Carramerica Realty L P 10Q 2005 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR QUARTER ENDED June 30, 2005

COMMISSION FILE NO. 000-22741

CARRAMERICA REALTY, L.P.

(Exact name of registrant as specified in its charter)

Delaware

52-1976308

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

1850 K Street, N.W., Washington, D.C. 20006

(Address or principal executive office) (Zip code)

Registrant’s telephone number, including area code (202) 729-1700

N/A

(Former name, former address and former fiscal year, if changed since last report)

Number of Partnership Units outstanding of each of the registrant’s

classes of Partnership Units as of July 25, 2005: 14,362,972

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or such shorter period that the Registrant was required to file such report) and (2) has been subject to such filing requirements for the past ninety (90) days. YES x NO ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

Index


		Page
Part I: Financial Information

Item 1.	Financial Statements

	Consolidated Balance Sheets as of June 30, 2005 (unaudited) and December 31, 2004	4

	Consolidated Statements of Operations for the three and six months ended June 30, 2005 and 2004 (unaudited)	5

	Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004 (unaudited)	6

	Notes to Consolidated Financial Statements (unaudited)	7 - 11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12 -21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

Part II: Other Information

Item 1.	Legal Proceedings	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 6.	Exhibits	23

Part I

Item 1.Financial Information

The information furnished in our accompanying consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows reflects all adjustments which are, in our opinion, necessary for a fair presentation of the aforementioned financial statements for the interim periods presented.

The financial statements should be read in conjunction with the notes to the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations. The results of operations for the three and six months ended June 30, 2005 are not necessarily indicative of the operating results to be expected for the full year.

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Consolidated Balance Sheets

As of June 30, 2005 and December 31, 2004


	June 30, 2005			December 31, 2004
(In thousands)	(unaudited)
Assets
Rental property:
Land	$	128,360		$	127,458
Buildings		573,379			579,220
Tenant improvements		68,754			61,633
Furniture, fixtures, and equipment		1,639			1,626

		772,132			769,937
Less – accumulated depreciation		(169,301	)		(158,043	)

Total rental property		602,831			611,894

Land held for development		5,826			5,826
Assets held for sale		11,826			—
Accounts receivable, net		2,375			2,957
Investments in unconsolidated entities		42,579			41,227
Accrued straight-line rents		17,771			18,300
Tenant leasing costs, net		11,319			10,689
Intangible assets, net		8,213			7,394
Prepaid expenses and other assets		1,111			599

	$	703,851		$	698,886

Liabilities, Redeemable Partnership Units and Partners’ Capital
Liabilities:
Mortgages payable	$	31,910		$	32,206
Notes payable to affiliates		64,270			64,634
Accounts payable and accrued expenses		6,617			14,645
Due to affiliates		22,576			8,872
Rents received in advance and security deposits		6,304			6,392

Total liabilities		131,677			126,749

Mandatorily redeemable partnership units (at redemption value)		35,843			37,188

Partners’ capital:
General partner		6,053			5,890
Limited partners		530,278			529,059

Total partners’ capital		536,331			534,949
Commitments and contingencies

	$	703,851		$	698,886

See accompanying notes to consolidated financial statements.

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2005 and 2004


	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited and in thousands)	2005			2004			2005			2004
Operating revenues:
Rental revenue:
Minimum base rent	$	18,759		$	19,948		$	38,773		$	40,162
Recoveries from tenants		2,760			2,847			5,499			6,269
Parking and other tenant charges		1,306			774			2,478			1,656

Total rental revenue		22,825			23,569			46,750			48,087
Other revenue		200			180			414			378

Total operating revenues		23,025			23,749			47,164			48,465

Operating expenses:
Property expenses:
Operating expenses		7,067			6,996			13,872			13,654
Real estate taxes		2,069			2,211			4,195			4,501
General and administrative		3,074			2,216			5,535			4,493
Depreciation and amortization		8,105			7,683			16,188			15,556

Total operating expenses		20,315			19,106			39,790			38,204

Real estate operating income		2,710			4,643			7,374			10,261

Other (expense) income:
Interest expense		(1,860	)		(2,204	)		(3,686	)		(4,605	)
Interest income		21			168			28			340
Equity in earnings of unconsolidated entities		243			307			497			731

Net other expense		(1,596	)		(1,729	)		(3,161	)		(3,534	)

Income from continuing operations before impairment losses and gain on sales of properties		1,114			2,914			4,213			6,727
Impairment losses on real estate		—			—			(4,000	)		—
Gain on sales of properties		482			—			482			7

Income from continuing operations		1,596			2,914			695			6,734

Discontinued operations		90			267			357			900

Net income	$	1,686		$	3,181		$	1,052		$	7,634

Net income attributable to general partner	$	17		$	32		$	11		$	76

Net income attributable to limited partners	$	1,669		$	3,149		$	1,041		$	7,558

See accompanying notes to consolidated financial statements.

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2005 and 2004


(Unaudited and in thousands)	2005			2004
Cash flows from operating activities:
Net income	$	1,052		$	7,634
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including discontinued operations)		16,350			15,822
Impairment losses on real estate		4,210			—
Gain on sale of properties		(482	)		(7	)
Gain on sale of discontinued operations		—			(66	)
Equity in earnings of unconsolidated entities		(497	)		(731	)
Other		179			(173	)
Changes in assets and liabilities:
Decrease in accounts receivable, net		582			1,777
Increase (decrease) in accrued straight-line rents		161			(902	)
Additions to tenant leasing costs		(1,763	)		(1,099	)
Increase in intangible assets and prepaid expenses and other assets		(616	)		(545	)
Decrease in accounts payable and accrued expenses		(8,588	)		(2,799	)
Decrease in rent received in advance and security deposits		(225	)		(2,156	)

Total adjustments		9,311			9,121

Net cash provided by operating activities		10,363			16,755

Cash flows from investing activities:
Rental property acquisitions		(16,455	)		—
Rental property additions		(5,543	)		(4,837	)
Distributions from unconsolidated entities		1,329			820
Contributions to unconsolidated entities		(1,723	)		—
Proceeds from sale of property		—			10,512
Increase in restricted deposits		—			(125	)

Net cash (used in) provided by investing activities		(22,392	)		6,370

Cash flows from financing activities:
Increase (decrease) in due to affiliates		13,520			(13,129	)
Distributions on mandatorily redeemable partnership units		(1,015	)		(1,125	)
Repayments on mortgages and notes payable		(476	)		(8,871	)

Net cash provided by (used in) financing activities		12,029			(23,125	)

Increase in cash and cash equivalents		—			—
Cash and cash equivalents, beginning of the period		—			—

Cash and cash equivalents, end of the period	$	—		$	—

Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,686		$	4,252

See accompanying notes to consolidated financial statements.

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(1)

Description of Business and Summary of Significant Accounting Policies

(a)

Business

We are a Delaware limited partnership formed on March 6, 1996 for the purpose of owning, acquiring, developing and operating office buildings across the United States. As of June 30, 2005, we owned a controlling interest in a portfolio of 53 operating office buildings. As of June 30, 2005, we also owned a minority interest in 31 operating office buildings. The properties are located in Austin, Chicago, Dallas, Denver, Orange County/Los Angeles, Phoenix, San Francisco Bay Area, Salt Lake City, San Diego, Seattle and Washington, D.C.

We are managed indirectly by CarrAmerica Realty Corporation, a fully integrated, self-administered and self-managed publicly traded real estate investment trust (“REIT”). On June 30, 2004, CarrAmerica Realty Corporation contributed substantially all of it assets to CarrAmerica Realty Operating Partnership, L.P. (“the Operating Partnership”) in exchange for units of common and preferred partnership interest in the Operating Partnership. The Operating Partnership assumed substantially all of CarrAmerica Realty Corporation’s liabilities (CarrAmerica Realty Corporation and CarrAmerica Realty Operating Partnership, L.P. are collectively referred to hereafter as “CarrAmerica”). Our general partner is CarrAmerica Realty GP Holdings, LLC (the “General Partner”), a wholly owned subsidiary of CarrAmerica. Our General Partner owned a 1.0% interest in us at June 30, 2005. Our limited partners are CarrAmerica Realty LP Holdings, LLC, a wholly owned subsidiary of CarrAmerica, which owned an approximate 92.1% interest in us at June 30, 2005, and various other individuals and entities, which collectively owned an approximate 6.9% interest in us at June 30, 2005.

(b)

Basis of Presentation

The financial statements have been prepared using the accounting policies described in our 2004 annual report on Form 10-K. Our accounts and those of our controlled subsidiaries and affiliates are consolidated in the financial statements. We consolidate all entities in which we own a direct or indirect majority voting interest and where the minority holders do not have rights to participate in significant decisions that are made in the ordinary course of business. If applicable, we would consolidate any variable interest entity of which we are the primary beneficiary. We use the equity method to account for our investments in and our share of the earnings or losses of unconsolidated entities. These entities are not controlled by us. If events or changes in circumstances indicate that the fair value of an investment accounted for using the equity method has declined below its carrying value and we consider the decline to be “other than temporary,” the investment is written down to fair value and an impairment loss is recognized.

Management has made a number of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements, and the disclosure of contingent assets and liabilities. Estimates are required in order for us to prepare our financial statements in conformity with U.S. generally accepted accounting principles. Significant estimates are required in a number of areas, including evaluating the impairment of long-lived assets, allocating the purchase cost of acquired properties and evaluating the collectibility of accounts receivable. Actual results could differ from these estimates.

In accordance with its established practices, CarrAmerica allocates certain general and administrative expenses to its subsidiaries, including us.

(c)

Revenue Recognition

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

leasehold improvement assets by the tenant. This letter caused REITs and their accounting firms to reevaluate their treatment of tenant improvements and lease incentives. Based upon the implications of the Chief Accountant’s letter, we have concluded that if a tenant improvement is deemed to be owned by the tenant for accounting purposes then we must record the amounts funded to construct the tenant improvements as a lease incentive instead of as an asset, and as a result, the amount funded would be amortized as a reduction of rental revenue rather than as an increase to depreciation expense. This change in presentation will have no effect on our net income.

This consideration of the issues raised in the Chief Accountant’s letter also resulted in examination of when revenue recognition under an operating lease should begin. Historically, we began to recognize revenue under a lease when possession or control of the space leased was turned over to our tenant. In instances where our tenant contracted directly with third parties for their tenant improvement work, we determined that the tenant took possession of the space and we would begin recognizing revenue when we turned over the space to the tenant to begin construction. However, after discussions with our registered independent public accounting firm, we have concluded that if we are the owner of the tenant improvements revenue recognition cannot commence until the leasehold improvements are substantially completed. In contrast, if we determine that the tenant allowances we are funding are lease incentives, then we will commence revenue recognition when possession or control of the space is turned over to the tenant for construction to begin.

As a result of this change in the timing of revenue recognition under leases where we own the improvements and where our tenant took possession or control of the space before the improvements were complete, we reduced base rental revenue previously recorded in the first quarter of 2005 by approximately $0.7 million. This change did not have a material impact on or require a material adjustment to our audited financial statements for fiscal years ended on or before December 31, 2004.

(d)

Interim Financial Statements

The financial statements reflect all adjustments, which are, in our opinion, necessary to reflect a fair presentation of results for the interim periods, and all adjustments are of a normal, recurring nature.

(2)

Mortgages and Notes Payable

Our mortgages and notes payable are summarized as follows:


(In thousands)	June 30, 2005		December 31, 2004
Fixed rate mortgages	$	31,910	$	32,206
Fixed rate notes payable to affiliate		37,270		37,634
Variable rate note payable to affiliate		27,000		27,000

	$	96,180	$	96,840

We have fixed rate debt in the form of mortgages payable (collateralized by properties) and notes payable to affiliates. The weighted average interest rate of our fixed rate debt at June 30, 2005 was 7.77%. Our mortgages payable mature in 2009 and have a weighted average interest rate at June 30, 2005 of 6.91%.

We have three loans pursuant to which we borrow from CarrAmerica. The first loan (balance as of June 30, 2005 and December 31, 2004 of $25.3 million and $25.6 million, respectively) bears interest at 8.5%, requires monthly principal and interest payments of $242,000 and matures on May 31, 2011. The second loan is a $12.0 million loan that bears interest at 8.5%, requires monthly interest only payments of $85,000 and matures on March 27, 2007. The third loan requires interest only payments equal to 100 basis points over 30-day LIBOR (4.34% as of June 30, 2005). The outstanding loan balance as of June 30, 2005 and December 31, 2004 was $27.0 million.

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Debt maturities at June 30, 2005 were as follows:


(In thousands)
2005	$	685
2006		1,455
2007		13,572
2008		1,699
2009		30,563
2010 and thereafter		48,206

	$	96,180

On June 30, 2004, CarrAmerica entered into a new $500.0 million, three-year unsecured revolving credit facility with JPMorgan Chase Bank as administrative agent for a syndicate of banks. We are an unconditional guarantor of borrowings under this facility. The facility replaced and was used to repay all amounts outstanding under CarrAmerica’s previous senior unsecured credit facility. CarrAmerica may increase the facility to $700.0 million by request at any time within 24 months of the closing, provided the funding commitments are increased accordingly. The facility can be extended one year at CarrAmerica’s option. The facility carries an interest rate of 65 basis points over 30-day LIBOR, or 3.99% as of June 30, 2005. As of June 30, 2005, $239.0 million was drawn on the credit facility, $35.9 million in letters of credit were outstanding, and CarrAmerica had $225.1 million available for borrowing.

CarrAmerica’s unsecured credit facility contains financial and other covenants with which it must comply. Some of these covenants include:

•

A minimum ratio of annual EBITDA (earnings before interest, taxes, depreciation and amortization) to interest expense of at least 2 to 1;

•

A minimum ratio of annual EBITDA to fixed charges of at least 1.5 to 1;

•

A maximum ratio of aggregate unsecured debt to tangible fair market value of CarrAmerica’s unencumbered assets of 60%;

•

A maximum ratio of total secured debt to tangible fair market value of 30%;

•

A maximum ratio of total debt to tangible fair market value of CarrAmerica’s assets of 60%; and

•

Restrictions on CarrAmerica’s ability to make dividend distributions in excess of 90% of funds from operations or the minimum amount necessary to enable CarrAmerica to maintain its status as a REIT.

As of June 30, 2005, CarrAmerica is in compliance with all debt covenants. For the remainder of 2005, CarrAmerica expects its minimum ratio of annual EBITDA to interest expense to be in compliance but relatively close to the minimum of 2.0 to 1 as a result of space that will be out of service related to a large new lease in Washington, D.C. and the delayed commencement of revenue recognition on leases that have been executed as a result of the change in how CarrAmerica and us recognize revenue. If circumstances change from CarrAmerica’s current expectations, there can be no assurance CarrAmerica will remain in compliance with this or its other covenants. During the first quarter of 2005, CarrAmerica amended its credit facility, increasing the maximum ratio of total debt to tangible fair market value of its assets to 60%. In addition, the capitalization rate used to compute the fair market value of its assets for purposes of calculating this ratio was decreased from 9.0% to 8.5% for properties located in the Washington, D.C. metropolitan area. CarrAmerica’s ability to draw on its unsecured credit facility or to incur other unsecured debt in the future could be restricted by the covenants.

We have unconditionally guaranteed certain unsecured notes issued by CarrAmerica to institutional and other investors. The aggregate principal amount of these unsecured notes was $1.275 billion and $1.375 billion as of June 30, 2005 and December 31, 2004, respectively. These notes are in the following form:

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)


	Note Principal
(In thousands)	June 30, 2005		December 31, 2004
6.625% notes due in 2005		—		100,000
7.375% notes due in 2007		125,000		125,000
5.261% notes due in 2007		50,000		50,000
5.25% notes due in 2007		175,000		175,000
6.875% notes due in 2008		100,000		100,000
3.625% notes due in 2009		225,000		225,000
5.125% notes due in 2011		200,000		200,000
7.125% notes due in 2012		400,000		400,000

	$	1,275,000	$	1,375,000

$100.0 million of senior unsecured notes matured on March 1, 2005 and were repaid on that date using borrowings from CarrAmerica’s unsecured credit facility.

(3)

Gain on Sale of Assets and Other Provisions, Net and Discontinued Operations

The table below summarizes our property sale for the three months ended March 31, 2004:


	2004
Property Name	Sale Date	Square Footage	Net Cash Proceeds ($000)	Gain Recognized ($000)
Tower of the Hills	Mar-04	166,149	10,512	66

We dispose of assets from time to time that are inconsistent with our long-term strategic or return objectives. We did not dispose of any assets during the three and six months ended June 30, 2005. A joint venture in which we own a 21.2% interest, sold an office building in June 2005. We recognized a gain of $0.5 million on the sale. During the three and six months ended June 30, 2004, we disposed of our Tower of the Hills property, recognizing a gain of $0.1 million. We have no continuing involvement with the Tower of the Hills property after the sale and, accordingly, the gain on this sale and the operating results of this property are classified as discontinued operations. We had previously recognized an impairment loss of $3.0 million on this property in the fourth quarter of 2003.

One building in our Phoenix, Arizona portfolio is under contract for sale. After the sale, we will have no continuing involvement with this property and therefore, its results of operations are classified as discontinued operations. We recognized an impairment loss on this property of $210,000 during the second quarter of 2005.

Operating results of the Tower of the Hills and the Phoenix property are summarized as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2005		2004		2005		2004
Revenues	$	365	$	364	$	729	$	1,289
Property operating expenses		—		—		—		261
Depreciation and amortization		65		97		162		194
Impairment loss on property held for sale		210		—		210		—
Gain on sale of real estate		—		—		—		66

Net operations of property sold	$	90	$	267	$	357	$	900

During the remainder of 2005, we are, currently or anticipate, marketing several properties for sale. As a result we have reduced our estimated holding periods for these properties. Of these properties, two, Quorum Place and 5000 Quorum in Dallas, Texas, had book values in excess of the undiscounted cash flows we expect to receive from the operation and sale of the properties. As a result, we recognized impairment losses of $1.8 million and $2.2 million, respectively, on these two properties in the first quarter of 2005. None of the properties which we are marketing, currently meet our criteria to be classified as held for sale or as discontinued operations.

CARRAMERICA REALTY, L.P. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(4)

Acquisition

In the first six months of 2005, we acquired one operating property from a third party. The acquired property totaled approximately 95,000 rentable square feet and our investment was approximately $16.5 million. The table below details the 2005 acquisition:

Property Name

Market

Month

Acquired

Number

Buildings

Rentable

Square

Footage

Purchase

Price

(000)

North Creek Corporate Center

Seattle,
WA

Jun-05

95,267

16,455

The aggregate purchase cost of the properties acquired in the six months ended June 30, 2005 was allocated as follows:


(In thousands)	2005
Land	$	3,810
In-place lease intangibles		1,498
Building and tenant improvements		11,408
Deferred revenue and other		(261	)

	$	16,455

Management’s Discussion and Analysis

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion that follows is based primarily on our consolidated financial statements as of June 30, 2005 and December 31, 2004 and for the three and six months ended June 30, 2005 and 2004 and should be read together with our consolidated financial statements and related notes appearing elsewhere in this report. The ability to compare one period to another may be significantly affected by acquisitions completed, development properties placed in service and dispositions made during those periods.

After several years of adverse conditions in the real estate markets, vacancy rates peaked in the majority of our markets in 2003 and then began to improve. In 2005, as a result of continued positive net absorption vacancy rates have continued to decline in all of our markets except Chicago. As a result of improved job growth, leasing activity is up significantly, and we believe that market rental rates have stabilized in all of our markets and have improved in many of our markets, including Washington, D.C. and Southern California. Rental economics are expected to improve in most of our markets for the discernable future.

Due to the improving market conditions described above, occupancy in our portfolio of operating properties increased to 88.2% at June 30, 2005 compared to 86.1% at December 31, 2004 and 84.9% at June 30, 2004. If demand continues to improve in the balance of 2005, we expect that our overall portfolio average occupancy may improve further.

In a letter dated February 7, 2005 sent by the Chief Accountant of the Securities and Exchange Commission (“Commission”) to the American Institute of Certified Public Accountants, the Chief Accountant addressed a number of issues related to lease accounting by tenants. In that letter, the Chief Accountant indicated that leasehold improvements made by a tenant that are funded by landlord incentives or allowances under an operating lease should in certain circumstances be recorded as leasehold improvement assets by the tenant. This letter caused REITs and their accounting firms to reevaluate their treatment of tenant improvements and lease incentives. Based upon the implications of the Chief Accountant’s letter, we have concluded that if a tenant improvement is deemed to be owned by the tenant for accounting purposes then we must record the amounts funded to construct the tenant improvements as a lease incentive instead of as an asset, and as a result, the amount funded would be amortized as a reduction of rental revenue rather than as an increase to depreciation expense. This change in presentation will have no effect on our net income.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex or subjective judgments. Our critical accounting policies and estimates relate to evaluating the impairment of long-lived assets, allocating the purchase cost of acquired properties, and evaluating the collectibility of accounts receivable.

Depreciation of rental properties is computed on a straight-line basis over the estimated useful lives of the assets. The estimated lives of our assets by class are as follows:


Base building		30 to 50 years
Building components		7 to 20 years
Tenant improvements		Lesser of the terms of the leases or useful lives of the assets
Furniture, fixtures and equipment		5 to 15 years

Management’s Discussion and Analysis

We make subjective assessments as to the useful lives of our assets. These assessments have a direct impact on our net income. Should we lengthen the expected useful life of an asset, it would be depreciated over a longer period, resulting in less depreciation expense and higher annual net income. Should we shorten the expected useful life of an asset, it would be depreciated over a shorter period, resulting in more depreciation expense and lower annual net income.

We assess the useful lives of our assets on a regular basis. If events or changes in circumstances indicate that the carrying value of a rental property to be held and used or land held for development may be impaired, we perform a recoverability analysis based on estimated undiscounted cash flows to be generated from the property in the future. If the analysis indicates that the carrying value is not recoverable from future cash flows, the property and related assets such as tenant improvements and lease commissions, are written down to estimated fair value and an impairment loss is recognized. If we decide to sell rental properties or land holdings, we evaluate the recoverability of the carrying amounts of the assets. If the evaluation indicates that the carrying value is not recoverable from estimated net sales proceeds, the property is written down to estimated fair value less costs to sell and an impairment loss is recognized. Our estimates of cash flows and fair values of the properties are based on current market conditions and consider matters such as rental rates and occupancies for comparable properties, recent sales data for comparable properties and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of additional impairment losses which, under applicable accounting guidance, could be substantial.

We allocate the purchase cost of acquired properties to the related physical assets and in-place leases based on their fair values. The fair values of acquired office buildings are determined on an “if-vacant” basis considering a variety of factors, including the physical condition and quality of the buildings, estimated rental and absorption rates, estimated future cash flows and valuation assumptions consistent with current market conditions. The “if-vacant” fair value is allocated to land, where applicable, buildings, tenant improvements and equipment based on property tax assessments and other relevant information obtained in connection with the acquisition of the property.

The fair value of in-place leases includes the effect of leases with above or below market rents, where applicable, customer relationship value and the cost of acquiring existing tenants at the date of acquisition. Above market and below market in-place lease values are determined on a lease by lease basis based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (a) the contractual amounts to be paid under the lease and (b) our estimate of the fair market lease rate for the corresponding space over the remaining non-cancelable terms of the related leases. The capitalized below market lease values are amortized as an increase to rental income over the initial term and any below market renewal periods of the related leases. Capitalized above market lease values are amortized as a decrease to rental income over the initial term of the related leases. Customer relationship values are determined based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the tenant. Characteristics we consider include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The value of customer relationship intangibles is amortized to expense over the lesser of the initial lease term and any expected renewal periods or the remaining useful life of the building. We determine the fair value of the cost of acquiring existing tenants by estimating the lease commissions avoided by having in-place tenants and avoided lost operating income for the estimated period required to lease the space occupied by existing tenants at the acquisition date. The cost of acquiring existing tenants is amortized to expense over the initial term of the respective leases. Should a tenant terminate its lease, the unamortized portion of the in-place lease value is charged to expense. Changes in the assumptions used in the allocation of the purchase cost among the acquired assets would affect the timing of recognition of the related revenue and expenses.

Our allowance for doubtful accounts receivable is established based on analysis of the risk of loss on specific accounts. The analysis places particular emphasis on past-due accounts and considers information such as the nature and age of the receivable, the payment history of the tenant or other debtor, the amount of security we hold, the financial condition of the tenant and our assessment of its ability to meet its lease obligations, the basis for any disputes and the

Management’s Discussion and Analysis

status of related negotiations, etc. Our estimate of the required allowance, which is reviewed on a quarterly basis, is subject to revision as these factors change and is sensitive to the effects of economic and market conditions on our tenants, particularly in our largest markets.

RESULTS OF OPERATIONS

Operating results are summarized as follows:


	For the three months ended June 30,				Variance			For the six months ended June 30,					Variance
(in millions)	2005		2004		2005 vs. 2004			2005			2004		2005 vs. 2004
Operating revenues	$	23.0	$	23.7	$	(0.7	)	$	47.2		$	48.5	$	(1.3	)
Property operating expense		9.1		9.2		(0.1	)		18.1			18.2		(0.1	)
General and administrative		3.1		2.2		0.9			5.5			4.5		1.0
Depreciation and amortization		8.1		7.7		0.4			16.2			15.6		0.6
Interest expense		1.9		2.2		(0.3	)		3.7			4.6		(0.9	)
Other income		0.3		0.5		(0.2	)		0.5			1.1		(0.6	)
Impairment losses		—		—		—			(4.0	)		—		(4.0	)
Discontinued operations		0.1		0.3		(0.2	)		0.4			0.9		(0.5	)

Operating revenues decreased $0.7 million (3.0%) for the second quarter of 2005 compared to 2004. This decrease was due primarily to a reduction in minimum base rent as a result of the change in timing of minimum base rent recognition with respect to certain leases under which our tenants are constructing their own improvements ($0.7 million). For a more detailed discussion of the impact of these revenue recognition timing changes, please refer to the discussion included in the introduction to the Management’s Discussion and Analysis.

Operating revenues decreased $1.3 million (2.7%) for the first half of 2005 compared to 2004. This decrease was due primarily to a reduction in minimum base rent as a result of the change in timing of minimum base rent recognition with respect to certain leases under which our tenants are constructing their own improvements ($0.7 million) and lower rental rates on new leases.

Our lease rollover by square footage at June 30, 2005 is as follows:


Year of Lease Expiration	Net Rentable Area Subject to Expiring Leases (sq. ft.)¹	Percent of Leased Square Footage Represented by Expiring Leases
2005	187,501	4.5	%
2006	183,928	4.4	%
2007	966,862	23.1	%
2008	777,456	18.6	%
2009	487,651	11.6	%
2010	377,094	9.0	%
2011	368,505	8.8	%
2012	453,052	10.8	%
2013	47,400	1.1	%
2014	169,098	4.0	%
2015 and thereafter	170,195	4.1	%

	4,188,742	100.0	%

1	Does not included vacant space at 6/30/05 - 558,923 sq. ft.

Property operating expenses remained relatively unchanged in the three and six months ended June 30, 2005 compared to the same periods in 2004.

General and administrative expense increased $0.9 million (40.9%) in the three months ended June 30, 2005 compared to the same period in 2004. The increase was due primarily to increased allocations of expense from

Management’s Discussion and Analysis

CarrAmerica. General and administrative expense increased $1.0 million (22.2%) in the six months ended June 30, 2005 compared to the same period in 2004. The increase was due primarily to increased allocations of expense from CarrAmerica.

Depreciation and amortization increased $0.4 million (5.2%) in the three months ended June 30, 2005, compared to the same period in 2004. The increase was due primarily to the increase in tenant improvements. Depreciation and amortization increased $0.6 million (3.9%) in the six months ended June 30, 2005, compared to the same period in 2004. The increase was due primarily to the increase in tenant improvements.

Interest expense decreased $0.3 million (13.6%) in the three months ended June 30, 2005 compared to the same period in 2004. Interest expense decreased $0.9 million (19.6%) in the six months ended June 30, 2005 compared to the same period in 2004. The decreases were primarily due to the decrease of mortgages and notes payable of $20.8 million in 2004 as a result of repayments of higher rate mortgages.

The table below summarizes our property sale for the six months ended June 30, 2004:


	2004
Property Name	Sale Date	Square Footage	Net Cash Proceeds ($000)	Gain Recognized ($000)
Tower of the Hills	Mar-04	166,149	10,512	66

One building in our Phoenix, Arizona portfolio is under contract for sale and met our criteria to be classified as held for sale. After the sale, we will have no continuing involvement with this property and therefore, its results of operations are classified as discontinued operations. We recognized an impairment loss on this property of $210,000 during the second quarter of 2005.

Operating results of the Tower of the Hills and the Phoenix property are summarized as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2005		2004		2005		2004
Revenues	$	365	$	364	$	729	$	1,289
Property operating expenses		—		—		—		261
Depreciation and amortization		65		97		162		194
Impairment loss on property held for sale		210		—		210		—
Gain on sale of real estate		—		—		—		66

Net operations of property sold	$	90	$	267	$	357	$	900

Management’s Discussion and Analysis

Consolidated Cash Flows

Consolidated cash flow information is summarized as follows:


	For the six months ended						Variance
	June 30,						Variance
(in millions)	2005			2004			2005 vs. 2004
Cash provided by operating activities	$	10.4		$	16.8		$	(6.4	)
Cash (used by) provided by investing activities		(22.4	)		6.4			(28.8	)
Cash provided by (used by) financing activities		12.0			(23.1	)		35.1

Operations generated $10.4 million of net cash for the first six months of 2005 compared to $16.8 million in the same period of 2004. The decrease in cash provided by operating activities was due primarily to the reduction in accounts payable and accrued expenses ($5.8 million). The level of net cash provided by operating activities is affected by the timing of receipt of revenues and payment of expenses.

Our investing activities used net cash of $22.4 million in the six months ended June 30, 2005 compared to providing net cash of $6.4 million in the same period of 2004. The net change in cash flows from investing activities in 2005 was due primarily to an increase in property acquisitions and additions ($17.1 million) as a result of the purchase of a property in Seattle for $16.5 million in the second quarter of 2005, a decrease in proceeds from the sale of property ($10.5 million) and increases in contributions to unconsolidated subsidiaries ($1.7 million).

Our financing activities provided net cash of $12.0 million for the first six months of 2005 and used net cash of $23.1 million for the same period in 2004. The net change in cash flows from financing activities is primarily a result of increased borrowings and amounts due to affiliates ($26.6 million) and lower repayments of mortgages and notes payable ($8.4 million) primarily as a result of the purchase and sale of properties.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are dependent upon CarrAmerica and its other affiliates. CarrAmerica’s primary sources of capital are real estate operations and its senior unsecured credit facility. On June 30, 2004, CarrAmerica entered into a new $500.0 million, three-year unsecured revolving credit facility with JPMorgan Chase Bank as administrative agent for a syndicate of banks. The facility replaced and was used to repay all amounts outstanding under CarrAmerica’s previous senior unsecured credit facility. CarrAmerica may increase the facility to $700.0 million by request at any time within 24 months of the closing, provided the funding commitments are increased accordingly. The facility can be extended one year at CarrAmerica’s option. The facility carries an interest rate of 65 basis points over 30-day LIBOR, or 3.99% as of June 30, 2005. As of June 30, 2005, $239.0 million was drawn on the credit facility, $35.9 million in letters of credit were outstanding, and CarrAmerica had $225.1 million available for borrowing.

We and CarrAmerica derive substantially all of our revenue from tenants under leases at our properties. Our operating cash flow therefore depends materially on the rents that we are able to charge to our tenants, and the ability of these tenants to make their rental payments. Our primary uses of cash are to fund distributions to Unitholders, to fund capital investments in our existing portfolio of operating assets, and to fund new acquisitions and our development activities. We regularly require capital to invest in our existing portfolio of operating assets in connection with large-scale renovations, routine capital improvements, deferred maintenance on properties we have recently acquired, and our leasing activities, including funding tenant improvements, allowances and leasing commissions. The amounts of the leasing-related expenditures can vary significantly depending on negotiations with tenants and the willingness of tenants to pay higher base rents over the life of the leases.

During the remainder of 2005, we expect that we will have significant capital requirements, including the following items. There can be no assurances that our capital requirements will not be materially higher or lower than these expectations. We expect to meet our capital requirements using cash generated by our real estate operations.

•

Approximately $1 - $2 million in distributions to Unitholders (other than Class B Unitholders);

•

Approximately $10 - $15 million to invest in our existing portfolio of operating assets, including approximately $8 - $14 million to fund tenant-related capital requirements;

•

Approximately $9 - $12 million to convert an office building in Southern California to a biotechnology building

Management’s Discussion and Analysis

We believe that we will generate sufficient cash flow from operations and have access to the capital resources necessary to expand and develop our business, to fund our operating and administrative expenses, to continue to meet our debt service obligations, to pay distributions to Unitholders, to acquire additional properties and land, and to pay for construction in progress. However, as a result of general economic downturns, if CarrAmerica’s credit rating is downgraded, if CarrAmerica is unable to comply with its line of credit covenants, if rental rates on new leases are significantly lower than expiring leases or if our properties do not otherwise perform as expected, we may not generate sufficient cash flow from operations or otherwise have access to capital on favorable terms, or at all. If we cannot raise the expected funds from the sale of properties and/or if we are unable to obtain capital from other sources, we may not be able make required principal and interest payments, make strategic acquisitions or make necessary routine capital improvements with respect to our existing portfolio of operating assets. Any of these events could have a material adverse effect on our liquidity, financial condition, results of operations and the value of our securities. In addition, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the holder of the mortgage could foreclose on the property, resulting in loss of income and asset value. An unsecured lender could also attempt to foreclose on some of our assets in order to receive payment. In most cases, very little of the principal amount that we borrow is repaid prior to the maturity of the loan. We may refinance that debt when it matures, or we may pay off the loan. If principal amounts due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our cash flow may be insufficient to repay all maturing debt. Prevailing interest rates or other factors at the time of a refinancing (such as possible reluctance of lenders to make commercial real estate loans) may result in higher interest rates and increased interest expense.

Under our partnership agreement, to the extent that there is available cash, each Class A Unit, Class D Unit, and Class E Unit is entitled to receive a distribution equal to the amount of dividend per common share that is paid to CarrAmerica’s shareholders. Once all of the holders of these units have received their distribution, all additional available cash may be distributed to the holders of Class B Units. Cash flows from operations are an important factor in our ability to sustain our quarterly distributions to our partners at the current rate of $0.50 per unit per quarter. Cash flows from operations decreased from $16.8 million in the first half of 2004 to $10.4 million for the same period in 2005. We expect our cash flows from operations to be lower in 2005 than 2004. We currently expect to maintain our distribution rate of $0.50 per unit per quarter for the remainder of 2005. We expect our operating cash flow will be sufficient to maintain these distributions. In the event available cash is insufficient to pay distributions at the current level, we may be unable to make distributions to Class B Unitholders.

Debt Financing

CarrAmerica’s unsecured credit facility contains financial and other covenants with which it must comply. Some of these covenants include:

•

A minimum ratio of annual EBITDA (earnings before interest, taxes, depreciation and amortization) to interest expense of at least 2 to 1;

•

A minimum ratio of annual EBITDA to fixed charges of at least 1.5 to 1;

•

A maximum ratio of aggregate unsecured debt to tangible fair market value of CarrAmerica’s unencumbered assets of 60%;

•

A maximum ratio of total secured debt to tangible fair market value of CarrAmerica’s assets of 30%;

��

•

A maximum ratio of total debt to tangible fair market value of CarrAmerica’s assets of 60%; and

•

Restrictions on its ability to make dividend distributions in excess of 90% of funds from operations or the minimum amount necessary to enable CarrAmerica to maintain its status as a REIT.

Management’s Discussion and Analysis

Failure to comply with any of the covenants under CarrAmerica’s unsecured credit facility or other debt instruments could result in a default under one or more of its debt instruments. This could cause CarrAmerica’s lenders to accelerate the timing of payments and would therefore have a material adverse effect on CarrAmerica’s and our business, operations, financial condition or liquidity.

Our total debt as of June 30, 2005 is summarized as follows:


(In thousands)
Fixed rate mortgages	$	31,910
Fixed rate notes payable to affiliate		37,270
Variable rate note payable to affiliate		27,000

	$	96,180

Our fixed rate debt bore an effective weighted average interest rate of 7.78% at June 30, 2005 and had a weighted average maturity of 4.2 years. The effective weighted average interest rate of our fixed rate debt, excluding our notes payable to affiliates, was 6.91% at June 30, 2005 and had a weighted average maturity of 3.7 years. Our variable rate note payable to affiliate at June 30, 2005 bore an interest rate of 100 basis points over 30-day LIBOR or 4.34%. We repaid $0.7 and $8.9 million of fixed rate mortgage debt and notes payable in the first half of 2005 and 2004, respectively.

Capital Commitments

We regularly incur expenditures in connection with the re-leasing of office space, principally in the form of tenant improvements and leasing commissions. The amounts of these expenditures can vary significantly, depending on negotiations with tenants and the willingness of tenants to pay higher base rents over the life of the leases. We expect to pay for these capital expenditures out of cash from operations or, to the extent necessary, borrowings from CarrAmerica. We believe that these expenditures are generally recouped in the form of continuing lease payments.

As of June 30, 2005, we had a contract pending to purchase a property in metropolitan Washington, D.C. for approximately, $61.7 million. We expect to finalize this purchase in the third quarter of 2005. We expect to pay for this acquisition with borrowings from CarrAmerica. There can be no assurance that this acquisition will close as expected.

Unconsolidated Investments and Joint Ventures

We have investments in real estate joint ventures in which we hold 21.2% to 49% interests. These investments are accounted for using the equity method and therefore the assets and liabilities of the joint ventures are not included in our financial statements. These joint ventures own and operate office buildings financed by non-recourse debt obligations that are secured only by the real estate and other assets of the joint ventures. We have no obligation to repay these non-recourse debt obligations and the lenders have no recourse to our other assets.

Our investments in these joint ventures are subject to risks not inherent in our majority owned properties, including:

•

Absence of exclusive control over the development, financing, leasing, management and other aspects of the project;

•

Possibility that our co-venturer or partner might:

•

become bankrupt;

•

have interests or goals that are inconsistent with ours;

•

take action contrary to our instructions, requests or interests (including those related to CarrAmerica’s qualification as a REIT for tax purposes);

•

otherwise impede our objectives; or

•

Possibility that we, together with our partners may be required to fund losses of the investee.

Management’s Discussion and Analysis

Off Balance Sheet Arrangements - Guarantee Obligations

We have unconditionally guaranteed unsecured notes issued by CarrAmerica to institutional and other investors. The aggregate principal amount of the unsecured notes was $1.275 and 1.375 billion as of June 30, 2005 and December 31, 2004, respectively. These notes are in the following form:


	Note Principal
(In thousands)	June 30, 2005		December 31, 2004
6.625% notes due in 2005		—		100,000
7.375% notes due in 2007		125,000		125,000
5.261% notes due in 2007		50,000		50,000
5.25% notes due in 2007		175,000		175,000
6.875% notes due in 2008		100,000		100,000
3.625% notes due in 2009		225,000		225,000
5.125% notes due in 2011		200,000		200,000
7.125% notes due in 2012		400,000		400,000

	$	1,275,000	$	1,375,000

CarrAmerica’s senior unsecured notes contain various covenants with which CarrAmerica must comply. The covenants include:

•

Limits on total indebtedness on a consolidated basis;

•

Limits on secured indebtedness on a consolidated basis;

•

Limits on required debt service payments; and

•

Compliance with the financial covenants of the credit facility.

As of June 30, 2005, CarrAmerica was in compliance with its unsecured note covenants.

$100.0 million of senior unsecured notes matured on March 1, 2005 and were repaid on that date using borrowings from CarrAmerica’s unsecured credit facility.

Management’s Discussion and Analysis

Building and Lease Information

The following table sets forth information about each wholly-owned property as of June 30, 2005:


	Net Rentable
Consolidated Properties	Area (square feet)(1)	Percent Leased(2)		Number of Buildings
Southern California, Orange County/Los Angeles
South Coast Executive Center	154,959	100.0	%	2
2600 W. Olive	145,274	36.2	%	1
Bay Technology Center	107,481	100.0	%	2
Southern California, San Diego
Towne Center Technology Park 4	105,358	100.0	%	1
Torrey Pines Research Center	81,816	0.0	%	1
Northern California, San Francisco Bay Area
San Mateo Center	209,017	82.4	%	3
Mountain View Gateway Center	236,400	100.0	%	2
Seattle, Washington:
Canyon Park Commons	95,290	100.0	%	1
Austin, Texas:
City View Centre	136,106	67.9	%	3
City View Center	128,716	100.0	%	1
Chicago, Illinois:
Bannockburn I & II, IV	315,784	79.1	%	3
Dallas, Texas:
Quorum North	115,848	84.9	%	1
Quorum Place	177,608	81.9	%	1
Cedar Maple Plaza	113,010	80.0	%	3
Two Mission Park	77,353	88.4	%	1
5000 Quorum	159,995	85.1	%	1
Denver, Colorado:
Harlequin Plaza	319,069	83.8	%	2
Quebec Court I & II	287,294	100.0	%	2
Quebec Center	106,865	91.9	%	3
Phoenix, Arizona:
Qwest Communications	532,506	100.0	%	4
Salt Lake City, Utah:
Sorenson Research Park X	321,428	95.2	%	6
Wasatch Corporate Center	227,875	94.7	%	4
Washington, DC:
TransPotomac V Plaza	97,402	86.6	%	1
Canal Center	495,211	93.6	%	4

Total Consolidated Properties	4,747,665			53
Weighted Average at June 30, 2005		88.2	%

(1)	Includes office and retail space but excludes storage space.

(2)	Includes space for leases that have been executed and have commenced as of June 30, 2005.

Management’s Discussion and Analysis

FORWARD-LOOKING STATEMENTS

Statements contained in this Form 10-Q which are not historical facts may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Such statements (none of which is intended as a guarantee of performance) are subject to certain risks and uncertainties, which could cause our actual future results, achievements or transactions to differ materially from those projected or anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the SEC. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, the risks described in our annual report on Form 10-K for the year ended December 31, 2004. Such factors include, among others:

•

National and local economic, business and real estate conditions that will, among other things, affect:

•

Demand for office space,

•

The extent, strength and duration of any economic recovery, including the effect on demand for office space and the creation of new office development,

•

Availability and creditworthiness of tenants,

•

The level of lease rents, and

•

The availability of financing for both tenants and us;

•

Adverse changes in the real estate markets, including, among other things:

•

The extent of tenant bankruptcies, financial difficulties and defaults,

•

The extent of future demand for office space in our core markets and barriers to entry into markets which we may seek to enter in the future,

•

Our ability to identify and consummate attractive acquisitions on favorable terms,

•

Our ability to consummate any planned dispositions in a timely manner on acceptable terms, and

•

Changes in operating costs, including real estate taxes, utilities, insurance and security costs;

•

Actions, strategies and performance of affiliates that we may not control or companies in which we have made investments;

•

Ability to obtain insurance at a reasonable cost;

•

Ability of CarrAmerica to maintain its status as a REIT for federal and state income tax purposes;

•

Ability to raise capital;

•

Effect of any terrorist activity or other heightened geopolitical risks;

•

Governmental actions and initiatives; and

•

Environmental/safety requirements.

For further discussion of these and other factors that could impact our future results, performance, achievements or transactions, see the documents we file from time to time with the Securities and Exchange Commission, and in particular, the section titled “The Company – Risk Factors” in CarrAmerica’s Annual Report on Form 10-K for the year ended December 31, 2004.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Any significant changes in our market risk that have occurred since the filing of our Annual Report on Form 10-K for the year ended December 31, 2004 are summarized in the Liquidity and Capital Resources section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness as of June 30, 2005 of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15 of the rules promulgated under the Securities and Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Controls over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) identified in connection with the evaluation required by Rule 13a-15(b) under the Securities Exchange Act of 1934 of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II

OTHER INFORMATION

Item 1. Legal Proceedings

We are party to a variety of other legal proceedings arising in the ordinary course of business. All of these matters, taken together, are not expected to have a material adverse impact on us. Based on currently available facts, we believe that the disposition of matters that are pending or asserted will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers:

Pursuant to our partnership agreement, minority interest units may be redeemed by us or one of our affiliates for either cash or common stock of CarrAmerica. The following table summarizes the number and average price for redemptions by CarrAmerica of third party units during the three months ended June 30, 2005:


	Total Number of Units Redeemed Purchased (1)	Average Price Per Unit		Remaining Outstanding Third Party Units That May Yet Be Purchased
March 31, 2005				1,007,912
April 1 - 30,2005	—		—	1,007,912
May 1 - 31, 2005	17,222	$	33.23	990,690
June 1 - 30, 2005	—		—	990,690

	17,222			990,690

(1)	Units purchased pursuant to the redemption terms included in our partnership agreement

Item 6. Exhibits

(a)

Exhibit

31.1 Section 302 Certification from Mr. Thomas A. Carr, dated August 2, 2005

31.2 Section 302 Certification from Mr. Stephen E. Riffee, dated August 2, 2005

32.1 Section 906 Certification from Mr. Thomas A. Carr and Mr. Stephen E. Riffee, dated August 2, 2005

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CARRAMERICA REALTY, L.P.

a Delaware Limited Partnership

By: CarrAmerica Realty GP Holdings, LLC, its general partner

By: CarrAmerica Realty Operating Partnership, L.P., its sole member

By: CarrAmerica Realty Corporation, its general partner

/s/ Kurt A. Heister

Kurt A. Heister, Treasurer

(on behalf of registrant and as its principal accounting officer)

Date: August 2, 2005

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Carramerica Realty L P Inactive 10-Q2005 Q2 Quarterly report

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