##### 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, 2011
 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
(State or other jurisdiction of 
incorporation or organization)
    
    20-3126457
(I.R.S. Employer
Identification No.)4401 Barclay Downs Drive, Suite 300
Charlotte, North Carolina
(Address of principal executive offices)
    
    28209
(Zip code)
 (704) 940-2900
 
 þ o
 o 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 INFORMATIONItem 1 Financial Statements
    
    
    3Item 2 Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    20Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    33Item 4 Controls and Procedures
    
    
    33PART II Other InformationItem 1 Legal Proceedings
    
    
    34Item 1A Risk Factors
    
    
    34Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3 Defaults Upon Senior Securities
    
    
    34Item 4 Removed and Reserved
    
    
    34Item 5 Other Information
    
    
    34Item 6 Exhibits
    
    
    34Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 COGDELL SPENCER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
  March 31,
    
    
    December 31,2011
    
    
    2010AssetsReal estate properties:Land
    
    $
    37,269
    
    
    $
    37,269Buildings and improvements
    
    
    604,443
    
    
    
    597,022Less: Accumulated depreciation
    
    
    (125,610
    )
    
    
    (119,141
    )Net operating real estate properties
    
    
    516,102
    
    
    
    515,150Construction in progress
    
    
    29,985
    
    
    
    22,243Net real estate properties
    
    
    546,087
    
    
    
    537,393Cash and cash equivalents
    
    
    17,235
    
    
    
    12,203Restricted cash
    
    
    6,784
    
    
    
    6,794Tenant and accounts receivable, net of allowance of $3,071 in 2011 and $3,010 in 2010
    
    
    10,247
    
    
    
    11,383Goodwill
    
    
    22,882
    
    
    
    22,882Intangible assets, net of accumulated amortization of $50,329 in 2011 and $49,287 in 2010
    
    
    18,418
    
    
    
    18,601Other assets
    
    
    28,162
    
    
    
    23,684Total assets
    
    $
    649,815
    
    
    $
    632,940Liabilities and equityMortgage notes payable
    
    $
    319,419
    
    
    $
    317,303Revolving credit facility
    
    
    55,000
    
    
    
    45,000Accounts payable
    
    
    11,628
    
    
    
    11,368Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    2,314
    
    
    
    1,930Other liabilities
    
    
    43,558
    
    
    
    39,819Total liabilities
    
    
    431,919
    
    
    
    415,420Commitments and contingenciesEquity:Cogdell Spencer Inc. stockholders equity:Preferred stock, $0.01 par value; 50,000 shares authorized: 8.5000% Series
A Cumulative Redeemable Perpetual Preferred Shares (liquidation
preference $25.00 per share), 2,940 and 2,600 shares issued and outstanding in 2011
and 2010, respectively
    
    
    73,500
    
    
    
    65,000Common stock, $0.01 par value; 200,000 shares authorized, 51,042 and 50,870 shares
issued and outstanding in 2011 and 2010, respectively
    
    
    510
    
    
    
    509Additional paid-in capital
    
    
    418,374
    
    
    
    417,960Accumulated other comprehensive loss
    
    
    (2,712
    )
    
    
    (3,339
    )Accumulated deficit
    
    
    (295,981
    )
    
    
    (287,798
    )Total Cogdell Spencer Inc. stockholders equity
    
    
    193,691
    
    
    
    192,332Noncontrolling interests:Real estate partnerships
    
    
    6,772
    
    
    
    6,452Operating partnership
    
    
    17,433
    
    
    
    18,736Total noncontrolling interests
    
    
    24,205
    
    
    
    25,188Total equity
    
    
    217,896
    
    
    
    217,520Total liabilities and equity
    
    $
    649,815
    
    
    $
    632,940
   3




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##### Table of Contents



COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Revenues:Rental revenue
    
    $
    23,054
    
    
    $
    21,245Design-Build contract revenue and other sales
    
    
    15,241
    
    
    
    35,436Property management and other fees
    
    
    775
    
    
    
    818Development management and other income
    
    
    74
    
    
    
    103Total revenues
    
    
    39,144
    
    
    
    57,602Expenses:Property operating and management
    
    
    9,287
    
    
    
    8,198Design-Build contracts and development management
    
    
    13,013
    
    
    
    24,619Selling, general, and administrative
    
    
    6,208
    
    
    
    5,820Depreciation and amortization
    
    
    7,830
    
    
    
    8,085Total expenses
    
    
    36,338
    
    
    
    46,722Income from continuing operations before other income (expense) and income
tax expense
    
    
    2,806
    
    
    
    10,880Other income (expense):Interest and other income
    
    
    178
    
    
    
    160Interest expense
    
    
    (4,850
    )
    
    
    (5,089
    )Interest rate derivative expense
    
    
    
    
    
    
    (15
    )Equity in earnings of unconsolidated real estate partnerships
    
    
    8
    
    
    
    3Total other income (expense)
    
    
    (4,664
    )
    
    
    (4,941
    )Income (loss) from continuing operations before income tax expense
    
    
    (1,858
    )
    
    
    5,939Income tax expense
    
    
    (18
    )
    
    
    (1,726
    )Income (loss) from continuing operations
    
    
    (1,876
    )
    
    
    4,213Loss from discontinued operations
    
    
    
    
    
    
    (18
    )Net income (loss)
    
    
    (1,876
    )
    
    
    4,195Net income attributable to the noncontrolling interests in real estate partnerships
    
    
    (200
    )
    
    
    (311
    )Net (income) loss attributable to the noncontrolling interests in operating partnership
    
    
    508
    
    
    
    (598
    )Dividends on preferred stock
    
    
    (1,562
    )
    
    
    Net income (loss) attributable to Cogdell Spencer Inc. common shareholders
    
    $
    (3,130
    )
    
    $
    3,286Per share data  basic and diluted:Income (loss) from continuing operations attributable to Cogdell Spencer Inc. common
shareholders
    
    $
    (0.06
    )
    
    $
    0.08Loss from discontinued operations attributable to Cogdell Spencer Inc. common
shareholders
    
    
    
    
    
    
    Net income (loss) per common share available to Cogdell Spencer Inc. common shareholders
    
    $
    (0.06
    )
    
    $
    0.08Weighted average common shares  basic and diluted
    
    
    51,009
    
    
    
    42,768Net income (loss) attributable to Cogdell Spencer Inc. common shareholders:Continuing operations, net of tax
    
    $
    (3,130
    )
    
    $
    3,301Discontinued operations
    
    
    
    
    
    
    (15
    )Net income (loss) attributable to Cogdell Spencer Inc. common shareholders
    
    $
    (3,130
    )
    
    $
    3,286
   4




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COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
  Cogdell Spencer Inc. StockholdersSeries AAccumulated
    
    
    Cumulative
    
    
    
    
    
    
    
    
    
    
    Noncontrolling
    
    
    NoncontrollingOther
    
    
    Redeemable
    
    
    
    
    
    
    Additional
    
    
    Interests in
    
    
    Interests inTotal
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Perpetual
    
    
    Common
    
    
    Paid-in
    
    
    Operating
    
    
    Real EstateEquity
    
    
    Loss
    
    
    Deficit
    
    
    Loss
    
    
    Preferred Shares
    
    
    Stock
    
    
    Capital
    
    
    Partnership
    
    
    PartnershipsBalance at December 31, 2010
    
    $
    217,520
    
    
    
    
    
    
    $
    (287,798
    )
    
    $
    (3,339
    )
    
    $
    65,000
    
    
    $
    509
    
    
    $
    417,960
    
    
    $
    18,736
    
    
    $
    6,452Comprehensive loss:Net income (loss)
    
    
    (1,876
    )
    
    $
    (1,876
    )
    
    
    (1,568
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508
    )
    
    
    200Unrealized gain on derivative financial
instruments
    
    
    959
    
    
    
    959
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    178Comprehensive loss
    
    
    (917
    )
    
    $
    (917
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of preferred stock, net of costs
    
    
    8,204
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,500
    
    
    
    
    
    
    
    (296
    )
    
    
    
    
    
    
    Conversion of operating partnership units
to common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    1
    
    
    
    409
    
    
    
    (384
    )
    
    
    Restricted stock and LTIP unit grants
    
    
    427
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    199
    
    
    
    Amortization of restricted stock grants
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    Dividends on common stock
    
    
    (5,053
    )
    
    
    
    
    
    
    (5,053
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends on preferred stock
    
    
    (1,562
    )
    
    
    
    
    
    
    (1,562
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Distributions to noncontrolling interests
    
    
    (921
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (738
    )
    
    
    (183
    )Contributed equity in real estate partnership
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125Balance at March 31, 2011
    
    $
    217,896
    
    
    
    
    
    
    $
    (295,981
    )
    
    $
    (2,712
    )
    
    $
    73,500
    
    
    $
    510
    
    
    $
    418,374
    
    
    $
    17,433
    
    
    $
    6,772
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COGDELL SPENCER INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 Cogdell Spencer Inc. StockholdersAccumulated
    
    
    
    
    
    
    
    
    
    
    Noncontrolling
    
    
    NoncontrollingOther
    
    
    
    
    
    
    Additional
    
    
    Interests in
    
    
    Interests inTotal
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Common
    
    
    Paid-in
    
    
    Operating
    
    
    Real EstateEquity
    
    
    Loss
    
    
    Deficit
    
    
    Loss
    
    
    Stock
    
    
    Capital
    
    
    Partnership
    
    
    PartnershipsBalance at December 31, 2009
    
    $
    247,780
    
    
    
    
    
    
    $
    (164,321
    )
    
    $
    (1,861
    )
    
    $
    427
    
    
    $
    370,593
    
    
    $
    37,722
    
    
    $
    5,220Comprehensive income:Net income
    
    
    4,195
    
    
    $
    4,195
    
    
    
    3,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    598
    
    
    
    311Unrealized loss on derivative financial
instruments
    
    
    (1,464
    )
    
    
    (1,464
    )
    
    
    
    
    
    
    (1,002
    )
    
    
    
    
    
    
    
    
    
    
    (184
    )
    
    
    (278
    )Comprehensive income:
    
    
    2,731
    
    
    $
    2,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conversion of operating partnership units
to common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    158
    
    
    
    (153
    )
    
    
    Restricted stock and LTIP unit grants
    
    
    333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    200
    
    
    
    132
    
    
    
    Dividends on common stock
    
    
    (4,279
    )
    
    
    
    
    
    
    (4,279
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Distributions to noncontrolling interests
    
    
    (1,581
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (765
    )
    
    
    (816
    )Balance at March 31, 2010
    
    $
    244,984
    
    
    
    
    
    
    $
    (165,314
    )
    
    $
    (2,868
    )
    
    $
    428
    
    
    $
    370,951
    
    
    $
    37,350
    
    
    $
    4,437
   6




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COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Operating activities:Net income (loss)
    
    $
    (1,876
    )
    
    $
    4,195Adjustments to reconcile net income (loss) to cash provided by operating activities:Depreciation and amortization
    
    
    7,830
    
    
    
    8,083Amortization of acquired above market leases and acquired below market
leases, net (including amounts in discontinued operations)
    
    
    (106
    )
    
    
    (110
    )Straight-line rental revenue
    
    
    (466
    )
    
    
    (221
    )Amortization of deferred finance costs and debt premium
    
    
    351
    
    
    
    392Provision for bad debts
    
    
    62
    
    
    
    (116
    )Deferred income taxes
    
    
    
    
    
    
    (311
    )Deferred tax expense on intersegment profits
    
    
    16
    
    
    
    (165
    )Equity-based compensation
    
    
    500
    
    
    
    260Equity in earnings of unconsolidated real estate partnerships
    
    
    (8
    )
    
    
    (3
    )Change in fair value of interest rate swap agreements
    
    
    
    
    
    
    (274
    )Interest rate derivative expense
    
    
    
    
    
    
    15Changes in operating assets and liabilities:Tenant and accounts receivable and other assets
    
    
    (390
    )
    
    
    1,695Accounts payable and other liabilities
    
    
    4,371
    
    
    
    (2,836
    )Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    384
    
    
    
    (7,836
    )Net cash provided by operating activities
    
    
    10,668
    
    
    
    2,768Investing activities:Investment in real estate properties
    
    
    (15,618
    )
    
    
    (9,393
    )Proceeds from sales-type capital lease
    
    
    76
    
    
    
    76Purchase of corporate property, plant and equipment
    
    
    (302
    )
    
    
    (126
    )Distributions received from unconsolidated real estate partnerships
    
    
    5
    
    
    
    4Decrease (increase) in restricted cash
    
    
    10
    
    
    
    (155
    )Net cash used in investing activities
    
    
    (15,829
    )
    
    
    (9,594
    )Financing activities:Proceeds from mortgage notes payable
    
    
    3,381
    
    
    
    6,424Repayments of mortgage notes payable
    
    
    (1,259
    )
    
    
    (1,031
    )Proceeds from revolving credit facility
    
    
    10,000
    
    
    
    Net proceeds from sale of preferred stock
    
    
    8,204
    
    
    
    Redemption of non-controlling interests in operating partnership
    
    
    
    
    
    
    Dividends on common stock
    
    
    (5,046
    )
    
    
    (4,279
    )Dividends on preferred stock
    
    
    (1,232
    )
    
    
    Distributions to noncontrolling interests in Operating Partnership
    
    
    (675
    )
    
    
    (765
    )Distributions to noncontrolling interests in real estate partnerships
    
    
    (183
    )
    
    
    (813
    )Equity contributions by partners in consolidated real estate partnerships
    
    
    125
    
    
    
    Payment of financing costs
    
    
    (3,122
    )
    
    
    (80
    )Net cash provided by (used in) financing activities
    
    
    10,193
    
    
    
    (544
    )Increase (decrease) in cash and cash equivalents
    
    
    5,032
    
    
    
    (7,370
    )Balance at beginning of period
    
    
    12,203
    
    
    
    25,914Balance at end of period
    
    $
    17,235
    
    
    $
    18,544Supplemental disclosure of cash flow information:Cash paid for interest, net of capitalized interest
    
    $
    4,622
    
    
    $
    5,289Cash paid for income taxes
    
    $
    
    
    
    $
    73Non-cash investing and financing activities:Investment in real estate properties included in accounts payable and
other liabilities
    
    $
    699
    
    
    $
    1,916Accrued dividends and distributions
    
    
    6,384
    
    
    
    5,057Operating Partnership Units converted into common stock
    
    
    409
    
    
    
    158
   7




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COGDELL SPENCER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Business
   2. Summary of Significant Accounting Policies
 Basis of Presentation
  Interim Financial Statements
  Use of Estimates in Financial Statements
   8




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Concentrations and Credit Risk
   March 31, 2011
    
    
    March 31, 2010Customer balances greater than 10% of tenants and accounts receivable
    
    Two
    
    TwoCustomer revenues greater than 10% of total revenue
    
    One
    
    Two
 Fair Value of Financial Instruments
       9




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3. Investments in Real Estate Partnerships
  Real Estate Entity
    
    Entity Holdings
    
    Year Founded
    
    
    Our OwnershipConsolidatedAnchor Cogdell, LLC
    
    one property
    
    
    2011
    
    
    
    95.0
    %Bonney Lake MOB Investors, LLC
    
    one property (under construction)
    
    
    2009
    
    
    
    61.7
    %Genesis Property Holdings, LLC
    
    one property
    
    
    2007
    
    
    
    40.0
    %Cogdell Health Campus MOB, LP
    
    one property
    
    
    2006
    
    
    
    80.9
    %Mebane Medical Investors, LLC
    
    one property
    
    
    2006
    
    
    
    35.1
    %Rocky Mount MOB, LLC
    
    one property
    
    
    2002
    
    
    
    34.5
    %UnconsolidatedCogdell Spencer Medical Partners LLC
    
    no assets or liabilities
    
    
    2008
    
    
    
    20.0
    %BSB Health/MOB Limited Partnership No. 2
    
    nine properties
    
    
    2002
    
    
    
    2.0
    %Shannon Health/MOB Limited Partnership No. 1
    
    ten properties
    
    
    2001
    
    
    
    2.0
    %McLeod Medical Partners, LLC
    
    three properties
    
    
    1982
    
    
    
    1.1
    %
     March 31,
    
    
    December 31,2011
    
    
    2010Financial position:Total assets
    
    $
    53,613
    
    
    $
    53,755Total liabilities
    
    
    47,109
    
    
    
    47,272Members equity
    
    
    6,504
    
    
    
    6,483
 For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Results of operations:Total revenues
    
    $
    2,771
    
    
    $
    3,129Operating and general and administrative expenses
    
    
    1,273
    
    
    
    1,462Net income
    
    
    334
    
    
    
    272
  10




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##### Table of Contents



4. Acquisitions
  Building and improvements
    
    $
    5,306Acquired in place lease value and deferred leasing costs
    
    
    807Acquired above market leases
    
    
    53Acquired below market leases
    
    
    (16
    )Total purchase price allocated
    
    $
    6,150
 5. Business Segments
    11




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##### Table of Contents



Design-BuildProperty
    
    
    and
    
    
    Intersegment
    
    
    UnallocatedQuarter ended March 31, 2011
    
    Operations
    
    
    Development
    
    
    Eliminations
    
    
    and Other
    
    
    TotalRevenues:Rental revenue
    
    $
    23,054
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23,054Design-Build contract revenue and other sales
    
    
    
    
    
    
    23,784
    
    
    
    (8,543
    )
    
    
    
    
    
    
    15,241Property management and other fees
    
    
    775
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    775Development management and other income
    
    
    
    
    
    
    879
    
    
    
    (805
    )
    
    
    
    
    
    
    74Total revenues
    
    
    23,829
    
    
    
    24,663
    
    
    
    (9,348
    )
    
    
    
    
    
    
    39,144Certain operating expenses:Property operating and management
    
    
    9,287
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,287Design-Build contracts and development management
    
    
    
    
    
    
    21,488
    
    
    
    (8,475
    )
    
    
    
    
    
    
    13,013Selling, general, and administrative
    
    
    
    
    
    
    3,776
    
    
    
    
    
    
    
    
    
    
    
    3,776Total certain operating expenses
    
    
    9,287
    
    
    
    25,264
    
    
    
    (8,475
    )
    
    
    
    
    
    
    26,07614,542
    
    
    
    (601
    )
    
    
    (873
    )
    
    
    
    
    
    
    13,068Interest and other income
    
    
    164
    
    
    
    8
    
    
    
    
    
    
    
    6
    
    
    
    178Corporate general and administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,432
    )
    
    
    (2,432
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,850
    )
    
    
    (4,850
    )Income tax expense applicable to funds from
operations modified
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    (18
    )Non-real estate related depreciation and amortization
    
    
    
    
    
    
    (278
    )
    
    
    
    
    
    
    (44
    )
    
    
    (322
    )Earnings from unconsolidated real estate partnerships,
before real estate related depreciation and amortization
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Noncontrolling interests in real estate partnerships,
before real estate related depreciation and amortization
    
    
    (498
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (498
    )Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,562
    )
    
    
    (1,562
    )Funds from operations modified (FFOM)
    
    
    14,218
    
    
    
    (871
    )
    
    
    (873
    )
    
    
    (8,900
    )
    
    
    3,574Amortization of intangibles related to purchase accounting
    
    
    (42
    )
    
    
    (189
    )
    
    
    
    
    
    
    
    
    
    
    (231
    )Funds from operations (FFO)
    
    
    14,176
    
    
    
    (1,060
    )
    
    
    (873
    )
    
    
    (8,900
    )
    
    
    3,343Real estate related depreciation and amortization
    
    
    (7,279
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,279
    )Noncontrolling interests in real estate partnerships,
before real estate related depreciation and amortization
    
    
    498
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    498Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,562
    
    
    
    1,562Net income (loss)
    
    $
    7,395
    
    
    $
    (1,060
    )
    
    $
    (873
    )
    
    $
    (7,338
    )
    
    $
    (1,876
    )Total assets
    
    $
    595,032
    
    
    $
    54,520
    
    
    $
    
    
    
    $
    263
    
    
    $
    649,815
  12




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##### Table of Contents



Design-BuildProperty
    
    
    and
    
    
    Intersegment
    
    
    UnallocatedQuarter ended March 31, 2010
    
    Operations
    
    
    Development
    
    
    Eliminations
    
    
    and Other
    
    
    TotalRevenues:Rental revenue
    
    $
    21,268
    
    
    $
    
    
    
    $
    (23
    )
    
    $
    
    
    
    $
    21,245Design-Build contract revenue and other sales
    
    
    
    
    
    
    39,200
    
    
    
    (3,764
    )
    
    
    
    
    
    
    35,436Property management and other fees
    
    
    818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    818Development management and other income
    
    
    
    
    
    
    886
    
    
    
    (783
    )
    
    
    
    
    
    
    103Total revenues
    
    
    22,086
    
    
    
    40,086
    
    
    
    (4,570
    )
    
    
    
    
    
    
    57,602Certain operating expenses:Property operating and management
    
    
    8,198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,198Design-Build contracts and development management
    
    
    
    
    
    
    28,648
    
    
    
    (4,029
    )
    
    
    
    
    
    
    24,619Selling, general, and administrative
    
    
    
    
    
    
    3,889
    
    
    
    (23
    )
    
    
    
    
    
    
    3,866Total certain operating expenses
    
    
    8,198
    
    
    
    32,537
    
    
    
    (4,052
    )
    
    
    
    
    
    
    36,68313,888
    
    
    
    7,549
    
    
    
    (518
    )
    
    
    
    
    
    
    20,919Interest and other income
    
    
    146
    
    
    
    3
    
    
    
    
    
    
    
    11
    
    
    
    160Corporate general and administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,954
    )
    
    
    (1,954
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,089
    )
    
    
    (5,089
    )Interest rate derivative expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (15
    )Income taxes expense applicable to funds from
operations modified
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,965
    )
    
    
    (1,965
    )Non-real estate related depreciation and amortization
    
    
    
    
    
    
    (219
    )
    
    
    
    
    
    
    (60
    )
    
    
    (279
    )Earnings from unconsolidated real estate partnerships,
before real estate related depreciation and amortization
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Noncontrolling interests in real estate partnerships,
before real estate related depreciation and amortization
    
    
    (616
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (616
    )Discontinued operations
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    (34
    )
    
    
    (18
    )Funds from operations modified (FFOM)
    
    
    13,440
    
    
    
    7,333
    
    
    
    (518
    )
    
    
    (9,106
    )
    
    
    11,149Amortization of intangibles related to purchase accounting,
net of income tax benefit
    
    
    (42
    )
    
    
    (570
    )
    
    
    
    
    
    
    239
    
    
    
    (373
    )Funds from operations (FFO)
    
    
    13,398
    
    
    
    6,763
    
    
    
    (518
    )
    
    
    (8,867
    )
    
    
    10,776Real estate related depreciation and amortization
    
    
    (7,197
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,197
    )Noncontrolling interests in real estate partnerships,
before real estate related depreciation and amortization
    
    
    616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    616Net income (loss)
    
    $
    6,817
    
    
    $
    6,763
    
    
    $
    (518
    )
    
    $
    (8,867
    )
    
    $
    4,195Total assets
    
    $
    554,138
    
    
    $
    187,710
    
    
    $
    
    
    
    $
    395
    
    
    $
    742,243
 6. Contracts
  March 31,
    
    
    December 31,2011
    
    
    2010Costs and estimated earnings on uncompleted contracts
    
    $
    61,122
    
    
    $
    48,394Billings to date
    
    
    (61,483
    )
    
    
    (49,336
    )Net billings in excess of costs and estimated earnings
    
    $
    (361
    )
    
    $
    (942
    )
  March 31,
    
    
    December 31,2011
    
    
    2010Costs and estimated earnings in excess of billings (1)
    
    $
    1,953
    
    
    $
    988Billings in excess of costs and estimated earnings
    
    
    (2,314
    )
    
    
    (1,930
    )Net billings in excess of costs and estimated earnings
    
    $
    (361
    )
    
    $
    (942
    )
 (1)
    
    Included in Other assets in the consolidated balance sheet
   13




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##### Table of Contents



7. Goodwill and Intangible Assets
      Accumulated
    
    
    NetGross Amount
    
    
    Impairment
    
    
    Carrying ValueGoodwill
    
    $
    180,438
    
    
    $
    (157,556
    )
    
    $
    22,882Trademarks and tradenames
    
    
    75,968
    
    
    
    (75,968
    )
    
    
    
  As of March 31, 2011NetAccumulated
    
    
    CarryingGross Amount
    
    
    Amortization
    
    
    ValueIn place lease value and deferred leasing costs
    
    $
    44,091
    
    
    $
    (31,461
    )
    
    $
    12,630Ground leases
    
    
    3,776
    
    
    
    (687
    )
    
    
    3,089Property management contracts
    
    
    2,097
    
    
    
    (806
    )
    
    
    1,291Design-build customer relationships
    
    
    1,789
    
    
    
    (825
    )
    
    
    964Above market tenant leases
    
    
    1,612
    
    
    
    (1,168
    )
    
    
    444Design-build signed contracts
    
    
    13,253
    
    
    
    (13,253
    )
    
    
    Design-build proposals
    
    
    2,129
    
    
    
    (2,129
    )
    
    
    Total amortizing intangible assets
    
    $
    68,747
    
    
    $
    (50,329
    )
    
    $
    18,418
  14




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##### Table of Contents



FutureAmortizationFor the year ending:
    
    ExpenseRemainder of 2011
    
    $
    2,6802012
    
    
    2,7322013
    
    
    1,8052014
    
    
    1,6602015
    
    
    1,190Thereafter
    
    
    8,351$
    18,418
 8. Mortgage Notes Payable and Borrowing Agreements
       15




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##### Table of Contents



For the year ending:
    
    TotalRemainder of 2011
    
    $
    76,1722012
    
    
    20,0252013
    
    
    15,8722014
    
    
    119,1272015
    
    
    12,490Thereafter
    
    
    130,675$
    374,361
   9. Derivative Financial Instruments
  As of March 31, 2011
    
    
    March 31, 2011
    
    
    December 31, 2010Notional
    
    
    
    
    
    
    
    Effective
    
    
    ExpirationEntity/Property
    
    Amount
    
    
    Receive Rate
    
    Pay Rate
    
    
    Date
    
    
    Date
    
    
    Asset
    
    
    Liability
    
    
    Asset
    
    
    LiabilitySt. Francis Community MOB LLC
    
    $
    6,642
    
    
    1 Month LIBOR
    
    
    3.32
    %
    
    
    10/15/2008
    
    
    
    6/15/2011
    
    
    $
    
    
    
    $
    52
    
    
    $
    
    
    
    $
    102St. Francis Medical Plaza (Greenville)
    
    
    7,135
    
    
    1 Month LIBOR
    
    
    3.32
    %
    
    
    10/15/2008
    
    
    
    6/15/2011
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    109Beaufort Medical Plaza
    
    
    4,605
    
    
    1 Month LIBOR
    
    
    3.80
    %
    
    
    8/18/2008
    
    
    
    8/18/2011
    
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    107East Jefferson Medical Plaza
    
    
    11,600
    
    
    1 Month LIBOR
    
    
    1.80
    %
    
    
    1/15/2009
    
    
    
    12/23/2011
    
    
    
    
    
    
    
    135
    
    
    
    
    
    
    
    173River Hills Medical Plaza
    
    
    3,208
    
    
    1 Month LIBOR
    
    
    1.78
    %
    
    
    1/15/2009
    
    
    
    1/31/2012
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    50HealthPartners Medical Office Building
    
    
    11,742
    
    
    1 Month LIBOR
    
    
    3.55
    %
    
    
    6/1/2010
    
    
    
    11/1/2014
    
    
    
    
    
    
    
    770
    
    
    
    
    
    
    
    899Lancaster ASC MOB
    
    
    10,330
    
    
    1 Month LIBOR
    
    
    4.03
    %
    
    
    3/14/2008
    
    
    
    3/2/2015
    
    
    
    
    
    
    
    825
    
    
    
    
    
    
    
    938Bonney Lake MOB Investors LLC
    
    
    11,505
    
    
    1 Month LIBOR
    
    
    3.19
    %
    
    
    10/1/2011
    
    
    
    10/1/2016
    
    
    
    
    
    
    
    243
    
    
    
    
    
    
    
    Woodlands Center for Specialized Medicine
    
    
    16,533
    
    
    1 Month LIBOR
    
    
    4.71
    %
    
    
    4/1/2010
    
    
    
    10/1/2018
    
    
    
    
    
    
    
    1,939
    
    
    
    
    
    
    
    2,200Medical Center Physicians Tower
    
    
    14,644
    
    
    1 Month LIBOR
    
    
    3.69
    %
    
    
    9/1/2010
    
    
    
    3/1/2019
    
    
    
    
    
    
    
    644
    
    
    
    
    
    
    
    921University Physicians  Grants Ferry
    
    
    10,361
    
    
    1 Month LIBOR
    
    
    3.70
    %
    
    
    10/1/2010
    
    
    
    4/1/2019
    
    
    
    
    
    
    
    457
    
    
    
    
    
    
    
    654Cogdell Spencer LP(1)
    
    
    n/a
    
    
    n/a
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162$
    
    
    
    $
    5,230
    
    
    $
    
    
    
    $
    6,315
 (1)
    
    Interest rate swap agreement expired March 10, 2011.
  16




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##### Table of Contents



As of March 31, 2011
    
    
    March 31, 2011
    
    
    December 31, 2010Notional
    
    
    
    
    
    
    
    
    
    
    Effective
    
    
    ExpirationEntity/Property
    
    Amount
    
    
    Reference Rate
    
    
    Cap Rate
    
    
    Date
    
    
    Date
    
    
    Asset
    
    
    Liability
    
    
    Asset
    
    
    LiabilityRocky Mount Medical Park LP
    
    $
    10,239
    
    
    1 Month LIBOR
    
    
    3.00
    %
    
    
    2/1/2011
    
    
    
    10/22/2014
    
    
    $
    110
    
    
    
    
    
    
    
    
    
    
    
    
  Location of Gain or
    
    
    Gain or (Loss)(Loss) Reclassified
    
    
    Reclassified fromGain or (Loss)
    
    
    from AOCI,
    
    
    AOCI,Recognized in AOCI,
    
    
    Noncontrolling
    
    
    NoncontrollingNoncontrolling
    
    
    Interests in
    
    
    Interests inInterests in
    
    
    Operating
    
    
    Operating
    
    
    Location of Gain or
    
    
    Gain or (Loss)Operating
    
    
    Partnership, and
    
    
    Partnership, and
    
    
    (Loss) Recognized -
    
    
    Recognized -Partnership, and
    
    
    Noncontrolling
    
    
    Noncontrolling
    
    
    Ineffective Portion
    
    
    Ineffective PortionNoncontrolling
    
    
    Interests in Real
    
    
    Interests in Real
    
    
    and Amount
    
    
    and AmountInterests in Real
    
    
    Estate Partnerships
    
    
    Estate Partnerships
    
    
    Excluded from
    
    
    Excluded fromEstate Partnerships -
    
    
    into Income -
    
    
    into Income -
    
    
    Effectiveness
    
    
    EffectivenessEffective Portion (1)
    
    
    Effective Portion
    
    
    Effective Portion (1)
    
    
    Testing
    
    
    TestingFor the three months ended:March 31, 2011
    
    $
    959
    
    
    Interest Expense
    
    $
    (959
    )
    
    Interest rate derivative expense
    
    $
    March 31, 2010
    
    $
    (1,464
    )
    
    Interest Expense
    
    $
    (254
    )
    
    Interest rate derivative expense
    
    $
    (15
    )
 
 (1)
    
    Refer to the Condensed Consolidated Statement of Changes in Equity, which
summarizes the activity in unrealized gain on derivative financial instruments, net of tax related
to the interest rate swap and interest rate cap agreements.
  Fair Value Measurements as ofMarch 31, 2011Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets-Interest rate cap agreement
    
    $
    110
    
    
    $
    
    
    
    $
    110
    
    
    $
    Liabilities-Interest rate swap agreements
    
    $
    (5,230
    )
    
    $
    
    
    
    $
    (5,230
    )
    
    $
    
 Fair Value Measurements as ofDecember 31, 2010Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Liabilities-Interest rate swap agreements
    
    $
    (6,315
    )
    
    $
    
    
    
    $
    (6,315
    )
    
    $
    
   17




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##### Table of Contents



10. Equity
 Preferred Shares
   For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Preferred stock shares at beginning of period
    
    
    2,600
    
    
    
    Issuance of preferred stock
    
    
    340
    
    
    
    Preferred stock shares at end of period
    
    
    2,940
    
    
    
    
 Common Shares and Units
     For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Shares of common stock at beginning of period
    
    
    50,870
    
    
    
    42,729Conversion of OP Units to common stock
    
    
    134
    
    
    
    29Restricted stock grants
    
    
    38
    
    
    
    35Shares of common stock at end of period
    
    
    51,042
    
    
    
    42,793
  18




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##### Table of Contents



For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Net income (loss) attributable to Cogdell Spencer Inc. common shareholders
    
    $
    (3,130
    )
    
    $
    3,286Increase in Cogdell Spencer Inc. additional paid-in capital for the
conversion of OP units into common stock
    
    
    409
    
    
    
    158Change from net income (loss) attributable to Cogdell Spencer Inc.
common shareholders and transfers from noncontrolling interests
    
    $
    (2,721
    )
    
    $
    3,444
 Noncontrolling Interests in Real Estate Partnerships
  Dividends and Distributions
   11. Incentive and Share-Based Compensation
     19




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##### Table of Contents



WeightedRestricted
    
    
    
    
    
    
    AverageStock
    
    
    LTIP Units
    
    
    Grant PriceUnvested balance at January 1, 2011
    
    
    75
    
    
    
    65
    
    
    $
    10.69Granted
    
    
    17
    
    
    
    54
    
    
    
    6.01Vested
    
    
    (17
    )
    
    
    (38
    )
    
    
    6.0775
    
    
    
    81
    
    
    $
    10.17Approved for grant
    
    
    447
    
    
    
    
    
    
    
    (a
    )Unvested balance at March 31, 2011
    
    
    522
    
    
    
    81
    
    
    
    n/a
 (a)
    
    Grant date fair value will be determined when the related performance criteria have
been mutually agreed upon by the Compensation Committee and Mr. Braun and approved by our
Board of Directors, which is expected on or before June 1, 2011.
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion should be read in conjunction with the Cogdell Spencer Inc.
Consolidated Financial Statements and Notes thereto appearing in our Annual Report on Form 10-K for
the year ended December 31, 2010 and our Condensed Consolidated Financial Statements and Notes
thereto appearing elsewhere in this Quarterly Report on Form 10-Q . We make statements in this
section that are forward-looking statements within the meaning of the federal securities laws.
Certain risk factors may cause actual results, performance or achievements to differ materially
from those expressed or implied by the following discussion. For a discussion of such risk
factors, see the section entitled Risk Factors in our Annual Report on Form 10-K for the year
ended December 31, 2010.
 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
Exchange Act of 1934, as amended. Actual results may differ materially due to uncertainties
including the following:
 
    
    our business strategy;
    
    our ability to comply with financial covenants in our debt instruments;
    
    our access to capital;
    
    our ability to obtain future financing arrangements, including refinancing existing arrangements;
    
    estimates relating to our future distributions;
    
    our understanding of our competition;
    
    our ability to renew our ground leases;
    
    legislative and regulatory changes (including changes to laws governing the taxation of REITs and
individuals);
    
    increases in costs of borrowing as a result of changes in interest rates;
    
    our ability to maintain our qualification as a REIT due to economic, market, legal, or tax considerations;
    
    changes in the reimbursement available to our tenants by government or private payors;
  20




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##### Table of Contents




    
    our tenants ability to make rent payments;
    
    defaults by tenants and customers;
    
    access to financing by customers;
    
    delays in project starts and cancellations by customers;
    
    our ability to convert design-build project opportunities into new engagements for us;
    
    market trends; and
    
    projected capital expenditures.
   Overview
     
    
    65 consolidated wholly-owned and joint venture properties, comprising a total of
approximately 3.6 million net rentable square feet, 91.0% leased;
 
    
    One wholly-owned property in the lease-up phase, comprising approximately 0.1 million
net rentable square feet, 75% leased and income producing with the remaining 25% leased and
under construction for a third quarter 2011 scheduled date of occupancy;
  21




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##### Table of Contents




    
    One consolidated joint venture acquisition property in the lease-up phase, comprising
approximately 0.1 million net rentable square feet, 76.1% leased;
 
    
    Three unconsolidated joint venture properties comprising a total of approximately 0.2
million net rentable square feet; and
 
    
    44 properties managed for third party clients comprising a total of approximately 2.0
million net rentable square feet.
     Critical Accounting Estimates
    22




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Acquisition of Real Estate
  Useful Lives of Assets
  Asset Impairment Valuation
     23




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Revenue Recognition
       24




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##### Table of Contents



Income Taxes
     REIT Qualification Requirements
  Results of Operations
  Business Segments
   25




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##### Table of Contents



Property Summary
  Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Properties at beginning of period
    
    
    66
    
    
    
    62Acquisitions
    
    
    1
    
    
    
    Developments
    
    
    
    
    
    
    1Properties at end of period
    
    
    67
    
    
    
    63
 Year EndedDecember 31,2010Properties at beginning of period
    
    
    62Acquisitions
    
    
    1Developments
    
    
    3Properties at end of period
    
    
    66
   Comparison of the Three Months Ended March 31, 2011 and 2010
 Funds from Operations Modified (FFOM)
   For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010FFOM attributable to:Property operations
    
    $
    14,218
    
    
    $
    13,440Design-Build and development
    
    
    (871
    )
    
    
    7,333Intersegment eliminations
    
    
    (873
    )
    
    
    (518
    )Unallocated and other
    
    
    (8,900
    )
    
    
    (9,106
    )FFOM
    
    $
    3,574
    
    
    $
    11,149
  26




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##### Table of Contents



For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Net income (loss)
    
    $
    (1,876
    )
    
    $
    4,195Add:Real estate related depreciation and amortization:Wholly-owned and consolidated properties
    
    
    7,277
    
    
    
    7,194Unconsolidated real estate partnerships
    
    
    2
    
    
    
    3Less:Noncontrolling interests in real estate partnerships
    
    
    (498
    )
    
    
    (616
    )Dividends on preferred stock
    
    
    (1,562
    )
    
    
    Funds from Operations (FFO)
    
    
    3,343
    
    
    
    10,776Amortization of intangibles related to purchase
accounting, net of income tax benefit
    
    
    231
    
    
    
    373Funds from Operations Modified (FFOM)
    
    $
    3,574
    
    
    $
    11,149
 FFOM attributable to Property Operations, net of intersegment eliminations
  For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Rental revenue, net of intersegment eliminations of $0 in 2011 and $23 2010
    
    $
    23,054
    
    
    $
    21,245Property management and other fee revenue
    
    
    775
    
    
    
    818Property operating and management expenses
    
    
    (9,287
    )
    
    
    (8,198
    )Interest and other income
    
    
    164
    
    
    
    146Earnings (loss) from unconsolidated real estate partnerships,
before real estate related depreciation and amortization
    
    
    10
    
    
    
    6Noncontrolling interests in real estate partnerships, before
real estate related depreciation and amortization
    
    
    (498
    )
    
    
    (616
    )Income from discontinued operations, before real estate
related depreciation and amortization
    
    
    
    
    
    
    16FFOM, net of intersegment eliminations
    
    
    14,218
    
    
    
    13,417Intersegment eliminations
    
    
    
    
    
    
    23FFOM
    
    $
    14,218
    
    
    $
    13,440
    27




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##### Table of Contents



FFOM attributable to Design-Build and Development, net of intersegment eliminations
  For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Design-Build contract revenue and other sales, net of intersegment
eliminations of $8,543 in 2011 and $3,764 in 2010
    
    $
    15,241
    
    
    $
    35,436Development management and other income, net of intersegment
eliminations of $805 in 2011 and $783 in 2010
    
    
    74
    
    
    
    103Design-Build contract and development management expenses, net of
intersegment eliminations of $8,475 in 2011 and $4,029 in 2010
    
    
    (13,013
    )
    
    
    (24,619
    )Selling, general, and administrative expenses, net of intersegment
eliminations of $0 in 2011 and $23 in 2010
    
    
    (3,776
    )
    
    
    (3,866
    )Interest and other income
    
    
    8
    
    
    
    3Depreciation and amortization
    
    
    (278
    )
    
    
    (219
    )FFOM, net of intersegment eliminations
    
    
    (1,744
    )
    
    
    6,838Intersegment eliminations
    
    
    873
    
    
    
    495FFOM
    
    $
    (871
    )
    
    $
    7,333
      Selling, general, and administrative
   28




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Depreciation and amortization
  Interest expense
  Income tax expense
  Cash Flows
  For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Net loss plus non-cash adjustments
    
    $
    6,303
    
    
    $
    11,745Changes in operating assets and liabilities
    
    
    4,365
    
    
    
    (8,977
    )Net cash provided by operating activities
    
    $
    10,668
    
    
    $
    2,768
    For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Development, redevelopment, and acquisitions
    
    $
    14,257
    
    
    $
    9,177Second generation tenant improvements
    
    
    1,122
    
    
    
    208Recurring property capital expenditures
    
    
    239
    
    
    
    8Investment in real estate properties
    
    $
    15,618
    
    
    $
    9,393
  29




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##### Table of Contents



Construction in Progress
  EstimatedEstimated
    
    
    Net Rentable
    
    
    Investment
    
    
    TotalProperty
    
    Location
    
    Completion Date
    
    
    Square Feet
    
    
    to Date
    
    
    InvestmentGood Sam MOB Investors, LLC
    
    Puyallup, WA
    
    
    4Q 2011
    
    
    
    80,000
    
    
    $
    12,012
    
    
    $
    24,700Bonney Lake MOB Investors, LLC (1)
    
    Bonney Lake, WA
    
    
    3Q 2011
    
    
    
    56,000
    
    
    
    14,213
    
    
    
    17,700St. Lukes Medical Office Building
    
    Duluth, MN
    
    
    3Q 2012
    
    
    
    176,000
    
    
    
    948
    
    
    
    27,800Land and pre-construction developments
    
    
    
    
    
    
    
    
    
    
    
    
    2,812
    
    
    
    312,000
    
    
    $
    29,985
    
    
    $
    70,200
 (1)
    
    We had a 61.7% ownership
interest at March 31, 2011.
 Liquidity and Capital Resources
      30




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##### Table of Contents



Financial Covenant
    
    March 31, 2011Maximum total leverage ratio (0.65 to 1.00 through March 31, 2013,
and 0.60 to 1.00 thereafter)
    
    
    0.49 to 1.00Maximum secured recourse indebtedness ratio (0.20 to 1.00)
    
    
    0.05 to 1.00Minimum fixed charge coverage ratio (1.35 to 1.00 through March 31, 2012,
and 1.50 to 1.00 thereafter)
    
    
    1.62 to 1.00Minimum consolidated tangible net worth ($237,106 plus 80% of the net
proceeds of equity issuance after March 1, 2011)
    
    
    $295,434Minimum facility interest coverage ratio (1.50 to 1.00)
    
    
    12.61 to 1.00
  Short-Term Liquidity Needs
      Long-Term Liquidity Needs
     31




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Contractual Obligations
  Remainder of2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    TotalObligation:Long-term debt principal
payments and maturities (1)
    
    $
    76,172
    
    
    $
    20,025
    
    
    $
    15,872
    
    
    $
    119,127
    
    
    $
    12,490
    
    
    $
    130,675
    
    
    $
    374,361Standby letters of credit (2)
    
    
    8,128
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,128Interest payments (3)
    
    
    11,869
    
    
    
    13,958
    
    
    
    13,153
    
    
    
    9,914
    
    
    
    6,878
    
    
    
    13,229
    
    
    
    69,001Purchase commitments (4)
    
    
    608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608Ground and air rights leases (5)
    
    
    910
    
    
    
    1,008
    
    
    
    1,008
    
    
    
    1,009
    
    
    
    1,010
    
    
    
    23,137
    
    
    
    28,082Operating leases (6)
    
    
    3,891
    
    
    
    4,467
    
    
    
    3,723
    
    
    
    3,531
    
    
    
    3,506
    
    
    
    21,008
    
    
    
    40,126Total
    
    $
    101,578
    
    
    $
    39,458
    
    
    $
    33,756
    
    
    $
    133,581
    
    
    $
    23,884
    
    
    $
    188,049
    
    
    $
    520,306
 
 (1)
    
    Includes notes payable under the Credit Facility.(2)
    
    As collateral for performance, we are contingently liable under standby letters of
credit, which also reduces the availability under the Credit Facility.(3)
    
    Assumes one-month LIBOR of 0.24% and a Prime Rate of 3.25%, which were the rates as
of March 31, 2011.(4)
    
    These purchase commitments are related to our development projects that are
currently under construction. We have committed construction loans that will fund the obligations.(5)
    
    Substantially all of the ground and air rights 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 or air rights lease.(6)
    
    Payments under operating lease agreements relate to equipment and office space
leases. The future minimum lease commitments under these leases are as indicated.
 Off-Balance Sheet Arrangements
  Real Estate Taxes
   32




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Inflation
  Seasonality
  Recent Accounting Pronouncements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 4.
    
    CONTROLS AND PROCEDURES
     33




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PART II. OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Issuer Purchases of Equity Securities
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    [REMOVED AND RESERVED]
 
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 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.
 
 SIGNATURES
  COGDELL SPENCER INC.RegistrantDate: May 10, 2011
    /s/ Raymond W. BraunRaymond W. BraunPresident and Chief Executive OfficerDate: May 10, 2011
    /s/ Charles M. HandyCharles M. HandyExecutive Vice President and Chief Financial Officer  34