The following discussion and analysis should be read in conjunction with our
accompanying consolidated financial statements (and notes thereto) and the
"Cautionary Note Regarding Forward-Looking Statements" preceding Part I of this
report, as well as our consolidated financial statements (and the notes thereto)
and Management's Discussion and Analysis of Financial Condition and Results of
Operations included in our 2019 Form 10-K.

Executive Summary
On January 24, 2020, we acquired Normandy, a developer, operator, and investment
manager of office and mixed-use assets in New York, Boston, and Washington,
D.C., interests in three real estate funds and contracts to provide real estate
services to properties affiliated with those funds. We believe that the
acquisition of Normandy will further our strategic initiatives by strengthening
our platform with additional development and redevelopment expertise, deal
sourcing, and other key capabilities, and by increasing our access to capital
through Normandy's investor relationships.
On March 11, 2020, the World Health Organization declared the novel strain of
coronavirus (COVID-19) a global pandemic and recommended containment and
mitigation measures worldwide. While response to the COVID-19 outbreak continues
to rapidly evolve, it has led to aggressive actions to reduce the spread of the
disease that have seriously disrupted activities in large segments of the
economy, including in the regional economies where we operate. We are continuing
to monitor the COVID-19 outbreak and its impact on our business, tenants, and
industry as a whole.
We are committed to the health and safety of our employees, tenants, and
communities. Because of our low-leverage operating model of long-term leases to
creditworthy tenants, to date the COVID-19 pandemic has not materially impacted
our financial condition or results of operations, our liquidity position, or
caused material impairments in our portfolio of operating properties. While the
impact of the COVID-19 pandemic on our business has not been severe to date, the
long-term impact of the pandemic on our tenants and the global economy is
uncertain and will depend on various factors, including the scope, severity, and
duration of the pandemic. A prolonged economic downturn or recession resulting
from the pandemic could adversely affect many of our tenants which could, in
turn, adversely impact our business, financial condition, and results of
operations. We have worked closely with our impacted tenants and will continue
to address their concerns on a case-by-case basis, seeking arrangements that
address cash flow interruptions while maintaining long-term lease obligations.
Our primary strategic objective is to generate long-term stockholder returns
from a combination of growing cash flows and appreciation in the values of our
properties. We own and operate high-quality office properties located in
high-barrier-to-entry markets, primarily New York, San Francisco, Washington,
D.C., and Boston. Our approach is to own office buildings that are competitive
within the top tier of their markets or that will be repositioned as such
through value-add initiatives, including development or redevelopment. Our
investment objectives include optimizing our portfolio allocation between
stabilized investments and more growth-oriented, value-add investments and
development projects with an emphasis on central business districts and
multi-tenant buildings.
Over the past several years, we have undertaken a capital recycling program that
has involved selling more than 50 properties in geographically dispersed markets
for aggregate proceeds of $4.5 billion, and reinvesting those proceeds in our
core markets. In January 2020, we sold Cranberry Woods Drive in Pittsburgh for a
gross sale price of $180.0 million; and in March 2020, we sold Pasadena
Corporate Park in Los Angeles for a gross sale price of $78.0 million, which
marked the exit of our last non-target market. In March 2020, we acquired an
8.65% interest in Terminal Warehouse, a 1.2-million-square-foot property located
in West Chelsea, New York, that will be fully redeveloped into a mixed-use
retail and office space, for an initial equity contribution of approximately
$40.0 million.
As of March 31, 2020, the operating properties in our portfolio are 97.6%
leased, with less than 3% of our leases scheduled to expire in 2020. During the
first three months of 2020, we leased a total of 125,800 square feet of space,
including a new lease for 34,800 square feet at 315 Park Avenue South in New
York. We continue to maintain a strong and flexible balance sheet. As of March
31, 2020, due to borrowings on our line of credit, which are held as cash on
hand at period end, our debt-to-real-estate-asset ratio is 41.8%(1), and
approximately 34.9% on a net basis (i.e., reduced for cash on hand)(1).
Additionally, 89%(1) of our portfolio is unencumbered by mortgages; and the
weighted average cost of our consolidated and pro-rata share of joint venture
borrowings during the quarter is 3.40%(1) per annum. Our debt maturities are
laddered, coming due over the next six years, and $951.0 million of our
unsecured borrowings can be
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repaid prior to maturity without penalty. From time to time when we believe our
stock is undervalued, we may take advantage of market opportunities by using our
stock repurchase program to buy shares and return capital to our stockholders.
During the first quarter of 2020, we repurchased 1.2 million shares at an
average price of $19.47 per share, for aggregate purchases of $23.3 million. As
of March 31, 2020, $143.3 million remains available under our current repurchase
program.
(1)Statistics include 100% of all of our consolidated properties and our
ownership interest in the gross real estate assets and debt at properties held
through unconsolidated joint ventures as described in Note 4, Unconsolidated
Joint Ventures, of the accompanying financial statements.

Key Performance Indicators
Our operating results depend primarily upon the level of income generated by the
leases at our properties. Occupancy and rental rates are key drivers of our
lease income. Our portfolio was 97.6% leased as of March 31, 2020, and 97.1%
leased as of March 31, 2019. The following table sets forth details related to
the financial impact of our recent leasing activities for properties we own
directly and based on our proportionate share of properties owned through
unconsolidated joint ventures:
                                                                      Three Months Ended March 31,
                                                                        2020                  2019
Total number of leases                                                        8                   13
Square feet of leasing - renewal                                         17,115                3,925
Square feet of leasing - new                                            102,549               63,291
Total square feet of leasing                                            119,664               67,216
Lease term (months)                                                         162                  130
Tenant improvements, per square foot - renewal                    $       34.28           $   102.91
Tenant improvements, per square foot - new                        $      103.37           $    91.72
Tenant improvements, per square foot - all leases                 $       97.82           $    92.01
Leasing commissions, per square foot - renewal                    $       18.79           $    23.53
Leasing commissions, per square foot - new                        $       62.86           $    69.87
Leasing commissions, per square foot - all leases                 $       59.33           $    68.65

Rent leasing spread - renewal(1)                                           42.4   %                -  %
Rent leasing spread - new(1)                                                9.0   %             65.8  %
Rent leasing spread - all leases(1)                                        16.0   %             61.7  %


(1)Rent leasing spreads are calculated based on the change in base rental income
measured on a straight-line basis; and, for new leases, only include space that
has been vacant for less than one year.
In the first quarter of 2020, rent leasing spreads (positive 16.0%) primarily
relate to a 15,500-square-foot office lease renewal at 650 California Street in
San Francisco and a new 34,800-square-foot lease at 315 Park Avenue South in New
York; and current quarter tenant improvements ($97.82 per square foot) and
leasing commissions ($59.33 per square foot) primarily relate to a new
59,500-square-foot lease at 80 M Street in Washington, D.C. In 2019, rent
leasing spreads (positive 61.7%) and lease commissions ($68.65 per square foot)
primarily relate to a new 3,500-square-foot retail lease at 315 Park Avenue
South in New York, offset by other leasing across our portfolio; and current
quarter tenant improvement costs for lease renewals ($102.91 per square foot)
primarily relate to a 3,000-square-foot lease at Market Square, measured at our
proportionate share. Over the next 12 months, approximately 104,000 square feet
of leases at our operating properties (approximately 2.3% of our portfolio,
based on revenues) are scheduled to expire.
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Liquidity and Capital Resources
Overview
Cash flows generated from the operation of our properties are primarily used to
fund recurring expenditures and stockholder dividends. The amount of
distributions to common stockholders is determined by our board of directors and
is dependent upon a number of factors, including funds deemed available for
distribution based principally on our current and future projected operating
cash flows, reduced by capital requirements necessary to maintain our existing
portfolio, our future capital needs, and future sources of liquidity, as well as
the annual distribution requirements necessary to maintain our status as a REIT
under the Code. Investments in new property acquisitions and first-generation
capital improvements are generally funded with capital proceeds from property
sales, debt, or cash on hand. Our board of directors elected to maintain a $0.21
dividend rate for the first quarter of 2020.
We are continuing to monitor the rapid developments around COVID-19 and the
related impacts to our business. In response to the economic uncertainty that
has unfolded as a result of COVID-19, we drew down $200.0 million on our
Revolving Credit Facility in late March 2020 and held approximately $292.0
million of cash balances as of March 31, 2020. See Item IA., Risk Factors, for
additional information.
Short-Term Liquidity and Capital Resources
During the first three months of 2020, we generated net cash flows from
operating activities of $16.1 million, which consists primarily of receipts from
tenants for rent and reimbursements, reduced by payments for operating costs,
administrative expenses, interest expense, and lease inducements. During the
same period, we paid total distributions to stockholders of $48.4 million, which
included dividend payments for two quarters ($24.2 million for each of the
fourth quarter of 2019 and first quarter of 2020). First quarter 2020 dividends
($24.2 million) exceeded cash flow from operations for the same period ($16.1
million), primarily due to acquisition costs incurred in connection with the
Normandy acquisition ($12.1 million).
During the first three months of 2020, we received $250.8 million in aggregate
net sales proceeds from the sale of Cranberry Woods Drive and Pasadena Corporate
Park and made net borrowings on our Revolving Credit Facility of $167.0 million.
These proceeds were used to fund the Terminal Warehouse Joint Venture ($40.0
million), leasing and capital projects for consolidated and unconsolidated
properties ($27.2 million), and redemptions of common stock ($25.5 million). As
of March 31, 2020, we had cash on hand of $292.8 million, which includes $200
million of proceeds drawn on our Revolving Credit Facility in late March 2020 in
response to the increase in economic uncertainty resulting from the COVID-19
outbreak.
Over the short term, we expect our primary sources of capital and liquidity to
be operating cash flows and cash on hand, and expect that our principal demands
for capital will be to fund development and redevelopment costs, capital
improvements to our existing portfolio, stockholder distributions, stock
repurchases, operating expenses, and interest and principal payments. As of
April 24, 2020, in addition to cash on hand, we have access to additional
borrowings of $149.0 million under our Revolving Credit Facility. We believe
that we will have adequate liquidity and capital resources to meet our current
obligations as they come due.
Long-Term Liquidity and Capital Resources
Over the long term, we expect that our primary sources of capital will include
operating cash flows, cash on hand, borrowing proceeds, and select property
dispositions. We expect that our primary uses of capital will continue to
include stockholder distributions; acquisitions; development and redevelopment
costs; capital expenditures, such as building improvements, tenant improvements,
and leasing costs; and repaying or refinancing debt.
Consistent with our financing objectives and operational strategy over the long
term, we have generally maintained debt levels at less than 40% of the
undepreciated costs of our assets; however, due to the amount of cash on hand as
of March 31, 2020, our debt-to-real-estate-asset ratio was approximately 41.8%
on a gross basis, and approximately 34.9% on a net basis (i.e., reduced for cash
on hand). Our debt-to-real-estate-asset ratio includes our share of joint
venture real estate assets and debt, as well as basis adjustments related to
joint venture real estate assets.
As described below, our variable-rate indebtedness may use London Interbank
Offering Rate ("LIBOR") as a benchmark for establishing the rate. LIBOR is
expected to be discontinued at the end of 2021. The anticipated discontinuation
of
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LIBOR will require lenders and their borrowers to transition from LIBOR to an
alternative benchmark interest rate, which might increase the cost of our
variable-interest debt instruments. At this time, no consensus exists as to what
rate or rates may become acceptable alternatives to LIBOR, and it is impossible
to predict the effect of any such alternatives on the value of LIBOR-based
variable-rate loans or other financial arrangements. If LIBOR is discontinued as
anticipated, or otherwise at our option, our Revolving Credit Facility and term
loan facilities provide for alternate interest rate calculations.
Unsecured Bank Debt
Our Revolving Credit Facility has a capacity of $650.0 million and matures in
January 2023, with two six-month extension options. As of March 31, 2020, we had
$501.0 million in outstanding borrowings on the Revolving Credit Facility.
Amounts outstanding under the Revolving Credit Facility bear interest at either
(i) LIBOR, plus an applicable margin ranging from 0.775% to 1.45% for LIBOR
borrowings, or (ii) an alternate base rate, plus an applicable margin ranging
from 0.00% to 0.45% for base rate borrowings, based on our applicable credit
rating. The per annum facility fee on the aggregate revolving commitment (used
or unused) ranges from 0.125% to 0.30%, also based on our applicable credit
rating. Additionally, the Revolving Credit Facility, along with the $300 Million
Term Loan, as described below, provides for four accordion options for an
aggregate additional amount of up to $500 million, subject to certain
limitations.
Our $300 Million Term Loan matures in January 2024 and bears interest, at our
option, at either (i) LIBOR, plus an applicable margin ranging from 0.85% to
1.65% for LIBOR loans, or (ii) an alternate base rate, plus an applicable margin
ranging from 0.00% to 0.65% for base rate loans, based on our applicable credit
rating. The interest rate on the $300 Million Term Loan is effectively fixed
with an interest rate swap agreement, which is designated as a cash flow hedge.
Based on the terms of the interest rate swap and our current credit rating, the
interest rate on the $300 Million Term Loan is effectively fixed at 2.55%.
Our $150 Million Term Loan matures in July 2022 and bears interest, at our
option, at either (i) LIBOR, plus an applicable margin ranging from 0.90% to
1.75% for LIBOR loans, or (ii) alternative base rate, plus an applicable margin
ranging from 0.00% to 0.75% for base rate loans. The interest rate on the $150
Million Term Loan is effectively fixed with an interest rate swap agreement,
which is designated as a cash flow hedge. Based on the terms of the interest
rate swap and our current credit rating, the interest rate on the $150 Million
Term Loan is effectively fixed at 3.07%.
Bonds Payable
We have two series of bonds outstanding as of March 31, 2020:
•$350.0 million of 10-year, unsecured 4.150% senior notes issued at 99.859% of
their face value, which require semi-annual interest payments in April and
October (the "2025 Bonds Payable").
•$350.0 million of 10-year, unsecured 3.650% senior notes issued at 99.626% of
their face value, which require semi-annual interest payments in February and
August (the "2026 Bonds Payable").
Columbia OP is the issuer of our Bonds Payable, both series of which are fully
and unconditionally guaranteed by Columbia Property Trust. Columbia Property
Trust owns 97.2% of Columbia OP, and includes the accounts of Columbia OP in its
consolidated financial statements. The primary differences between Columbia
Property Trust and Columbia OP are as follows: Columbia Property Trust owns one
property directly and has made intercompany loans to subsidiaries of Columbia
OP, and Columbia Property Trust - the publicly traded entity -- issues publicly
traded common stock to investors (including employees), and has engaged in share
repurchases from time to time. Columbia Property Trust has contributed the
substantial majority of proceeds from sales of its common stock to Columbia OP.
Columbia Property Trust guarantees of Columbia OP's obligations under the Bonds
Payable include the punctual payments of principal, premium, if any, and
interest on the Bonds Payable, whether at stated maturity, by declaration of
acceleration, call for redemption or otherwise. The obligations of Columbia
Property Trust under its guarantees is limited to the amount necessary to
prevent such guarantees from constituting a fraudulent transfer or conveyance
under applicable law. The Bonds Payable are Columbia OP's senior unsecured
obligations and rank equally in right of payment with all of its other existing
and future senior unsecured indebtedness; Columbia Property Trust's guarantees
of the Bonds Payable are its senior unsecured obligations and rank equally in
right of payment with all of Columbia Property Trust's other existing and future
senior unsecured indebtedness and guarantees.
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As a result of Columbia Property Trust's guarantee, we are presenting the
following summarized financial information (in thousands) for Columbia Property
Trust and Columbia OP pursuant to Rule 13-01 of Regulation S-X, Guarantors and
Issuers of Guaranteed Securities Registered or Being Registered. For purposes of
the following summarized financial information, transactions between Columbia
Property Trust and Columbia OP, presented on a combined basis, have been
eliminated and information for non-guarantor subsidiaries has been excluded.
Balance Sheet Information:

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