##### 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 September 30, 2007
 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 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)4401 Barclay Downs Drive, Suite 300Charlotte, North Carolina
(Address of principal executive offices)
    
    28209
(Zip code)
 (704) 940-2900
 
 þ o
  o þ o
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I
    
    FINANCIAL INFORMATION
    
    
    1Item 1
    
    Financial Statements
    
    
    1Item 2
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    12Item 3
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4
    
    Controls and Procedures
    
    
    21PART II
    
    Other Information
    
    
    21Item 1
    
    Legal Proceedings
    
    
    21Item 1A
    
    Risk Factors
    
    
    21Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3
    
    Defaults Upon Senior Securities
    
    
    22Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    22Item 5
    
    Other Information
    
    
    23Item 6
    
    Exhibits
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 COGDELL SPENCER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 As of
    
    
    As ofSeptember 30, 2007
    
    
    December 31, 2006AssetsReal estate properties:Land
    
    $
    28,139
    
    
    $
    22,768Buildings and improvements
    
    
    430,188
    
    
    
    339,214Less: Accumulated depreciation
    
    
    (39,065
    )
    
    
    (23,664
    )Total operating real estate properties, net
    
    
    419,262
    
    
    
    338,318Construction in progress
    
    
    10,110
    
    
    
    12,854Total real estate properties, net
    
    
    429,372
    
    
    
    351,172Cash and cash equivalents
    
    
    3,184
    
    
    
    1,029Restricted cash
    
    
    1,311
    
    
    
    982Investment in capital lease
    
    
    5,964
    
    
    
    6,193Acquired above market leases, net of accumulated
amortization of $457 in 2007 and $290 in 2006
    
    
    1,003
    
    
    
    966Acquired in place lease value and deferred leasing
costs, net of accumulated amortization of $16,185
in 2007 and $11,184 in 2006
    
    
    18,076
    
    
    
    18,205Acquired ground leases, net of accumulated
amortization of $192 in 2007 and $146 in 2006
    
    
    3,046
    
    
    
    3,092Deferred financing costs, net of accumulated
amortization of $573 in 2007 and $342 in 2006
    
    
    1,315
    
    
    
    1,018Goodwill
    
    
    5,335
    
    
    
    5,326Other assets
    
    
    7,046
    
    
    
    5,075Total assets
    
    $
    475,652
    
    
    $
    393,058Liabilities and stockholders equityNotes payable under line of credit
    
    $
    46,100
    
    
    $
    77,487Mortgage loans
    
    
    233,629
    
    
    
    184,544Accounts payable and other liabilities
    
    
    16,345
    
    
    
    9,851Accrued dividends and distributions
    
    
    5,779
    
    
    
    4,404Acquired below market leases, net of accumulated
amortization of $2,080 in 2007 and $1,384 in 2006
    
    
    3,489
    
    
    
    3,096Total liabilities
    
    
    305,342
    
    
    
    279,382Commitments and contingenciesMinority interests in real estate partnerships
    
    
    1,859
    
    
    
    157Minority interests in operating partnership
    
    
    47,192
    
    
    
    53,844Stockholders 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, 11,948 and 8,000 shares issued and
outstanding in 2007 and 2006, respectively
    
    
    119
    
    
    
    80Additional paid-in capital
    
    
    166,865
    
    
    
    87,224Accumulated other comprehensive income (loss)
    
    
    (479
    )
    
    
    73Accumulated deficit
    
    
    (45,246
    )
    
    
    (27,702
    )Total stockholders equity
    
    
    121,259
    
    
    
    59,675Total liabilities and stockholders equity
    
    $
    475,652
    
    
    $
    393,058
  1




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##### Table of Contents



COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Rental
    
    $
    16,389
    
    
    $
    13,394
    
    
    $
    45,314
    
    
    $
    38,492Management fee revenue
    
    
    526
    
    
    
    188
    
    
    
    1,621
    
    
    
    748Expense reimbursements
    
    
    315
    
    
    
    89
    
    
    
    989
    
    
    
    398Development fee revenue
    
    
    25
    
    
    
    19
    
    
    
    276
    
    
    
    108Interest and other income
    
    
    226
    
    
    
    202
    
    
    
    827
    
    
    
    736Total revenues
    
    
    17,481
    
    
    
    13,892
    
    
    
    49,027
    
    
    
    40,482Expenses:Property operating and management
    
    
    6,797
    
    
    
    5,050
    
    
    
    18,766
    
    
    
    14,139General and administrative
    
    
    1,513
    
    
    
    1,387
    
    
    
    5,447
    
    
    
    4,822Depreciation
    
    
    5,581
    
    
    
    5,120
    
    
    
    15,455
    
    
    
    14,288Amortization
    
    
    1,692
    
    
    
    2,617
    
    
    
    5,209
    
    
    
    7,375Interest
    
    
    4,101
    
    
    
    4,195
    
    
    
    11,324
    
    
    
    9,979Prepayment penalty on early extinguishment of debt
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    37Total expenses
    
    
    19,684
    
    
    
    18,406
    
    
    
    56,201
    
    
    
    50,640Loss from continuing operations before equity in earnings (loss)
of unconsolidated real estate partnerships, gain from sale of
real estate partnership interests, minority interest in real
estate partnerships, minority interests in operating partnership,
and discontinued operations
    
    
    (2,203
    )
    
    
    (4,514
    )
    
    
    (7,174
    )
    
    
    (10,158
    )Equity in earnings (loss) of unconsolidated real estate
partnerships
    
    
    2
    
    
    
    2
    
    
    
    (2
    )
    
    
    7Gain from sale of real estate partnership interests
    
    
    
    
    
    
    484
    
    
    
    
    
    
    
    484Minority interests in real estate partnerships
    
    
    (16
    )
    
    
    (24
    )
    
    
    (55
    )
    
    
    (77
    )Minority interests in operating partnership
    
    
    615
    
    
    
    1,430
    
    
    
    2,226
    
    
    
    3,438Loss from continuing operations
    
    
    (1,602
    )
    
    
    (2,622
    )
    
    
    (5,005
    )
    
    
    (6,306
    )Discontinued operations:Income (loss) from discontinued operations
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    (9
    )Gain from sale of real estate property
    
    
    
    
    
    
    435
    
    
    
    
    
    
    
    435Minority interests in operating partnership
    
    
    
    
    
    
    (154
    )
    
    
    
    
    
    
    (150
    )Total discontinued operations
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    276Net loss
    
    $
    (1,602
    )
    
    $
    (2,339
    )
    
    $
    (5,005
    )
    
    $
    (6,030
    )Per share data  basic and dilutedLoss from continuing operations
    
    $
    (0.13
    )
    
    $
    (0.33
    )
    
    $
    (0.47
    )
    
    $
    (0.79
    )Income from discontinued operations
    
    
    
    
    
    
    0.04
    
    
    
    
    
    
    
    0.03Net loss
    
    $
    (0.13
    )
    
    $
    (0.29
    )
    
    $
    (0.47
    )
    
    $
    (0.76
    )Weighted average common shares  basic and diluted
    
    
    11,934
    
    
    
    7,976
    
    
    
    10,755
    
    
    
    7,975
  2




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COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 AccumulatedNumber of
    
    
    
    
    
    
    Additional
    
    
    OtherCommon
    
    
    Common
    
    
    Paid-in
    
    
    Comprehensive
    
    
    AccumulatedShares
    
    
    Stock
    
    
    Capital
    
    

Income
(loss)
    
    
    Deficit
    
    
    TotalBalance at December 31, 2006
    
    
    8,000
    
    
    $
    80
    
    
    $
    87,224
    
    
    $
    73
    
    
    $
    (27,702
    )
    
    $
    59,675Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,005
    )
    
    
    (5,005
    )Unrealized loss on interest rate
swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (552
    )
    
    
    
    
    
    
    (552
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,557
    )Issuance of common stock, net of costs
    
    
    3,950
    
    
    
    39
    
    
    
    78,404
    
    
    
    
    
    
    
    
    
    
    
    78,443Conversion of operating partnership
units to common stock
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Amortization of restricted stock grants
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    74Forfeiture of restricted stock grants
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends to common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,539
    )
    
    
    (12,539
    )Adjustment to record change of interest
in the operating partnership due to
the
issuance of operating partnership
units in excess of book value
    
    
    
    
    
    
    
    
    
    
    1,157
    
    
    
    
    
    
    
    
    
    
    
    1,157Balance at September 30, 2007
    
    
    11,948
    
    
    $
    119
    
    
    $
    166,865
    
    
    $
    (479
    )
    
    $
    (45,246
    )
    
    $
    121,259
  3




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##### Table of Contents



COGDELL SPENCER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2006Operating activities:Net loss
    
    $
    (5,005
    )
    
    $
    (6,030
    )Adjustments to reconcile net loss to cash
provided by operating activities:Minority interests
    
    
    (2,171
    )
    
    
    (3,211
    )Gain from sale of real estate partnership interests
    
    
    
    
    
    
    (484
    )Gain from
sale of real estate property  discontinued operations
    
    
    
    
    
    
    (435
    )Depreciation and amortization (including amounts in
discontinued operations)
    
    
    20,664
    
    
    
    21,686Amortization of acquired above market leases and
acquired below market leases, net (including amounts in
discontinued operations)
    
    
    (529
    )
    
    
    (696
    )Straight line rental revenue
    
    
    (237
    )
    
    
    (139
    )Amortization of deferred finance costs and debt premium
    
    
    186
    
    
    
    58Equity-based compensation
    
    
    158
    
    
    
    79Equity in loss (earnings) of unconsolidated
real estate partnerships
    
    
    2
    
    
    
    (7
    )Prepayment penalty for early extinguishment of debt
    
    
    
    
    
    
    37Change in fair value of interest rate swap agreements
    
    
    
    
    
    
    (59
    )Changes in operating assets and liabilities:Other assets
    
    
    (852
    )
    
    
    (210
    )Accounts payable and other liabilities
    
    
    5,330
    
    
    
    2,154Net cash provided by operating activities
    
    
    17,546
    
    
    
    12,743Investing activities:Investment in real estate properties
    
    
    (91,868
    )
    
    
    (97,194
    )Purchase of minority interests in operating partnership
    
    
    (3,807
    )
    
    
    Proceeds from sale of real estate property
    
    
    
    
    
    
    1,914Proceeds from sale of real estate partnership interests
    
    
    
    
    
    
    546Proceeds from capital lease
    
    
    229
    
    
    
    229Purchase of corporate equipment
    
    
    (502
    )
    
    
    Distributions received from unconsolidated real estate
partnership
    
    
    4
    
    
    
    2Increase in restricted cash
    
    
    (329
    )
    
    
    (277
    )Net cash used in investing activities
    
    
    (96,273
    )
    
    
    (94,780
    )Financing activities:Proceeds from mortgage notes payable
    
    
    65,941
    
    
    
    13,270Repayments of mortgage notes payable
    
    
    (16,714
    )
    
    
    (7,799
    )Proceeds from line of credit
    
    
    49,300
    
    
    
    82,750Repayments to line of credit
    
    
    (80,687
    )
    
    
    (4,500
    )Prepayment penalty for early extinguishment of debt
    
    
    
    
    
    
    (37
    )Net proceeds from sale of common stock
    
    
    78,443
    
    
    
    Dividends and distributions
    
    
    (15,919
    )
    
    
    (8,653
    )Equity contribution by partner in a consolidated real estate
partnership
    
    
    1,304
    
    
    
    Distributions to minority interests in real estate partnership
    
    
    (117
    )
    
    
    (134
    )Payment of deferred financing costs
    
    
    (669
    )
    
    
    (261
    )Net cash provided by financing activities
    
    
    80,882
    
    
    
    74,636Increase (decrease) in cash and cash equivalents
    
    
    2,155
    
    
    
    (7,401
    )Balance at beginning of period
    
    
    1,029
    
    
    
    9,571Cumulative effect adjustment associated with the
implementation of EITF 04-5
    
    
    
    
    
    
    213Balance at end of period
    
    $
    3,184
    
    
    $
    2,383Supplemental disclosure of cash flow information:Cash paid for interest, net of capitalized interest
    
    $
    11,792
    
    
    $
    9,673Cash paid for income taxes
    
    $
    307
    
    
    $
    Supplemental cash flow information  noncash
investing and financing activities:Issuance of operating partnership units as consideration for
investment in real estate property
    
    
    3,583
    
    
    
    6,018Investment in real estate costs contributed by partner in a
consolidated real estate partnership
    
    
    460
    
    
    
    Debt assumed with purchase of property
    
    
    
    
    
    
    5,178Accrued dividends and distributions
    
    
    5,779
    
    
    
    4,326
  4




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##### Table of Contents



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
  Reclassifications
  5




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##### Table of Contents



Recent Accounting Pronouncements
     3. Property Acquisitions
  Land
    
    $
    2,112Building and improvements
    
    
    32,674Acquired in place lease value and deferred leasing costs
    
    
    2,429Acquired above market leases
    
    
    28Acquired below market leases
    
    
    (1,043
    )Total purchase price allocated
    
    $
    36,200
  6




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##### Table of Contents



Land
    
    $
    3,167Building and improvements
    
    
    18,628Acquired in place lease value and deferred leasing costs
    
    
    2,374Acquired above market leases
    
    
    174Acquired below market leases
    
    
    (36
    )Total purchase price allocated
    
    $
    24,307
  Nine Months EndedSeptember 30, 2007
    
    September 30, 2006Total revenues
    
    $
    53,896
    
    
    $
    45,268Net loss
    
    
    (3,213
    )
    
    
    (4,252
    )Per share information:Basic and diluted loss per share
    
    $
    (0.30
    )
    
    $
    (0.53
    )
 4. Investments in Real Estate Partnerships
   
    
    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;
    
    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
    
    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.
  
    
    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;
    
    Cogdell Health Campus MOB, LP, a Pennsylvania limited partnership, founded in
2006, 89.4% owned by the Company, and owns one medical office building; and
    
    Mebane Medical Investors, LLC, a North Carolina limited liability company, founded in
2006, 49.0% owned by the Company, and currently has one medical office building under
construction.
    7




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##### Table of Contents



As of
    
    As ofSeptember 30, 2007
    
    December 31, 2006Financial position:Total assets
    
    $
    58,071
    
    
    $
    58,267Total liabilities
    
    
    51,415
    
    
    
    51,441Members equity
    
    
    6,657
    
    
    
    6,826
 Three Months Ended September 30,
    
    Nine Months Ended September 30,2007
    
    2006
    
    2007
    
    2006Results of operations:Revenues
    
    $
    3,052
    
    
    $
    2,837
    
    
    $
    9,119
    
    
    $
    9,042Operating and general and
administrative expenses
    
    
    1,320
    
    
    
    1,360
    
    
    
    3,853
    
    
    
    3,770Net income
    
    
    285
    
    
    
    30
    
    
    
    914
    
    
    
    934
  5. Mortgages, Notes Payable and Guarantees
       6. Derivative Financial Instruments
  8




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##### Table of Contents



NotionalAmount as of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    September 30,
    
    
    December 31,September 30,
    
    
    
    
        
    
    
    
Effective
    
    
    Expiration
    
    
    2007
    
    
    2006Entity
    
    2007
    
    
    Receive Rate
    
    Pay Rate
    
    
    Date
    
    
    Date
    
    
    Asset
    
    
    Liability
    
    
    Asset
    
    
    LiabilityBeaufort Medical Plaza
    
    $
    4,955
    
    
    1 Month LIBOR
    
    
    5.01
    %
    
    
    10/25/2006
    
    
    
    7/25/2008
    
    
    $
    
    
    
    $
    12
    
    
    $
    6
    
    
    $
    Gaston MOB
    
    
    15,972
    
    
    1 Month LIBOR
    
    
    5.18
    %
    
    
    11/3/2006
    
    
    
    11/22/2007
    
    
    
    8
    
    
    
    
    
    
    
    8
    
    
    
    Medical Investors I, LLC
    
    
    8,676
    
    
    1 Month LIBOR
    
    
    5.15
    %
    
    
    10/10/2006
    
    
    
    12/10/2007
    
    
    
    3
    
    
    
    
    
    
    
    6
    
    
    
    River Hills Medical Associates
    
    
    2,998
    
    
    1 Month LIBOR
    
    
    4.97
    %
    
    
    10/16/2006
    
    
    
    12/15/2008
    
    
    
    
    
    
    
    12
    
    
    
    4
    
    
    
    Roper MOB
    
    
    9,617
    
    
    1 Month LIBOR
    
    
    6.45
    %
    
    
    10/10/2006
    
    
    
    7/10/2009
    
    
    
    
    
    
    
    65
    
    
    
    12
    
    
    
    Methodist Professional Center I
    
    
    30,000
    
    
    1 Month LIBOR
    
    
    4.95
    %
    
    
    11/6/2006
    
    
    
    10/31/2009
    
    
    
    
    
    
    
    248
    
    
    
    34
    
    
    
    Cogdell Spencer LP
    
    
    3,000
    
    
    1 Month LIBOR
    
    
    5.06
    %
    
    
    8/14/2007
    
    
    
    10/31/2008
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    Cogdell Spencer LP
    
    
    27,000
    
    
    1 Month LIBOR
    
    
    5.06
    %
    
    
    8/20/2007
    
    
    
    10/31/2008
    
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    St. Francis Medical Plaza, LLC
    
    
    7,673
    
    
    1 Month LIBOR
    
    
    5.11
    %
    
    
    9/18/2007
    
    
    
    6/15/2008
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    St. Francis Community MOB, LLC
    
    
    7,144
    
    
    1 Month LIBOR
    
    
    5.11
    %
    
    
    9/18/2007
    
    
    
    6/15/2008
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    $
    11
    
    
    $
    492
    
    
    $
    70
    
    
    $
    
 7. Minority Interests
   8. Dividends and Distributions
  9. Loss per Share
  9




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Loss from continuing operations
    
    $
    (1,601
    )
    
    $
    (2,622
    )
    
    $
    (5,005
    )
    
    $
    (6,306
    )Income from discontinued operations
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    276Net loss
    
    $
    (1,601
    )
    
    $
    (2,339
    )
    
    $
    (5,005
    )
    
    $
    (6,030
    )Per share data  basic and diluted:Loss from continuing operations
    
    $
    (0.13
    )
    
    $
    (0.33
    )
    
    $
    (0.47
    )
    
    $
    (0.79
    )Income from discontinued operations
    
    
    
    
    
    
    0.04
    
    
    
    
    
    
    
    0.03Net loss
    
    $
    (0.13
    )
    
    $
    (0.29
    )
    
    $
    (0.47
    )
    
    $
    (0.76
    )Weighted average shares outstanding  basic and diluted
    
    
    11,934
    
    
    
    7,976
    
    
    
    10,755
    
    
    
    7,975
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Operating Partnership units
    
    
    4,596
    
    
    
    4,371
    
    
    
    4,562
    
    
    
    4,367Unvested restricted stock
    
    
    15
    
    
    
    20
    
    
    
    18
    
    
    
    23
 10. Related Party Transactions
  11. Segment Reporting
  10




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2006
    
    
    September 30, 2007
    
    
    September 30, 2006Property operations:Rental revenues
    
    $
    16,389
    
    
    $
    13,394
    
    
    $
    45,314
    
    
    $
    38,492Interest and other income
    
    
    147
    
    
    
    158
    
    
    
    447
    
    
    
    491Intersegment revenues
    
    
    93
    
    
    
    83
    
    
    
    270
    
    
    
    250Property operating expenses
    
    
    (5,190
    )
    
    
    (4,071
    )
    
    
    (13,714
    )
    
    
    (11,026
    )Intersegment expenses
    
    
    (1,041
    )
    
    
    (881
    )
    
    
    (3,079
    )
    
    
    (2,563
    )Net operating income
    
    $
    10,398
    
    
    $
    8,683
    
    
    $
    29,238
    
    
    $
    25,644Total segment assets, end of period
    
    $
    468,035
    
    
    $
    384,080
    
    
    $
    468,035
    
    
    $
    384,080Real estate services:Fee revenue
    
    $
    551
    
    
    $
    207
    
    
    $
    1,897
    
    
    $
    856Expense reimbursements
    
    
    315
    
    
    
    89
    
    
    
    989
    
    
    
    398Interest and other income
    
    
    79
    
    
    
    44
    
    
    
    380
    
    
    
    245Intersegment revenues
    
    
    1,041
    
    
    
    881
    
    
    
    3,079
    
    
    
    2,563Real estate
services operating expenses
    
    
    (1,717
    )
    
    
    (987
    )
    
    
    (5,422
    )
    
    
    (3,365
    )Intersegment expenses
    
    
    (93
    )
    
    
    (83
    )
    
    
    (270
    )
    
    
    (250
    )Net operating income
    
    $
    176
    
    
    $
    151
    
    
    $
    653
    
    
    $
    447Total segment assets, end of period
    
    $
    7,617
    
    
    $
    8,821
    
    
    $
    7,617
    
    
    $
    8,821Reconciliations:Total segment revenues
    
    $
    18,615
    
    
    $
    14,856
    
    
    $
    52,376
    
    
    $
    43,295Elimination of intersegment revenues
    
    
    (1,134
    )
    
    
    (964
    )
    
    
    (3,349
    )
    
    
    (2,813
    )Total revenues
    
    $
    17,481
    
    
    $
    13,892
    
    
    $
    49,027
    
    
    $
    40,482Total segment net operating income
    
    $
    10,574
    
    
    $
    8,842
    
    
    $
    29,891
    
    
    $
    26,343Corporate general and administrative expenses
    
    
    (1,403
    )
    
    
    (1,379
    )
    
    
    (5,077
    )
    
    
    (4,570
    )Depreciation and amortization expense
    
    
    (7,273
    )
    
    
    (7,737
    )
    
    
    (20,664
    )
    
    
    (21,663
    )Interest expense
    
    
    (4,101
    )
    
    
    (4,195
    )
    
    
    (11,324
    )
    
    
    (9,979
    )Prepayment penalty on early extinguishment of debt
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    (37
    )Equity in earnings (loss) of unconsolidated
real estate partnerships
    
    
    2
    
    
    
    2
    
    
    
    (2
    )
    
    
    7Gain from sale of real estate partnership interests
    
    
    
    
    
    
    484
    
    
    
    
    
    
    
    484Minority interests
    
    
    599
    
    
    
    1,406
    
    
    
    2,171
    
    
    
    3,361Total discontinued operations
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    276Net loss
    
    $
    (1,602
    )
    
    $
    (2,339
    )
    
    $
    (5,005
    )
    
    $
    (6,030
    )Total assets, end of period
    
    $
    475,652
    
    
    $
    392,901
    
    
    $
    475,652
    
    
    $
    392,901
 11




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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 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
    
    
    55 wholly owned properties;
    
    five joint venture properties; and
 12




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##### Table of Contents




    
    57 other properties owned by
third parties which the Company manages.
  Factors Which May Influence Future Results of Operations
   Critical Accounting Policies
   Investments in Real Estate
 Acquisition of real estate.
 13




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##### Table of Contents



Useful lives of assets.
 Asset impairment valuation.
 Revenue Recognition
   14




---



##### Table of Contents



REIT Qualification Requirements
  Changes in Financial Condition
  Results of Operations
  Property Summary
  Three Months Ended
    

    Nine Months EndedSeptember 30, 2007

    
    September 30, 2006

    
    September 30, 2007

    
    September 30, 2006Properties at beginning of the period
    
    
    52
    
    
    
    49
    
    
    
    50
    
    
    
    44Consolidation of Rocky Mount MOB LLC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Acquisitions
    
    
    2
    
    
    
    2
    
    
    
    3
    
    
    
    6In-service development
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Dispositions
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Properties at end of the period
    
    
    54
    
    
    
    50
    
    
    
    54
    
    
    
    50Lease-up development property
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
 Year EndedDecember 31, 2006Properties at January 1
    
    
    44Consolidation of Rocky Mount MOB LLC
    
    
    1Acquisitions
    
    
    6Dispositions
    
    
    (1
    )Properties at December 31
    
    
    50
   15




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##### Table of Contents



Comparison of the three months ended September 30, 2007 and September 30, 2006
 Revenue.
 Property operating and management expenses.
 General and administrative expenses.
 Interest expense.
  Comparison of the nine months ended September 30, 2007 and September 30, 2006
 Revenue.
 Property operating and management expenses.
 General and administrative expenses.
 Interest expense.
  16




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##### Table of Contents



Cash Flows
 Comparison of the nine months ended September 30, 2007 and September 30, 2006
    Construction in Progress
   Estimated
    
    Estimated
    
    
    
    
    
    
    EstimatedCompletion
    
    Net Rentable
    
    
    Investment
    
    
    TotalProperty
    
    Location
    
    Date
    
    Square Feet
    
    
    to Date
    
    
    InvestmentMebane Medical Office Building
    
    Mebane, NC
    
    2Q 2008
    
    
    60,000
    
    
    $
    8,813
    
    
    $
    16,200Land and pre-construction developments
    
    
    
    
    
    
    
    
    
    
    1,297
    
    
    
    60,000
    
    
    $
    10,110
    
    
    $
    16,200
   17




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##### Table of Contents



Liquidity and Capital Resources
        Long-Term Liquidity Needs
  18




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##### Table of Contents



Contractual Obligations
  ThroughRemainderof 2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalObligation:Long-term debt principal
payments and maturities (1)
    
    $
    25,273
    
    
    $
    90,244
    
    
    $
    46,701
    
    
    $
    6,209
    
    
    $
    3,674
    
    
    $
    107,267
    
    
    $
    279,368Standby letters of credit (2)
    
    
    
    
    
    
    1,908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,908Interest payments (3)
    
    
    4,158
    
    
    
    13,488
    
    
    
    9,018
    
    
    
    6,692
    
    
    
    6,431
    
    
    
    26,964
    
    
    
    66,751Ground leases (4)
    
    
    111
    
    
    
    228
    
    
    
    228
    
    
    
    228
    
    
    
    228
    
    
    
    9,224
    
    
    
    10,247Operating leases (5)
    
    
    85
    
    
    
    409
    
    
    
    412
    
    
    
    356
    
    
    
    360
    
    
    
    31
    
    
    
    1,653Total
    
    $
    29,627
    
    
    $
    106,277
    
    
    $
    56,359
    
    
    $
    13,485
    
    
    $
    10,693
    
    
    $
    143,486
    
    
    $
    359,927
 
 (1)
    
    Includes notes payable under the Companys Credit Facility(2)
    
    As collateral for performance on a mortgage note payable, the Company is
contingently liable under a standby letter of credit, which also reduces the availability
under the Credit Facility(3)
    
    Assumes one-month LIBOR 5.12% and Prime Rate of 7.75%(4)
    
    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.(5)
    
    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
  19




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##### Table of Contents



Real Estate Taxes
  Inflation
  Seasonality
  Recent Accounting Pronouncements
     
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 20




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
    
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  21




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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 Ended
    
    Purchased
    
    
    Security
    
    
    or Programs
    
    
    Under the PlanJuly 1 -
July 31, 2007
    
    
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/AAugust 1 - August 31, 2007
    
    
    2,948
    
    
    $
    19.91
    
    
    
    N/A
    
    
    
    N/ASeptember 1 - September 30, 2007
    
    
    9,779
    
    
    $
    17.72
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    12,727
    
    
    $
    18.23
    
    
    
    N/A
    
    
    
    N/A
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  22




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##### Table of Contents



ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 3.1
    
    Articles of Amendment and Restatement of Cogdell Spencer Inc., incorporated by reference to
Exhibit 3.1 of the Companys Registration Statement on Form S-11 (File No. 333-127396).3.2
    
    Bylaws of Cogdell Spencer Inc., incorporated by reference to Exhibit 3.2 of the Companys
Registration Statement on Form S-11 (File No. 333-127396).3.3
    
    Amended and Restated Agreement of Limited Partnership of Cogdell Spencer LP, incorporated by
reference to Exhibit 3.3 of the Companys Registration Statement on Form S-11 (File No.
333-127396).3.4
    
    Declaration of Trust of CS Business Trust I., incorporated by reference to Exhibit 3.4 of the
Companys Registration Statement on Form S-11 (File No. 333-127396).3.5
    
    Declaration of Trust of CS Business Trust II, incorporated by reference to Exhibit 3.5 of the
Companys Registration Statement on Form S-11 (File No. 333-127396).4.1
    
    Form of stock certificate, incorporated by reference to Exhibit 4.0 of the Companys
Registration Statement on Form S-11 (File No. 333-127396).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.
 23




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##### Table of Contents



SIGNATURES
  COGDELL SPENCER INC.RegistrantDate: November 9, 2007

/s/ Frank C. SpencerFrank C. SpencerPresident and Chief Executive OfficerDate: November 9, 2007

/s/ Charles M. HandyCharles M. HandySenior Vice President and Chief Financial Officer 24