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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 September 30, 2002
 
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 September 30, 2002:
 
(# of shares) 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                     

Table of Contents
 
Index
 
         
Page
Part I:        Financial Information
     
Item 1.
        
       
4
       
5
       
6
       
7 - 9
Item 2.
      
10 - 17
Item 3.
      
18
Item 4.
      
18
Part II:       Other Information
     
Item 6.
      
19

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Table of Contents
 
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 of CarrAmerica Realty, L.P. and subsidiary reflects all adjustments which are, in our opinion, necessary for a fair presentation of the aforementioned financial statements for the interim periods.
 
The financial statements should be read in conjunction with the notes to the financial statements. The results of operations for the three and nine months ended September 30, 2002 are not necessarily indicative of the operating results to be expected for the full year.

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CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Balance Sheets As of September 30, 2002 and December 31, 2001
 
 
(In thousands)
 
    
September 30, 2002
     
December 31, 2001
  
    
(unaudited)
         
Assets
                  
Rental property:
                  
Land
   
$
129,091
 
   
$
113,583
 
Buildings
   
 
594,785
 
   
 
533,132
 
Tenant improvements
   
 
41,886
 
   
 
64,856
 
Furniture, fixtures, and equipment
   
 
673
 
   
 
591
 
    
  
    
 
766,435
 
   
 
712,162
 
Less—accumulated depreciation
   
 
(98,823
)
   
 
(92,025
)
    
  
Total rental property
   
 
667,612
 
   
 
620,137
 
Land held for development or sale
   
 
5,642
 
   
 
6,412
 
Cash and cash equivalents
   
 
385
 
   
 
1,226
 
Restricted deposits
   
 
1,553
 
   
 
1,015
 
Accounts and notes receivable, net
   
 
10,203
 
   
 
12,665
 
Due from affiliates
   
 
9,273
 
   
 
—  
 
Investments in unconsolidated entities
   
 
47,776
 
   
 
47,970
 
Accrued straight-line rents
   
 
12,507
 
   
 
12,340
 
Tenant leasing costs, net
   
 
7,172
 
   
 
11,918
 
Deferred financing costs, net
   
 
104
 
   
 
167
 
Prepaid expenses and other assets, net
   
 
2,003
 
   
 
1,053
 
    
  
    
$
764,230
 
   
$
714,903
 
    
  
Liabilities, Mandatorily Redeemable Partnership Units and Partners’ Capital
                  
Liabilities:
                  
Mortgages and notes payable
   
$
196,775
 
   
$
140,729
 
Accounts payable and accrued expenses
   
 
13,049
 
   
 
12,119
 
Due to affiliates
   
 
—  
 
   
 
44,785
 
Rents received in advance and security deposits
   
 
5,675
 
   
 
6,277
 
    
  
Total liabilities
   
 
215,499
 
   
 
203,910
 
Mandatorily redeemable partnership units
   
 
32,933
 
   
 
40,151
 
Partners’ capital:
                  
General partner
   
 
5,613
 
   
 
5,215
 
Limited partners
   
 
510,185
 
   
 
465,627
 
    
  
Total partners’ capital
   
 
515,798
 
   
 
470,842
 
Commitments and contingencies
                  
    
$
764,230
 
   
$
714,903
 
    
  
 
See accompanying notes to consolidated financial statements.
 

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CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2002 and 2001

(Unaudited and in thousands)
 
    
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
  
    
2002
   
2001
   
2002
     
2001
  
Operating revenues:
                                
Rental revenue:
                                
Base rent
   
$
20,011
   
$
18,187
   
$
56,219
 
   
$
55,096
 
Recoveries from tenants
   
 
3,944
   
 
3,039
   
 
10,942
 
   
 
8,878
 
Parking and other tenant charges
   
 
1,035
   
 
827
   
 
2,165
 
   
 
2,304
 
    
  
  
  
Total rental revenue
   
 
24,990
   
 
22,053
   
 
69,326
 
   
 
66,278
 
Other revenue
   
 
201
   
 
195
   
 
646
 
   
 
676
 
    
  
  
  
Total operating revenues
   
 
25,191
   
 
22,248
   
 
69,972
 
   
 
66,954
 
    
  
  
  
Operating expenses:
                                
Property expenses:
                                
Operating expenses
   
 
6,643
   
 
5,781
   
 
17,760
 
   
 
18,500
 
Real estate taxes
   
 
2,403
   
 
1,672
   
 
7,140
 
   
 
5,207
 
Interest expense
   
 
3,602
   
 
4,333
   
 
11,533
 
   
 
15,289
 
General and administrative
   
 
598
   
 
1,699
   
 
3,058
 
   
 
6,154
 
Depreciation and amortization
   
 
7,224
   
 
6,442
   
 
19,720
 
   
 
18,017
 
    
  
  
  
Total operating expenses
   
 
20,470
   
 
19,927
   
 
59,211
 
   
 
63,167
 
    
  
  
  
Real estate operating income
   
 
4,721
   
 
2,321
   
 
10,761
 
   
 
3,787
 
    
  
  
  
Other income:
                                
Interest income
   
 
208
   
 
332
   
 
618
 
   
 
1,359
 
Equity in earnings of unconsolidated entities
   
 
635
   
 
363
   
 
2,654
 
   
 
3,400
 
    
  
  
  
Total other income
   
 
843
   
 
695
   
 
3,272
 
   
 
4,759
 
    
  
  
  
Income from continuing operations before gain (loss) on sale of assets and other provisions, net
   
 
5,564
   
 
3,016
   
 
14,033
 
   
 
8,546
 
Gain (loss) on sale of assets and other provisions, net
   
 
—  
   
 
67
   
 
(1,009
)
   
 
(7,435
)
    
  
  
  
Income from continuing operations
   
 
5,564
   
 
3,083
   
 
13,024
 
   
 
1,111
 
Discontinued operations—Net operations of sold properties
   
 
1,017
   
 
1,872
   
 
4,376
 
   
 
5,744
 
Discontinued operations—Gain on sale of properties
   
 
19,085
   
 
—  
   
 
22,425
 
   
 
—  
 
    
  
  
  
Income from discontinued operations
   
 
20,102
   
 
1,872
   
 
26,801
 
   
 
5,744
 
    
  
  
  
Net income
   
$
25,666
   
$
4,955
   
$
39,825
 
   
$
6,855
 
    
  
  
  
Net income attributable to general partner
   
$
257
   
$
50
   
$
398
 
   
$
69
 
    
  
  
  
Net income attributable to limited partners
   
$
25,403
   
$
4,905
   
$
39,427
 
   
$
6,786
 
    
  
  
  
 
See accompanying notes to consolidated financial statements.
 

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CARRAMERICA REALTY, L. P. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2002 and 2001
 
 
(Unaudited and in thousands)
 
    
2002
     
2001
  
Cash flows from operating activities:
                  
Net income
   
$
39,825
 
   
$
6,855
 
Adjustments to reconcile net income to net cash (used by) provided by operating activities:
                  
Depreciation and amortization (including discontinued operations)
   
 
23,358
 
   
 
22,606
 
Loss on sale of assets and other provisions, net
   
 
1,009
 
   
 
7,435
 
Gain on sale of discontinued operations
   
 
(22,425
)
   
 
—  
 
Equity in earnings of unconsolidated entities
   
 
(2,654
)
   
 
(3,400
)
Other
   
 
(143
)
   
 
(67
)
Changes in assets and liabilities:
                  
Decrease in accounts and notes receivable
   
 
2,462
 
   
 
1,752
 
Increase in accrued straight-line rents
   
 
(1,508
)
   
 
(1,095
)
Additions to tenant leasing costs
   
 
(2,659
)
   
 
(1,486
)
Increase in prepaid expenses and other assets
   
 
(1,123
)
   
 
(207
)
Increase (decrease) in accounts payable and accrued expenses
   
 
331
 
   
 
(1,727
)
Decrease in due to/from affiliates
   
 
(54,058
)
   
 
(16,069
)
Decrease in rents received in advance and security deposits
   
 
(602
)
   
 
(51
)
    
  
Total adjustments
   
 
(58,012
)
   
 
(7,691
)
    
  
Net cash (used by) provided by operating activities
   
 
(18,187
)
   
 
14,546
 
    
  
Cash flows from investing activities:
                  
Acquisitions and additions to rental property
   
 
(104,743
)
   
 
(63,896
)
Additions to land held for development
   
 
(239
)
   
 
(472
)
Distributions from unconsolidated entities
   
 
2,957
 
   
 
50,709
 
Investments in unconsolidated entities
   
 
(109
)
   
 
(5,224
)
(Increase) decrease in restricted deposits
   
 
(538
)
   
 
22,510
 
Proceeds from sales of properties
   
 
129,418
 
   
 
13,203
 
    
  
Net cash provided by investing activities
   
 
26,746
 
   
 
16,830
 
    
  
Cash flows from financing activities:
                  
Capital distributions
   
 
(1,946
)
   
 
(2,032
)
Repayments on notes and mortgages payable
   
 
(7,454
)
   
 
(32,031
)
    
  
Net Cash used by financing activities
   
 
(9,400
)
   
 
(34,063
)
    
  
Decrease in cash and cash equivalent
   
 
(841
)
   
 
(2,687
)
Cash and cash equivalents, beginning of the period
   
 
1,226
 
   
 
5,819
 
    
  
Cash and cash equivalents, end of the period
   
$
385
 
   
$
3,132
 
    
  
Supplemental disclosure of cash flow information:
                  
Cash paid for interest (net of capitalized interest of $196 and $594 for the nine months ended September 30, 2002 and 2001, respectively)
   
$
11,714
 
   
$
16,117
 
    
  
 
See accompanying notes to consolidated financial statements.

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CARRAMERICA REALTY, L.P. AND SUBSIDIARY
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 in March 1996 for the purpose of owning, acquiring, developing and operating office buildings across the United States. At September 30, 2002, we owned 55 office buildings with no properties under development. The properties are located in Austin, Chicago, Dallas, Denver, Orange County/Los Angeles, San Francisco Bay Area, Salt Lake City, San Diego, Washington, D.C. and Seattle.
 
Our general partner is CarrAmerica Realty GP Holdings, Inc. (the “General Partner”), a wholly-owned subsidiary of CarrAmerica Realty Corporation (“CarrAmerica”), a self-administered and self-managed real estate investment trust. The General Partner owned a 1% interest in us at September 30, 2002. Our limited partners are CarrAmerica Realty LP Holdings, Inc., a wholly-owned subsidiary of CarrAmerica, which owned an approximate 89.9% interest in us at September 30, 2002 and various other individuals and entities, which collectively owned an approximate 9.1% interest in us at September 30, 2002.
 
(b)  Basis of Presentation
 
Our accounts and those of our wholly-owned subsidiary are consolidated in the accompanying financial statements. We use the equity method of accounting for our investments in and our share of earnings and losses of unconsolidated entities. These entities are not majority-owned or controlled by us.
 
We have presented these financial statements in accordance with the requirements of Regulation S-X of the Securities and Exchange Commission.
 
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 accounting principles generally accepted in the United States of America. Significant estimates are required in a number of areas, including the evaluation of impairment of long-lived assets and evaluation of the collectibility of accounts and notes receivable. Actual results could differ from these estimates.
 
(c)  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.
 
(d)  New Accounting Pronouncements
 
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 2001. SFAS No. 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization approach to an impairment-only approach. Adoption of SFAS No. 142 in January 2002 did not have a material effect on our financial statements.
 
In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of

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CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)

Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” The Statement does not change the fundamental provisions of SFAS No. 121; however, it resolves various implementation issues of SFAS No. 121 and establishes a single accounting model for long-lived assets to be disposed of by sale. It retains the requirement of Opinion No. 30 to report separately discontinued operations but extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in distribution to owners) or is classified as held for sale. Adoption of SFAS No. 144 in January 2002 did not have a material effect on our financial statements. However, we are required to present assets held for sale and related liabilities separately in our consolidated balance sheets, if we meet the applicable criteria of SFAS No. 144. In addition, if we meet the applicable criteria of SFAS No. 144, we are required to report the operating results of properties sold or classified as held for sale and related gain (loss) on sale in discontinued operations and to reclassify operating results of such properties to discontinued operations for all prior periods presented.
 
(e) Reclassifications
 
Certain reclassifications of prior period amounts have been made to conform to the current period’s presentation.
 
(2)    Mandatorily Redeemable Partnership Units
 
Our ownership is expressed in partnership units (“Units”). These Units are redeemable at the option of the holder for, as determined by CarrAmerica, a like number of shares of common stock of CarrAmerica or cash. Since these Units are redeemable, at the option of the holders, they are classified outside partners’ capital on the balance sheet as redeemable partnership units and measured at the redemption value as of the end of the periods presented. As of September 30, 2002 and December 31, 2001, there were 1,308,411 and 1,333,920 redeemable Units outstanding, respectively. The value of the redeemable Units is based on the closing market price of CarrAmerica common stock, which was $25.17 per share as of September 30, 2002 and $30.10 per share as of December 31, 2001.
 
(3)    Mortgages and Notes Payable
 
Our mortgages and notes payable are summarized as follows:
 
(In thousands)
   
September 30,
2002
   
December 31,
2001
Mortgages payable
   
$
157,682
   
$
101,206
Fixed rate notes payable to affiliate
   
 
39,093
   
 
39,523
    
  
    
$
196,775
   
$
140,729
    
  
 
Mortgages payable are collateralized by properties and generally require monthly principal and/or interest payments. The mortgages mature at various dates from February 2003 through May 2017. Our mortgages payable bore an effective weighted average interest rate of 5.77% at September 30, 2002. The weighted average term of these mortgages is 4.2 years.
 
In June 2001, CarrAmerica closed on a new three-year $500 million unsecured credit facility with J.P. Morgan Chase, as agent for a group of banks. We are an unconditional guarantor of borrowings under this facility. CarrAmerica can extend the life of the facility for one year at its option. The interest rate on the unsecured credit facility is 70 basis points over 30-day LIBOR.
 
We have two borrowing agreements with CarrAmerica. The first is a $12.0 million loan that bears interest at 8.5% and requires monthly interest only payments of $85,000. This note matures on March 27, 2007. The second is a $30.0 million loan that bears interest at 8.5% and requires monthly principal and interest payments of $242,000. This note matures on May 31, 2011. The outstanding

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CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)

balance on this note was $27.1 million at September 30, 2002 and $27.5 million at December 31, 2001. Both notes are secured by certain office properties and other assets.
 
Debt maturities at September 30, 2002 were as follows:
 
(In thousands)
     
2002
   
$
2,770
2003
   
 
21,324
2004
   
 
16,506
2005
   
 
13,271
2006
   
 
62,879
2007 and thereafter
   
 
80,025
    
    
$
196,775
    
 
(4)    Gain (Loss) on Sale of Assets and Other Provisions, Net and Discontinued Operations
 
We dispose of assets that are inconsistent with our long-term strategic or return objectives or where market conditions for sale are favorable. During the three months ended September 30, 2002, we disposed of one operating property, recognizing a gain of $19.1 million which is classified as discontinued operations. During the three months ended September 30, 2001 we did not dispose of any operating properties.
 
During the nine months ended September 30, 2002, we disposed of two operating properties, recognizing a gain of $22.4 million. These gains have been classified as discontinued operations. We also recognized impairment losses of $1.0 million on two parcels of land held for development. During the nine months ended September 30, 2001, we disposed of one operating property in connection with the sale of a group of properties by CarrAmerica. There was a net gain on this transaction; however, we incurred a loss of $6.6 million on our property. We also recognized an impairment loss of $0.9 million on a parcel of land held for development during the nine months ended September 30, 2001.
 
(5)    Supplemental Cash Flow Information
 
In the third quarter of 2002, we assumed $63.5 million of debt related to the purchase of two operating properties. The total purchase price of the properties was approximately $141.5 million.
 
 

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Management’s Discussion and Analysis of Financial Condition
and Results of Operation
(Unaudited)
 
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 September 30, 2002 and December 31, 2001 and for the three and nine months ended September 30, 2002 and 2001 and should be read along with the consolidated financial statements and related notes. 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.
 
General
 
During the nine months ended September 30, 2002 we completed, or were part of, the following significant transactions:
 
—CarrAmerica issued $400.0 million of 7.125% senior unsecured notes for which we are a guarantor.
—CarrAmerica entered into an interest rate swap against $150.0 million of their senior unsecured notes, which we guarantee, converting their fixed rate debt to variable rate debt.
—We acquired three operating properties for an aggregate purchase price of approximately $160.5 million.
—We disposed of two operating properties for aggregate net proceeds of approximately $130.4 million.
 
Critical Accounting Policies
 
Critical accounting policies 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 relate to the evaluation of impairment of long-lived assets and the evaluation of the collectibility of accounts and notes receivable.
 
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 is written down to estimated fair value and an impairment loss is recognized. If we decide to sell rental properties or land held for development, 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 within income from continuing operations. 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. Our estimates are subject to revision as market conditions and our assessments of them change.
 
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 financial condition of the tenant and our assessment of its ability to meet its lease obligations, the basis for any disputes and the 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. For example, due to economic conditions and analysis of our accounts receivable, we increased our provision for uncollectible accounts by approximately $1.8 million in 2001 and by an additional $0.8 million in the first three quarters of 2002.

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Management’s Discussion and Analysis of Financial Condition
and Results of Operation
(Unaudited)
 
RESULTS OF OPERATIONS
 
Operating results are summarized as follows:
 
    
For the three months ended September 30,
   
Variance
     
For the nine months ended September 30,
   
Variance
  
(in millions)
   
2002
   
2001
   
2002 vs. 2001
     
2002
   
2001
   
2002 vs. 2001
  
Operating revenue
   
$
25.2
   
$
22.2
   
$
3.0
 
   
$
70.0
   
$
67.0
   
$
3.0
 
Property operating expense
   
 
9.0
   
 
7.5
   
 
1.5
 
   
 
24.9
   
 
23.7
   
 
1.2
 
General and administrative
   
 
0.6
   
 
1.7
   
 
(1.1
)
   
 
3.1
   
 
6.2
   
 
(3.1
)
Depreciation and amortization
   
 
7.2
   
 
6.4
   
 
0.8
 
   
 
19.7
   
 
18.0
   
 
1.7
 
Interest expense
   
 
3.6
   
 
4.3
   
 
(0.7
)
   
 
11.5
   
 
15.3
   
 
(3.8
)
Other operating income, net
   
 
0.8
   
 
0.7
   
 
0.1
 
   
 
3.3
   
 
4.8
   
 
(1.5
)
 
Operating revenues increased 13.5% ($3.0 million) for the third quarter of 2002 from the same period in 2001. This increase primarily resulted from higher expense recoveries from tenants and the acquisition of two properties in August 2002, partially offset by the sale of one property in August 2002 and increased vacancy rates. Same store rental revenues increased by approximately 1.7% (approximately $0.4 million) due to higher expense recoveries. For the nine months ended September 30, 2002, revenues increased 4.5% ($3.0 million) as compared to the nine months ended September 30, 2001 for the same reasons discussed above. Same store rental revenues decreased 4.0% primarily as a result of declining occupancy, partially offset by increased expense recoveries. Same store average occupancy decreased from 94.4% for the nine months ended September 30, 2001 to 89.0% for the nine months ended September 30, 2002.
 
Property operating expenses increased $1.5 million (20.0%) for the third quarter of 2002 as compared to the same period in 2001. This increase primarily resulted from higher real estate taxes and rate increases for property insurance. Same store operating expenses for the quarter also increased due to higher taxes and insurance. For the nine months ended September 30, 2002, property operating expenses increased $1.2 million (5.1%) compared to the nine months ended September 30, 2001. Much of this increase was due to higher real estate taxes, increases to property insurance and additional property expenses associated with the operating properties acquired in April 2001 and August 2002, partially offset by property dispositions. Same store property operating expenses increased by approximately $0.3 million (approximately 1.5%) primarily due to taxes and insurance.
 
For the third quarter of 2002, general and administrative expenses decreased $1.1 million (64.7%) as compared to 2001. This decrease resulted primarily from a reduction in allocated costs from CarrAmerica due to the completion of portions of its internal process improvement efforts. For the nine months ended September 30, 2002, general and administrative expenses decreased $3.1 million (50.0%) compared to the nine months ended September 30, 2001 for the same reason.
 
Depreciation and amortization increased $0.8 million (12.5%) in the third quarter of 2002 compared to the same period in 2001. For the nine months ended September 30, 2002, depreciation and amortization increased $1.7 million (9.4%) compared to the nine months ended September 30, 2001. These increases were due primarily to the acquisitions of properties discussed above partially offset by property dispositions.
 
Interest expense decreased $0.7 million (16.3%) in the third quarter of 2002 as compared to the same period in 2001. This decrease was principally the result of the retirement of certain mortgages due to maturities, partially offset by debt assumed in connection with property acquisitions. Interest expense decreased $3.8 million (24.8%) for the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001. This decrease was principally the result of the repayment of mortgages due to maturities or property dispositions in 2001.

11

Table of Contents
 
Management’s Discussion and Analysis of Financial Condition
and Results of Operation
(Unaudited)
 
For the three months ended September 30, 2002 other operating income increased $0.1 million as compared to the same period in 2001 due primarily to higher equity in earnings of unconsolidated entities, primarily due to one investment property becoming operational in 2002 which was offset by lower interest income. For the nine months ended September 30, 2002, other operating income decreased $1.5 million from the nine months ended September 30, 2001. This was due to lower interest income and decreased equity in earnings of unconsolidated entities. In June 2001, Carr Office Park, L.L.C., a significant investee, obtained third party financing on its properties which increased its interest expense and reduced our equity in earnings.
 
Gain (Loss) on Sale of Assets and Other Provisions, Net and Discontinued Operations
 
In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we have classified the operating results of properties we sold in 2002 as discontinued operations for all periods presented in the consolidated statements of operations. The operating results of the properties decreased $0.9 million and $1.4 million for the three and nine months ended September 30, 2002 in comparison to the corresponding periods in 2001 due to the sale of a property early in the second quarter of 2002 and another property sale in August 2002.
 
During the three months ended September 30, 2002 we disposed of one operating property, recognizing a gain of $19.1 million which is classified as discontinued operations. No properties were sold during the three months ended September 30, 2001. During the nine months ended September 30, 2002, we disposed of two operating properties, recognizing a gain of $22.4 million. These gains have been classified as discontinued operations. We also recognized impairment losses of $1.0 million on two parcels of land held for development. During the nine months ended September 30, 2001, we disposed of one operating property in connection with the sale of a group of properties by CarrAmerica. There was a net gain on this transaction; however, we incurred a loss of $6.6 million on our property. We also recognized an impairment loss of $0.9 million on a parcel of land held for development during the nine months ended September 30, 2001.
 
Consolidated Cash Flows
 
Consolidated cash flow information is summarized as follows:
 
    
For the nine months ended September 30,
     
Variance
  
(in millions)
   
2002
     
2001
     
2002 vs. 2001
  
Cash provided by (used by) operating activities
   
$
(18.2
)
   
$
14.5
 
   
$
(32.7
)
Cash provided by investing activities
   
 
26.7
 
   
 
16.8
 
   
 
9.9
 
Cash used by financing activities
   
 
(9.4
)
   
 
(34.1
)
   
 
24.7
 
 
Operations used net cash of $18.2 million in 2002 compared to generating net cash of $14.5 million in 2001. The changes in cash flow from operating activities were partially the result of factors discussed above in the analysis of operating results. The level of net cash provided by operating activities was also significantly affected by the timing of receipt of revenues and payment of expenses and operating advances from affiliates.
 
Our investing activities generated net cash of $26.7 million in 2002 compared to $16.8 million in 2001. The change in net cash provided by investing activities in 2002 is due primarily to an increase in proceeds from the sale of properties ($116.2 million) and reduced investment in unconsolidated entities ($5.1 million). The effect of these changes was partially offset by increased acquisitions and additions to rental properties ($40.8 million), lower distributions from unconsolidated entities primarily from Carr Office Park, L.L.C. ($47.8 million) and releases of restricted deposits in 2001 ($23.0 million).
 
Financing activities used net cash of $9.4 million in 2002 compared to $34.1 million in 2001. This decrease is due primarily to a $16.9 million repayment of a mortgage that matured in the third quarter of 2001. Additionally, there was a $7.4 million repayment of a mortgage balance in 2001 related to the sale of a property.

12

Table of Contents

Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(Unaudited)

Liquidity and Capital Resources
 
Our liquidity and capital resources are dependent upon CarrAmerica and its affiliates. CarrAmerica, as a REIT, is required to distribute at least 90% of its taxable income to its stockholders on an annual basis. We and CarrAmerica require capital to invest in our existing portfolio of operating assets for capital projects. These capital projects can include such things as large-scale renovations, routine capital improvements, deferred maintenance on properties we have recently acquired and tenant related matters, including tenant improvements, allowances and leasing commissions. Therefore, as a general matter, it is unlikely our cash balances would satisfy our liquidity needs. Instead, these needs must be met from cash generated from rental revenue and external sources of capital.
 
We derive substantially all of our revenue from tenants under existing 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. We believe that the diversity of our tenant base helps insulate us from the negative impact of tenant defaults and bankruptcies. However, general economic downturns, or economic downturns in one or more of our markets, still may adversely impact the ability of our tenants to make lease payments and our ability to re-lease space on favorable terms as leases expire. In either of these cases, our cash flow and therefore our ability to meet our capital needs would be adversely affected.
 
As a result of the ongoing economic climate, the real estate markets have been materially affected. The sustained lack of job growth has reduced any demand for office space and vacancy rates have increased in each of our core markets except for Washington, D.C. In reviewing various outlooks for the economy, we believe that the vacancy rates will not improve in any material fashion until 2004. For the first nine months of 2002, our core markets weakened significantly and our operations in those markets were impacted. The occupancy in our portfolio of operating properties decreased to 89.6% at September 30, 2002 compared to 92.2% at December 31, 2001 and 92.3% at September 30, 2001. Market rental rates have declined in most markets from peak levels and we believe there will be additional declines in some markets over the next 12 months.
 
CarrAmerica is our principal source of liquidity. CarrAmerica’s primary external source of liquidity is its credit facility. It has a three-year $500 million unsecured credit facility expiring in June 2004 with J.P. Morgan Chase, as agent for a group of banks. CarrAmerica can extend the life of the line an additional year at its option. The line carries an interest rate of 70 basis points over 30-day LIBOR. The unsecured facility contains financial and other covenants with which CarrAmerica must comply and availability is limited to a specified percentage of the fair value of unmortgaged properties. We unconditionally guarantee this credit facility. As of September 30, 2002, $198.0 million was drawn on the credit facility, $5.2 million in letters of credit were outstanding and $296.8 million was available for borrowing. An uncured default by CarrAmerica on its line of credit could cause us to be required by lenders to make payments under the guarantee of the facility.
 
Our long-term liquidity requirements consist primarily of funds necessary to pay for the principal amount of our long-term debt as it matures, significant non-recurring capital expenditures that need to be made periodically at our properties, development projects that we undertake and the costs associated with acquisitions of properties.
 
In the future, if, as a result of general economic downturns, our or CarrAmerica’s properties do not perform as expected, or we cannot raise the expected funds from the sale of properties and/or if we are unable to obtain capital from other sources, such as CarrAmerica, we may not be able to make required principal and interest payments or make necessary routine capital improvements with respect to our existing portfolio of operating assets. While we believe that we would continue to have sufficient funds to pay our operating expenses and debt service and our regular quarterly distributions, our ability to perform development activity or to fund additional development in our joint ventures could be adversely affected. 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 or lender could foreclose on the property, resulting in loss of income and asset value. An unsecured

13

Table of Contents

Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(Unaudited)

lender could also attempt to foreclose on some of our assets in order to receive payment. In many cases, very little of the principal amount that we borrow is repaid prior to the maturity of the loan. We generally expect to refinance that debt when it matures, although in some cases 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.
 
We have unconditionally guaranteed unsecured notes issued by CarrAmerica to institutional and other investors. The aggregate principal amount of the unsecured notes was $875.0 million as of September 30, 2002. These notes are in the form of $150.0 million of 7.20% notes due in 2004, $100.0 million of 6.625% notes due in 2005, $125.0 million of 7.375% notes due in 2007, $100.0 million of 6.875% notes due in 2008 and $400.0 million of 7.125% notes due in 2012. CarrAmerica’s senior unsecured notes contain various covenants with which CarrAmerica must comply. The covenants include:
 
 
•
 
Limits on CarrAmerica’s total indebtedness on a consolidated basis;
 
•
 
Limits on CarrAmerica’s secured indebtedness on a consolidated basis; and
 
•
 
Limits on CarrAmerica’s required debt service payments.
 
We will require capital for development projects currently underway and in the future. As of September 30, 2002, we had 266,000 square feet of office space under construction in two projects in which we own minority interests. These projects are expected to cost $49.6 million, of which our total investment is expected to be approximately $10.5 million. Through September 30, 2002, approximately $21.2 million or 42.7% of the total project costs had been expended on these projects. We have funded our investment in projects under construction at September 30, 2002, primarily from the proceeds of asset dispositions and loans from CarrAmerica. We expect that these sources and project-specific financing of selected assets will provide additional funds required to complete the development and to finance the costs of additional projects we may undertake. As a result of market conditions, we believe we will be limiting our development activities in the near future and expect to concentrate our growth efforts on the acquisition of properties.
 
We also 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 recouped in the form of continuing lease payments.
 
Although we believe our properties are adequately covered by insurance, we cannot predict at this time if we will be able to obtain full coverage at a reasonable cost in the future. The costs associated with our June 30, 2002 property and casualty insurance renewals were higher than anticipated. Although we have an excellent claims history and safety record, all lines of coverage were affected by higher premiums, in part because insurance companies have experienced a loss of income on their investments, underwriting results have been poor and also as a result of the events of September 11, 2001.
 
Our insurance renewal on June 30, 2002 increased premiums from last year approximately 155%. The property insurance deductible increased from $5,000 to $10,000 per claim. Since reinsurance treaties renew twice each year (January and July), our property and casualty insurance renewal date has been changed from June 30 to May 15 to enable underwriters to concentrate on the insurance proposals well ahead of treaty renewal.
 
Prior to year end, three policies, the Directors and Officers Liability, Employment Practices Liability and Professional Liability (Errors and Omissions) will renew. Directors and Officers Liability insurance premiums are expected to increase 50% to 125%. Employment Practices and Professional Liability insurance premiums are also expected to increase.

14

Table of Contents

Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(Unaudited)

Early this year, all risk property insurers began attaching terrorism exclusions to insurance policies. Terrorism insurance must now be purchased separately. Unlike earthquake exposure, insurers do not yet have a means of modeling the terrorism risk. A limited number of companies are currently underwriting terrorism insurance, with limited capacity and at an extremely high cost.
 
We have completed an in-depth asset evaluation of our terrorism exposure as well as our lender requirements. Upon our renewal date for insurance of June 30, 2002, we, in conjunction with CarrAmerica, purchased terrorism limits of $200 million per occurrence and in the aggregate with a deductible of $1.0 million per claim at a cost of approximately $2.2 million. The policy only covers physical damage. Coverage does not include biological, chemical or radioactive contamination.
 
We have investments in real estate joint ventures in which we hold 21.2% to 49.0% 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. Most of 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 this debt 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); or
 
•
 
otherwise impede our objectives.

15

Table of Contents

Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(Unaudited)

Building and Lease Information
 
The following table sets forth certain information about each wholly-owned operating property as of September 30, 2002:
 
    
Net Rentable
              
    
Area
   
Percent
       
Number
Consolidated Properties
   
(square feet) (1)
   
Leased (2)
       
of Buildings
Southern California, Orange County/Los Angeles:
                   
South Coast Executive Center
   
161,787
   
61.0    
%
     
2
2600 W. Olive
   
144,831
   
100.0    
 
     
1
Bay Technology Center
   
107,481
   
84.6    
 
     
2
Southern California, San Diego:
                   
Jaycor
   
105,358
   
100.0    
 
     
1
11119 Torrey Pines Road
   
76,701
   
100.0    
 
     
1
Northern California, San Francisco Bay Area:
                   
San Mateo I
   
72,137
   
28.6    
 
     
1
San Mateo II and III
   
141,731
   
81.2    
 
     
2
Mountain View Gateway Center
   
236,400
   
100.0    
 
     
2
Seattle, Washington:
                   
Canyon Park Commons
   
95,290
   
100.0    
 
     
1
Austin, Texas:
                   
City View Centre
   
137,218
   
56.3    
 
     
3
Tower of the Hills
   
166,149
   
100.0    
 
     
2
City View Center
   
128,716
   
100.0    
 
     
1
Chicago, Illinois:
                   
Bannockburn I & II
   
209,969
   
92.6    
 
     
2
Bannockburn IV
   
110,319
   
95.2    
 
     
1
Dallas, Texas:
                   
Quorum North
   
116,194
   
94.3    
 
     
1
Quorum Place
   
178,399
   
62.7    
 
     
1
Cedar Maple Plaza
   
113,045
   
92.9    
 
     
3
Two Mission Park
   
77,593
   
48.4    
 
     
1
5000 Quorum
   
162,186
   
85.5    
 
     
1
Denver, Colorado:
                   
Harlequin Plaza
   
328,623
   
92.4    
 
     
2
Quebec Court I & II
   
287,294
   
100.0    
 
     
2
Quebec Center
   
106,865
   
93.6    
 
     
3
Phoenix, Arizona:
                   
Qwest Communications
   
532,506
   
100.0    
 
     
4
Salt Lake City, Utah:
                   
Sorenson Research Park
   
282,944
   
100.0    
 
     
5
Wasatch Corporate Center 18
   
49,566
   
72.6    
 
     
1
Wasatch Corporate Center
   
178,231
   
81.7    
 
     
3
Sorensen X
   
41,288
   
89.8    
 
     
1
Washington, DC:
                   
Canal Center
   
492,001
   
90.0    
 
     
4
TransPotomac V Plaza
   
96,419
   
100.0    
 
     
1
TOTAL CONSOLIDATED PROPERTIES:
                   
WEIGHTED AVERAGE
   
4,937,241
            
55
         
89.6    
%
       
(1)
 
Includes office and retail space but excludes storage space.
(2)
 
Includes space for leases that have been executed and have commenced as of September 30, 2002.
 

16

Table of Contents
 
Management’s Discussion Analysis of Financial Condition
and Results of Operations
(Unaudited)
 
The following table sets outs a schedule of the lease expirations as of September 30, 2002:
 
      
Approximate Net
     
Percent of Leased
  
      
Rentable Area Subject
     
Square Footage
  
      
to Expiring Lease
     
Represented by
  
Year of Lease Expiration
     
(square feet) (1)
     
Expiring Leases
  
2002
     
170,233
     
3.8
%
2003
     
361,059
     
8.2
%
2004
     
862,967
     
19.5
%
2005
     
486,690
     
11.0
%
2006
     
242,468
     
5.5
%
2007
     
1,009,789
     
22.9
%
2008
     
424,003
     
9.6
%
2009
     
173,472
     
3.9
%
2010
     
97,844
     
2.2
%
2011
     
155,203
     
3.5
%
2012 and thereafter
     
441,012
     
9.9
%
      
4,424,740
     
100.0
%
(1)
 
Excludes 512,501 square feet of vacant space.
 
FORWARD-LOOKING STATEMENTS
 
Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our and our affiliates, or the industry’s actual results, performance, achievements or transactions to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such factors include, among others, the following:
 
 
•
 
National and local economic, business and real estate conditions that will, among other things affect:
 
•
 
Demand for office properties
 
•
 
The ability of the general economy to recover timely from the current economic downturn
 
•
 
The availability and creditworthiness of tenants
 
•
 
Level of lease rents
 
•
 
The availability of financing for both tenants and us;
 
•
 
Adverse changes in the real estate markets, including, among other things:
 
•
 
Competition with other companies, and
 
•
 
Risks of real estate acquisition and development (including the failure of pending developments to be completed on time and within budget);
 
•
 
Actions, strategies and performance of affiliates that we may not control or companies in which we have made investments;
 
•
 
The ability of CarrAmerica to maintain its status as a REIT for federal income tax purposes;
 
•
 
The ability to obtain insurance at a reasonable cost;
 
•
 
Governmental actions and initiatives; and
 
•
 
Environmental/safety requirements.
 
For further discussion of these and other factors that could impact our or CarrAmerica’s future results, performance, achievements or transactions, see the documents that we and CarrAmerica 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.

17

Table of Contents
 
Item 3.     Quantitative and Qualitative Disclosures About Market Risk
 
CarrAmerica uses derivative financial instruments from time to time to limit market risk. Interest rate exchange agreements may be used to convert floating rate debt to a fixed rate basis, to convert fixed rate debt to a floating rate basis or to hedge anticipated financing transactions. CarrAmerica uses derivative financial instruments only for hedging purposes, and not for speculation or trading purposes. On May 8, 2002, CarrAmerica entered into an interest rate swap, which we guarantee, with J.P. Morgan Chase and Bank of America, hedging $150.0 million of senior unsecured notes due July 2004. The interest rate swap matures at the same time the notes are due. The swap qualifies as a fair value hedge. Net semi-annual settlement payments are recognized as an increase or decrease to CarrAmerica’s interest expense. The fair value of the interest rate swap is recognized on CarrAmerica’s balance sheet and the carrying value of the senior unsecured notes is increased or decreased by an offsetting amount. As of September 30, 2002, the fair value of the interest rate swap was approximately $5.4 million. CarrAmerica recognized a reduction of interest expense for the three and nine months ended September 30, 2002 of approximately $1.0 million and $1.5 million related to the swap.
 
As part of the assumption of $63.5 million of debt associated with the purchase of two operating properties in August 2002, we also purchased interest rate caps. As of September 30, 2002, the fair market value of these interest rate caps was $35,600.
 
CarrAmerica is our principal source of liquidity. CarrAmerica’s primary external source of liquidity is its credit facility of which CarrAmerica Realty, L.P. is an unconditional guarantor. The line of credit is a three-year $500 million unsecured credit facility expiring in June 2004 with J.P. Morgan Chase, as agent for a group of banks. CarrAmerica can extend the life of the line an additional year at its option. The line carries an interest rate of 70 basis points over 30-day LIBOR. This exposes us to the risk of higher interest costs if LIBOR should increase above its current low levels. A 10% increase in the current interest rate would have increased interest expense on the line of credit $134,000 for the third quarter of 2002. The unsecured facility contains financial and other covenants with which CarrAmerica must comply and availability is limited to a specified percentage of the fair value of unmortgaged properties. As of September 30, 2002, $198.0 million was drawn on the credit facility, $5.2 million in letters of credit were outstanding and $296.8 million was available for borrowing.
 
Item 4.     Controls and Procedures
 
Within the 90-day period prior to the filing of this quarterly report, an 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 of the design and operation of our disclosure controls and procedures as defined in Rule 13a-14 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. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

18

Table of Contents
 
Part II
 
OTHER INFORMATION
 
Item 6.     Exhibits and Reports on Form 8-K.
 
(a)  Exhibits
 
10.1
   
Third Amended and Restated Agreement of Limited Partnership of CarrAmerica Realty, L.P. dated July 31, 2002, (incorporated by reference to Exhibit 10.1 to CarrAmerica’s Quarterly Report on Form 10Q for the quarter ended September 30, 2002)
 
(b)  Reports on Form 8-K
 
None.

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Table of Contents
 
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, Inc.,
        its general partner
 
/s/ Stephen E. Riffee         
Stephen E. Riffee, Chief Financial Officer
(on behalf of the registrant and as the registrant’s
principal financial officer)
 
Date:  November 8, 2002

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Table of Contents
 
CERTIFICATION
 
I, Thomas A. Carr, certify that:
 
1.  I have reviewed this quarterly report on Form 10-Q of CarrAmerica Realty, L.P.;
 
2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
 
a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
 
c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
 
5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
 
a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
 
b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
 
6.  The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
/s/ Thomas A. Carr        
Thomas A. Carr
Chief Executive Officer
 
Date:  November 8, 2002
 

21

Table of Contents
 
CERTIFICATION
 
I, Stephen E. Riffee, certify that:
 
1.  I have reviewed this quarterly report on Form 10-Q of CarrAmerica Realty, L.P.;
 
2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
 
a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
 
c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
 
5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
 
a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
 
b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
 
6.  The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
/s/ Stephen E. Riffee        
Stephen E. Riffee
Chief Financial Officer
 
Date:  November 8, 2002
 
 

22