##### 



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 September 30, 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 NO. 001-32536
 COLUMBIA EQUITY TRUST, INC.
  Maryland
    
    20-1978579(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)1750 H Street, N.W.,Suite 500, Washington, D.C.
    
    20006(Address of principal executive office)
    
    (Zip code)
 (202) 303-3080
 þ o
  o o þ
 o þ




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##### 



COLUMBIA EQUITY TRUST, INC.
FORM 10-Q
 TABLE OF CONTENTS
 PagePART I            FINANCIAL INFORMATIONItem 1. Financial Statements.Balance Sheets as of September 30, 2006 (unaudited) and December 31, 2005 for
Columbia Equity Trust, Inc.
    
    4Statements of Operations for the three months ended September 30, 2006 (unaudited) and for the
period July 5, 2005 to September 30, 2005 (unaudited) for Columbia Equity Trust, Inc. and for
the period July 1, 2005 to July 4, 2005 (unaudited) for Columbia Predecessor
    
    5Statements of Operations for the nine months ended September 30, 2006 (unaudited) and for the
period July 5, 2005 to September 30, 2005 (unaudited) for Columbia Equity Trust, Inc. and for
the period January 1, 2005 to July 4, 2005 (unaudited) for Columbia Predecessor
    
    6Statements of Cash Flows for the nine months ended September 30, 2006 (unaudited) and for the
period July 5, 2005 to September 30, 2005 (unaudited) for Columbia Equity Trust, Inc. and for
the period January 1, 2005 to July 4, 2005 (unaudited) for Columbia Predecessor
    
    7Notes to Financial Statements
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    27Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
    51Item 4. Controls and Procedures.
    
    51PART II  OTHER INFORMATIONItem 1A. Risk Factors.
    
    52Item 6. Exhibits.
    
    52SIGNATURES
    
    54EXHIBIT INDEX
    
    55
 2




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##### 



PART I
 FINANCIAL INFORMATION
 Item 1. Financial Statements
    3




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##### 



COLUMBIA EQUITY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)AssetsRental propertyLand
    
    $
    35,605,497
    
    
    $
    19,300,819Buildings
    
    
    166,351,174
    
    
    
    120,509,954Tenant improvements
    
    
    29,494,750
    
    
    
    24,377,997Furniture, fixtures and equipment
    
    
    81,607
    
    
    
    1,088,989231,533,028
    
    
    
    165,277,759Accumulated depreciation
    
    
    (9,244,983
    )
    
    
    (2,805,222
    )Total rental property, net
    
    
    222,288,045
    
    
    
    162,472,537Cash and cash equivalents
    
    
    9,653,534
    
    
    
    8,149,634Restricted deposits
    
    
    636,522
    
    
    
    256,356Accounts and other receivables, net of reserves for doubtful
accounts of $122,294 and $39,401, respectively
    
    
    779,989
    
    
    
    1,039,510Investments in unconsolidated real estate entities
    
    
    45,198,714
    
    
    
    42,308,003Accrued straight-line rents
    
    
    1,939,272
    
    
    
    524,258Deferred leasing costs, net
    
    
    767,260
    
    
    
    490,609Deferred financing costs, net
    
    
    920,853
    
    
    
    955,129Intangible assetsAbove market leases, net
    
    
    4,807,043
    
    
    
    3,610,453In-place leases, net
    
    
    19,403,671
    
    
    
    15,813,098Tenant relationships, net
    
    
    7,732,325
    
    
    
    6,387,594Prepaid expenses and other assets
    
    
    1,736,953
    
    
    
    1,323,308Total assets
    
    $
    315,864,181
    
    
    $
    243,330,489Liabilities and Stockholders EquityLiabilitiesRevolving loan payable
    
    $
    30,900,000
    
    
    $
    22,000,000Mortgage notes payable
    
    
    97,337,933
    
    
    
    27,358,998Accounts payable and accrued expenses
    
    
    3,531,094
    
    
    
    2,252,575Security deposits
    
    
    1,395,159
    
    
    
    945,158Dividends payable
    
    
    2,079,500
    
    
    
    1,940,867Rent received in advance
    
    
    1,250,975
    
    
    
    758,265Deferred credits  Below market leases, net
    
    
    2,336,575
    
    
    
    1,593,812Other liabilities
    
    
    97,571
    
    
    
    Total liabilities
    
    
    138,928,807
    
    
    
    56,849,675Commitments and contingenciesMinority interest
    
    
    14,059,816
    
    
    
    14,205,638Stockholders equityPreferred stock, $0.001 par value, 100,000,000 shares authorized in
2006 and 2005, no shares issued or outstanding in either period
    
    
    
    
    
    
    Common stock, $0.001 par value, 500,000,000 shares authorized
and 13,863,334 shares issued and outstanding in 2006 and 2005
    
    
    13,863
    
    
    
    13,863Additional paid-in capital
    
    
    178,366,298
    
    
    
    178,366,298Cumulative dividends in excess of net income
    
    
    (15,504,603
    )
    
    
    (6,104,985
    )Total stockholders equity
    
    
    162,875,558
    
    
    
    172,275,176Total liabilities and stockholders equity
    
    $
    315,864,181
    
    
    $
    243,330,489
  4




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##### 



COLUMBIA EQUITY TRUST, INC.
AND COLUMBIA EQUITY TRUST, INC. PREDECESSOR
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
 Consolidated
    
    
    Consolidated
    
    
    CombinedColumbia Equity
    
    
    Columbia Equity
    
    
    Columbia PredecessorTrust, Inc. for the
    
    
    Trust, Inc. for the
    
    
    For the PeriodThree Months Ended
    
    
    Period July 5, 2005 to
    
    
    July 1, 2005 toSeptember 30, 2006
    
    
    September 30, 2005
    
    
    July 4, 2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)RevenuesBase rents
    
    $
    6,776,344
    
    
    $
    2,870,411
    
    
    $
    Recoveries from tenants
    
    
    521,211
    
    
    
    143,404
    
    
    
    Fee income, primarily from related parties
    
    
    663,673
    
    
    
    239,376
    
    
    
    Parking and other income
    
    
    227,107
    
    
    
    22,725
    
    
    
    Total revenues
    
    
    8,188,335
    
    
    
    3,275,916
    
    
    
    Operating expensesProperty operating
    
    
    1,164,711
    
    
    
    501,159
    
    
    
    Utilities
    
    
    698,013
    
    
    
    227,586
    
    
    
    Real estate taxes and insurance
    
    
    708,172
    
    
    
    192,780
    
    
    
    General and administrative, including share-based
compensation cost of $234,750, $1,700,060
and $0, respectively
    
    
    1,409,635
    
    
    
    2,562,951
    
    
    
    4,229Depreciation and amortization
    
    
    3,654,305
    
    
    
    1,770,527
    
    
    
    25Total operating expenses
    
    
    7,634,836
    
    
    
    5,255,003
    
    
    
    4,254Operating income (loss)
    
    
    553,499
    
    
    
    (1,979,087
    )
    
    
    (4,254
    )Other income and expenseInterest income
    
    
    94,712
    
    
    
    442,491
    
    
    
    1,572Interest expense
    
    
    (1,644,535
    )
    
    
    (229,150
    )
    
    
    (97
    )Loss before income taxes, equity
in net loss of unconsolidated
real estate entities and minority interest
    
    
    (996,324
    )
    
    
    (1,765,746
    )
    
    
    (2,779
    )Equity in net loss of unconsolidated
real estate entities
    
    
    (98,315
    )
    
    
    (68,669
    )
    
    
    (23,334
    )Minority interest
    
    
    78,431
    
    
    
    131,486
    
    
    
    Loss before income taxes
    
    
    (1,016,208
    )
    
    
    (1,702,929
    )
    
    
    (26,113
    )Provision for income taxes
    
    
    34,823
    
    
    
    
    
    
    
    Net loss
    
    $
    (1,051,031
    )
    
    $
    (1,702,929
    )
    
    $
    (26,113
    )Net loss per common share  Basic and diluted
    
    $
    (0.08
    )
    
    $
    (0.12
    )Weighted average shares of common stock
outstanding  Basic and diluted
    
    
    13,863,334
    
    
    
    13,679,243
  5




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##### 



COLUMBIA EQUITY TRUST, INC.
AND COLUMBIA EQUITY TRUST, INC. PREDECESSOR
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
 Consolidated
    
    
    Consolidated
    
    
    CombinedColumbia Equity
    
    
    Columbia Equity
    
    
    Columbia PredecessorTrust, Inc. for the
    
    
    Trust, Inc. for the
    
    
    For the PeriodNine Months Ended
    
    
    Period July 5, 2005 to
    
    
    January 1, 2005 toSeptember 30, 2006
    
    
    September 30, 2005
    
    
    July 4, 2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)RevenuesBase rents
    
    $
    19,480,944
    
    
    $
    2,870,411
    
    
    $
    Recoveries from tenants
    
    
    1,232,226
    
    
    
    143,404
    
    
    
    Fee income, primarily from related parties
    
    
    1,331,994
    
    
    
    239,376
    
    
    
    1,438,356Parking and other income
    
    
    521,281
    
    
    
    22,725
    
    
    
    Total revenues
    
    
    22,566,445
    
    
    
    3,275,916
    
    
    
    1,438,356Operating expensesProperty operating
    
    
    3,405,320
    
    
    
    501,159
    
    
    
    Utilities
    
    
    1,827,856
    
    
    
    227,586
    
    
    
    Real estate taxes and insurance
    
    
    1,985,474
    
    
    
    192,780
    
    
    
    General and administrative, including share-based
compensation cost of $704,250, $1,700,060
and $0, respectively
    
    
    3,818,606
    
    
    
    2,563,651
    
    
    
    1,549,127Depreciation and amortization
    
    
    10,660,201
    
    
    
    1,770,527
    
    
    
    7,385Total operating expenses
    
    
    21,697,457
    
    
    
    5,255,703
    
    
    
    1,556,512Operating income (loss)
    
    
    868,988
    
    
    
    (1,979,787
    )
    
    
    (118,156
    )Other income and expenseInterest income
    
    
    210,466
    
    
    
    442,491
    
    
    
    21,450Interest expense
    
    
    (4,206,118
    )
    
    
    (229,150
    )
    
    
    (4,597
    )Loss before income taxes, equity
in net (loss) income of unconsolidated
real estate entities and minority interest
    
    
    (3,126,664
    )
    
    
    (1,766,446
    )
    
    
    (101,303
    )Equity in net (loss) income of unconsolidated
real estate entities
    
    
    (196,216
    )
    
    
    (68,669
    )
    
    
    2,281,641Minority interest
    
    
    238,085
    
    
    
    131,486
    
    
    
    (Loss) income before income taxes
    
    
    (3,084,795
    )
    
    
    (1,703,629
    )
    
    
    2,180,338Provision for income taxes
    
    
    76,323
    
    
    
    
    
    
    
    231,884Net (loss) income
    
    $
    (3,161,118
    )
    
    $
    (1,703,629
    )
    
    $
    1,948,454Net loss per common share  Basic and diluted
    
    $
    (0.23
    )
    
    $
    (0.12
    )Weighted average shares of common stock
outstanding  Basic and diluted
    
    
    13,863,334
    
    
    
    13,679,243
  6




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##### 



COLUMBIA EQUITY TRUST, INC.
AND COLUMBIA EQUITY TRUST, INC. PREDECESSOR
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
 Consolidated
    
    
    Consolidated
    
    
    CombinedColumbia Equity
    
    
    Columbia Equity
    
    
    Columbia PredecessorTrust, Inc. for the
    
    
    Trust, Inc. for the
    
    
    For the PeriodNine Months Ended
    
    
    Period July 5, 2005 to
    
    
    January 1, 2005 toSeptember 30, 2006
    
    
    September 30, 2005
    
    
    July 4, 2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Cash flows from operating activitiesNet (loss) income
    
    $
    (3,161,118
    )
    
    $
    (1,703,629
    )
    
    $
    1,948,454Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activitiesMinority interest
    
    
    (238,085
    )
    
    
    (131,486
    )
    
    
    Equity in net loss (income) of unconsolidated real estate entities
    
    
    196,216
    
    
    
    68,669
    
    
    
    (2,281,641
    )Compensation cost related to stock split
    
    
    
    
    
    
    949,010
    
    
    
    Compensation cost related to LTIP units
    
    
    573,750
    
    
    
    716,250
    
    
    
    Distributions received from earnings of unconsolidated
real estate entities
    
    
    567,381
    
    
    
    48,918
    
    
    
    19,055Depreciation and amortization
    
    
    10,660,201
    
    
    
    1,770,527
    
    
    
    7,385Amortization of above and below market leases
    
    
    286,234
    
    
    
    34,260
    
    
    
    Amortization of deferred financing costs
    
    
    343,397
    
    
    
    
    
    
    
    Provision for doubtful accounts
    
    
    82,893
    
    
    
    
    
    
    
    Changes in assets and liabilitiesAccounts and other receivables
    
    
    176,628
    
    
    
    (433,815
    )
    
    
    (36,505
    )Accrued straight-line rents
    
    
    (1,415,014
    )
    
    
    (230,261
    )
    
    
    Deferred leasing costs
    
    
    (352,881
    )
    
    
    (319,402
    )
    
    
    Deferred offering costs
    
    
    
    
    
    
    
    
    
    
    (2,693,176
    )Prepaid expenses and other assets
    
    
    134,698
    
    
    
    (447,225
    )
    
    
    (440,020
    )Accounts payable and accrued expenses
    
    
    750,601
    
    
    
    699,751
    
    
    
    2,725,286Accrued interest payable to stockholders
    
    
    
    
    
    
    
    
    
    
    4,597Rent received in advance
    
    
    120,980
    
    
    
    (70,401
    )
    
    
    Other liabilities
    
    
    7,015
    
    
    
    
    
    
    
    Net cash provided by (used in) operating activities
    
    
    8,732,896
    
    
    
    951,166
    
    
    
    (746,565
    )Cash flows from investing activitiesPurchases of interests in rental property and related net assets
    
    
    (38,571,476
    )
    
    
    (96,917,274
    )
    
    
    Purchases of interests in unconsolidated real estate entities
    
    
    (5,466,667
    )
    
    
    (41,950,254
    )
    
    
    Deposit on pending purchase of interest in rental property
    
    
    (500,000
    )
    
    
    (500,000
    )
    
    
    Additions to rental properties
    
    
    (2,511,038
    )
    
    
    (639,767
    )
    
    
    Additions to rental property furniture, fixtures and equipment
    
    
    (27,395
    )
    
    
    (51,328
    )
    
    
    (3,772
    )Restricted deposits
    
    
    (25,413
    )
    
    
    (144,588
    )
    
    
    Distributions in excess of net income received from real estate entities
    
    
    2,061,897
    
    
    
    438,437
    
    
    
    2,707,753Contributions made to unconsolidated real estate entities
    
    
    (49,538
    )
    
    
    (269,766
    )
    
    
    (508,000
    )Net cash (used in) provided by investing activities
    
    
    (45,089,630
    )
    
    
    (140,034,540
    )
    
    
    2,195,981Cash flows from financing activitiesGross proceeds from initial public offering of common stock
    
    
    
    
    
    
    207,000,000
    
    
    
    Payment of offering costs, underwriting discount and advisory fees
    
    
    
    
    
    
    (18,543,369
    )
    
    
    Payment received for subscribed common stock
    
    
    
    
    
    
    1,000
    
    
    
    Borrowings under revolving credit line
    
    
    56,450,000
    
    
    
    
    
    
    
    Repayment of revolving credit line borrowings
    
    
    (47,550,000
    )
    
    
    
    
    
    
    Repayment of mortgage loans and prepayment penalties
    
    
    (97,855
    )
    
    
    (40,653,668
    )
    
    
    Mortgage note borrowings
    
    
    35,785,985
    
    
    
    
    
    
    
    Deferred financing costs
    
    
    (117,121
    )
    
    
    
    
    
    
    Dividends
    
    
    (6,099,867
    )
    
    
    
    
    
    
    Decrease in security deposit liability
    
    
    (39,720
    )
    
    
    (66,977
    )Contributions
    
    
    
    
    
    
    
    
    
    
    250,000Distributions to minority interest
    
    
    (470,788
    )
    
    
    
    
    
    
    (163,989
    )Net cash provided by financing activities
    
    
    37,860,634
    
    
    
    147,736,986
    
    
    
    86,011Net increase in cash and cash equivalents
    
    
    1,503,900
    
    
    
    8,653,612
    
    
    
    1,535,427Cash and cash equivalents, beginning of period
    
    
    8,149,634
    
    
    
    
    
    
    
    1,188,146Cash and cash equivalents, end of period
    
    $
    9,653,534
    
    
    $
    8,653,612
    
    
    $
    2,723,573Supplemental disclosuresCash paid for income taxes
    
    $
    73,270
    
    
    $
    
    
    
    $
    Cash paid for interest
    
    $
    3,396,795
    
    
    $
    229,900
    
    
    $
    Debt assumed in purchases of interests in rental property
    
    $
    34,500,000
    
    
    $
    59,653,668
    
    
    $
    Liability for asbestos remediation assumed as part of
purchase of rental property
    
    $
    156,989
    
    
    $
    
    
    
    $
    Non-cash additions to rental properties
    
    $
    592,043
    
    
    $
    
    
    
    $
    
  7




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##### 



COLUMBIA EQUITY TRUST, INC. AND
COLUMBIA EQUITY TRUST, INC. PREDECESSOR
 NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 1. Organization and Description of Business
     2. Basis of Presentation
and Summary of Significant Accounting Policies
 a) Unaudited Interim Consolidated Financial Information
  8




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##### 



b) Principles of Consolidation
  c) Cash and Cash Equivalents
  d) Fair Value of Financial Instruments
  e) Revenue Recognition
   9




---



##### 



f) Investments in Rental Property
     g) Investments in Unconsolidated Real Estate Entities
     10




---



##### 



h) Minority Interest
     i) Tenant Leasing Costs
  j) Deferred Financing Costs
  k) Share Based Compensation
  11




---



##### 



l) New Accounting Pronouncements
    m) Income Taxes
   n) Managements Estimates
  o) Segment Disclosure
  12




---



##### 



p) Concentration of Credit Risk
   q) Comprehensive Income
  q) Reclassification
  3. Earnings Per Share
  13




---



##### 



For the Three
    
    
    For the Nine
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    July 5, 2005 toSeptember 30, 2006
    
    
    September 30, 2006
    
    
    September 30, 2005Net loss
    
    $
    (1,051,031
    )
    
    $
    (3,161,118
    )
    
    $
    (1,702,929
    )Weighted average shares outstanding
    
    
    13,863,334
    
    
    
    13,863,334
    
    
    
    13,679,243Basic and diluted loss per share
    
    $
    (0.08
    )
    
    $
    (0.23
    )
    
    $
    (0.12
    )
  4. Office Property Acquisitions
     Rental property
    
    $
    63,277,000Intangible assets
    
    
    11,066,000Other assets
    
    
    668,000Total assets acquired
    
    
    75,011,000Mortgage notes payable
    
    
    34,164,000Deferred credits
    
    
    1,119,000Other liabilities
    
    
    1,157,000Total liabilities assumed
    
    
    36,440,000Net assets acquired
    
    $
    38,571,000
 14




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##### 



Pro Forma
    
    
    As ReportedFor the Period
    
    
    For the PeriodJuly 5, 2005 to
    
    
    July 5, 2005 toSeptember 30, 2005
    
    
    September 30, 2005Revenues
    
    $
    7,288,000
    
    
    $
    3,275,916Net loss
    
    $
    (2,794,000
    )
    
    $
    (1,702,929
    )Net loss per share
    
    $
    (0.20
    )
    
    $
    (0.12
    )Weighted average number
of shares outstanding
    
    
    13,679,243
    
    
    
    13,679,243
 Pro Forma
    
    
    As ReportedFor the Three
    
    
    For the ThreeMonths Ended
    
    
    Months EndedSeptember 30, 2006
    
    
    September 30, 2006Revenues
    
    $
    8,914,000
    
    
    $
    8,188,335Net loss
    
    $
    (1,514,000
    )
    
    $
    (1,051,031
    )Net loss per share
    
    $
    (0.11
    )
    
    $
    (0.08
    )Weighted average number
of shares outstanding
    
    
    13,863,334
    
    
    
    13,863,334
 15




---



##### 



Pro Forma
    
    
    As ReportedFor the Nine
    
    
    For the NineMonths Ended
    
    
    Months EndedSeptember 30, 2006
    
    
    September 30, 2006Revenues
    
    $
    28,534,000
    
    
    $
    22,566,445Net loss
    
    $
    (4,376,000
    )
    
    $
    (3,161,118
    )Net loss per share
    
    $
    (0.32
    )
    
    $
    (0.23
    )Weighted average number
of shares outstanding
    
    
    13,863,334
    
    
    
    13,863,334
 5. Investments in Unconsolidated Real Estate Entities
  Square
    
    PercentProperty
    
    Location
    
    Feet
    
    Owned1575 Eye Street
    
    Washington, D.C.
    
    
    210,372
    
    
    
    9.18
    %Atrium
    
    Alexandria, Va.
    
    
    138,507
    
    
    
    37.00
    %Barlow Building
    
    Chevy Chase, Md.
    
    
    270,490
    
    
    
    40.00
    %Independence Center  I
    
    Chantilly, Va.
    
    
    275,002
    
    
    
    14.74
    %Independence Center  II
    
    Chantilly, Va.
    
    
    
    (1)
    
    
    8.10
    %Georgetown Plaza
    
    Washington, D.C.
    
    
    148,330
    
    
    
    40.00
    %King Street
    
    Alexandria, Va.
    
    
    149,080
    
    
    
    50.00
    %Madison Place
    
    Alexandria, Va.
    
    
    107,960
    
    
    
    50.00
    %Suffolk Building
    
    Falls Church, Va.
    
    
    257,425
    
    
    
    36.50
    %Victory Point
    
    Chantilly, Va.
    
    
    147,743
    
    
    
    10.00
    %
 
 (1)
    
    A 115,368 square foot office building is currently under construction. 16




---



##### 



2006
    
    
    2005AssetsInvestments in real estate
    
    $
    333,278,712
    
    
    $
    306,193,345Receivables and deferred rents
    
    
    9,720,675
    
    
    
    9,458,009Other assets
    
    
    59,290,542
    
    
    
    51,513,600Total assets
    
    $
    402,289,929
    
    
    $
    367,164,954Liabilities and EquityMortgage loans
    
    $
    282,538,327
    
    
    $
    255,897,580Other liabilities
    
    
    17,352,290
    
    
    
    16,515,825Equity  Columbia Equity Trust, Inc.
    
    
    38,576,955
    
    
    
    35,176,959Equity  Other owners
    
    
    63,822,357
    
    
    
    59,574,590Total liabilities and equity
    
    $
    402,289,929
    
    
    $
    367,164,954
  2006
    
    
    2005Equity in underlying real estate entities, above
    
    $
    38,576,955
    
    
    $
    35,176,959Excess of purchase price over underlying assets
acquired by Columbia Equity Trust, Inc.
    
    
    7,314,565
    
    
    
    7,314,565Additional investment by Columbia Equity Trust, Inc.
    
    
    12,283
    
    
    
    12,283Less additional depreciation and amortization of
underlying assets of unconsolidated real estate entities
    
    
    (489,511
    )
    
    
    (195,804
    )Elimination of intercompany transactions
    
    
    (215,578
    )
    
    
    Investments in unconsolidated real estate entities
    
    $
    45,198,714
    
    
    $
    42,308,003
 17




---



##### 



For the Three
    
    
    For the NineMonths Ended
    
    
    Months EndedSeptember 30, 2006
    
    
    September 30, 2006Revenues
    
    $
    11,677,529
    
    
    $
    34,895,414Operating and other expenses
    
    
    4,369,538
    
    
    
    12,791,324Depreciation
    
    
    4,063,929
    
    
    
    11,870,312Interest expense
    
    
    3,710,887
    
    
    
    10,397,199Total expenses
    
    
    12,144,354
    
    
    
    35,058,835Net loss
    
    $
    (466,825
    )
    
    $
    (163,421
    )Company share of net loss
    
    $
    (42,806
    )
    
    $
    (30,449
    )Less additional depreciation and amortization of
underlying assets of unconsolidated real estate entities
    
    
    (97,902
    )
    
    
    (293,706
    )Elimination of intercompany revenues and expenses
    
    
    42,393
    
    
    
    127,939Equity in net loss of unconsolidated real estate entities
    
    $
    (98,315
    )
    
    $
    (196,216
    )
 For the Period
    
    
    For the PeriodJuly 5, 2005 to
    
    
    January 1, 2005 toSeptember 30, 2005
    
    
    July 4, 2005Revenues
    
    $
    10,704,127
    
    
    $
    19,628,722Operating and other expenses
    
    
    5,668,666
    
    
    
    7,803,566Depreciation
    
    
    2,039,355
    
    
    
    6,666,025Interest expense
    
    
    3,515,052
    
    
    
    6,444,013Total expenses
    
    
    11,223,073
    
    
    
    20,913,604Net loss
    
    $
    (518,946
    )
    
    $
    (1,284,882
    )Company and
Columbia Predecessor share of net loss, respectively
    
    $
    (6,625
    )
    
    $
    (139,460
    )Less additional depreciation and amortization of
underlying assets of unconsolidated real estate entities
    
    
    (98,301
    )
    
    
    Equity in net income of real estate entities not
contributed by Columbia Predecessor at the Initial
Public Offering
    
    
    
    
    
    
    2,421,101Elimination of intercompany revenues and expenses
    
    
    36,257
    
    
    
    Equity in net (loss) income of unconsolidated real estate
entities
    
    $
    (68,669
    )
    
    $
    2,281,641
 18




---



##### 



6. Intangible Assets
  September 30,
    
    
    December 31,2006
    
    
    2005Intangible AssetsAbove market leases
    
    $
    5,774,632
    
    
    $
    3,892,695Accumulated amortization
    
    
    (967,589
    )
    
    
    (282,242
    )$
    4,807,043
    
    
    $
    3,610,453In-Place leases
    
    $
    23,498,518
    
    
    $
    16,980,485Accumulated amortization
    
    
    (4,094,847
    )
    
    
    (1,167,387
    )$
    19,403,671
    
    
    $
    15,813,098Tenant relationships
    
    $
    9,452,797
    
    
    $
    6,891,313Accumulated amortization
    
    
    (1,720,472
    )
    
    
    (503,719
    )$
    7,732,325
    
    
    $
    6,387,594Deferred CreditsBelow market leases
    
    $
    2,852,837
    
    
    $
    1,710,959Accumulated amortization
    
    
    (516,262
    )
    
    
    (117,147
    )$
    2,336,575
    
    
    $
    1,593,812
   19




---



##### 



7. Debt Agreements
  FairType/
    
    
    
    
    
    
    
    
    
    Note
    
    
    ValueIssuer
    
    Rate
    
    
    Maturity
    
    
    Principal
    
    
    Adjustment
    
    
    TotalCredit Facility
    
    
    6.44
    %
    
    
    11/28/2007
    
    
    $
    30,900,000
    
    
    $
    
    
    
    $
    30,900,0001025 Vermont
    
    
    5.11
    %
    
    
    1/1/2010
    
    
    
    22,500,000
    
    
    
    
    
    
    
    22,500,000Chubb
    
    
    6.11
    %
    
    
    7/1/2011
    
    
    
    8,100,000
    
    
    
    
    
    
    
    8,100,000Orchard Ridge
    
    
    6.06
    %
    
    
    5/1/2014
    
    
    
    15,500,000
    
    
    
    (333,386
    )
    
    
    15,166,614Meadows IV
    
    
    4.95
    %
    
    
    11/1/2011
    
    
    
    19,000,000
    
    
    
    
    
    
    
    19,000,000Park Plaza II
    
    
    5.53
    %
    
    
    2/1/2016
    
    
    
    24,290,000
    
    
    
    
    
    
    
    24,290,000Patrick Henry
    
    
    5.02
    %
    
    
    4/1/2009
    
    
    
    8,347,788
    
    
    
    (66,469
    )
    
    
    8,281,319$
    128,637,788
    
    
    $
    (399,855
    )
    
    $
    128,237,933
  FairType/
    
    
    
    
    
    
    
    
    
    Note
    
    
    ValueIssuer
    
    Rate
    
    
    Maturity
    
    
    Principal
    
    
    Adjustment
    
    
    TotalCredit Facility
    
    
    5.55
    %
    
    
    11/28/2007
    
    
    $
    22,000,000
    
    
    $
    
    
    
    $
    22,000,000Meadows IV
    
    
    4.95
    %
    
    
    11/1/2011
    
    
    
    19,000,000
    
    
    
    
    
    
    
    19,000,000Patrick Henry
    
    
    5.02
    %
    
    
    4/1/2009
    
    
    
    8,445,643
    
    
    
    (86,645
    )
    
    
    8,358,998$
    49,445,643
    
    
    $
    (86,645
    )
    
    $
    49,358,998
  20




---



##### 



2006
    
    $
    33,8372007
    
    
    31,038,5532008
    
    
    144,5902009
    
    
    8,176,0562010
    
    
    22,683,8552011
    
    
    27,292,950Thereafter
    
    
    39,267,947$
    128,637,788
 21




---



##### 



8. Income and Other Taxes
  9. Equity Compensation Plan
  Minority Interest and
    
    
    Minority Interest and
    
    
    Minority Interest andAs of
    
    
    Compensation Expense
    
    
    Compensation Expense
    
    
    Compensation ExpenseSeptember 30, 2006
    
    
    Recognized for the
    
    
    Recognized for the
    
    
    Recognized for theRecipient
    
    LTIP Units
    
    
    LTIP Units
    
    
    Three Months Ended
    
    
    Nine Months Ended
    
    
    Period July 5, 2005 toClass
    
    Granted
    
    
    Vested
    
    
    September 30, 2006
    
    
    September 30, 2006
    
    
    September 30, 2005Directors
    
    
    20,000
    
    
    
    20,000
    
    
    $
    
    
    
    $
    
    
    
    $
    300,000Consultants
    
    
    15,000
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    225,000Employees
    
    
    255,000
    
    
    
    51,000
    
    
    
    191,250
    
    
    
    573,750
    
    
    
    191,250290,000
    
    
    
    86,000
    
    
    $
    191,250
    
    
    $
    573,750
    
    
    $
    716,250
 22




---



##### 



10. Minimum Future Rentals
   Year EndingDecember 31,2006 (three months)
    
    $
    6,978,4472007
    
    
    28,052,9082008
    
    
    26,803,2402009
    
    
    24,359,8142010
    
    
    19,691,7752011
    
    
    16,292,126Thereafter
    
    
    28,616,989$
    150,795,299
 11. Related Party Transactions
  Transactions Reflected in the Consolidated and Combined Financial Statements
     23




---



##### 



For the Three
    
    For the Nine
    
    For the Period
    
    For the PeriodMonths Ended
    
    Months Ended
    
    July 5, 2005 to
    
    January 1, 2005 toService
    
    September 30, 2006
    
    September 30, 2006
    
    September 30, 2005
    
    July 4, 2005RevenuesAsset management
    
    $
    161,808
    
    
    $
    497,602
    
    
    $
    239,376
    
    
    $
    701,194Construction management
    
    
    166,766
    
    
    
    310,800
    
    
    
    
    
    
    
    737,162Transaction advisory
    
    
    138,000
    
    
    
    138,000
    
    
    
    
    
    
    
    Rental revenues
    
    
    44,353
    
    
    
    132,812
    
    
    
    
    
    
    
    Leasing revenues
    
    
    197,099
    
    
    
    385,591
    
    
    
    
    
    
    
    ExpensesOffice space
    
    
    61,628
    
    
    
    187,979
    
    
    
    36,161
    
    
    
    89,391Administrative services
    
    
    13,395
    
    
    
    46,186
    
    
    
    15,000
    
    
    
    45,129
 As of
    
    As ofSeptember 30,
    
    December 31,2006
    
    2005ReceivablesAsset management
    
    $
    99,381
    
    
    $
    166,850Construction management
    
    
    140,458
    
    
    
    40,242Rental revenues
    
    
    9,453
    
    
    
    13,999
 Transactions Reflected in the Unconsolidated Real Estate Entities
    24




---



##### 



12. Commitments
       25




---



##### 



13. Subsequent Events
     26




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
   Forward Looking Statements
   
    
    general risks affecting the commercial office property industry;
    
    risks associated with the availability and terms of financing and the use of debt,
equity or other types of financings;
    
    failure to manage effectively (i) our growth and (ii) our transition from a privately
held to a publicly held company;
    
    risks and uncertainties affecting property development and construction;
    
    risks associated with downturns in the national and local economies, increases in
interest rates and volatility in the securities markets;
    
    risks associated with actual and threatened terrorist attacks;
    
    costs of compliance with the Americans with Disabilities Act and other similar laws and
potential liability for uninsured losses and environmental contamination;
    
    risks associated with the potential failure to qualify as a REIT; and
    
    the other risk factors identified in Part I, Item 1A  Risk Factors contained in our
Annual Report on Form 10-K for the year ended December 31, 2005.
 27




---



##### 



Recent Developments
   
    
    each share of our common stock, issued and outstanding
immediately prior to the Effective Time (other than shares
owned by us and Acquiror and their respective
subsidiaries), will be converted into, and cancelled in
exchange for, the right to receive a cash amount equal to
$19.00 per share, without interest;
    
    each unit of limited partnership interest in the Operating
Partnership issued and outstanding immediately prior to the
Effective Time (other than those held by us or our
subsidiaries) and including LTIP Units in the Operating
Partnership (LTIP Units and together with the units of
limited partnership interest in the Operating Partnership,
the OP Units) will be converted into the right to
receive, at the election of the holder, (a) cash in an
amount equal to $19.00 per OP Unit or LTIP Unit, (b) one
unit of common equity membership interest in Acquiror
(Common Units), (c) one unit of preferred equity
membership interest in Acquiror or (d) a combination of any
of (a) through (c); provided, however,that only those
holders of OP Units or LTIP Units that qualify as
accredited investors pursuant to Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended,
will be eligible to receive units of preferred or common
equity membership interest in Acquiror.
  28




---



##### 



Overview
    
    
    owned interests in 21 commercial office properties consisting of approximately 2.9
million square feet, including:
 -
    
    100% fee simple ownership in eleven properties totaling approximately
1.1 million square feet of net rentable area;-
    
    a 100% leasehold interest in an approximately 126,000 square foot
office building in North Rockville, Maryland (the property is subject to a ground
lease with a remaining term, including extension options, of approximately 70
years);-
    
    partial interests ranging from 9% to 50% in eight office properties
totaling approximately 1.7 million square feet of net rentable area;-
    
    a 40% leasehold interest in an approximately 148,000 square foot
office building in Washington, D.C. (the property is subject to a ground lease
with a remaining term of approximately 99 years); and
 
    
    maintained an 8.1% joint venture interest in a development adjacent to our Independence
Center I property that will be comprised of an approximately 115,000 square foot office
building.
    
    provided asset management services to related parties for three office buildings
containing approximately 690,000 net rentable square feet and two hotel properties
containing approximately 610 rooms.
 29




---



##### 



Acquisitions Completed in 2006
  
    
    On January 12, 2006, we completed the acquisition of 1025 Vermont Avenue in Washington,
D.C. for a purchase price of approximately $34.1 million, net of transaction costs. The
transaction was funded with borrowings under our credit facility and the assumption of a
$19.0 million mortgage loan which bears interest at 4.91% and matures in January 2010.
Subsequent to the closing of the acquisition, the lender for the mortgage loan advanced an
additional $3.5 million in loan proceeds resulting in an outstanding balance of $22.5
million. Concurrent with the increase in loan proceeds, the interest rate was re-set to a
fixed rate of 5.11%. The additional loan proceeds were used to repay amounts outstanding
under our credit facility. The property contains approximately 115,000 net rentable square
feet of space and was 97% leased to 27 tenants at the time of acquisition.
    
    On May 23, 2006, we completed the acquisition of 1741 Business Center Drive in Reston,
Virginia (the Chubb Building, as defined in Note 4 to the financial statements) for a
purchase price of approximately $11.5 million, net of transaction costs. The purchase
price excludes approximately $950,000 of costs associated with the defeasance of existing
property level financing at the time of closing. The transaction was initially funded with
borrowings under our credit facility. Subsequently, on July 5, 2006, we completed an $8.1
million, five-year debt financing that matures in August 2011 and is secured by a mortgage
deed of trust on the property. The financing requires monthly payments of interest-only at
a fixed interest rate of 6.11%. The property contains approximately 41,400 net rentable
square feet of space and was 100% leased to a single tenant at the time of acquisition.
    
    On September 8, 2006, we completed the acquisition of 101 Orchard Ridge Drive in
Gaithersburg, Maryland (101 Orchard Ridge) for a purchase price of approximately $26.7
million, net of transaction costs. The transaction was funded with borrowings under our
credit facility and the assumption of a $15.5 million mortgage loan which bears interest at
6.06% and matures in May 2014. The property contains approximately 102,000 net rentable
square feet of space and was 100% leased to six tenants at the time of acquisition.
    
    On September 28, 2006, a joint venture in which we maintain a 40% interest, acquired a
leasehold interest in 2233 Wisconsin Avenue in Washington, D.C. (Georgetown Plaza) for a
purchase price of $23.0 million, net of transaction costs. The ownership of Georgetown
Plaza is currently subject to a ground lease which expires in September 2105. Our portion
of the investment was funded with borrowings under our credit facility. In conjunction with
the transaction, the joint venture assumed an approximately $15.8 million mortgage loan
which bears interest at 5.78% and matures in June 2013. Our institutional partner in the
joint venture is Aetna Life Insurance Company. The property contains approximately 148,000
net rentable square feet of space and was 67% leased at the time of acquisition. The joint
venture intends to make approximately $2 million in targeted capital upgrades to
re-position the asset within the sub-market.
 Properties Under Contract
  30




---



##### 



Other Transactions and Developments
       Our Business Strategy
  
    
    Investing in Small-to-Medium Size Office Buildings.We invest principally in
small-to-medium size office properties with an initial cost between $10 and $60 million as
we believe these properties present opportunities for attractive, risk-adjusted returns due
to the lower degree of institutional focus on this segment of the office market.
 31




---



##### 




    
    Selective and Strategic Geographic Focus. We focus primarily on the Greater Washington,
D.C. commercial office property market to take advantage of the strong economic and
demographic characteristics of that market, leverage our local market expertise and
relationships and create economies of scale through the clustering of properties.
    
    Intensive and Efficient Asset Management.We intensively manage each of our properties
through active property leasing and targeted capital improvements, which may include
re-positioning or redeveloping certain properties, while maintaining efficiency through the
outsourcing of non-strategic property functions.
    
    Strategic Joint Ventures.We selectively enter into joint ventures where appropriate to
leverage our equity returns through fees and disproportionate cash flow distributions, as
well as manage the risks associated with certain properties that may be inappropriate to
wholly own due to size or vacancy levels.
    
    Recycling Capital.We evaluate individual properties in our portfolio to assess their
future potential growth against current market values. If we believe that we have
maximized a propertys value potential, we will look to sell or recapitalize the property
and reinvest the profit generated from the sale or recapitalization into new investments
that offer improved earnings potential for our stockholders.
    
    Maintain Investment Flexibility. When the market for new acquisitions remains
competitive, we will consider allocating additional capital into development and
alternative investment structures, including equity joint ventures and mezzanine debt,
which may offer investment yields above those provided through wholly owned property
acquisitions. In addition, we will consider investments in contiguous markets, as well as
investments in mixed-use properties, that provide an appropriate investment yield premium.
 Office Market Commentary
   
    
    Market-wide office vacancy levels remained low increasing slightly to 9.3% at September
30, 2006. This compares to vacancy rates of 9.2% at June 30, 2006; 9.0% at March 31, 2006;
9.2% at December 31, 2005; and 9.7% at September 30, 2005.
    
    Vacancy levels by region at September 30, 2006 stood at 7.4% for the District of
Columbia; 9.8% for suburban Maryland; and 10.5% for northern Virginia.
    
    The average quoted asking rental rate for all classes of available office space was
$32.14 at September 30, 2006, representing a 5.7% increase in quoted rental rates from
$30.42 at September 30, 2005.
    
    There was approximately 15.4 million square feet of office space under construction at
September 30, 2006, represented by 5.4 million square feet in the District of Columbia, 7.4
million square feet in northern Virginia and 2.6 million square feet in suburban Maryland.
This compares to a total of 15.4 million square feet of office space under construction at
September 30, 2005.
 32




---



##### 



33




---



##### 



Our ProRata Shareof TotalAnnualizedYear
    
    
    
    
    
    
    
    Occupancy
    
    
    
    
    
    
    Rent as a %Acquired
    
    
    
    Net Rentable
    
    
    at
    
    
    Total
    
    
    of our TotalOwnership
    
    
    
    
    
    by Columbia
    
    Year Built/
    
    Area
    
    
    September 30,
    
    
    Annualized
    
    
    AnnualizedProperty
    
    Interest
    
    Tenancy
    
    Market
    
    or Predecessor
    
    Renovated
    
    (Square Feet)
    
    
    2006
    
    
    Rent (1)
    
    
    Rent (2)101 Orchard Ridge
    
    100%
    
    Multi-Tenant
    
    Suburban Maryland
    
    2006
    
    1986
    
    
    102,396
    
    
    
    100
    %
    
    $
    2,783,136
    
    
    
    6.6
    %1025 Vermont Avenue
    
    100%
    
    Multi-Tenant
    
    Washington, D.C.
    
    2006
    
    1964 - 2003
    
    
    114,636
    
    
    
    97
    %
    
    
    3,691,368
    
    
    
    8.8
    %1741 Business
Cntr. Dr.
    
    100%
    
    Single Tenant
    
    Northern Virginia
    
    2006
    
    2000
    
    
    41,358
    
    
    
    100
    %
    
    
    957,204
    
    
    
    2.3
    %14700 Lee Road
    
    100%
    
    Single Tenant
    
    Northern Virginia
    
    2005
    
    2000
    
    
    84,652
    
    
    
    100
    %
    
    
    2,126,280
    
    
    
    5.1
    %Fair Oaks
    
    100%
    
    Multi-Tenant
    
    Northern Virginia
    
    2001
    
    1985
    
    
    126,949
    
    
    
    91
    %
    
    
    2,443,608
    
    
    
    5.8
    %Greenbriar
    
    100%
    
    Multi-Tenant
    
    Northern Virginia
    
    2001
    
    1985 - 1998
    
    
    111,721
    
    
    
    88
    %
    
    
    2,177,928
    
    
    
    5.2
    %Loudoun Gateway IV
    
    100%
    
    Single Tenant
    
    Northern Virginia
    
    2005
    
    2002
    
    
    102,987
    
    
    
    100
    %
    
    
    1,563,096
    
    
    
    3.7
    %Meadows IV
    
    100%
    
    Multi-Tenant
    
    Northern Virginia
    
    2004
    
    1988 - 1997
    
    
    148,160
    
    
    
    100
    %
    
    
    3,315,216
    
    
    
    7.9
    %Oakton
    
    100%
    
    Multi-Tenant
    
    Northern Virginia
    
    2005
    
    1985
    
    
    64,648
    
    
    
    100
    %
    
    
    1,710,924
    
    
    
    4.1
    %Park Plaza II (3)
    
    100%
    
    Multi-Tenant
    
    Suburban Maryland
    
    2005
    
    2001
    
    
    126,228
    
    
    
    100
    %
    
    
    3,869,400
    
    
    
    9.2
    %Patrick Henry
    
    100%
    
    Multi-Tenant
    
    Newport News, VA
    
    2005
    
    1989
    
    
    98,883
    
    
    
    94
    %
    
    
    1,816,236
    
    
    
    4.3
    %Sherwood Plaza
    
    100%
    
    Multi-Tenant
    
    Northern Virginia
    
    2000
    
    1984
    
    
    92,960
    
    
    
    100
    %
    
    
    2,029,920
    
    
    
    4.8
    %King Street
    
    50%
    
    Multi-Tenant
    
    Northern Virginia
    
    1999
    
    1984 - 2004
    
    
    149,080
    
    
    
    85
    %
    
    
    3,858,384
    
    
    
    4.6
    %Madison Place
    
    50%
    
    Multi-Tenant
    
    Northern Virginia
    
    2003
    
    1989
    
    
    108,252
    
    
    
    83
    %
    
    
    2,493,540
    
    
    
    3.0
    %Barlow Building
    
    40%
    
    Multi-Tenant
    
    Suburban Maryland
    
    2005
    
    1966 - 2001
    
    
    270,562
    
    
    
    95
    %
    
    
    9,143,616
    
    
    
    8.7
    %Georgetown Plaza (4)
    
    40%
    
    Multi-Tenant
    
    Washington, D.C.
    
    2006
    
    1964-2001
    
    
    148,330
    
    
    
    69
    %
    
    
    2,642,808
    
    
    
    2.5
    %Atrium Building
    
    37%
    
    Multi-Tenant
    
    Northern Virginia
    
    2004
    
    1978 - 1999
    
    
    138,507
    
    
    
    100
    %
    
    
    3,873,060
    
    
    
    3.4
    %Suffolk Building
    
    37%
    
    Single Tenant
    
    Northern Virginia
    
    2005
    
    1964 - 2003
    
    
    257,425
    
    
    
    100
    %
    
    
    6,475,704
    
    
    
    5.6
    %Independence Center
I
    
    15%
    
    Multi-Tenant
    
    Northern Virginia
    
    2002
    
    1999
    
    
    275,002
    
    
    
    92
    %
    
    
    6,180,108
    
    
    
    2.2
    %1575 Eye Street
    
    9%
    
    Multi-Tenant
    
    Washington, D.C.
    
    2002
    
    1979
    
    
    210,372
    
    
    
    98
    %
    
    
    7,904,892
    
    
    
    0.2
    %Victory Point
    
    10%
    
    Multi-Tenant
    
    Northern Virginia
    
    2005
    
    1989 - 2005
    
    
    147,966
    
    
    
    17
    %
    
    
    673,176
    
    
    
    1.7
    %Total / Weighted
Average (5)
    
    
    
    
    
    
    
    
    
    
    
    
    2,921,074
    
    
    
    91
    %
    
    $
    71,729,604
    
    
    
    100
    %
 
 (1)
    
    Annualized rent is calculated by multiplying by a factor of twelve the actual
contractual monthly base rent at September 30, 2006 for each tenant. Total annualized rent
includes our joint venture partners pro rata share of contractual base rent.(2)
    
    Represents the percentage of our pro rata share of annualized rent (which is based upon
our percentage ownership interest in each property) divided by our total pro rata share of
annualized rent of our portfolio.(3)
    
    The property is subject to a ground lease with a remaining term, including extension
options, of approximately 70 years.(4)
    
    The property is subject to a ground lease with a remaining term, including extension
options, of approximately 99 years.(5)
    
    Information set forth in this table excludes our 8.1% ownership interest in the joint
venture that owns the Independence Center II development property. 34




---



##### 



Summary of Critical Accounting Policies and Estimates
   Revenue Recognition and Allowance for Doubtful Accounts Receivable
   Investments in Real Estate
   35




---



##### 



Investments in Unconsolidated Real Estate Entities
  Depreciation, Amortization and Impairment of Long-Lived Assets
   36




---



##### 



Results of Operations
  Comparison of Three Months Ended September 30, 2006 to Three Months Ended September 30, 2005
 Total Revenues
  Columbia Equity
    
    
    Columbia Equity
    
    
    Columbia PredecessorTrust, Inc. for the
    
    
    Trust, Inc. for the
    
    
    For the PeriodThree Months Ended
    
    
    Period July 5, 2005 to
    
    
    July 1, 2005 to
    
    
    Increase
    
    
    PercentSeptember 30, 2006
    
    
    September 30, 2005
    
    
    July 4, 2005
    
    
    (Decrease)
    
    
    ChangeRevenuesBase rents
    
    $
    6,776,344
    
    
    $
    2,870,411
    
    
    $
    
    
    
    $
    3,905,933
    
    
    
    136
    %Recoveries from tenants
    
    
    521,211
    
    
    
    143,404
    
    
    
    
    
    
    
    377,807
    
    
    
    263
    %Fee income, primarily from related parties
    
    
    663,673
    
    
    
    239,376
    
    
    
    
    
    
    
    424,297
    
    
    
    177
    %Parking and other income
    
    
    227,107
    
    
    
    22,725
    
    
    
    
    
    
    
    204,382
    
    
    
    899
    %Total revenues
    
    $
    8,188,335
    
    
    $
    3,275,916
    
    
    $
    
    
    
    $
    4,912,419
    
    
    
    150
    %
 Base Rents
  Recoveries from Tenants
  37




---



##### 



Fee Income
  Property Operating Expenses
  Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodThree Months Ended
    
    Period July 5, 2005 to
    
    July 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeOperating expensesProperty operating
    
    $
    1,164,711
    
    
    $
    501,159
    
    
    $
    
    
    
    $
    663,552
    
    
    
    132
    %Utilities
    
    
    698,013
    
    
    
    227,586
    
    
    
    
    
    
    
    470,427
    
    
    
    207
    %Real estate taxes and insurance
    
    
    708,172
    
    
    
    192,780
    
    
    
    
    
    
    
    515,392
    
    
    
    267
    %
 Property Operating Expenses
  Utilities Expenses
  38




---



##### 



Real Estate Taxes and Insurance Expenses
  General and Administrative Expenses
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodThree Months Ended
    
    Period July 5, 2005 to
    
    July 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeGeneral and administrative expenses
    
    $
    1,409,635
    
    
    $
    2,562,951
    
    
    $
    4,229
    
    
    $
    (1,157,545
    )
    
    
    (45
    )%
    Depreciation and Amortization Expenses
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodThree Months Ended
    
    Period July 5, 2005 to
    
    July 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeDepreciation and amortization
    
    $
    3,654,305
    
    
    $
    1,770,527
    
    
    $
    25
    
    
    $
    1,883,753
    
    
    
    106
    %
 39




---



##### 



Other Operating Expenses and Income
 Interest Income
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodThree Months Ended
    
    Period July 5, 2005 to
    
    July 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeInterest income
    
    $
    94,712
    
    
    $
    442,491
    
    
    $
    1,572
    
    
    $
    (349,351
    )
    
    
    (79
    )%
  Interest Expense
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodThree Months Ended
    
    Period July 5, 2005 to
    
    July 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeInterest expense
    
    $
    1,644,535
    
    
    $
    229,150
    
    
    $
    97
    
    
    $
    1,415,288
    
    
    
    617
    %
  Equity in Net Income of Unconsolidated Real Estate Entities
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodThree Months Ended
    
    Period July 5, 2005 to
    
    July 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeEquity in net (loss) income of unconsolidated
real estate entities
    
    $
    (98,315
    )
    
    $
    (68,669
    )
    
    $
    (23,334
    )
    
    $
    (6,312
    )
    
    
    (7
    )%
  40




---



##### 



Minority Interest
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodThree Months Ended
    
    Period July 5, 2005 to
    
    July 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeMinority Interest
    
    $
    78,431
    
    
    $
    131,486
    
    
    $
    
    
    
    $
    (53,055
    )
    
    
    (40
    )%
  Comparison of Nine Months Ended September 30, 2006 to Nine Months Ended September 30, 2005
 Total Revenues
  Columbia Equity
    
    
    Columbia Equity
    
    
    Columbia PredecessorTrust, Inc. for the
    
    
    Trust, Inc. for the
    
    
    For the PeriodNine Months Ended
    
    
    Period July 5, 2005 to
    
    
    January 1, 2005 to
    
    
    Increase
    
    
    PercentSeptember 30, 2006
    
    
    September 30, 2005
    
    
    July 4, 2005
    
    
    (Decrease)
    
    
    ChangeRevenuesBase rents
    
    $
    19,480,944
    
    
    $
    2,870,411
    
    
    $
    
    
    
    $
    16,610,533
    
    
    
    579
    %Recoveries from tenants
    
    
    1,232,226
    
    
    
    143,404
    
    
    
    
    
    
    
    1,088,822
    
    
    
    759
    %Fee income, primarily from related parties
    
    
    1,331,994
    
    
    
    239,376
    
    
    
    1,438,356
    
    
    
    (345,738
    )
    
    
    (21
    )%Parking and other income
    
    
    521,281
    
    
    
    22,725
    
    
    
    
    
    
    
    498,556
    
    
    
    2194
    %Total revenues
    
    $
    22,566,445
    
    
    $
    3,275,916
    
    
    $
    1,438,356
    
    
    $
    17,852,173
    
    
    
    379
    %
 Base Rents
  Recoveries from Tenants
  41




---



##### 



Fee Income
  Property Operating Expenses
  Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeOperating expensesProperty operating
    
    $
    3,405,320
    
    
    $
    501,159
    
    
    $
    
    
    
    $
    2,904,161
    
    
    
    579
    %Utilities
    
    
    1,827,856
    
    
    
    227,586
    
    
    
    
    
    
    
    1,600,270
    
    
    
    703
    %Real estate taxes and insurance
    
    
    1,985,474
    
    
    
    192,780
    
    
    
    
    
    
    
    1,792,694
    
    
    
    930
    %
 Property Operating Expenses
  Utilities Expenses
  42




---



##### 



Real Estate Taxes and Insurance Expenses
  General and Administrative Expenses
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeGeneral and administrative expenses
    
    $
    3,818,606
    
    
    $
    2,563,651
    
    
    $
    1,549,127
    
    
    $
    (294,172
    )
    
    
    (7
    )%
    43




---



##### 



Depreciation and Amortization Expenses
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeDepreciation and amortization
    
    $
    10,660,201
    
    
    $
    1,770,527
    
    
    $
    7,385
    
    
    $
    8,882,289
    
    
    
    500
    %
   Other Operating Expenses and Income
 Interest Income
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeInterest income
    
    $
    210,466
    
    
    $
    442,491
    
    
    $
    21,450
    
    
    $
    (253,475
    )
    
    
    (55
    )%
  Interest Expense
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeInterest expense
    
    $
    4,206,118
    
    
    $
    229,150
    
    
    $
    4,597
    
    
    $
    3,972,371
    
    
    
    1699
    %
  44




---



##### 



Equity in Net Income of Unconsolidated Real Estate Entities
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeEquity in net (loss) income of unconsolidated
real estate entities
    
    $
    (196,216
    )
    
    $
    (68,669
    )
    
    $
    2,281,641
    
    
    $
    (2,409,188
    )
    
    
    109
    %
  Minority Interest
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    Increase
    
    PercentSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)
    
    ChangeMinority Interest
    
    $
    238,085
    
    
    $
    131,486
    
    
    $
    
    
    
    $
    106,599
    
    
    
    81
    %
  Consolidated Cash Flows
 Columbia Equity
    
    Columbia Equity
    
    Columbia PredecessorTrust, Inc. for the
    
    Trust, Inc. for the
    
    For the PeriodNine Months Ended
    
    Period July 5, 2005 to
    
    January 1, 2005 to
    
    IncreaseSeptember 30, 2006
    
    September 30, 2005
    
    July 4, 2005
    
    (Decrease)Net cash provided by (used In) operating activities
    
    
    8,932,896
    
    
    
    951,166
    
    
    
    (746,565
    )
    
    
    8,728,295Net cash (used in) provided by investing activities
    
    
    (45,289,630
    )
    
    
    (140,034,540
    )
    
    
    2,195,981
    
    
    
    92,548,929Net cash provided by financing activities
    
    
    37,860,634
    
    
    
    147,736,986
    
    
    
    86,011
    
    
    
    (109,962,363
    )
    45




---



##### 



Liquidity and Capital Resources
  Short-term Liquidity
  
    
    recurring maintenance, repairs and other operating expenses necessary to
properly maintain our properties;
    
    property taxes and insurance expenses;
    
    interest expense and scheduled principal payments on outstanding indebtedness;
    
    capital expenditures incurred to facilitate the leasing of space at our
properties, including tenant improvements and leasing commissions;
    
    general and administrative expenses; and
    
    distributions to our stockholders and operating partnership unit holders.
  Long-term Liquidity
  46




---



##### 




    
    Acquiror agrees to acquire such acquisition property through an affiliate;
    
    Acquiror will cause its affiliate to grant us an option to acquire such property for
the option price if the Merger Agreement is terminated prior to closing; and
    
    in the event the closing of the Mergers occurs, Acquiror will cause its affiliate to
sell and transfer such acquisition property to a subsidiary of Merger Sub at closing for a
purchase price equal to Acquirors total costs in acquiring the property, including the
purchase price, financing fees and other transaction costs (the Acquisition Costs).
     47




---



##### 



Principal Balance
    
    
    Pro Rata Share ofInterest
    
    Maturity
    
    as of
    
    
    Principal Balance as ofRate
    
    Date
    
    September 30, 2006
    
    
    September 30, 2006 (1)Consolidated Debt (2)Fixed
RatePatrick Henry
    
    5.02%
    
    4/1/2009
    
    $
    8,281,319
    
    
    $
    8,281,3191025 Vermont Avenue
    
    5.11%
    
    1/1/2010
    
    
    22,500,000
    
    
    
    22,500,0001741
Business Center Drive
    
    6.11%
    
    8/1/2011
    
    
    8,100,000
    
    
    
    8,100,000Meadows IV
    
    4.95%
    
    11/1/2011
    
    
    19,000,000
    
    
    
    19,000,000101 Orchard Ridge
    
    6.06%
    
    5/11/2014
    
    
    15,166,614
    
    
    
    15,166,614Park Plaza II
    
    5.53%
    
    3/4/2016
    
    
    24,290,000
    
    
    
    24,290,000Floating
RateCredit Facility
    
    LIBOR + 1.10 - 1.35%
    
    11/28/2007
    
    
    30,900,000
    
    
    
    30,900,000Subtotal
    
    
    
    
    
    
    128,237,933
    
    
    
    128,237,933Unconsolidated Debt (2)Fixed
RateKing Street
    
    5.06%
    
    3/1/2008
    
    
    21,266,420
    
    
    
    10,633,210Madison Place
    
    4.49%
    
    8/1/2008
    
    
    15,097,314
    
    
    
    7,548,6571575 Eye Street
    
    6.82%
    
    3/1/2009
    
    
    42,454,939
    
    
    
    3,897,363Independence Center I
    
    5.04%
    
    9/10/2009
    
    
    30,510,472
    
    
    
    4,497,244Independence Center II
    
    6.02%
    
    9/10/2009
    
    
    11,625,561
    
    
    
    941,670Barlow Building
    
    5.04%
    
    8/1/2012
    
    
    61,750,000
    
    
    
    24,700,000Atrium  Loan # 1
    
    8.43%
    
    9/1/2012
    
    
    17,775,951
    
    
    
    6,577,102Atrium  Loan # 2
    
    6.21%
    
    9/1/2012
    
    
    5,748,150
    
    
    
    2,126,816Georgetown Plaza
    
    5.78%
    
    6/1/2013
    
    
    15,964,389
    
    
    
    6,385,756Suffolk
    
    5.10%
    
    5/4/2015
    
    
    42,000,000
    
    
    
    15,330,000Floating
RateVictory Point
    
    LIBOR + 2.95%
    
    3/31/2008
    
    
    18,344,943
    
    
    
    1,834,494Subtotal
    
    
    
    
    
    
    282,538,139
    
    
    
    84,472,312Total
    
    
    
    
    
    $
    410,776,072
    
    
    $
    212,710,245
 
 (1)
    
    Principal amount multiplied by our percentage interest in the joint venture entity that
owns the property.(2)
    
    With the exception of a limited guarantee in the amount of approximately $737,000 for
the debt at our Independence Center II property, our pro rata share of unconsolidated debt
is non-recourse to us and is collateralized by the real estate properties held by the
joint venture entities.  Unconsolidated Investments and Joint Ventures
  48




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##### 




    
    absence of exclusive control over the development, financing, leasing, management and
other aspects of the project; and
    
    possibility that our co-venturer or partner might:
 o
    
    become bankrupt;o
    
    have interests or goals that are inconsistent with ours;o
    
    take action contrary to our instructions, requests or interests
(including those related to our qualification as a REIT for tax purposes); oro
    
    otherwise impede our objectives; and
 
    
    possibility that we may elect to fund losses of the joint venture.
 Off Balance Sheet Arrangements
    49




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##### 



Cash Distribution Policy
  Inflation
  Geographic Concentration
  Funds From Operations
  50




---



##### 



Three months
    
    
    Nine monthsended
    
    
    endedSeptember 30, 2006
    
    
    September 30, 2006Net loss
    
    $
    (1,051,031
    )
    
    $
    (3,161,118
    )AdjustmentsMinority interests
    
    
    (78,431
    )
    
    
    (238,085
    )Depreciation and amortization  consolidated entities
    
    
    3,647,932
    
    
    
    10,643,368Depreciation and amortization  unconsolidated entities
    
    
    1,422,156
    
    
    
    4,277,692Funds from operations
    
    $
    3,940,626
    
    
    $
    11,521,857
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
     Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  51




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##### 



PART II
 OTHER INFORMATION
 Item 1A. Risk Factors
  Item 6. Exhibits.
 3.1
    
    Articles of Amendment and Restatement of the Registrant (incorporated
by reference to Exhibit 3.1 to the Companys Registration Statement
on Form S-11/A (Registration No. 333-122644) filed on June 28, 2005).3.2
    
    Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Companys Registration Statement on
Form S-11/A (Registration No. 333-122644) filed on June 28, 2005).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Registrants Quarterly Report on Form 10-Q filed
on November 14, 2005).4.2
    
    Amended and Restated Agreement of Limited Partnership of Columbia
Equity, LP (incorporated by reference to Exhibit 3.3 to the Companys
Registration Statement on Form S-11/A (Registration No. 333-122644)
filed on June 28, 2005).10.1
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc.
and Stafford Commerce Center, L.L.C., dated July 27, 2006
(incorporated by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed on July 27, 2006).10.2
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc.
and Stafford Commerce Center II, L.L.C., dated July 27, 2006
(incorporated by reference to Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed on July 27, 2006).10.3
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc.
and Stafford Commerce Center III, L.L.C., dated July 27, 2006
(incorporated by reference to Exhibit 10.3 to the Registrants
Current Report on Form 8-K filed on July 27, 2006).10.4
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc. and Stafford Commerce Center IV, L.L.C., dated July
27, 2006 (incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K filed on July 27, 2006).10.5*
    
    Amended and Restated Deed of Trust Note by and between Argo Orchard Ridge, LC and Foulger Land
Limited Partnership, dated May 7, 2004.10.6*
    
    Loan Assumption and Substitution Agreement by and among Argo Orchard Ridge; LC, Foulger Land
Orchard Ridge 2006, LLC; Columbia Equity , LP; Foulger Land Limited Partnership; Clayton Foulger;
John Austin; Richard Perlmutter; and Wells Fargo Bank, N.A., dated September 8, 2006.
 52




---



##### 



10.7*
    
    Allonge to Note by Argo Orchard Ridge, LC and Foulger Land Orchard Ridge 2006, LLC31.1*
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.31.2*
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer.32.1*
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer
and Chief Financial Officer.
 
 *
    
    filed herewith 53




---



##### 



SIGNATURES
  COLUMBIA
    
    EQUITY TRUST, INC.Date: November 14, 2006
    
    By:
    
    /s/ Oliver T. Carr, III

Oliver T. Carr, IIIPresident and Chief Executive OfficerDate: November 14, 2006
    
    By:
    
    /s/ John A. Schissel

John A. SchisselExecutive Vice President and Chief 

Financial Officer
 54




---



##### 



EXHIBIT INDEX
 No.
    
    Description3.1
    
    Articles of Amendment and Restatement of the Registrant (incorporated
by reference to Exhibit 3.1 to the Companys Registration Statement
on Form S-11/A (Registration No. 333-122644) filed on June 28, 2005).3.2
    
    Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Companys Registration Statement on
Form S-11/A (Registration No. 333-122644) filed on June 28, 2005).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Registrants Quarterly Report on Form 10-Q filed
on November 14, 2005).4.2
    
    Amended and Restated Agreement of Limited Partnership of Columbia
Equity, LP (incorporated by reference to Exhibit 3.3 to the Companys
Registration Statement on Form S-11/A (Registration No. 333-122644)
filed on June 28, 2005).10.1
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc.
and Stafford Commerce Center, L.L.C., dated July 27, 2006
(incorporated by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed on July 27, 2006).10.2
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc.
and Stafford Commerce Center II, L.L.C., dated July 27, 2006
(incorporated by reference to Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed on July 27, 2006).10.3
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc.
and Stafford Commerce Center III, L.L.C., dated July 27, 2006
(incorporated by reference to Exhibit 10.3 to the Registrants
Current Report on Form 8-K filed on July 27, 2006).10.4
    
    Agreement of Purchase and Sale between Columbia Equity Trust, Inc. and Stafford Commerce Center IV, L.L.C., dated July
27, 2006 (incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K filed on
July 27, 2006).10.5*
    
    Amended and Restated Deed of Trust Note by and between Argo Orchard Ridge, LC and Foulger Land
Limited Partnership, dated May 7, 2004.10.6*
    
    Loan Assumption and Substitution Agreement by and among Argo Orchard Ridge; LC, Foulger Land
Orchard Ridge 2006, LLC; Columbia Equity , LP; Foulger Land Limited Partnership; Clayton Foulger;
John Austin; Richard Perlmutter; and Wells Fargo Bank, N.A., dated September 8, 2006.10.7*
    
    Allonge to Note by Argo Orchard Ridge, LC and Foulger Land Orchard Ridge 2006, LLC31.1*
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.31.2*
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer.32.1*
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer
and Chief Financial Officer.
 
 *
    
    filed herewith 55