Note 4. Real Estate Properties

As of December 31, 2013, we owned 68 properties (87 buildings), excluding three properties (three buildings) classified as discontinued operations, with an undepreciated carrying value of $1,568,562. We generally lease space in our properties on a gross lease or modified gross lease basis pursuant to fixed term operating leases expiring between 2014 and 2029. Certain of our government tenants have the right to terminate their leases before the lease term expires. Our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the year ended December 31, 2013, we entered into 48 leases for 1,017,753 rentable square feet for a weighted (by revenue) average lease term of 8.7 years and we made commitments for approximately $25,495 of leasing related costs. We have unspent leasing related obligations of approximately $16,557 as of December 31, 2013.

Our future minimum lease payments related to our properties, excluding properties classified as discontinued operations and estimated real estate tax and other expense reimbursements, scheduled to be received during the current terms of the existing leases as of December 31, 2013 are as follows:


2014	$	214,261
2015		198,986
2016		178,076
2017		153,036
2018		128,404
Thereafter		342,036


	$	1,214,799

As of December 31, 2013, excluding properties classified as discontinued operations, government tenants who currently represent approximately 3.6% of our total future minimum lease payments have currently exercisable rights to terminate their leases before the stated expirations. In 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2022, early termination rights become exercisable by other government tenants who currently represent an additional approximately 2.6%, 3.5%, 9.7%, 3.1%, 1.7%, 8.8%, 5.9%, 1.4% and 2.3% of our total future minimum lease payments, respectively. In addition as of December 31, 2013, 10 of our state government tenants have the currently exercisable right to terminate their leases if these states do not appropriate rent in their respective annual budgets. These 10 tenants represent approximately 6.5% of our total future minimum lease payments. Also, one of our U.S. Government tenants has the option, pursuant to its lease, to acquire the property it leases from us, with a depreciated carrying value of $33,058 as of December 31, 2013, for $31,000 at the end of its lease term in 2015. We expect the depreciated carrying value of the property will be equal to or less than the tenant's purchase option price at the end of its lease term in 2015.

Acquisition Activities

During the year ended December 31, 2013, we acquired four office properties (seven buildings) and one warehouse property (one building) located in four states for an aggregate purchase price of $99,518, excluding acquisition costs. We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets and assumed liabilities as follows:

Date	Location	Type			Purchase Price⁽¹⁾		Land		Buildings and Improvements		Acquired Leases		Acquired Lease Obligations			Other Assumed Liabilities

August 2013	Chester, VA	Warehouse	1 / 1	228,108	$	12,503	$	1,478	$	9,594	$	1,440	$	(9	)	$	—
August 2013	Bethesda, MD	Office	1 / 1	128,645		18,300		3,349		11,152		4,182		(383	)		—
October 2013	Rancho Cordova, CA⁽²⁾	Office	1 / 1	93,807		21,190		562		16,922		5,498		(1,792	)		—
November 2013	Fairfax, VA⁽²⁾	Office	1 / 4	170,940		31,500		2,529		21,386		8,005		(420	)		(269	)
December 2013	Montgomery, AL⁽²⁾	Office	1 / 1	49,370		16,025		1,374		11,658		3,776		(783	)		—


			5 / 8	670,870	$	99,518	$	9,292	$	70,712	$	22,901	$	(3,387	)	$	(269	)

(1): Purchase price excludes acquisition related costs.
(2): The allocation of purchase price is based upon preliminary estimates and may change based upon the completion of our analysis of acquired in place leases.

In August 2013, we acquired a warehouse property (one building) located in Chester, VA with 228,108 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the United States Army. The purchase price was $12,503, excluding acquisition costs.

Also in August 2013, we acquired an office property (one building) located in Bethesda, MD with 128,645 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the National Institutes of Health. The purchase price was $18,300, excluding acquisition costs.

In October 2013, we acquired an office property (one building) located in Rancho Cordova, CA with 93,807 rentable square feet. This property is 100% leased to the State of California and occupied by the Department of Consumer Affairs. The purchase price was $21,190, excluding acquisition costs.

In November 2013, we acquired an office property (four buildings) located in Fairfax, VA with 170,940 rentable square feet. This property is 100% leased to eight tenants, of which 51% is leased to the Commonwealth of Virginia and occupied by Northern Virginia Community College. The purchase price was $31,500, excluding acquisition costs.

In December 2013, we acquired an office property (one building) located in Montgomery, AL with 49,370 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the Social Security Administration. The purchase price was $16,025, excluding acquisition costs.

In November 2013, we entered an agreement to acquire an office property (one building) located in Fairfax, VA with 83,130 rentable square feet. This property is 100% leased to the U.S. Government. The contract purchase price is $19,775, including the assumption of $14,576 of mortgage debt and excluding acquisition costs. As of December 31, 2013, we had made a deposit in the amount of $2,000 in connection with this acquisition, which is included in other assets on our consolidated balance sheet.

In December 2013, we entered an agreement to acquire an office property (two buildings) located in Reston, VA with 406,388 rentable square feet. This property is 100% leased to the U.S. Government. The contract purchase price is $113,250, including the assumption of $83,000 of mortgage debt and excluding acquisition costs. As of December 31, 2013, we had made a deposit in the amount of $11,325 in connection with this acquisition, which is included in other assets on our consolidated balance sheet.

Our pending acquisitions are subject to closing conditions typical of commercial real estate transactions and lender approval of our assumption of mortgage debt; accordingly, we can provide no assurance that we will acquire these properties or that these acquisitions will not be delayed or that the terms will not change.

Disposition Activities

In February 2013, we sold an office property (one building) located in Oklahoma City, OK with 185,881 rentable square feet and a net book value of $8,069 for $16,300, excluding closing costs, and recognized a gain on sale of $8,198.

In March 2013, we sold an office property (one building) located in Tucson, AZ with 31,051 rentable square feet and a net book value of $2,080 for $2,189, excluding closing costs, and recognized a loss on sale of $30.

During the year ended December 31, 2013, we began marketing for sale three office properties (three buildings) located in Phoenix, AZ, San Diego, CA and Falls Church, VA, with an aggregate of 356,163 rentable square feet. The aggregate net book value of these properties, after recording a $10,142 loss on asset impairment on two of the three properties during the year ended December 31, 2013, totaled $25,604 at December 31, 2013. In January 2014, we entered an agreement to sell the property located in Phoenix, AZ with a net book value as of December 31, 2013 of $2,300, after recording an $8,344 loss on asset impairment, for $5,000, excluding closing costs. In February 2014, we entered an agreement to sell the property located in Falls Church, VA with a net book value as of December 31, 2013 of $12,289, after recording a $1,798 loss on asset impairment, for $15,750, excluding closing costs.

Our pending dispositions are subject to various terms and conditions typical of commercial real estate transactions; accordingly we can provide no assurance that we will sell these properties or that these dispositions will not be delayed or that the terms will not change. See Note 8 regarding the fair value of assets and liabilities.

The two properties sold in 2013 and the three properties held for sale at December 31, 2013 are classified as discontinued operations in our consolidated financial statements. Summarized balance sheet and income statement information for properties classified as discontinued operations is as follows:

Balance Sheet:

	December 31, 2013		December 31, 2012

Real estate properties	$	25,574	$	46,784
Acquired real estate leases, net		—		82
Rents receivable, net		381		217
Other assets, net		42		59


Assets of discontinued operations	$	25,997	$	47,142




Other liabilities	$	276	$	298


Liabilities of discontinued operations	$	276	$	298

Statement of Operations:

	Year ended December 31,

	2013			2012			2011
Rental income	$	4,580		$	7,376		$	10,876
Real estate taxes		(678	)		(928	)		(919	)
Utility expenses		(539	)		(1,043	)		(1,398	)
Other operating expenses		(966	)		(1,484	)		(2,011	)
Depreciation and amortization		(1,025	)		(2,096	)		(2,313	)
General and administrative		(287	)		(431	)		(429	)
Loss on asset impairment		(10,142	)		(494	)		—
Net gain on sale of properties		8,168			—			—


Income (loss) from discontinued operations	$	(889	)	$	900		$	3,806