##### Table of Contents



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
 JUNE 30, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
  1-9997
 CRT PROPERTIES, INC.
  FLORIDA
    
    59-2898045(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 225 NE MIZNER BOULEVARD, SUITE 200BOCA RATON, FLORIDA
    
    33432(Address of principal executive offices)
    
    (Zip Code)
 (561) 395-9666
  x o
  x o
  Class
    
    Outstanding at July 29, 2005Common Stock, $.01 par value
    
    31,852,370 shares




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##### Table of Contents



CRT PROPERTIES, INC.
 FORM 10-Q INDEX
 PAGEPART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited):Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004
    
    
    3Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004
    
    
    4Condensed Consolidated Statement of Changes in Shareholders Equity for the Six Months Ended June 30, 2005
    
    
    5Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004
    
    
    6Notes to Condensed Consolidated Financial Statements for the Three and Six Months Ended June 30, 2005 and 2004
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4.
    
    Controls and Procedures
    
    
    27PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28Item 5.
    
    Other Information
    
    
    29Item 6.
    
    Exhibits
    
    
    31Signatures
    
    
    32Form of Amended Participation AgreementAmended Participation AgreementForm of Amended Supplemental Executive Retirement AgreementSection 302 Chief Executive Officer CertificationSection 302 Certification of CFOSection 906 Certification of CEO and CFO
 2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited):
 CRT PROPERTIES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited and amounts in thousands, except share data)
 June 30,
    
    
    December 31,2005
    
    
    2004ASSETSReal Estate Investments:Operating properties:Land
    
    $
    164,420
    
    
    $
    162,988Buildings
    
    
    1,269,850
    
    
    
    1,189,658Furniture and equipment
    
    
    3,758
    
    
    
    3,747Accumulated depreciation
    
    
    (238,182
    )
    
    
    (215,587
    )Operating properties, net
    
    
    1,199,846
    
    
    
    1,140,806Undeveloped land held for investment
    
    
    14,628
    
    
    
    14,628Cash and cash equivalents
    
    
    11,801
    
    
    
    32,717Restricted cash
    
    
    8,222
    
    
    
    15,964Accounts receivable, net of allowance for
uncollectible accounts of $1,325 and $1,169
    
    
    2,750
    
    
    
    2,839Straight-line rents receivable
    
    
    28,999
    
    
    
    20,118Fair value of in-place leases
    
    
    9,668
    
    
    
    10,695Investment in unconsolidated entity
    
    
    
    
    
    
    3,217Other assets
    
    
    44,414
    
    
    
    43,282TOTAL ASSETS
    
    $
    1,320,328
    
    
    $
    1,284,266LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Mortgages and loans payable
    
    $
    676,971
    
    
    $
    623,467Accounts payable
    
    
    11,121
    
    
    
    8,584Accrued real estate taxes payable
    
    
    11,613
    
    
    
    2,414Accrued liabilities  other
    
    
    13,234
    
    
    
    24,259Dividends payable
    
    
    11,448
    
    
    
    11,365Advance rents and security deposits
    
    
    9,307
    
    
    
    9,039Total Liabilities
    
    
    733,694
    
    
    
    679,128Minority interest
    
    
    13,294
    
    
    
    11,179Shareholders Equity:Preferred stock, $.01 par value; 50,000,000 shares
authorized; liquidation preference of $25 per share;
2,990,000 shares issued and outstanding
    
    
    30
    
    
    
    30Common stock, $.01 par value; 100,000,000 shares
authorized; 40,352,351 and 40,115,540 shares
issued; 31,852,370 and 31,614,502 shares outstanding
    
    
    403
    
    
    
    401Capital in excess of par value
    
    
    767,896
    
    
    
    762,642Unearned compensation
    
    
    (3,690
    )
    
    
    Accumulated other comprehensive loss
    
    
    (536
    )
    
    
    (536
    )Dividends in excess of net income
    
    
    (59,304
    )
    
    
    (37,110
    )Treasury stock, at cost; 8,499,981 and 8,501,038 shares
    
    
    (131,459
    )
    
    
    (131,468
    )Total Shareholders Equity
    
    
    573,340
    
    
    
    593,959TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    1,320,328
    
    
    $
    1,284,266
  3




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CRT PROPERTIES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited and amounts In thousands, except per share data)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUESBase rental revenues
    
    $
    43,769
    
    
    $
    36,778
    
    
    $
    86,605
    
    
    $
    71,534Recoveries from tenants
    
    
    4,799
    
    
    
    2,582
    
    
    
    9,590
    
    
    
    6,095Parking and other
    
    
    1,491
    
    
    
    1,571
    
    
    
    2,949
    
    
    
    2,770Management fees
    
    
    172
    
    
    
    108
    
    
    
    382
    
    
    
    174Total operating revenues
    
    
    50,231
    
    
    
    41,039
    
    
    
    99,526
    
    
    
    80,573EXPENSESProperty operations
    
    
    14,397
    
    
    
    11,534
    
    
    
    27,713
    
    
    
    22,481Real estate taxes
    
    
    5,785
    
    
    
    4,502
    
    
    
    11,429
    
    
    
    9,091Depreciation and amortization
    
    
    13,173
    
    
    
    9,916
    
    
    
    25,211
    
    
    
    19,136General and administrative
    
    
    6,817
    
    
    
    3,167
    
    
    
    10,922
    
    
    
    6,011Other
    
    
    23
    
    
    
    58
    
    
    
    46
    
    
    
    110Total operating expenses
    
    
    40,195
    
    
    
    29,177
    
    
    
    75,321
    
    
    
    56,829OPERATING INCOME
    
    
    10,036
    
    
    
    11,862
    
    
    
    24,205
    
    
    
    23,744OTHER INCOME AND (EXPENSE)Interest income
    
    
    69
    
    
    
    135
    
    
    
    184
    
    
    
    262Mortgage and loan interest, including amortization
of deferred loan costs of $332 and $378 for the three
months and $1,320 and $752 for the six months
    
    
    (10,466
    )
    
    
    (7,520
    )
    
    
    (21,108
    )
    
    
    (14,826
    )Total other income and (expense)
    
    
    (10,397
    )
    
    
    (7,385
    )
    
    
    (20,924
    )
    
    
    (14,564
    )INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTEREST,
AND EQUITY IN EARNINGS OF UNCONSOLIDATED ENTITY
    
    
    (361
    )
    
    
    4,477
    
    
    
    3,281
    
    
    
    9,180Income tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET INCOME (LOSS) BEFORE MINORITY INTEREST AND
EQUITY IN EARNINGS OF UNCONSOLIDATED ENTITY
    
    
    (361
    )
    
    
    4,477
    
    
    
    3,281
    
    
    
    9,180Minority Interest
    
    
    (62
    )
    
    
    
    
    
    
    (138
    )
    
    
    NET INCOME BEFORE EQUITY IN EARNINGS
OF UNCONSOLIDATED ENTITY
    
    
    (423
    )
    
    
    4,477
    
    
    
    3,143
    
    
    
    9,180Equity in earnings of unconsolidated entity
    
    
    24
    
    
    
    110
    
    
    
    124
    
    
    
    241NET INCOME (LOSS)
    
    
    (399
    )
    
    
    4,587
    
    
    
    3,267
    
    
    
    9,421Dividends on preferred stock
    
    
    (1,588
    )
    
    
    (1,588
    )
    
    
    (3,177
    )
    
    
    (3,176
    )NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
    
    $
    (1,987
    )
    
    $
    2,999
    
    
    $
    90
    
    
    $
    6,245EARNINGS (LOSS) PER SHARE:Basic
    
    $
    (0.06
    )
    
    $
    0.11
    
    
    $
    
    
    
    $
    0.24Diluted
    
    $
    (0.06
    )
    
    $
    0.11
    
    
    $
    
    
    
    $
    0.23WEIGHTED AVERAGE SHARES:Basic
    
    
    31,822
    
    
    
    26,840
    
    
    
    31,787
    
    
    
    26,455Diluted
    
    
    31,822
    
    
    
    27,230
    
    
    
    32,151
    
    
    
    26,882
  4




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CRT PROPERTIES, INC.
 
 CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS EQUITY
 (Unaudited and amounts in thousands)
 Preferred Stock
    
    
    Common Stock
    
    
    Capital
    
    
    
    
    
    
    Accumulated
    
    
    Dividends
    
    
    
    
    
    
    Totalin Excess
    
    
    
    
    
    
    Other
    
    
    In Excess
    
    
    
    
    
    
    Share-Shares
    
    
    Par
    
    
    Shares
    
    
    Par
    
    
    Of Par
    
    
    Unearned
    
    
    Comprehensive
    
    
    of Net
    
    
    Treasury
    
    
    holders'Issued
    
    
    Value
    
    
    Issued
    
    
    Value
    
    
    Value
    
    
    Compensation
    
    
    Loss
    
    
    Income
    
    
    Stock
    
    
    EquityBALANCE AT
DECEMBER 31, 2004
    
    
    2,990
    
    
    $
    30
    
    
    
    40,115
    
    
    $
    401
    
    
    $
    762,642
    
    
    $
    
    
    
    $
    (536
    )
    
    $
    (37,110)
    )
    
    $
    (131,468
    )
    
    $
    593,959Issuance of restricted stock
    
    
    
    
    
    
    
    
    
    
    180
    
    
    
    2
    
    
    
    4,098
    
    
    
    (4,100
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    25Amortization of restricted
stock award
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    410
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    410Shares issued pursuant to
long-term incentive plan
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    479
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    479Options exercised
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    661
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    661Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,461
    )
    
    
    
    
    
    
    (25,461
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,267
    
    
    
    
    
    
    
    3,267BALANCE AT
JUNE 30, 2005
    
    
    2,990
    
    
    $
    30
    
    
    
    40,352
    
    
    $
    403
    
    
    $
    767,896
    
    
    $
    (3,690
    )
    
    $
    (536
    )
    
    $
    (59,304
    )
    
    $
    (131,459
    )
    
    $
    573,340
 
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CRT PROPERTIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited and amounts in thousands)
 Six MonthsEnded June 30,2005
    
    
    2004OPERATING ACTIVITIESNet income
    
    $
    3,267
    
    
    $
    9,421Adjustments to reconcile net income to net cash
provided by operating activities:Equity in earnings of unconsolidated entity
    
    
    (124
    )
    
    
    (241
    )Minority interest expense
    
    
    138
    
    
    
    Depreciation and amortization
    
    
    25,211
    
    
    
    19,136Amortization of deferred loan costs
    
    
    1,320
    
    
    
    752Provision for uncollectible accounts
    
    
    282
    
    
    
    277Amortization of restricted stock award
    
    
    410
    
    
    
    Changes in assets and liabilities:Increase in receivables and other assets
    
    
    (10,928
    )
    
    
    (7,701
    )Increase in accounts payable, accrued liabilities
and other liabilities
    
    
    1,477
    
    
    
    8,742Net cash provided by operating activities
    
    
    21,053
    
    
    
    30,386INVESTING ACTIVITIESProperty acquisitions
    
    
    (14,990
    )
    
    
    (83,944
    )Tenant improvements to first generation space
    
    
    (6,125
    )
    
    
    (4,297
    )Tenant improvements to second generation space
    
    
    (5,081
    )
    
    
    (2,106
    )Building improvements
    
    
    (3,618
    )
    
    
    (7,940
    )Deferred tenant costs
    
    
    (2,228
    )
    
    
    (2,371
    )Additions to furniture and equipment
    
    
    (11
    )
    
    
    (114
    )Decrease (Increase) in restricted cash
    
    
    7,742
    
    
    
    (809
    )Investment in unconsolidated entity
    
    
    
    
    
    
    (3,148
    )Dividends from unconsolidated entity
    
    
    57
    
    
    
    Net cash used in investing activities
    
    
    (24,254
    )
    
    
    (104,729
    )FINANCING ACTIVITIESProceeds from exercise of stock options
    
    
    661
    
    
    
    2,643Proceeds from sales of common stock
    
    
    25
    
    
    
    100,337Proceeds from mortgages and loans
    
    
    87,000
    
    
    
    6,000Principal payments on mortgages and loans payable
    
    
    (79,996
    )
    
    
    (17,724
    )Distributions to minority interest
    
    
    (26
    )
    
    
    Dividends paid
    
    
    (25,379
    )
    
    
    (20,095
    )Net cash (used in) provided by financing activities
    
    
    (17,715
    )
    
    
    71,161Net decrease in cash and cash equivalents
    
    
    (20,916
    )
    
    
    (3,182
    )Cash and cash equivalents  beginning of period
    
    
    32,717
    
    
    
    9,163Cash and cash equivalents  end of period
    
    $
    11,801
    
    
    $
    5,981SUPPLEMENTAL CASH FLOW INFORMATIONCash paid during the period for income taxes
    
    $
    
    
    
    $
    5Cash paid during the period for interest
    
    $
    19,799
    
    
    $
    13,966Non cash item-issuance of restricted stock to certain key executives
    
    $
    4,100
    
    
    $
    Non cash item-shares issued pursuant to long-term incentive plan
    
    $
    479
    
    
    $
    Non cash item-assumption of debt from real estate acquisitions
    
    $
    46,500
    
    
    $
    75,874Non cash item-issuance of assets and limited partner units for acquisitions
    
    $
    5,269
    
    
    $
    2,041
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CRT PROPERTIES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS
ENDED JUNE 30, 2005 AND 2004
(Unaudited and in thousands, except per share data)
 Unless the context otherwise requires, all references to the terms we, our or us CRT or
the Company in this report refer collectively to CRT Properties, Inc., a Florida corporation
incorporated in 1988 under the name Koger Equity, Inc., individually or together with our
subsidiaries and our predecessors, unless the context requires otherwise.
 1. Organization.
 2. Pending Merger Transaction
      7




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th
  3. Basis of Presentation and Summary of Recent Accounting Pronouncements
     4. Summary of Significant Accounting Policies and Estimates.
  8




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Investments in Real Estate
  Depreciation and Amortization.
 Impairment of Long-Lived Assets.
 Cost of Real Estate Acquired.
  Revenue Recognition .
 9




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Allowances for Doubtful Accounts.
 Federal Income Taxes.
 Investment in Unconsolidated Entity.
 Fair Value of Financial Instruments.
 10




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Fair Value of In-Place Leases.
 Net
    
    WeightedCarrying Value
    
    AverageAccumulated
    
    of In-place
    
    AmortizationInitial Cost
    
    Amortization
    
    Leases
    
    Period (in years)Atlantic Center Plaza
    
    $
    9,400
    
    
    $
    (1,332
    )
    
    $
    8,068
    
    
    
    10Baymeadows Way
    
    
    242
    
    
    
    (71
    )
    
    
    171
    
    
    
    10Campus Circle &
Tollway Crossing
    
    
    500
    
    
    
    (224
    )
    
    
    276
    
    
    
    4Decoverly
    
    
    654
    
    
    
    (343
    )
    
    
    311
    
    
    
    3McGinnis Park
    
    
    329
    
    
    
    (124
    )
    
    
    205
    
    
    
    4The Lakes on Post Oak
    
    
    1,500
    
    
    
    (969
    )
    
    
    531
    
    
    
    4Three Ravinia
    
    
    274
    
    
    
    (168
    )
    
    
    106
    
    
    
    5.5Total
    
    $
    12,899
    
    
    $
    (3,231
    )
    
    $
    9,668
   Cash and Cash Equivalents.
 Restricted Cash.
 5. Stock Options.
 11




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Three MonthsEnded June 30,2005
    
    
    2004Net income (loss) attributable to common shareholders- As reported
    
    $
    (1,987,000
    )
    
    $
    2,999,000Stock-based employee compensation expense
determined under fair value method for all
forfeitures (awards)
    
    
    94,000
    
    
    
    62,000Pro forma net income (loss)
    
    $
    (1,893,000
    )
    
    $
    3,061,000EARNINGS PER SHARE:Basic-as reported
    
    $
    (0.06
    )
    
    $
    0.11Basic-pro forma
    
    $
    (0.06
    )
    
    $
    0.11Diluted-as reported
    
    $
    (0.06
    )
    
    $
    0.11Diluted-pro forma
    
    $
    (0.06
    )
    
    $
    0.11
 Six MonthsEnded June 302005
    
    
    2004Net income attributable to common shareholders- As reported
    
    $
    90,000
    
    
    $
    6,245,000Stock-based employee compensation expense
determined under fair value method for all
forfeitures (awards)
    
    
    94,000
    
    
    
    94,000Pro forma net income
    
    $
    184,000
    
    
    $
    6,339,000EARNINGS PER SHARE:Basic-as reported
    
    $
    
    
    
    $
    0.24Basic-pro forma
    
    $
    0.01
    
    
    $
    0.24Diluted-as reported
    
    $
    
    
    
    $
    0.23Diluted-pro forma
    
    $
    0.01
    
    
    $
    0.24
 6. Statement of Cash Flows.
  12




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7. Earnings Per Share.
  Three MonthsEnded June 30,2005
    
    
    2004EARNINGS PER COMMON AND DILUTIVE
POTENTIAL COMMON SHARE:Net Income (loss) attributable to common shareholders
    
    $
    (1,987
    )
    
    $
    2,999Shares:Weighted average number of common
shares outstanding  Basic
    
    
    31,822
    
    
    
    26,840EARNINGS PER SHARE  BASIC
    
    $
    (0.06
    )
    
    $
    0.11Shares:Weighted average number of common
shares outstanding  Basic
    
    
    31,822
    
    
    
    26,840Effect of dilutive securities (a):Stock options
    
    
    
    
    
    
    390Adjusted weighted average common shares  Diluted
    
    
    31,822
    
    
    
    27,230EARNINGS PER SHARE  DILUTED
    
    $
    (0.06
    )
    
    $
    0.11
 Six MonthsEnded June 30,2005
    
    
    2004EARNINGS PER COMMON AND DILUTIVE
POTENTIAL COMMON SHARE:Net Income attributable to common shareholders
    
    $
    90
    
    
    $
    6,245Shares:Weighted average number of common
shares outstanding  Basic
    
    
    31,787
    
    
    
    26,455EARNINGS PER SHARE  BASIC
    
    $
    
    
    
    $
    0.24Shares:Weighted average number of common
shares outstanding  Basic
    
    
    31,787
    
    
    
    26,455Effect of dilutive securities (a):Stock options
    
    
    364
    
    
    
    427Adjusted weighted average common shares  Diluted
    
    
    32,151
    
    
    
    26,882EARNINGS PER SHARE  DILUTED
    
    $
    
    
    
    $
    0.23
 
 (a)
    
    Shares issuable were derived using the Treasury Stock Method for all dilutive potential
shares. We excluded 396,000 dilutive stock options from the above calculation for the three months
ended June 30, 2005. 13




---



##### Table of Contents



8. Mortgages and Loans Payable
 Year Ending December 31,2005
    
    $
    3,0712006
    
    
    24,9742007
    
    
    108,9892008
    
    
    120,1302009
    
    
    141,016Subsequent Years
    
    
    278,791Total
    
    $
    676,971
 9. Dividends
  10. Segment Reporting
 11. Common Stock
   14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
   
    
    the satisfaction of the conditions to closing of our proposed
merger with and into DRA CRT Acquisition Corp., pursuant to the
Agreement and Plan of Merger, dated June 17, 2005 between us, DRA
G&I Fund V Real Estate Investment Trust and DRA CRT Acquisition
Corp., including the approval of our shareholders;
    
    potential or actual litigation, including those matters described
in Part IILegal Proceedings below or other litigation challenging
the proposed merger transaction;
    
    general risks affecting the real estate industry (including,
without limitation, the inability to enter into or renew leases,
dependence on tenants financial condition, and competition from
other developers, owners and operators of real estate);
    
    risks associated with the availability and terms of financing and
the use of debt to fund acquisitions and developments;
 15




---



##### Table of Contents




    
    failure to manage effectively our growth and expansion into new
markets or to integrate acquisitions successfully;
    
    risks and uncertainties affecting property development and
construction (including, without limitation, construction delays,
cost overruns, inability to obtain necessary permits and public
opposition to such activities);
    
    risks associated with downturns in the national and local
economies, increases in interest rates, and volatility in the
securities markets;
    
    costs of compliance with the Americans with Disabilities Act and other similar laws;
    
    potential liability for uninsured losses and environmental contamination;
    
    risks associated with our potential failure to qualify as a REIT
under the Internal Revenue Code of 1986, as amended, and possible
adverse changes in tax and environmental laws; and
    
    risks associated with our dependence on key personnel whose continued service is not guaranteed.
  Overview
    16




---



##### Table of Contents



Pending Merger Transaction
      Critical Accounting Policies And Estimates
  17




---



##### Table of Contents



Revenue Recognition
 Impairment or Disposal of Long-Lived Assets.
  Depreciation.
 Cost of Real Estate Acquired.
  18




---



##### Table of Contents



Allowance for Doubtful Accounts.
 Off Balance-Sheet Arrangements
  19




---



##### Table of Contents



Related-Party Transactions
   Results of Operations
 Operating Revenues.
 Operating
    
    OperatingRevenues
    
    RevenuesFor the Period
    
    For the PeriodEnded June
    
    Ended JuneCenter Name
    
    Date of Acquisition
    
    30, 2005
    
    30, 2004
    
    VarianceBaymeadows Way
    
    July 23, 2004
    
    $
    600
    
    
    $
    
    
    
    $
    600Broward Financial Centre
    
    May 9, 2005
    
    
    1,386
    
    
    
    
    
    
    
    1,386Las Olas Centre
    
    November 24, 2004
    
    
    3,612
    
    
    
    
    
    
    
    3,612Signature Place
    
    December 30, 2004
    
    
    1,723
    
    
    
    
    
    
    
    1,723Westchase Corporate
Center
    
    August 16, 2004
    
    
    918
    
    
    
    
    
    
    
    918TOTAL
    
    
    
    $
    8,239
    
    
    $
    
    
    
    $
    8,239
  Operating
    
    OperatingRevenues
    
    RevenuesFor the Period
    
    For the PeriodEnded June
    
    Ended JuneCenter Name
    
    Date of Acquisition
    
    30, 2005
    
    30, 2004
    
    VarianceAtlantic Center Plaza
    
    January 27, 2004
    
    $
    7,218
    
    
    $
    6,042
    
    
    $
    1,176Baymeadows Way
    
    July 23, 2004
    
    
    1,198
    
    
    
    
    
    
    
    1,198Broward Financial Centre
    
    May 9, 2005
    
    
    1,386
    
    
    
    
    
    
    
    1,386Decoverly
    
    April 2, 2004
    
    
    2,750
    
    
    
    1,136
    
    
    
    1,614Las Olas Centre
    
    November 24, 2004
    
    
    7,338
    
    
    
    
    
    
    
    7,338Signature Place
    
    December 30, 2004
    
    
    3,378
    
    
    
    
    
    
    
    3,378Westchase Corporate
Center
    
    August 16, 2004
    
    
    1,982
    
    
    
    
    
    
    
    1,982TOTAL
    
    
    
    $
    25,250
    
    
    $
    7,178
    
    
    $
    18,072
 20




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##### Table of Contents



Property operations and real estate taxes.
   Percent ofPeriod
    
    Amount
    
    Total RevenuesJune 30, 2005Quarter
    
    $
    20,182,000
    
    
    
    40.3
    %June 30, 2004Quarter
    
    $
    16,036,000
    
    
    
    39.2
    %June 30, 2005Six Months
    
    $
    39,142,000
    
    
    
    39.5
    %June 30, 2004Six Months
    
    $
    31,572,000
    
    
    
    39.3
    %
 Depreciation and amortization expense.
 General and administrative expense.
  Mortgage and loan interest
 21




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##### Table of Contents



Net income and net income attributable to common shareholders
  Liquidity and Capital Resources
 Operating Activities
    22




---



##### Table of Contents



Investing Activities
  Financing Activities
    23




---



##### Table of Contents



Contractual Obligations (In thousands)
 Less than
    
    
    
    
    
    
    
    
    
    More thanOne
    
    
    
    
    
    
    
    
    
    FiveTotal
    
    year
    
    1-3 years
    
    3-5 years
    
    yearsLong-Term Debt Obligations(a)
    
    $
    676,971
    
    
    $
    3,071
    
    
    $
    133,963
    
    
    $
    261,146
    
    
    $
    278,791
 
 (a)
    
    Increases in interest rates on variable rate debt could increase our interest expense and
adversely affect cash flow and the ability to pay dividends to shareholders. We may be required to
purchase interest rate protection products in connection with future variable rate debt, which may
further increase borrowing costs. Our use of leverage can adversely impact our operation, cash
flow, and ability to make distributions and our financial condition will be negatively impacted if
we cannot repay or refinance our indebtedness as it becomes due. We are subject to risks normally
associated with debt financing, including: the risk that our cash flow will be insufficient to
meet required payments of principal and interest; the risk that the existing debt with respect to
our properties, which in most cases will not have been fully amortized at maturity, will not be
able to be refinanced; and the risk that the terms of any refinancing of any existing debt will not
be as favorable as the terms of the existing debt.  As of
    
    
    As ofJune 30,
    
    
    December 31,
    
    
    Current
    
    MaturityMortgage
    
    2005
    
    
    2004
    
    
    Interest Rate
    
    DateVariable rate mortgages (a)
    
    $
    115,800
    
    
    $
    185,800
    
    
    3.84% to 4.77%
    
    January 2008 to March 2031Fixed rate mortgages
    
    
    561,171
    
    
    
    437,667
    
    
    4.84% to 8.33%
    
    December 2006 to January 2015Total mortgage notes payable
    
    $
    676,971
    
    
    $
    623,467
 
 (a)
    
    On January 1, 2005, $80,000,000 of the variable rate mortgages was converted to a 5.49% fixed
rate mortgage which has a maturity of January 1, 2015.  Funds from Operations.
  24




---



##### Table of Contents



Three MonthsEnded June 30,2005
    
    
    2004(in thousands)Net income (loss)
    
    $
    (399
    )
    
    $
    4,587Dividends on preferred stock
    
    
    (1,588
    )
    
    
    (1,588
    )Real estate related depreciation
    
    
    11,577
    
    
    
    8,909Real estate related depreciation
 unconsolidated entity
    
    
    39
    
    
    
    170Real estate related amortization
 deferred tenant costs
    
    
    916
    
    
    
    718Real estate related amortization
 fair value of acquired leases
    
    
    573
    
    
    
    179Minority interest share of add-backs
    
    
    19
    
    
    
    FFO attributable to common shareholders
    
    $
    11,137
    
    
    $
    12,975
 Six MonthsEnded June 30,2005
    
    
    2004(in thousands)Net income
    
    $
    3,267
    
    
    $
    9,421Dividends on preferred stock
    
    
    (3,177
    )
    
    
    (3,176
    )Real estate related depreciation
    
    
    22,437
    
    
    
    17,256Real estate related depreciation
 unconsolidated entity
    
    
    155
    
    
    
    271Real estate related amortization
 deferred tenant costs
    
    
    1,413
    
    
    
    1,327Real estate related amortization
 fair value of acquired leases
    
    
    1,027
    
    
    
    316Minority interest share of add-backs
    
    
    54
    
    
    
    FFO attributable to common shareholders
    
    $
    25,176
    
    
    $
    25,415
 25




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##### Table of Contents



Net Operating Income
   Three Months EndedJune 30,2005
    
    
    2004(in thousands)Net Operating income (a)
    
    $
    29,877
    
    
    $
    24,895Add:Management fee revenues
    
    
    172
    
    
    
    108Interest income
    
    
    69
    
    
    
    135Income from unconsolidated joint ventures
    
    
    24
    
    
    
    110Less:General and administrative
    
    
    6,817
    
    
    
    3,167Interest expense
    
    
    10,466
    
    
    
    7,520Depreciation and amortization
    
    
    13,173
    
    
    
    9,916Other
    
    
    23
    
    
    
    58Dividends on preferred shares
    
    
    1,588
    
    
    
    1,588Minority interests in property partnerships
    
    
    62
    
    
    
    Net income (loss) attributable to common shareholders
    
    $
    (1,987
    )
    
    $
    2,999
 26




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##### Table of Contents



Six Months EndedJune 30,2005
    
    
    2004(in thousands)Net Operating income (a)
    
    $
    60,002
    
    
    $
    48,827Add:Management fee revenues
    
    
    382
    
    
    
    174Interest income
    
    
    184
    
    
    
    262Income from unconsolidated joint ventures
    
    
    124
    
    
    
    241Less:General and administrative
    
    
    10,922
    
    
    
    6,011Interest expense
    
    
    21,108
    
    
    
    14,826Depreciation and amortization
    
    
    25,211
    
    
    
    19,136Other
    
    
    46
    
    
    
    110Dividends on preferred shares
    
    
    3,177
    
    
    
    3,176Minority interests in property partnerships
    
    
    138
    
    
    
    Net income attributable to common shareholders
    
    $
    90
    
    
    $
    6,245
 
 (a)
    
    Net operating income is defined as total operating revenues (excluding management fees)
less property operations expense and real estate taxes. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
 
 Item 4. Controls and Procedures.
  27




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  th Sam Leff et al v. CRT Properties, Inc. et al. Robert Dee et al v. CRT Properties, Inc. et al.
  
 Item 4. Submission of Matters to a Vote of Security Holders
  (a)
    
    At the meeting, our shareholders elected D. Pike Aloian,
Benjamin C. Bishop, Jr., Thomas J. Crocker, Peter J.
Farrell, David B. Hiley, Victor A. Hughes, Jr., Randall
E. Paulson and George F. Staudter to serve a one-year
term. The number of votes cast for and withheld for each
of the director nominees was as follows:
 NOMINEE
    
    FOR
    
    
    WITHHELDD. Pike Aloian
    
    
    27,655,027
    
    
    
    2,008,342Benjamin C. Bishop, Jr.
    
    
    29,142,593
    
    
    
    520,777Thomas J. Crocker
    
    
    29,055,046
    
    
    
    608,323Peter J. Farrell
    
    
    29,143,738
    
    
    
    519,631David B. Hiley
    
    
    29,126,148
    
    
    
    537,221Victor A. Huges, Jr.
    
    
    29,125,789
    
    
    
    537,580Randall E. Paulson
    
    
    29,172,774
    
    
    
    490,595George F. Staudter
    
    
    29,066,349
    
    
    
    597,020
 (b)
    
    The holders of 23,747,866 shares of our common stock
voted for a proposal to change our state of
incorporation from Florida to Maryland, the holders of
801,496 shares voted against the reincorporation
proposal, the holders of 90,975 shares abstained and
there were 5,023,032 broker non-votes. As a result, this
reincorporation was approved (though we have taken no
steps to implement the reincorporation, pending our
proposed merger transaction with DRA CRT Acquisition
Corp.).(c)
    
    The holders of 23,715,612 shares of our common stock
voted for the approval of our 2005 Employee Stock
Investment Plan, the holders of 787,351 shares voted
against approval of the plan, the holders of 137,374
shares abstained and there were 5,023,032 broker
non-votes. As a result, the 2005 Employee Stock
Investment Plan was approved (though we have not yet
implemented the plan, pending our proposed merger
transaction with DRA CRT Acquisition Corp.).(d)
    
    The holders of 29,261,462 shares of our common stock
voted for the ratification of the Board of Directors
selection of Deloitte & Touche, LLP., as the Companys
independent accountants, the holders of 355,772 shares
voted against such ratification, the holders of 46,135
shares abstained and there were no broker non-votes. As
a result, this ratification was approved.
 28




---



##### Table of Contents



Item 5. Other Information
 (a)
    
    The following table sets forth, with respect to each office project or location at June 30,
2005, gross square feet, rentable square feet, percentage leased, and the average annual rent
per rentable square foot leased.
 AverageGross
    
    
    Rentable
    
    
    
    
    
    
    Rent PerSquare
    
    
    Square
    
    
    Percent
    
    
    SquareOffice Project/Location
    
    Feet
    
    
    Feet (5)
    
    
    Leased (1)
    
    
    Foot (2)Atlanta Atlantic Center Plaza
    
    
    507,700
    
    
    
    501,185
    
    
    
    89
    %
    
    $
    28.73Atlanta Chamblee
    
    
    1,199,800
    
    
    
    1,129,594
    
    
    
    90
    %
    
    
    18.38Atlanta Gwinnett
    
    
    274,400
    
    
    
    262,806
    
    
    
    87
    %
    
    
    19.59Atlanta McGinnis Park
    
    
    212,400
    
    
    
    202,243
    
    
    
    72
    %
    
    
    17.83Atlanta Perimeter
    
    
    184,000
    
    
    
    181,862
    
    
    
    80
    %
    
    
    18.36Atlanta Three Ravinia
    
    
    845,000
    
    
    
    804,336
    
    
    
    73
    %
    
    
    17.73
    (4)Charlotte University
    
    
    190,600
    
    
    
    182,891
    
    
    
    60
    %
    
    
    18.61Charlotte Vanguard
    
    
    548,200
    
    
    
    527,471
    
    
    
    62
    %
    
    
    15.41Dallas Campus Circle
    
    
    133,600
    
    
    
    127,226
    
    
    
    97
    %
    
    
    21.83Dallas Signature Place (3)
    
    
    460,000
    
    
    
    437,319
    
    
    
    73
    %
    
    
    20.23Dallas Tollway Crossing
    
    
    159,800
    
    
    
    152,163
    
    
    
    100
    %
    
    
    22.10Ft. Lauderdale Broward Financial (3)
    
    
    342,000
    
    
    
    325,583
    
    
    
    86
    %
    
    
    27.77Ft. Lauderdale Las Olas (3)
    
    
    479,000
    
    
    
    469,199
    
    
    
    88
    %
    
    
    21.60Houston Post Oak
    
    
    1,265,000
    
    
    
    1,200,984
    
    
    
    82
    %
    
    
    17.81Houston Westchase Corporate Center (3)
    
    
    194,000
    
    
    
    184,259
    
    
    
    92
    %
    
    
    22.49Jacksonville Baymeadows
    
    
    793,400
    
    
    
    751,295
    
    
    
    98
    %
    
    
    12.98
    (4)Jacksonville Baymeadows Way (3)
    
    
    236,000
    
    
    
    224,281
    
    
    
    100
    %
    
    
    9.50
    (4)Jacksonville JTB
    
    
    436,000
    
    
    
    416,773
    
    
    
    100
    %
    
    
    13.03
    (4)Memphis Germantown
    
    
    562,600
    
    
    
    531,709
    
    
    
    83
    %
    
    
    17.97Orlando Central
    
    
    699,700
    
    
    
    616,477
    
    
    
    86
    %
    
    
    16.61Orlando Lake Mary
    
    
    318,000
    
    
    
    303,540
    
    
    
    77
    %
    
    
    16.82Orlando University
    
    
    405,200
    
    
    
    381,786
    
    
    
    79
    %
    
    
    19.39Richmond Paragon
    
    
    154,300
    
    
    
    145,127
    
    
    
    98
    %
    
    
    18.81St. Petersburg
    
    
    715,500
    
    
    
    672,837
    
    
    
    88
    %
    
    
    16.86Tallahassee
    
    
    960,300
    
    
    
    826,384
    
    
    
    79
    %
    
    
    16.39Washington D.C. Decoverly (3)
    
    
    162,500
    
    
    
    154,787
    
    
    
    93
    %
    
    
    24.24Total
    
    
    12,428,000
    
    
    
    11,714,117Weighted Average  Total Company  137 Buildings
    
    
    
    
    
    
    
    
    
    
    84
    %
    
    $
    18.23Weighted Average  Same Store  129 Buildings
    
    
    
    
    
    
    
    
    
    
    83
    %
    
    $
    17.71Weighted Average  Acquisition  8 Buildings
    
    
    
    
    
    
    
    
    
    
    86
    %
    
    $
    21.01
 
 (1)
    
    The percent leased rates have been calculated by dividing total rentable square feet occupied
in an office building by total rentable square feet in such building.(2)
    
    Rental rates are computed by dividing (a) total annualized base rents (which excludes expense
pass-through and reimbursements) for an office project or location as of June 30, 2005 by (b)
the rentable square feet applicable to such total annualized rents.(3)
    
    Properties acquired subsequent to March 31, 2004 (Acquisition Buildings).(4)
    
    Includes the effect of leases where tenants who occupy all or a substantial portion of an
entire office building pay substantially all operating costs in addition to base rent. 29




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##### Table of Contents



(b)
    
    The following schedule sets forth for all of our buildings (i) the number of leases which
will expire during the remainder of calendar year 2005 (without regard to any renewals),
calendar years 2006 through 2013, and years subsequent to 2013, (ii) the total rentable area
in square feet covered by such leases, (iii) the percentage of total rentable square feet
represented by such leases, (iv) the average annual rent per square foot for such leases, (v)
the current annualized base rents represented by such leases, and (vi) the percentage of gross
annualized base rents contributed by such leases. This information is based on the buildings
that we owned on June 30, 2005, and on the terms of leases in effect as of June 30, 2005, on
the basis of then existing base rentals, and without regard to the exercise of options to
renew. Furthermore, the information below does not reflect that some leases have provisions
for early termination for various reasons, including, in the case of government entities, lack
of budget appropriations. Leases were renewed on approximately 65 percent of our rentable
square feet which expired during the six months ended June 30, 2005.
 Percentage of
    
    
    Average
    
    
    
    
    
    
    PercentageTotal Square
    
    
    Annual Rent
    
    
    Total
    
    
    of TotalNumber of
    
    
    Number of
    
    
    Feet Leased
    
    
    per Square
    
    
    Annualized
    
    
    Annual RentsLeases
    
    
    Square Feet
    
    
    Represented by
    
    
    Foot Under
    
    
    Rents Under
    
    
    Represented byPeriod
    
    Expiring
    
    
    Expiring
    
    
    Expiring Leases
    
    
    Expiring Leases
    
    
    Expiring Leases
    
    
    Expiring Leases2005
    
    
    210
    
    
    
    907,066
    
    
    
    9.3
    %
    
    $
    18.17
    
    
    $
    16,484,879
    
    
    
    9.2
    %2006
    
    
    227
    
    
    
    1,547,771
    
    
    
    15.8
    %
    
    
    18.69
    
    
    
    28,925,609
    
    
    
    16.2
    %2007
    
    
    198
    
    
    
    1,188,350
    
    
    
    12.2
    %
    
    
    19.30
    
    
    
    22,937,490
    
    
    
    12.9
    %2008
    
    
    148
    
    
    
    982,996
    
    
    
    10.1
    %
    
    
    18.62
    
    
    
    18,301,220
    
    
    
    10.3
    %2009
    
    
    124
    
    
    
    1,813,069
    
    
    
    18.5
    %
    
    
    18.11
    
    
    
    32,832,607
    
    
    
    18.4
    %2010
    
    
    75
    
    
    
    606,194
    
    
    
    6.2
    %
    
    
    17.39
    
    
    
    10,542,959
    
    
    
    5.9
    %2011
    
    
    33
    
    
    
    535,727
    
    
    
    5.5
    %
    
    
    18.95
    
    
    
    10,153,835
    
    
    
    5.7
    %2012
    
    
    29
    
    
    
    522,891
    
    
    
    5.3
    %
    
    
    18.03
    
    
    
    9,425,631
    
    
    
    5.3
    %2013
    
    
    3
    
    
    
    281,147
    
    
    
    2.9
    %
    
    
    28.91
    
    
    
    8,128,422
    
    
    
    4.6
    %Thereafter
    
    
    44
    
    
    
    1,389,349
    
    
    
    14.2
    %
    
    
    14.71
    
    
    
    20,431,838
    
    
    
    11.5
    %Total
    
    
    1,091
    
    
    
    9,774,560
    
    
    
    100.0
    %
    
    $
    18.23
    
    
    $
    178,164,489
    
    
    
    100.0
    %
 30




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##### Table of Contents



Item 6. Exhibits
 Number
    
    Description2.1
    
    
    Agreement and Plan of Merger, dated June 17, 2005, by and among DRA G&I
Fund V Real Estate Investment Trust, DRA CRT Acquisition Corp. and CRT Properties,
Inc. (1)10.1
    
    
    Form of Amended Participation Agreement, dated June 16, 2005*10.2
    
    
    Amended Participation Agreement between CRT Properties, Inc. and Terence
D. McNally*10.3
    
    
    Form of Amended Supplemental Executive Retirement Plan, dated June 16, 2005*31.1
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act*31.2
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act*32
    
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act*99.1
    
    
    Guaranty, dated June 17, 2005, by DRA Growth and Income Fund V in favor
of CRT Properties, Inc. (1)
 
 *
    
    Filed herewith(1)
    
    Incorporated by reference to the Companys Current Report on Form 8-K
filed on June 20, 2005. 31




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##### Table of Contents



SIGNATURES
  CRT PROPERTIES, INC.RegistrantDated:  August 8, 2005
    /s/ Thomas J. CrockerThomas J. CrockerChief Executive Officer
(Principal Executive Officer)
CRT Properties, Inc.Dated: August 8, 2005
    /s/ Terence D. McNallyTerence D. McNallySenior Vice President and
Chief Financial Officer
(Principal Financial Officer)
CRT Properties, Inc.Dated: August 8, 2005
    /s/ Randal L. MartinRandal L. MartinVice President and Controller
(Principal Accounting Officer)
CRT Properties, Inc. 32