##### Table of Contents



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 March 31, 2008
 OR
 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 001-32649
 COGDELL SPENCER INC.
  Maryland
    
    20-3126457(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)4401 Barclay Downs Drive, Suite 300Charlotte, North Carolina
    
    28209(Address of principal executive offices)
    
    (Zip code)
 (704) 940-2900
 
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I FINANCIAL INFORMATION
    
    
    3Item 1 Financial Statements
    
    
    3Item 2 Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    23Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 4 Controls and Procedures
    
    
    34PART II Other Information
    
    
    35Item 1 Legal Proceedings
    
    
    35Item 1A Risk Factors
    
    
    35Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 3 Defaults Upon Senior Securities
    
    
    36Item 4 Submission of Matters to a Vote of Security Holders
    
    
    36Item 5 Other Information
    
    
    36Item 6 Exhibits
    
    
    36Exhibit 3.1Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 10.8Exhibit 10.9Exhibit 10.10Exhibit 10.11Exhibit 10.12Exhibit 10.13Exhibit 10.14Exhibit 10.15Exhibit 10.16Exhibit 31.1Exhibit 31.2Exhibit 32.1
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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 COGDELL SPENCER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2008
    
    
    2007AssetsReal estate properties:Land
    
    $
    30,674
    
    
    $
    30,673Buildings and improvements
    
    
    477,529
    
    
    
    455,606Less: Accumulated depreciation
    
    
    (50,805
    )
    
    
    (44,596
    )Net operating real estate properties
    
    
    457,398
    
    
    
    441,683Construction in progress
    
    
    16,600
    
    
    
    13,380Net real estate properties
    
    
    473,998
    
    
    
    455,063Cash and cash equivalents
    
    
    13,581
    
    
    
    3,555Restricted cash
    
    
    22,874
    
    
    
    1,803Tenant and accounts receivable, net of allowance
of $94 in 2008 and $19 in 2007
    
    
    53,124
    
    
    
    2,249Goodwill and intangible assets, net of accumulated
amortization of $21,476 in 2008 and $18,728 in 2007
    
    
    321,922
    
    
    
    31,589Other assets
    
    
    27,729
    
    
    
    11,978Total assets
    
    $
    913,228
    
    
    $
    506,237Liabilities and stockholders equityMortgage notes payable
    
    $
    241,105
    
    
    $
    237,504Revolving credit facility
    
    
    116,000
    
    
    
    79,200Term loan
    
    
    100,000
    
    
    
    Accounts payable
    
    
    31,607
    
    
    
    5,817Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    38,875
    
    
    
    Deferred income taxes
    
    
    42,893
    
    
    
    217Payable to MEA shareholders
    
    
    32,405
    
    
    
    Other liabilities
    
    
    37,900
    
    
    
    21,243Total liabilities
    
    
    640,785
    
    
    
    343,981Commitments and contingenciesMinority interests in real estate partnerships
    
    
    2,502
    
    
    
    2,434Minority interests in operating partnership
    
    
    95,531
    
    
    
    44,787Stockholders equity:Preferred stock, $0.01 par value; 50,000 shares
authorized, none issued or outstanding
    
    
    
    
    
    
    Common Stock; $0.01 par value; 200,000 shares
authorized, 15,403 and 11,948 shares issued
and outstanding in 2008 and 2007, respectively
    
    
    154
    
    
    
    119Additional paid-in capital
    
    
    235,211
    
    
    
    166,901Accumulated other comprehensive loss
    
    
    (3,006
    )
    
    
    (1,234
    )Accumulated deficit
    
    
    (57,949
    )
    
    
    (50,751
    )Total stockholders equity
    
    
    174,410
    
    
    
    115,035Total liabilities and stockholders equity
    
    $
    913,228
    
    
    $
    506,237
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COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months EndedMarch 31, 2008
    
    
    March 31, 2007Revenues:Rental revenue
    
    $
    18,691
    
    
    $
    14,321Design-Build contract revenue and other sales
    
    
    23,936
    
    
    
    Property management and other fees
    
    
    841
    
    
    
    943Development management and other income
    
    
    19
    
    
    
    230Total revenues
    
    
    43,487
    
    
    
    15,494Expenses:Property operating and management
    
    
    7,199
    
    
    
    5,905Costs related to design-build revenue and other sales
    
    
    21,043
    
    
    
    Selling, general and administrative
    
    
    4,306
    
    
    
    2,107Depreciation and amortization
    
    
    9,025
    
    
    
    6,642Total expenses
    
    
    41,573
    
    
    
    14,654Income from operations before other income (expense), income
tax expense (benefit), minority interests in real estate
partnerships, and minority interests in operating partnership
    
    
    1,914
    
    
    
    840Other income (expense):Interest and other income, net
    
    
    255
    
    
    
    404Interest expense
    
    
    (5,096
    )
    
    
    (4,035
    )Equity in earnings of unconsolidated real estate partnerships
    
    
    3
    
    
    
    (9
    )Total other income (expense)
    
    
    (4,838
    )
    
    
    (3,640
    )Loss from operations before income tax expense (benefit),
minority interests in real estate partnerships, and minority
interests in operating partnership
    
    
    (2,924
    )
    
    
    (2,800
    )Income tax expense (benefit)
    
    
    (358
    )
    
    
    144Loss from operations before minority interests in real estate
partnerships, and minority interests in operating partnership
    
    
    (2,566
    )
    
    
    (2,944
    )Minority interests in real estate partnerships
    
    
    13
    
    
    
    (17
    )Minority interests in operating partnership
    
    
    752
    
    
    
    1,048Net loss
    
    $
    (1,801
    )
    
    $
    (1,913
    )Net loss per share  basic and diluted
    
    $
    (0.13
    )
    
    $
    (0.23
    )Weighted average common shares  basic and diluted
    
    
    14,364
    
    
    
    8,334
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COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 AccumulatedNumber of
    
    
    
    
    
    
    Additional
    
    
    OtherCommon
    
    
    Common
    
    
    Paid-in
    
    
    Comprehensive
    
    
    AccumulatedShares
    
    
    Stock
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    TotalBalance at December 31, 2007
    
    
    11,948
    
    
    $
    119
    
    
    $
    166,901
    
    
    $
    (1,234
    )
    
    $
    (50,751
    )
    
    $
    115,035Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,801
    )
    
    
    (1,801
    )Unrealized loss on interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,772
    )
    
    
    
    
    
    
    (1,772
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,573
    )Issuance of common stock, net of costs
    
    
    3,449
    
    
    
    35
    
    
    
    53,698
    
    
    
    
    
    
    
    
    
    
    
    53,733Restricted stock grants
    
    
    6
    
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    94Amortization of restricted stock grants
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Dividends to common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,397
    )
    
    
    (5,397
    )Adjustment to record change of interest
in the operating partnership due to the
issuance of operating partnership units
in excess of book value
    
    
    
    
    
    
    
    
    
    
    14,502
    
    
    
    
    
    
    
    
    
    
    
    14,502Balance at March 31, 2008
    
    
    15,403
    
    
    $
    154
    
    
    $
    235,211
    
    
    $
    (3,006
    )
    
    $
    (57,949
    )
    
    $
    174,410
  5




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COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Three Months EndedMarch 31, 2008
    
    
    March 31, 2007Operating activities:Net loss
    
    $
    (1,801
    )
    
    $
    (1,913
    )Adjustments to reconcile net loss to cash
provided by (used in) operating activities:Minority interests
    
    
    (765
    )
    
    
    (1,031
    )Depreciation and amortization
    
    
    9,060
    
    
    
    6,642Amortization of acquired above market leases and
acquired below market leases, net
    
    
    (188
    )
    
    
    (180
    )Straight line rental revenue
    
    
    (113
    )
    
    
    (60
    )Amortization of deferred finance costs and debt premium
    
    
    135
    
    
    
    56Deferred income taxes
    
    
    (562
    )
    
    
    (7
    )Equity-based compensation
    
    
    754
    
    
    
    29Equity in loss (earnings) of unconsolidated
real estate partnerships
    
    
    (3
    )
    
    
    9Changes in operating assets and liabilities:Tenant and accounts receivable and other assets
    
    
    1,185
    
    
    
    94Accounts payable and other liabilities
    
    
    (10,418
    )
    
    
    1,884Net cash provided by (used in) operating activities
    
    
    (2,716
    )
    
    
    5,523Investing activities:Business acquisition, net of cash acquired
    
    
    (124,086
    )
    
    
    Investment in real estate properties
    
    
    (23,255
    )
    
    
    (8,059
    )Purchase of minority interests in operating partnership
    
    
    (174
    )
    
    
    Proceeds from sales-type capital lease
    
    
    77
    
    
    
    76Purchase of corporate equipment
    
    
    (47
    )
    
    
    (237
    )Distributions received from unconsolidated real
estate partnerships
    
    
    5
    
    
    
    Decrease (increase) in restricted cash
    
    
    (21,071
    )
    
    
    108Net cash used in investing activities
    
    
    (168,551
    )
    
    
    (8,112
    )Financing activities:Repayments of mortgage notes payable
    
    
    (717
    )
    
    
    (1,675
    )Proceeds from revolving credit facility
    
    
    90,500
    
    
    
    11,200Repayments to revolving credit facility
    
    
    (53,700
    )
    
    
    (77,187
    )Proceeds from term loan
    
    
    100,000
    
    
    
    Net proceeds from sale of common stock
    
    
    53,733
    
    
    
    78,875Dividends and distributions
    
    
    (5,737
    )
    
    
    (4,404
    )Equity contribution by partner in a consolidated real
estate partnerships
    
    
    135
    
    
    
    Distributions to minority interests in real estate partnership
    
    
    (54
    )
    
    
    (68
    )Payment of deferred financing costs
    
    
    (2,867
    )
    
    
    (196
    )Net cash provided by financing activities
    
    
    181,293
    
    
    
    6,545Increase in cash and cash equivalents
    
    
    10,026
    
    
    
    3,956Balance at beginning of period
    
    
    3,555
    
    
    
    1,029Balance at end of period
    
    $
    13,581
    
    
    $
    4,985Supplemental disclosure of cash flow information:Cash paid for interest, net of capitalized interest
    
    $
    4,874
    
    
    $
    3,654Noncash investing and financing activities:OP Units
issued or to be issued in connection with the
acquisition of a business
    
    
    81,347
    
    
    
    Accrued dividends and distributions
    
    
    8,551
    
    
    
    5,787
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COGDELL SPENCER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Business Description
  2. Summary of Significant Accounting Policies
 Basis of Presentation
   Interim Financial Information
  Use of Estimates in Financial Statements
  7




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Revenue Recognition
 Rental Revenue and Property Management.
  Design-Build Contract Revenues and Development Management.
   Gains on Disposition of Real Estate.
 8




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Other income.
 Income Taxes
     Warranties
  9




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2008
    
    
    2007Balance at the beginning of period
    
    $
    
    
    
    $
    Erdman acquisition
    
    
    2,000
    
    
    
    Accruals
    
    
    
    
    
    
    Settlements
    
    
    
    
    
    
    Balance at the end of period
    
    $
    2,000
    
    
    $
    
 Deferred Finance Costs
  Per Share Data
  Concentrations and Credit Risk
   Reclassifications
  Recent Accounting Pronouncements
 
 10




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3. Business and Property Acquisitions
 Merger with Erdman
     11




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Fair value of OP Units issued and to be issued
    
    $
    81,347Cash consideration, net of cash acquried
    
    
    144,479Total purchase price, net of cash acquired
    
    $
    225,826
    Accounts receivable, including retainage receivables
    
    $
    52,637Goodwill and intangible assets
    
    
    289,798Other assets
    
    
    14,381Accounts payable
    
    
    (27,449
    )Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    (37,134
    )Deferred income taxes
    
    
    (43,238
    )Other liabilities
    
    
    (23,169
    )Total purchase price, net of cash acquired
    
    $
    225,826
  12




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Property Acquisitions
     Building and improvements
    
    $
    20,225Acquired ground or air rights leases
    
    
    325Acquired in place lease value and deferred leasing costs
    
    
    2,948Acquired above market leases
    
    
    10Total purchase price allocated
    
    $
    23,508
  Three Months EndedMarch 31, 2008
    
    March 31, 2007Revenue
    
    $
    68,181
    
    
    $
    75,001Net loss
    
    
    (1,982
    )
    
    
    (2,148
    )Net loss per share  basic and diluted
    
    $
    (0.14
    )
    
    $
    (0.26
    )
 4. Investments in Real Estate Partnerships
   
    
    BSB Health/MOB Limited Partnership No. 2, a Delaware limited
partnership, founded in 2002, 2.0% owned by the Company, and owns nine
medical office buildings;
    
    Shannon Health/MOB Limited Partnership No. 1, a Delaware limited
partnership, founded in 2001, 2.0% owned by the Company, and owns ten
medical office buildings; and
    
    McLeod Medical Partners, LLC, a South Carolina limited liability
company, founded in 1982, 1.1% owned by the Company, and owns three
medical office buildings.
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
    
    Cogdell General Health Campus MOB, LP, a Pennsylvania limited
partnership, founded in 2006, 80.9% owned by the Company, and owns one
medical office building;
    
    Mebane Medical Investors, LLC, a North Carolina limited liability
company, founded in 2006, 45.1% owned by the Company, and currently
has one medical office building under construction; and
    
    Rocky Mount MOB, LLC, a North Carolina limited liability company,
founded in 2002, 34.5% owned by the Company, and owns one medical
office building.
    As of
    
    As ofMarch 31, 2008
    
    December 31, 2007Financial position:Total assets
    
    $
    57,089
    
    
    $
    57,406Total liabilities
    
    
    50,661
    
    
    
    50,725Members equity
    
    
    6,428
    
    
    
    6,681
 For the Three Months EndedMarch 31, 2008
    
    March 31, 2007Results of operations:Total revenues
    
    $
    3,068
    
    
    $
    2,848Operating and general and
administrative expenses
    
    
    1,417
    
    
    
    1,119Net income
    
    
    225
    
    
    
    299
 5. Business Segments
   14




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Design-BuildProperty
    
    
    and
    
    
    UnallocatedOperations
    
    
    Development
    
    
    and Other
    
    
    TotalThree months ended March 31, 2008:Revenues:Rental revenue
    
    $
    18,691
    
    
    $
    
    
    
    $
    
    
    
    $
    18,691Design-Build contract revenue and other sales
    
    
    
    
    
    
    23,936
    
    
    
    
    
    
    
    23,936Property management and other fees
    
    
    841
    
    
    
    
    
    
    
    
    
    
    
    841Development management and other income
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Total revenues
    
    
    19,532
    
    
    
    23,955
    
    
    
    
    
    
    
    43,487Certain operating expenses:Property operating and management
    
    
    7,199
    
    
    
    
    
    
    
    
    
    
    
    7,199Costs related to design-build revenue and other
sales
    
    
    
    
    
    
    21,043
    
    
    
    
    
    
    
    21,043Selling, general and administrative
    
    
    
    
    
    
    1,881
    
    
    
    
    
    
    
    1,881Total certain operating expenses
    
    
    7,199
    
    
    
    22,924
    
    
    
    
    
    
    
    30,12312,333
    
    
    
    1,031
    
    
    
    
    
    
    
    13,364Other income (expense)
    
    
    161
    
    
    
    40
    
    
    
    54
    
    
    
    255Corporate general and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (2,425
    )
    
    
    (2,425
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (5,096
    )
    
    
    (5,096
    )Provision for income taxes applicable to funds from
operations modified
    
    
    
    
    
    
    
    
    
    
    (64
    )
    
    
    (64
    )Depreciation and amortization
    
    
    
    
    
    
    (115
    )
    
    
    (52
    )
    
    
    (167
    )Earnings from unconsolidated real estate partnerships,
before real estate related depreciation and
amortization
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Minority interests in real estate partnerships, before
real estate related depreciation and amortization
    
    
    (78
    )
    
    
    
    
    
    
    
    
    
    
    (78
    )Funds from operations modified (FFOM)
    
    
    12,422
    
    
    
    956
    
    
    
    (7,583
    )
    
    
    5,795Amortization of intangibles related to purchase
accounting, net of income tax benefit
    
    
    (42
    )
    
    
    (1,028
    )
    
    
    422
    
    
    
    (648
    )Funds from operations (FFO)
    
    
    12,380
    
    
    
    (72
    )
    
    
    (7,161
    )
    
    
    5,147Real estate related depreciation and amortization
    
    
    (7,700
    )
    
    
    
    
    
    
    
    
    
    
    (7,700
    )Minority interests in operating partnership
    
    
    
    
    
    
    
    
    
    
    752
    
    
    
    752Net income (loss)
    
    $
    4,680
    
    
    $
    (72
    )
    
    $
    (6,409
    )
    
    $
    (1,801
    )Total assets
    
    $
    561,503
    
    
    $
    350,926
    
    
    $
    799
    
    
    $
    913,228
 16




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Design-BuildProperty
    
    
    and
    
    
    UnallocatedOperations
    
    
    Development
    
    
    and Other
    
    
    TotalThree months ended March 31, 2007:Revenues:Rental revenue
    
    $
    14,321
    
    
    $
    
    
    
    $
    
    
    
    $
    14,321Design-Build contract revenue and other sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Property management and other fees
    
    
    943
    
    
    
    
    
    
    
    
    
    
    
    943Development management and other income
    
    
    
    
    
    
    230
    
    
    
    
    
    
    
    230Total revenues
    
    
    15,264
    
    
    
    230
    
    
    
    
    
    
    
    15,494Certain operating expenses:Property operating and management
    
    
    5,905
    
    
    
    
    
    
    
    
    
    
    
    5,905Costs related to design-build revenue and other
sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Selling, general and administrative
    
    
    
    
    
    
    117
    
    
    
    
    
    
    
    117Total certain operating expenses
    
    
    5,905
    
    
    
    117
    
    
    
    
    
    
    
    6,0229,359
    
    
    
    113
    
    
    
    
    
    
    
    9,472Other income (expense)
    
    
    161
    
    
    
    208
    
    
    
    35
    
    
    
    404Corporate general and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (1,990
    )
    
    
    (1,990
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (4,035
    )
    
    
    (4,035
    )Provision for income taxes applicable to funds from
operations modified
    
    
    
    
    
    
    
    
    
    
    (160
    )
    
    
    (160
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    (27
    )Earnings from unconsolidated real estate partnerships,
before real estate related depreciation and
amortization
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )Minority interests in real estate partnerships, before
real estate related depreciation and amortization
    
    
    (42
    )
    
    
    
    
    
    
    
    
    
    
    (42
    )Funds from operations modified (FFOM)
    
    
    9,473
    
    
    
    321
    
    
    
    (6,177
    )
    
    
    3,617Amortization of intangibles related to purchase
accounting, net of income tax benefit
    
    
    (42
    )
    
    
    
    
    
    
    16
    
    
    
    (26
    )Funds from operations (FFO)
    
    
    9,431
    
    
    
    321
    
    
    
    (6,161
    )
    
    
    3,591Real estate related depreciation and amortization
    
    
    (6,552
    )
    
    
    
    
    
    
    
    
    
    
    (6,552
    )Minority interests in operating partnership
    
    
    
    
    
    
    
    
    
    
    1,048
    
    
    
    1,048Net income (loss)
    
    $
    2,879
    
    
    $
    321
    
    
    $
    (5,113
    )
    
    $
    (1,913
    )Total assets
    
    $
    399,157
    
    
    $
    852
    
    
    $
    596
    
    
    $
    400,605
 6. Contracts
  2008
    
    
    2007Costs and estimated earnings on uncompleted contracts
    
    $
    335,661
    
    
    $
    Billings to date
    
    
    (368,831
    )
    
    
    Net billings in excess of costs and estimated earnings
    
    $
    (33,170
    )
    
    $
    
  17




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##### Table of Contents



2008
    
    
    2007Costs and estimated earnings in excess of billings (1)
    
    $
    5,705
    
    
    $
    Billings in excess of costs and estimated earnings
    
    
    (38,875
    )
    
    
    Net billings in excess of costs and estimated earnings
    
    $
    (33,170
    )
    
    $
    
 
 (1)
    
    Included in Other assets in the consolidated balance sheet 7. Goodwill and Intangible Assets
  2008
    
    
    2007Goodwill
    
    $
    5,335
    
    
    $
    5,335Goodwill and intangible assets related to the Erdman
acquisition, net of accumulated amortization of
$1,027 in 2008
    
    
    288,771
    
    
    
    Acquired above market leases, net of accumulated
amortization of $576 in 2008 and $516 in 2007
    
    
    983
    
    
    
    1,033Acquired in place lease value and deferred leasing costs,
net of accumulated amortization of $19,329 in 2008 and
$17,739 in 2007
    
    
    21,718
    
    
    
    20,359Acquired ground leases, net of accumulated amortization
of $246 in 2008 and $217 in 2007
    
    
    3,316
    
    
    
    3,021Acquired property management contracts, net of
accumulated amortization of $298 in 2008 and $256
in 2007
    
    
    1,799
    
    
    
    1,841Total goodwill and intangible assets, net
    
    $
    321,922
    
    
    $
    31,589
  8. Mortgage Notes Payable and Borrowing Agreements
 Revolving Credit Facility
  18




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Term Loan
  Construction Financing
   19




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##### Table of Contents



Mortgage Notes Payable
   Scheduled Maturities
  For the period or year ending December 31:2008
    
    
    47,4602009
    
    
    47,2842010
    
    
    28,4512011
    
    
    220,0912012
    
    
    6,408Thereafter
    
    
    107,114456,808Unamortized premium
    
    
    297$
    457,105
 9. Derivative Financial Instruments
   NotionalAmount as of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    December 31,March 31,
    
    
    
    
    
    
    Pay
    
    
    Effective
    
    
    Expiration
    
    
    2008
    
    
    2007Entity
    
    2008
    
    
    Receive Rate
    
    
    Rate
    
    
    Date
    
    
    Date
    
    
    Asset
    
    
    Liability
    
    
    Asset
    
    
    LiabilityBeaufort Medical Plaza, LLC
    
    $
    4,889
    
    
    1 Month LIBOR
    
    
    5.01
    %
    
    
    10/25/2006
    
    
    
    7/25/2008
    
    
    $
    
    
    
    $
    43
    
    
    $
    
    
    
    $
    23Cogdell Health Campus MOB, LP
    
    
    11,025
    
    
    1 Month LIBOR
    
    
    4.03
    %
    
    
    3/14/2008
    
    
    
    3/2/2015
    
    
    
    
    
    
    
    308
    
    
    
    
    
    
    
    Indianapolis MOB LLC
    
    
    30,000
    
    
    1 Month LIBOR
    
    
    4.95
    %
    
    
    11/6/2006
    
    
    
    10/31/2009
    
    
    
    
    
    
    
    1,327
    
    
    
    
    
    
    
    689River Hills Medical Associates, LLC
    
    
    2,948
    
    
    1 Month LIBOR
    
    
    4.97
    %
    
    
    10/16/2006
    
    
    
    12/15/2008
    
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    29Roper MOB, LLC
    
    
    9,449
    
    
    1 Month LIBOR
    
    
    4.95
    %
    
    
    10/10/2006
    
    
    
    7/10/2009
    
    
    
    
    
    
    
    335
    
    
    
    
    
    
    
    173St. Francis Community MOB, LLC
    
    
    7,144
    
    
    1 Month LIBOR
    
    
    5.11
    %
    
    
    9/18/2007
    
    
    
    6/15/2008
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    25St. Francis Medical Plaza, LLC
    
    
    7,673
    
    
    1 Month LIBOR
    
    
    5.11
    %
    
    
    9/18/2007
    
    
    
    6/15/2008
    
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    27MEA Holdings, Inc.
    
    
    100,000
    
    
    1 Month LIBOR
    
    
    2.82
    %
    
    
    4/1/2008
    
    
    
    3/1/2011
    
    
    
    
    
    
    
    526
    
    
    
    
    
    
    
    Cogdell Spencer LP
    
    
    3,000
    
    
    1 Month LIBOR
    
    
    5.06
    %
    
    
    8/14/2007
    
    
    
    10/31/2008
    
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    27Cogdell Spencer LP
    
    
    27,000
    
    
    1 Month LIBOR
    
    
    5.06
    %
    
    
    8/20/2007
    
    
    
    10/31/2008
    
    
    
    
    
    
    
    470
    
    
    
    
    
    
    
    242$
    
    
    
    $
    3,214
    
    
    $
    
    
    
    $
    1,235
 .
 20




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##### Table of Contents



Fair Value Measurements as ofMarch 31, 2008Total
    
    Level 1
    
    Level 2
    
    Level 3Liabilities:Derivative financial instruments
    
    $
    3,214
    
    
    $
    
    
    
    $
    3,214
    
    
    $
    
  21




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##### Table of Contents



10. Minority Interests
  Entity
    
    2008
    
    
    2007Cogdell Health Campus MOB, LP
    
    $
    529
    
    
    $
    556Mebane Medical Investors, LLC
    
    
    1,900
    
    
    
    1,765Rocky Mount MOB, LLC
    
    
    73
    
    
    
    113$
    2,502
    
    
    $
    2,434
  11. Dividends and Distributions
  12. Incentive Plan
   13. Related Party Transactions
   22




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 When used in this discussion and elsewhere in this Quarterly Report on Form 10-Q, the words
believes, anticipates, projects, should, estimates, expects, and similar expressions
are intended to identify forward-looking statements with the meaning of that term in Section 27A of
the Securities Act of 1933, as amended (the Securities Act), and in Section 21F of the Securities
and Exchange Act of 1934, as amended. Actual results may differ materially due to uncertainties
including:
 
    
    the Companys business strategy;
    
    the Companys ability to integrate Erdman;
    
    the Companys ability to obtain future financing arrangements;
    
    estimates relating to the Companys future distributions;
    
    the Companys understanding of the Companys competition;
    
    the Companys ability to renew the Companys ground leases;
    
    changes in the reimbursement available to the Companys tenants by government or private
payors;
    
    the Companys tenants ability to make rent payments;
    
    defaults by tenants;
    
    market trends; and
    
    projected capital expenditures.
  Overview
   23




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##### Table of Contents



Core CapabilitiesErdman
    
    (CHART)
    
    Core CapabilitiesCogdell SpencerAdvanced Planning
    

    
    ConstructionDesign
    

    
    DevelopmentConstruction
    

    
    AcquisitionsProperty Management
      
    
    61 properties, comprised of 3.3 million net rentable square feet, that
the Company wholly-owns or is a consolidated real estate partnership;
    
    Three properties, comprised of 0.2 million net rentable square feet,
in which the Company owns a minority interest; and
    
    52 properties, comprised of 2.2 million net rentable square feet, that
the Company manages for third parties.
  24




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##### Table of Contents



Factors Which May Influence Future Results of Operations
   Critical Accounting Policies
   Acquisition of Real Estate
  25




---



##### Table of Contents



Useful Lives of Assets
  Asset Impairment Valuation
  Revenue Recognition
   26




---



##### Table of Contents



REIT Qualification Requirements
  Changes in Financial Condition
   Results of Operations
  Business Segments
  27




---



##### Table of Contents



Property Summary
  Three Months Ended
    
    Three Months EndedMarch 31, 2008
    
    March 31, 2007Properties at January 1
    
    
    59
    
    
    
    51Acquisitions
    
    
    2
    
    
    
    Properties at March 31
    
    
    61
    
    
    
    51
 Year EndedDecember 31, 2007Properties at January 1
    
    
    51Acquisitions
    
    
    5In-service completed developments
    
    
    2Lease-up completed development
    
    
    1Properties at December 31
    
    
    59
   Comparison of the three months ended March 31, 2008 and March 31, 2007
 FFOM
  28




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##### Table of Contents



Net loss
    
    $
    (1,801
    )
    
    $
    (1,913
    )Plus minority interests in operating partnership
    
    
    (752
    )
    
    
    (1,048
    )Plus real estate related depreciation and amortization
    
    
    7,700
    
    
    
    6,552Funds from Operations (FFO)
    
    
    5,147
    
    
    
    3,591Plus amortization of intangibles related to purchase
accounting, net of income tax benefit
    
    
    648
    
    
    
    26Funds from Operations Modified (FFOM)
    
    $
    5,795
    
    
    $
    3,617FFO per share and unit  basic and diluted
    
    $
    0.26
    
    
    $
    0.28FFOM per share and unit  basic and diluted
    
    $
    0.29
    
    
    $
    0.28Weighted average shares and units outstanding  basic
    
    
    19,972
    
    
    
    12,919Weighted average shares and units outstanding  diluted
    
    
    19,985
    
    
    
    12,939
 Revenue
    Expenses
     29




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##### Table of Contents



Interest expense
  Income tax expense (benefit)
  Cash Flows
 Comparison of the three months ended March 31, 2008 and March 31, 2007
    Construction in Progress
  EstimatedEstimated
    
    
    Net Rentable
    
    
    Investment
    
    
    TotalProperty
    
    Location
    
    
    Completion Date
    
    
    Square Feet
    
    
    to Date
    
    
    InvestmentMebane Medical Office Building
    
    Mebane, NC
    
    
    2Q 2008
    
    
    
    60,000
    
    
    $
    13,994
    
    
    $
    16,200St. Lukes Riverside MOB
    
    Bethlehem, PA
    
    
    4Q 2009
    
    
    
    170,000
    
    
    $
    876
    
    
    $
    38,900Land and pre-construction developments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,730
    
    
    
    230,000
    
    
    $
    16,600
    
    
    $
    55,100
 30




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##### Table of Contents



Liquidity and Capital Resources
       31




---



##### Table of Contents



Long-Term Liquidity Needs
   32




---



##### Table of Contents



Contractual Obligations
  Remainderof 2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    TotalObligation:Long-term debt principal payments and maturities (1)
    
    $
    47,460
    
    
    $
    47,284
    
    
    $
    28,451
    
    
    $
    220,091
    
    
    $
    6,408
    
    
    $
    107,114
    
    
    $
    456,808Standby letters of credit (2)
    
    
    7,063
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,063Interest payments (3)
    
    
    17,238
    
    
    
    21,063
    
    
    
    18,504
    
    
    
    8,705
    
    
    
    6,505
    
    
    
    19,156
    
    
    
    91,171Purchase commitments (4)
    
    
    852
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    852Ground leases (5)
    
    
    203
    
    
    
    271
    
    
    
    271
    
    
    
    271
    
    
    
    271
    
    
    
    7,951
    
    
    
    9,238Operating leases (6)
    
    
    4,358
    
    
    
    4,796
    
    
    
    3,731
    
    
    
    3,201
    
    
    
    3,101
    
    
    
    27,776
    
    
    
    46,963Total
    
    $
    77,174
    
    
    $
    73,414
    
    
    $
    50,957
    
    
    $
    232,268
    
    
    $
    16,285
    
    
    $
    161,997
    
    
    $
    612,095
 
 (1)
    
    Includes notes payable under the Companys Credit Facility(2)
    
    As collateral for performance, the Company is contingently liable under standby
letters of credit, which also reduces the availability under the Credit Facility(3)
    
    Assumes one-month LIBOR of 2.70% and Prime Rate of 5.25%(4)
    
    These purchase commitments are related to the Companys development projects that
are currently under construction.(5)
    
    Substantially all of the ground leases effectively limit our control over various
aspects of the operation of the applicable property, restrict our ability to transfer the
property and allow the lessor the right of first refusal to purchase the building and
improvements. All of the ground leases provide for the property to revert to the lessor for no
consideration upon the expiration or earlier termination of the ground lease.(6)
    
    Payments under operating lease agreements relate to various of our properties
equipment and office space leases. The future minimum lease commitments under these leases are
as indicated. Off-Balance Sheet Arrangements
  Real Estate Taxes
  Inflation
 Seasonality
  33




---



##### Table of Contents



Recent Accounting Pronouncements
 
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 4. CONTROLS AND PROCEDURES
    34




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
     35




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##### Table of Contents



Issuer Purchases of Equity Securities
  Total Number ofEquity Securities
    
    
    Approximate DollarAverage
    
    
    Purchased as Part
    
    
    Value of EquityTotal Number of
    
    
    Price Paid
    
    
    of Publicly
    
    
    Securities that MayEquity Securities
    
    
    Per Equity
    
    
    Announced Plans
    
    
    Yet Be PurchasedFor the Month of
    
    Purchased
    
    
    Security
    
    
    or Programs
    
    
    Under the PlanJanuary 2008
    
    
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/AFebruary 2008
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AMarch 2008
    
    
    11,397
    
    
    
    15.22
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    11,397
    
    
    $
    15.22
    
    
    
    N/A
    
    
    
    N/A
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 3.1
    
    First Amendment to First Amended and Restated Agreement of Limited Partnership of Cogdell
Spencer LP.10.1
    
    Agreement and Plan of Merger, dated January 23, 2008, by and among Cogdell Spencer LP,
Goldenboy Acquisitions Corp., MEA Holdings, Inc., Marshall Erdman & Associates, Inc., Marshall
Erdman Development, LLC, David Pelisek, David Lubar and Scott Ransom.10.2
    
    Amendment to Agreement and Plan of Merger, dated March 10, 2008, by and among Cogdell Spencer
LP, Goldenboy Acquisitions Corp., MEA Holdings, Inc., Marshall Erdman & Associates, Inc., Marshall
Erdman Development, LLC, David Pelisek, David Lubar and Scott Ransom.10.3
    
    Escrow Agreement, dated March 10, 2008, by and between Cogdell Spencer LP, David Pelisek,
David Lubar, Scott Ransom and Mellon Investor Services LLC.10.4
    
    Exchange Agent Agreement, dated March 10, 2008, by and between Cogdell Spencer LP, David
Pelisek, David Lubar, Scott Ransom and Mellon Investor Services LLC.10.5
    
    Voting Agreement, dated January 23, 2008, by and among the Shareholders (as defined therein)
of MEA Holdings, Inc. for the benefit of Cogdell Spencer LP and Goldenboy Acquisitions Corp.10.6
    
    Voting Agreement, dated January 23, 2008, by and among Baird Capital Partners III Limited
Partnership, BCP III Affiliates Fund Limited Partnership, BCP III Special Affiliates Fund Limited
Partnership, Lubar Capital LLC, James Cogdell and Frank Spencer.10.7
    
    Contributing Shareholders Voting Agreement, dated March 10, 2008, by and among James Cogdell,
Frank Spencer, David Pelisek, David Lubar and Scott Ransom.10.8
    
    Director Designation Agreement, dated March 10, 2008, by and between Cogdell Spencer Inc. and
David Lubar.10.9
    
    Registration Rights Agreement, dated March 10, 2008, by and among Cogdell Spencer Inc. and
certain persons listed on Schedule I thereto.10.10
    
    Registration Rights Agreement, dated January 28, 2008, by and among Cogdell Spencer Inc. and
KeyBanc Capital Markets Inc. on behalf of the persons listed on Schedule I thereto.10.11
    
    Guaranty Agreement, dated March 10, 2008, among each of the Guarantors named therein and Bank
of America, N.A.10.12
    
    Intercreditor Agreement, dated March 10, 2008, between Bank of America, N.A. and KeyBank
National Association.10.13
    
    Credit Agreement, dated March 10, 2008, among Cogdell Spencer LP, Cogdell Spencer Inc., Bank
of America, N.A., KeyBank National Association, Branch Banking & Trust Company, Wachovia Bank,
National Association, each lender signatory thereto and Banc of America Securities LLC.10.14
    
    Employment Agreement, dated March 1, 2008, between Marshall Erdman & Associates, Inc. and
Scott A. Ransom.10.15
    
    Form of Contribution Agreement by and among Cogdell Spencer Inc., Cogdell Spencer LP and each
of the persons set forth on Schedule 1 to Exhibit 10.15.10.16
    
    Contribution Agreement Side Letter, dated March 10, 2008, by Cogdell Spencer Inc. and Cogdell
Spencer LP delivered to David Pelisek, David Lubar and Scott Ransom.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of
2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of
2002.32.1
    
    Certification of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C. Section
1350 as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 36




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##### Table of Contents



SIGNATURES
  COGDELL SPENCER INC.RegistrantDate: May 12, 2008
    /s/Frank C. SpencerFrank C. SpencerPresident and Chief Executive OfficerDate: May 12, 2008
    /s/Charles M. HandyCharles M. HandySenior Vice President and Chief Financial Officer 37