENT PROPERTIES TRUST, INC.Date: August 5, 2005
    
    By: /s/ NANCY D. OLSONNancy D. OlsonChief Financial Officer and Treasurer(principal financial officer)
 23