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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 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, 2006
 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: 1-32699
 REPUBLIC PROPERTY TRUST
  Maryland
    
    20-3241867(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1280 Maryland Avenue, S.W., Suite 280Washington, D.C.
    
    20024(Address of principal executive offices)
    
    (Zip Code)
 (202) 863-0300
 None
  þ o
 o o þ
 o þ
  Class
    
    Outstanding at May 8, 2006Common Shares of beneficial interest,
    

26,049,437 shares$0.01 par value per share




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TABLE OF CONTENTS
 Page No.PART
I FINANCIAL INFORMATIONItem 1.
Financial StatementsItem 2.
Managements Discussion and Analysis of Financial Condition and
Results of OperationsItem 3.
Quantitative and Qualitative Disclosures About Market RiskItem 4.
Controls and ProceduresPART
II.
OTHER INFORMATIONItem 1.
Legal ProceedingsItem 1A.
Risk FactorsItem 2.
Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
Defaults Upon Senior SecuritiesItem 4.
Submission of Matters to a Vote of Security HoldersItem 5.
Other InformationItem 6.
Exhibits
 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
   
    
    the general international, national and
local economic climate;
    
    the supply and demand for office
properties;
    
    interest rate levels;
    
    the availability to us of financing for our
development projects or acquisition activities;
    
    risks associated with the acquisition and
operation of office properties, including risks that we may not be able to lease available
space to tenants at favorable rental rates, that tenants will not take occupancy or pay rent
in accordance with their leases, or that development or operating costs may be greater than
anticipated; and
    
    those risks described in the section entitled
Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and
elsewhere in this report.
  2




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PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements
 Republic Property Trust (The Company) and RKB Washington Property Fund I L.P. (The Predecessor)
 Condensed Consolidated Balance Sheets  Unaudited
As of March 31, 2006 and December 31, 2005
 The Company
    
    
    The Company(Dollars in thousands)
    
    March 31, 2006
    
    
    December 31, 2005ASSETSInvestment in real estate:Land
    
    $
    83,600
    
    
    $
    83,600Commercial office buildings and improvements
    
    
    386,786
    
    
    
    384,490470,386
    
    
    
    468,090Less: accumulated depreciation and amortization
    
    
    (23,387
    )
    
    
    (19,486
    )446,999
    
    
    
    448,604Cash and cash equivalents
    
    
    10,382
    
    
    
    23,127Marketable securities
    
    
    8,350
    
    
    
    10,004Restricted cash
    
    
    5,920
    
    
    
    9,386Rents and other receivables
    
    
    6,343
    
    
    
    5,301Prepaid expenses and other assets
    
    
    24,364
    
    
    
    23,975Total Assets
    
    $
    502,358
    
    
    $
    520,397LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Mortgage notes payable
    
    $
    231,847
    
    
    $
    231,894Intangible lease liabilities
    
    
    20,213
    
    
    
    20,886Taxes payable
    
    
    2,989
    
    
    
    16,604Accounts payable and accrued liabilities
    
    
    8,150
    
    
    
    15,127Acquisition payables
    
    
    
    
    
    
    7,204Tenant security deposits
    
    
    2,261
    
    
    
    2,267Advance rents
    
    
    857
    
    
    
    1,005Total liabilities
    
    
    266,317
    
    
    
    294,987Minority interest  operating partnership
    
    
    28,386
    
    
    
    28,080Shareholders EquityPreferred stock, par value $0.01, 40 million
shares authorized, none issued and outstanding
in 2006 or 2005
    
    
    
    
    
    
    Common stock, par value $0.01, 200 million
shares authorized, 26.0 million and 25.0
million shares issued and outstanding in 2006
and 2005, respectively
    
    
    260
    
    
    
    250Additional paid-in capital
    
    
    219,771
    
    
    
    208,814Accumulated deficit
    
    
    (12,376
    )
    
    
    (11,734
    )Total Shareholders Equity
    
    
    207,655
    
    
    
    197,330Total Liabilities and Shareholders Equity
    
    $
    502,358
    
    
    $
    520,397
  3




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Republic Property Trust (The Company) and RKB Washington Property Fund I L.P. (The Predecessor)
Consolidated Statements of Operations  Unaudited
For the Fiscal Quarters Ended March 31, 2006 and 2005
 The Company
    
    
    The PredecessorFiscal Quarter ended March 31,(Dollars in thousands except per share amounts)
    
    2006
    
    
    2005Revenue:Rental income
    
    $
    13,325
    
    
    $
    8,691Management and development fees and
reimbursements from related parties
    
    
    1,362
    
    
    
    Total operating revenue
    
    
    14,687
    
    
    
    8,691Expenses:Real estate taxes
    
    
    1,290
    
    
    
    770Property operating costs
    
    
    2,510
    
    
    
    1,559Depreciation and amortization
    
    
    4,699
    
    
    
    2,731Management fees
    
    
    
    
    
    
    766General and administrative
    
    
    3,198
    
    
    
    125Total operating expenses
    
    
    11,697
    
    
    
    5,951Operating income
    
    
    2,990
    
    
    
    2,740Other income and expense:Interest income
    
    
    314
    
    
    
    26Interest expense
    
    
    (3,235
    )
    
    
    (4,460
    )Total other income and expense
    
    
    (2,921
    )
    
    
    (4,434
    )Net income (loss) before minority interest
    
    
    69
    
    
    
    (1,694
    )Minority interest
    
    
    (8
    )
    
    
    Net income (loss)
    
    $
    61
    
    
    $
    (1,694
    )Basic and diluted earnings per common share
    
    $
    0.00Weighted average common shares outstanding
basic and diluted
    
    
    25,985,752Distributions declared per common share
    
    $
    0.027
  4




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Republic Property Trust (The Company) and RKB Washington Property Fund I L.P. (The Predecessor)
Consolidated Statements of Cash Flows  Unaudited
For the Fiscal Quarters Ended March 31, 2006 and 2005
 The Company
    
    
    The PredecessorFiscal Quarter Ended March 31,(Dollars in thousands)
    
    2006
    
    
    2005Operating activities:Net income (loss)
    
    $
    61
    
    
    $
    (1,694
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Minority interest
    
    
    8
    
    
    
    Stock awards
    
    
    52
    
    
    
    Depreciation and amortization
    
    
    4,699
    
    
    
    2,731Amortization of loan costs
    
    
    57
    
    
    
    563Other
    
    
    97
    
    
    
    Changes in operating assets and liabilities:Rents and other receivables
    
    
    (1,042
    )
    
    
    (371
    )Prepaid expenses and other assets
    
    
    (1,332
    )
    
    
    (79
    )Accounts payable and accrued expenses
    
    
    (1,478
    )
    
    
    1,792Advance rents
    
    
    (148
    )
    
    
    200Tenant security deposits
    
    
    (6
    )
    
    
    Net cash provided by operating activities
    
    
    968
    
    
    
    3,142Investing activitiesInvestment in real estate and intangibles
    
    
    (8,204
    )
    
    
    Purchase of property and equipment
    
    
    (3,901
    )
    
    
    (201
    )Investment in marketable securities, net
    
    
    1,654
    
    
    
    Net cash used in investing activities
    
    
    (10,451
    )
    
    
    (201
    )Financing activitiesNet proceeds of sale of common stock
    
    
    11,396
    
    
    
    Payment of IPO offering costs
    
    
    (4,018
    )
    
    
    Payment of tax liability assumed in Formation Transactions
    
    
    (12,865
    )
    
    
    Principal repayments of debt
    
    
    (144
    )
    
    
    (136
    )Deferred financing costs
    
    
    (298
    )
    
    
    Decrease (increase) in restricted cash
    
    
    3,466
    
    
    
    (230
    )Distributions paid to shareholders
    
    
    (703
    )
    
    
    Distributions paid to unitholders
    
    
    (96
    )
    
    
    Contributions from partners
    
    
    
    
    
    
    2,386Distributions to partners
    
    
    
    
    
    
    (2,165
    )Net cash used in financing activities
    
    
    (3,262
    )
    
    
    (145
    )Net (decrease) increase in cash and cash equivalents
    
    
    (12,745
    )
    
    
    2,796Cash and cash equivalents at beginning of period
    
    
    23,127
    
    
    
    2,075Cash and cash equivalents at end of period
    
    $
    10,382
    
    
    $
    4,871Supplemental disclosure of cash flow informationCash paid during the period for interest
    
    $
    2,950
    
    
    $
    2,909
  5




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Republic Property Trust (The Company) and RKB Washington Property Fund I L.P. (The Predecessor)
Notes to Consolidated Financial Statements  Unaudited
For the Fiscal Quarters Ended March 31, 2006 and 2005
 1.
Organization and Description of Business
     2. Basis of Presentation
   3.
Earnings per Share
  6




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Republic Property Trust (The Company) and RKB Washington Property Fund I L.P. (The Predecessor)
Notes to Consolidated Financial Statements  Unaudited
For the Fiscal Quarters Ended March 31, 2006 and 2005
 4. Comprehensive Income
  5. Distributions Declared
  6. Shareholders Equity
   7. Taxes payable
   8. WillowWood I and II Acquisition
   9. Commitments and Contingencies
 Legal Matters
  7




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Republic Property Trust (The Company) and RKB Washington Property Fund I L.P. (The Predecessor)
Notes to Consolidated Financial Statements  Unaudited
For the Fiscal Quarters Ended March 31, 2006 and 2005
 10. Line of Credit
   11. Subsequent Events
  8




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 .
 Critical Accounting Policies
  Comparison of fiscal quarter ended March 31, 2006 to fiscal quarter ended March 31, 2005
 ChangesResultingfromMarch 31,
    
    
    March 31,
    
    
    
    
    
    
    Additional
    
    
    Remaining(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    Variance
    
    
    Properties
    
    
    VarianceRevenueRental income
    
    $
    11,709
    
    
    $
    7,694
    
    
    $
    4,015
    
    
    $
    3,123
    
    
    $
    892Tenant reimbursements
    
    
    1,454
    
    
    
    902
    
    
    
    552
    
    
    
    505
    
    
    
    47Management and development fees
    
    
    1,362
    
    
    
    
    
    
    
    1,362
    
    
    
    
    
    
    
    1,362Other
    
    
    162
    
    
    
    95
    
    
    
    67
    
    
    
    30
    
    
    
    37Total revenue
    
    
    14,687
    
    
    
    8,691
    
    
    
    5,996
    
    
    
    3,658
    
    
    
    2,338ExpensesReal estate taxes
    
    
    1,290
    
    
    
    770
    
    
    
    520
    
    
    
    410
    
    
    
    110Property operating costs
    
    
    2,510
    
    
    
    1,559
    
    
    
    951
    
    
    
    542
    
    
    
    409Depreciation and amortization
    
    
    4,699
    
    
    
    2,731
    
    
    
    1,968
    
    
    
    1,514
    
    
    
    454Management fees
    
    
    
    
    
    
    766
    
    
    
    (766
    )
    
    
    
    
    
    
    (766
    )General and administrative
    
    
    3,198
    
    
    
    125
    
    
    
    3,073
    
    
    
    
    
    
    
    3,073Total operating expenses
    
    
    11,697
    
    
    
    5,951
    
    
    
    5,746
    
    
    
    2,466
    
    
    
    3,280Interest income and expense,
minority interestInterest income
    
    
    314
    
    
    
    26
    
    
    
    288
    
    
    
    16
    
    
    
    272Interest expense
    
    
    (3,235
    )
    
    
    (4,460
    )
    
    
    1,225
    
    
    
    (1,459
    )
    
    
    2,684Minority interest
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )
    
    
    30
    
    
    
    (38
    )Net income (loss)
    
    $
    61
    
    
    $
    (1,694
    )
    
    $
    1,755
    
    
    $
    (221
    )
    
    $
    1,976
   
    
    Rental income Increased rental income is primarily attributable to our Presidents
Park property which was 44.5% leased at January 1, 2005 and 69.5% leased at March 31, 2006.
    
    Management and development fees We earned management and development fees from the
various management and development agreements with related parties that were contributed to
us in connection with the IPO and formation transactions.
    
    Real estate taxes Real estate tax expense increased due to increased tax assessments
at two of our properties.
    
    Property operating costs Property operating costs increased due to increased
occupancy at Presidents Park, in addition to higher HVAC, landscaping and property
management costs at our other properties.
    
    Depreciation and amortization Depreciation and amortization increased as a result of
the amortization of the intangible assets for our third-party management and development
agreements, together with increased depreciation arising from tenant improvements at our
Presidents Park property.
    
    Management fees Management fees expense represents fees paid by our Predecessor prior
to our IPO. These agreements were terminated on December 19, 2005.
    
    General and administrative General and administrative expense is not directly
comparable since the costs of our administrative function were not borne by our
predecessor. These costs include costs of our administrative function
 9




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generally, costs associated with operating as a public company and costs associated with
providing the services under our management and development agreements. Also reflected in
general and administrative expense for the 2006 first quarter is approximately $0.5 million
of costs incurred in connection with the termination of the line of credit commitment from
Lehman Brothers.
    
    Interest income Interest income increased as a result of our higher cash balances and
temporary investments of some of our IPO proceeds in marketable securities.
    
    Interest expense Interest expense decreased due to the repayment of approximately
$124 million of our Predecessors debt using proceeds from our IPO.
 Liquidity and Capital Resources
 March 31,
    
    March 31,(Dollars in thousands)
    
    2006
    
    2005Net income (loss)
    
    $
    61
    
    
    $
    (1,694
    )Net cash provided by operating activities
    
    
    968
    
    
    
    3,142Net cash (used in) investing activities
    
    
    (10,451
    )
    
    
    (201
    )Net cash (used in) financing activities
    
    
    (3,262
    )
    
    
    (145
    )Cash and cash equivalents at end of period
    
    
    10,382
    
    
    
    4,871
       i.e.,
 
 
 
    10




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11




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
   Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
  12




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PART II. OTHER INFORMATION
 Item 1. Legal Proceedings.
  Item 1A. Risk Factors.
  
    
    In May 2006, we closed on our $150.0 million senior secured line of credit with KeyBank
National Association and other lenders. Accordingly, the risk of not closing the line that
was provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005
is no longer applicable. Further, as anticipated, the executed line of credit includes
financial and other covenants that limit our ability to take certain actions in respect to
our business, which could adversely affect our financial condition, liquidity and results
of operations.
    
    Advances under our line of credit bear interest at a variable rate. We may borrow
additional money with variable interest rates in the future. Although we may enter into
hedging agreements to limit our exposure to rising interest rates as we determine to be
appropriate and cost effective, increases in interest rates, or the loss of the benefits of
hedging agreements, would increase our interest expense and consequently could adversely
affect our cash flows and results of operations. As of May 1, 2006, the date we closed our
line of credit, we had $23.0 million of variable rate debt outstanding. We have not
entered into any hedging agreements.Further, rising interest rates could limit our ability to refinance existing debt when it
matures. An inability to refinance our existing debt could harm our ability to execute our
business strategies and grow our portfolio. In addition, an increase in interest rates could
decrease the amount third-parties are willing to pay for our assets, thereby limiting our
ability to change our portfolio promptly in response to changes in economic or other
conditions.
    
    Following the federal charges filed against, and the subsequent resignation of, a commissioner of
the City of West Palm Beach, Florida, and following certain discussions with the Citys
representatives concerning our involvement in the City Center project and other matters involving
that commissioner, the Company understands that on May 8, 2006, the West Palm Beach City Commission
ratified a motion of the West Palm Beach Community Redevelopment Agency that seeks our consent to
an assignment of the City Center development agreement with the City of West Palm Beach to an
unrelated third party. We have commenced an internal review relating to such matters, and upon
completion of this review we intend to discuss with the City of West Palm Beach the most
appropriate manner for amicably resolving issues relating to this matter. We cannot provide any
assurances, however, that any such resolution will be reached, that such resolution will be on
terms favorable to us, or that the City of West Palm Beach will not determine to abandon, or
otherwise terminate the City Center project, all of which may have a negative impact on our cash
flows and operating results. In addition, the ongoing internal review may divert managements
attention away from our day-to-day operations and cause us to incur certain legal and other costs,
which could have an adverse impact on our operating results and financial condition.
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 (a) Recent sales of unregistered securities
  (b) Use of proceeds
  (c) Issuer Purchases of Equity Securities
  Item 3. Defaults Upon Senior Securities.
  13




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Item 4. Submission of Matters to a Vote of Security Holders.
  Item 5. Other Information.
  Item 6. Exhibits.
 10.1
    
    Professional Services Agreement, effective as of October 26, 2004, by and between West Palm Beach Community
Redevelopment Agency and Republic-WPB Corp. *10.2
    
    Amendment No. 1 to Professional Services Agreement, effective as of March 28, 2005, by and between West Palm
Beach Community Redevelopment Agency and Republic-WPB Corp. *10.3
    
    Amendment No. 2 to Professional Services Agreement, effective as of March 29, 2006, by and between West Palm
Beach Community Redevelopment Agency and Republic-WPB LLC. *10.4
    
    Amendment to Republic Property Trust Trustees Compensation Policy, effective as of January 1, 2006. # *10.5
    
    Senior Secured Revolving Credit Agreement, dated as of May 1, 2006, by and among Republic Property Limited
Partnership, as borrower, and Republic Property Trust, as guarantor, and Key Bank National Association, and
other lenders which are parties to the Agreement, and KeyBank National Association, as agent, and KeyBanc
Capital Markets, as sole lead arranger and sole book manager. *10.6
    
    Letter Agreement, effective as of March 13, 2006, by and among Parcel 47D LLC, Portals Interests LLC and
Republic Property TRS, LLC (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form
8-K, filed on March 17, 2006).10.7
    
    Purchase and Sale Agreement and Escrow Instructions by and between SMII Fairfax LLC and Republic Property
Limited Partnership, dated as of March 22, 2006 (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K, filed on March 24, 2006).31.1
    
    Section 302 Certification of Mark R. Keller, the
Registrants Chief Executive Officer, dated May 12, 2006. *31.2
    
    Section 302 Certification of Michael J. Green, the
Registrants Chief Financial Officer, dated May 12, 2006. *32.1
    
    Section 906 Certification of Mark R. Keller and Michael J. Green, the Registrants Chief Executive Officer and
the Chief Financial Officer, respectively, dated May 12, 2006. *
 
 #
    
    Represents a management contract or compensation plan, contract or arrangement.*
    
    Filed herewith. SIGNATURES
  REPUBLIC PROPERTY TRUSTBy: /s/ Michael J. GreenMichael J. GreenExecutive Vice President and Chief Financial Officer(On behalf of Republic
Property Trust and as its
     Principal Financial Officer)May 12, 2006