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COPT Reports Third Quarter 2020 Results

10/29/2020

3Q20 Results Outperform High-End of Guidance; Increase Full Year Guidance

COVID-19 Impact on Operations Remain Minimal; 3Q20 Rent Collections Continue to Exceed 99.5%

FFO per share, as adjusted for comparability, of $0.54 in 3Q Exceeded High-End of Guidance by 1-Cent

Same-Property Cash NOI change of (0.2%) in 3Q20 was at High-End of Guidance

Core Portfolio 94.0% Occupied & 94.6% Leased

1.2 Million SF of 99% Leased Developments Placed in Service During First Nine Months of 2020

Raising Full-Year Guidance for FFO per Share, as Adjusted for Comparability, by 2-Cents at the Mid-Point, to $2.09

Solid Leasing Volumes

Total Leasing of 1.1 Million SF in 3Q included 244,000 SF of Development Leasing and 61,000 SF of Vacancy Leasing

Continued Strong Tenant Retention of 89% in 3Q; 84% for First Nine Months of 2020

1.6 Million SF Under Active Development are 84% Leased

COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the third quarter ended September 30, 2020.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Third quarter FFO per share exceeded the high-end of our guidance, marking the third consecutive quarter of outperformance. Solid demand throughout our Defense/IT Locations continued to support strong development leasing volumes, and tenant retention remains on-track to set a 20-year record. We are in the process of selling interests in data center shell properties to a joint venture with an institutional partner. We anticipate completing two transactions that are expected to raise approximately $165 million of equity proceeds, which would reduce our year-end debt-to-EBITDA ratio to between 6.2x and 6.4x.” He continued, “The Company continues to meet or exceed its 2020 plan objectives largely unimpeded by restrictions, shutdowns, or tenant credit issues related to the pandemic, and is raising the mid-point of 2020 guidance for FFO per share, as adjusted for comparability, by 2-cents, to $2.09. The nearly 1.8 million square feet of fully leased development projects we have or will place in service this year position the Company to generate FFO growth of 3-to-6 percent in 2021.”

Financial Highlights

3rd Quarter Financial Results:

  • Diluted earnings (loss) per share (“EPS”) was ($0.29) for the quarter ended September 30, 2020 as compared to $0.19 for the third quarter of 2019.
  • Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.04 for the third quarter of 2020 as compared to $0.51 for third quarter 2019 results.
  • FFOPS as adjusted for comparability of $0.54 in the third quarter of 2020 was 5.9% higher than the $0.51 reported for the third quarter of 2019.

Operating Performance Highlights

Operating Portfolio Summary:

  • At September 30, 2020, the Company’s core portfolio of 174 operating office and data center shell properties was 94.0% occupied and 94.6% leased.
  • During the quarter, the Company placed into service 599,000 square feet that were 100% leased, bringing the total for the year to 1.2 million square feet placed in service that were 99% leased.

Same-Property Performance:

  • At September 30, 2020, COPT’s same-property portfolio of 152 buildings was 92.5% occupied and 93.2% leased.
  • For the quarter and nine months ended September 30, 2020, the Company’s same-property cash NOI decreased 0.2% and increased 2.1%, respectively, over the prior year’s comparable periods.

Leasing:

  • Total Square Feet Leased: For the quarter ended September 30, 2020, the Company leased 1.1 million total square feet, including 841,000 square feet of renewals, 244,000 square feet in development projects, and 61,000 square feet of new leases on vacant space.

For the nine months ended September 30, 2020, the Company executed 2.7 million square feet of total leasing, including 1.9 million square feet of renewals, 520,000 square feet of development leasing, and 274,000 square feet of vacancy leasing.

  • Renewal Rates: During the quarter and nine months ended September 30, 2020, the Company respectively renewed 89.0% and 84.3% of total expiring square feet and is on-track to set a 20-year record for tenant retention.
  • Cash Rent Spreads & Average Escalations on Renewing Leases: For the quarter and nine months ended September 30, 2020, cash rents on renewed space decreased 2.0%. For the same time periods, annual escalations on renewing leases averaged 2.4%.
  • Lease Terms: In the third quarter, lease terms averaged 3.2 years on renewing leases, 11.8 years on development leasing, and 6.6 years on new leasing of vacant space. For the nine months, lease terms averaged 4.2 years on renewing leases, 14.2 years on development leasing, and 6.6 years on vacancy leasing.

Investment Activity Highlights

  • Development Pipeline: As of October 7, 2020, the Company’s development pipeline consisted of 11 properties and expansion of one fully operational property totaling 1.6 million square feet that were 84% leased. These projects have a total estimated cost of $650.9 million, of which $410.1 million had been incurred as of September 30, 2020.

Balance Sheet and Capital Transaction Highlights

  • As of September 30, 2020, the Company’s net debt plus preferred equity to adjusted book ratio was 41.1% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 6.8x. For the quarter ended September 30, 2020, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.9x.
  • As of September 30, 2020, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.55% with a weighted average maturity of 3.3 years; additionally, 94.0% of the Company’s debt was subject to fixed interest rates.
  • During the quarter the Company issued $400 million of 2.25% senior unsecured notes, the proceeds from which were used to complete the tender offer for and subsequent redemption of all of its remaining $300 million of 3.7% senior unsecured notes due in 2021. The redemption was completed on October 19, 2020.

2020 Guidance

Management is increasing its prior full-year guidance ranges from $0.48-$0.52 for EPS to a new range of $0.77-$0.79. Management is also increasing its full-year guidance ranges for FFOPS per Nareit and FFOPS, as adjusted for comparability, to $1.44-$1.46 and $2.08-$2.10, respectively.

For the fourth quarter ending December 31, 2020, management is increasing its guidance for EPS from $0.43-$0.45 to a new range of $0.63-$0.65, lowering its existing guidance for FFOPS, per Nareit, to $0.48-$0.50, and affirming its existing guidance range of $0.52-$0.54 for FFOPS, as adjusted for comparability. Reconciliations of projected diluted EPS to projected FFOPS are as follows:

 
Table 1: Reconciliation of EPS to FFOPS, per Nareit and Quarter ending Year ending
As Adjusted for Comparability December 31, 2020 December 31, 2020
Low High Low High
 
EPS

$

0.63

 

$

0.65

 

$

0.77

 

$

0.79

 

Real estate-related depreciation and amortization

 

0.36

 

 

0.36

 

 

1.27

 

 

1.27

 

Gain on sales of real estate

 

(0.51

)

 

(0.51

)

 

(0.51

)

 

(0.51

)

Impairment losses

 

-

 

 

-

 

 

0.01

 

 

0.01

 

FFO allocation to other noncontrolling interests resulting from capital event

 

-

 

 

-

 

 

(0.10

)

 

(0.10

)

FFOPS, Nareit definition

 

0.48

 

 

0.50

 

 

1.44

 

 

1.46

 

FFO allocation to other noncontrolling interests resulting from capital event

 

-

 

 

-

 

 

0.10

 

 

0.10

 

Loss on interest rate derivatives and early extinguishment of debt

 

0.04

 

 

0.04

 

 

0.54

 

 

0.54

 

FFOPS, as adjusted for comparability

$

0.52

 

$

0.54

 

$

2.08

 

$

2.10

 

 

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its third quarter 2020 conference call, the details of which are provided below. The accompanying slide presentation can be viewed on and downloaded from the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Conference Call Information

Management will discuss third quarter 2020 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date:

Friday, October 30, 2020

Time:

12:00 p.m. Eastern Time

Telephone Number: (within the U.S.)

855-463-9057

Telephone Number: (outside the U.S.)

661-378-9894

Passcode:

8968029

The conference call will also be available via live webcast in the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Replay Information

A replay of the conference call will be immediately available via webcast on the Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, October 30, through 2:00 p.m. Eastern Time on Friday, November 13. To access the replay within the United States, please call 855-859-2056; to access it from outside the United States, please call 404-537-3406. In either case, use passcode 8968029.

Definitions

For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.

About COPT

COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what it believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of September 30, 2020, the Company derived 88% of its core portfolio annualized rental revenue from Defense/IT Locations and 12% from its Regional Office Properties. As of the same date and including 15 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 174 office and data center shell properties encompassed 20.2 million square feet and was 94.6% leased; the Company also owned one wholesale data center with a critical load of 19.25 megawatts that was 86.7% leased.

Forward-Looking Information

This press release may contain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although the Company believes that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements and the Company undertakes no obligation to update or supplement any forward-looking statements.

The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q.

Category: Quarterly Results

Source: Corporate Office Properties Trust

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Revenues

 

 

 

 

 

 

 

Revenues from real estate operations

$

134,443

 

 

$

130,734

 

 

$

399,097

 

 

$

395,495

 

Construction contract and other service revenues

20,323

 

 

28,697

 

 

46,240

 

 

87,946

 

Total revenues

154,766

 

 

159,431

 

 

445,337

 

 

483,441

 

Operating expenses

 

 

 

 

 

 

 

Property operating expenses

51,552

 

 

49,714

 

 

151,755

 

 

147,045

 

Depreciation and amortization associated with real estate operations

35,332

 

 

34,692

 

 

101,540

 

 

104,290

 

Construction contract and other service expenses

19,220

 

 

27,802

 

 

44,052

 

 

85,130

 

Impairment losses

1,530

 

 

327

 

 

1,530

 

 

327

 

General and administrative expenses

5,558

 

 

6,105

 

 

17,372

 

 

20,474

 

Leasing expenses

1,909

 

 

1,824

 

 

5,739

 

 

5,592

 

Business development expenses and land carry costs

1,094

 

 

964

 

 

3,474

 

 

2,947

 

Total operating expenses

116,195

 

 

121,428

 

 

325,462

 

 

365,805

 

Interest expense

(17,152)

 

 

(17,126)

 

 

(50,789)

 

 

(54,275)

 

Interest and other income

1,746

 

 

1,842

 

 

5,233

 

 

5,977

 

Credit loss recoveries

1,465

 

 

 

 

161

 

 

 

Gain on sales of real estate

 

 

 

 

5

 

 

84,469

 

Loss on early extinguishment of debt

(3,237)

 

 

 

 

(3,237)

 

 

 

Loss on interest rate derivatives

(53,196)

 

 

 

 

(53,196)

 

 

 

(Loss) income before equity in income of unconsolidated entities and income taxes

(31,803)

 

 

22,719

 

 

18,052

 

 

153,807

 

Equity in income of unconsolidated entities

477

 

 

396

 

 

1,372

 

 

1,207

 

Income tax (expense) benefit

(16)

 

 

131

 

 

(95)

 

 

113

 

Net (loss) income

(31,342)

 

 

23,246

 

 

19,329

 

 

155,127

 

Net loss (income) attributable to noncontrolling interests:

 

 

 

 

 

 

 

Common units in the Operating Partnership (“OP”)

386

 

 

(267)

 

 

(185)

 

 

(1,863)

 

Preferred units in the OP

(77)

 

 

(157)

 

 

(231)

 

 

(487)

 

Other consolidated entities

(812)

 

 

(1,565)

 

 

(3,207)

 

 

(3,870)

 

Net (loss) income attributable to COPT common shareholders

$

(31,845)

 

 

$

21,257

 

 

$

15,706

 

 

$

148,907

 

 

 

 

 

 

 

 

 

Earnings per share (“EPS”) computation:

 

 

 

 

 

 

 

Numerator for diluted EPS:

 

 

 

 

 

 

 

Net (loss) income attributable to COPT common shareholders

$

(31,845)

 

 

$

21,257

 

 

$

15,706

 

 

$

148,907

 

Redeemable noncontrolling interests

 

 

 

 

 

 

100

 

Amount allocable to share-based compensation awards

(145)

 

 

(118)

 

 

(359)

 

 

(469)

 

Numerator for diluted EPS

$

(31,990)

 

 

$

21,139

 

 

$

15,347

 

 

$

148,538

 

Denominator:

 

 

 

 

 

 

 

Weighted average common shares - basic

111,811

 

 

111,582

 

 

111,778

 

 

111,036

 

Dilutive effect of share-based compensation awards

 

 

361

 

 

278

 

 

313

 

Dilutive effect of redeemable noncontrolling interests

 

 

 

 

 

 

123

 

Weighted average common shares - diluted

111,811

 

 

111,943

 

 

112,056

 

 

111,472

 

Diluted EPS

$

(0.29)

 

 

$

0.19

 

 

$

0.14

 

 

$

1.33

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Net (loss) income

$

(31,342)

 

 

$

23,246

 

 

$

19,329

 

 

$

155,127

 

Real estate-related depreciation and amortization

35,332

 

 

34,692

 

 

101,540

 

 

104,290

 

Impairment losses on real estate

1,530

 

 

327

 

 

1,530

 

 

327

 

Gain on sales of real estate

 

 

 

 

(5)

 

 

(84,469)

 

Depreciation and amortization on unconsolidated real estate JVs

819

 

 

790

 

 

2,455

 

 

1,922

 

Funds from operations (“FFO”)

6,339

 

 

59,055

 

 

124,849

 

 

177,197

 

Noncontrolling interests - preferred units in the OP

(77)

 

 

(157)

 

 

(231)

 

 

(487)

 

FFO allocable to other noncontrolling interests

(1,074)

 

 

(1,429)

 

 

(14,614)

 

 

(3,588)

 

Basic FFO allocable to share-based compensation awards

(119)

 

 

(248)

 

 

(449)

 

 

(662)

 

Basic FFO available to common share and common unit holders (“Basic FFO”)

5,069

 

 

57,221

 

 

109,555

 

 

172,460

 

Redeemable noncontrolling interests

 

 

34

 

 

103

 

 

100

 

Diluted FFO available to common share and common unit holders (“Diluted FFO”)

5,069

 

 

57,255

 

 

109,658

 

 

172,560

 

Loss on early extinguishment of debt

3,237

 

 

 

 

3,237

 

 

 

Loss on interest rate derivatives

53,196

 

 

 

 

53,196

 

 

 

Demolition costs on redevelopment and nonrecurring improvements

11

 

 

 

 

63

 

 

44

 

Executive transition costs

 

 

 

 

 

 

4

 

Non-comparable professional and legal expenses

 

 

175

 

 

 

 

486

 

Dilutive preferred units in the OP

77

 

 

 

 

231

 

 

 

FFO allocation to other noncontrolling interests resulting from capital event

 

 

 

 

11,090

 

 

 

Diluted FFO comparability adjustments for redeemable noncontrolling interests

34

 

 

 

 

 

 

 

Diluted FFO comparability adjustments allocable to share-based compensation awards

(139)

 

 

 

 

(307)

 

 

(2)

 

Diluted FFO available to common share and common unit holders, as adjusted for comparability

61,485

 

 

57,430

 

 

177,168

 

 

173,092

 

Straight line rent adjustments and lease incentive amortization

(1,009)

 

 

(515)

 

 

662

 

 

(1,131)

 

Amortization of intangibles included in net operating income

(39)

 

 

(59)

 

 

(186)

 

 

(47)

 

Share-based compensation, net of amounts capitalized

1,727

 

 

1,697

 

 

4,754

 

 

4,993

 

Amortization of deferred financing costs

658

 

 

538

 

 

1,875

 

 

1,595

 

Amortization of net debt discounts, net of amounts capitalized

453

 

 

377

 

 

1,229

 

 

1,121

 

Accum. other comprehensive loss on derivatives amortized to expense

 

 

12

 

 

 

 

79

 

Replacement capital expenditures

(13,085)

 

 

(16,752)

 

 

(46,971)

 

 

(43,927)

 

Other diluted AFFO adjustments associated with real estate JVs

150

 

 

66

 

 

(6)

 

 

280

 

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)

$

50,340

 

 

$

42,794

 

 

$

138,525

 

 

$

136,055

 

Diluted FFO per share

$

0.04

 

 

$

0.51

 

 

$

0.97

 

 

$

1.53

 

Diluted FFO per share, as adjusted for comparability

$

0.54

 

 

$

0.51

 

 

$

1.56

 

 

$

1.53

 

Dividends/distributions per common share/unit

$

0.275

 

 

$

0.275

 

 

$

0.825

 

 

$

0.825

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars and shares in thousands, except per share data)

 

 

September 30,
2020

 

December 31,
2019

Balance Sheet Data

 

 

 

Properties, net of accumulated depreciation

$

3,586,938

 

 

$

3,340,886

 

Total assets

4,120,189

 

 

3,854,453

 

Debt, per balance sheet

2,181,551

 

 

1,831,139

 

Total liabilities

2,447,031

 

 

2,105,777

 

Redeemable noncontrolling interests

23,522

 

 

29,431

 

Equity

1,649,636

 

 

1,719,245

 

Net debt to adjusted book

41.0

%

 

36.8

%

 

 

 

 

Core Portfolio Data (as of period end) (1)

 

 

 

Number of operating properties

174

 

 

168

 

Total operational square feet (in thousands)

20,232

 

 

19,016

 

% Occupied

94.0

%

 

93.1

%

% Leased

94.6

%

 

94.6

%

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

 

Payout ratios

 

 

 

 

 

 

 

 

Diluted FFO

613.6

%

 

54.2

%

 

85.1

%

 

54.0

%

 

Diluted FFO, as adjusted for comparability

50.7

%

 

54.1

%

 

52.8

%

 

53.8

%

 

Diluted AFFO

61.9

%

 

72.6

%

 

67.5

%

 

68.5

%

 

Adjusted EBITDA fixed charge coverage ratio

3.9x

 

 

3.7x

 

 

3.8x

 

 

3.7x

 

 

Net debt to in-place adjusted EBITDA ratio (2)

6.8x

 

 

6.1x

 

 

N/A

 

N/A

 

Net debt plus preferred equity to in-place adjusted EBITDA ratio (3)

6.8x

 

 

6.1x

 

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

Reconciliation of denominators for per share measures

 

 

 

 

 

 

 

Denominator for diluted EPS

111,811

 

 

111,943

 

 

112,056

 

 

111,472

 

 

Weighted average common units

1,240

 

 

1,312

 

 

1,235

 

 

1,323

 

 

Redeemable noncontrolling interests

 

 

109

 

 

125

 

 

 

 

Anti-dilutive EPS effect of share-based compensation awards

274

 

 

 

 

 

 

 

 

Denominator for diluted FFO per share

113,325

 

 

113,364

 

 

113,416

 

 

112,795

 

 

Dilutive convertible preferred units

176

 

 

 

 

176

 

 

 

 

Redeemable noncontrolling interests

109

 

 

 

 

 

 

 

 

Denominator for diluted FFO per share, as adjusted for comparability

113,610

 

 

113,364

 

 

113,592

 

 

112,795

 

 

(1)

Represents Defense/IT Locations and Regional Office properties.

(2)

Represents net debt as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

(3)

Represents net debt plus the total liquidation preference of preferred equity as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of common share dividends to dividends and distributions for payout ratios

 

 

 

 

 

 

 

Common share dividends - unrestricted shares and deferred shares

$

30,763

 

 

$

30,721

 

 

$

92,278

 

 

$

92,099

 

Common unit distributions - unrestricted units

341

 

 

338

 

 

1,021

 

 

1,068

 

Dividends and distributions for diluted FFO payout ratio

31,104

 

 

31,059

 

 

93,299

 

 

93,167

 

Distributions on dilutive preferred units

77

 

 

 

 

231

 

 

 

Dividends and distributions for other payout ratios

$

31,181

 

 

$

31,059

 

 

$

93,530

 

 

$

93,167

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA and in-place adjusted EBITDA

 

 

 

 

 

 

 

Net (loss) income

$

(31,342)

 

 

$

23,246

 

 

$

19,329

 

 

$

155,127

 

Interest expense

17,152

 

 

17,126

 

 

50,789

 

 

54,275

 

Income tax expense (benefit)

16

 

 

(131)

 

 

95

 

 

(113)

 

Real estate-related depreciation and amortization

35,332

 

 

34,692

 

 

101,540

 

 

104,290

 

Impairment losses on real estate

1,530

 

 

327

 

 

1,530

 

 

327

 

Other depreciation and amortization

457

 

 

467

 

 

1,324

 

 

1,396

 

Gain on sales of real estate

 

 

 

 

(5)

 

 

(84,469)

 

Adjustments from unconsolidated real estate JVs

1,274

 

 

1,202

 

 

3,814

 

 

2,859

 

EBITDAre

24,419

 

 

76,929

 

 

178,416

 

 

233,692

 

Loss on early extinguishment of debt

3,237

 

 

 

 

3,237

 

 

 

Loss on interest rate derivatives

53,196

 

 

 

 

53,196

 

 

 

Net loss (gain) on other investments

250

 

 

 

 

252

 

 

(400)

 

Credit loss recoveries

(1,465)

 

 

 

 

(161)

 

 

 

Business development expenses

414

 

 

419

 

 

1,630

 

 

1,427

 

Non-comparable professional and legal expenses

 

 

175

 

 

 

 

486

 

Demolition costs on redevelopment and nonrecurring improvements

11

 

 

 

 

63

 

 

44

 

Executive transition costs

 

 

 

 

 

 

4

 

Adjusted EBITDA

80,062

 

 

77,523

 

 

$

236,633

 

 

$

235,253

 

Proforma net operating income adjustment for property changes within period

1,631

 

 

 

 

 

 

 

Change in collectability of deferred rental revenue

224

 

 

 

 

 

 

 

In-place adjusted EBITDA

$

81,917

 

 

$

77,523

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA

 

 

 

 

 

 

 

Interest expense

$

17,152

 

 

$

17,126

 

 

$

50,789

 

 

$

54,275

 

Less: Amortization of deferred financing costs

(658)

 

 

(538)

 

 

(1,875)

 

 

(1,595)

 

Less: Amortization of net debt discounts, net of amounts capitalized

(453)

 

 

(377)

 

 

(1,229)

 

 

(1,121)

 

Less: Accum. other comprehensive loss on derivatives amortized to expense

 

 

(12)

 

 

 

 

(79)

 

COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs

444

 

 

403

 

 

1,327

 

 

916

 

Scheduled principal amortization

1,033

 

 

1,107

 

 

3,077

 

 

3,300

 

Capitalized interest

2,908

 

 

2,927

 

 

9,440

 

 

7,319

 

Preferred unit distributions

77

 

 

157

 

 

231

 

 

487

 

Denominator for fixed charge coverage-Adjusted EBITDA

$

20,503

 

 

$

20,793

 

 

$

61,760

 

 

$

63,502

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures

 

 

 

 

 

 

 

Tenant improvements and incentives

$

6,950

 

 

$

10,880

 

 

$

27,177

 

 

$

26,600

 

Building improvements

10,400

 

 

8,908

 

 

26,537

 

 

17,772

 

Leasing costs

1,934

 

 

2,722

 

 

6,918

 

 

8,665

 

Net additions to (exclusions from) tenant improvements and incentives

(943)

 

 

(2,156)

 

 

1,412

 

 

(1,866)

 

Excluded building improvements and leasing costs

(5,256)

 

 

(3,602)

 

 

(15,073)

 

 

(7,244)

 

Replacement capital expenditures

$

13,085

 

 

$

16,752

 

 

$

46,971

 

 

$

43,927

 

 

 

 

 

 

 

 

 

Same Properties cash NOI

$

73,910

 

 

$

74,071

 

 

$

224,709

 

 

$

220,063

 

Straight line rent adjustments and lease incentive amortization

(1,214)

 

 

(572)

 

 

(3,294)

 

 

(587)

 

Amortization of acquired above- and below-market rents

98

 

 

82

 

 

291

 

 

115

 

Amortization of intangibles and other assets to property operating expenses

(23)

 

 

(23)

 

 

(69)

 

 

(69)

 

Lease termination fees, gross

609

 

 

823

 

 

1,052

 

 

1,629

 

Tenant funded landlord assets and lease incentives

342

 

 

526

 

 

564

 

 

1,452

 

Cash NOI adjustments in unconsolidated real estate JV

48

 

 

42

 

 

111

 

 

147

 

Same Properties NOI

$

73,770

 

 

$

74,949

 

 

$

223,364

 

 

$

222,750

 

 

September 30,
2020

 

December 31,
2019

Reconciliation of total assets to adjusted book

 

 

 

Total assets

$

4,120,189

 

 

$

3,854,453

 

Accumulated depreciation

1,095,441

 

 

1,007,120

 

Accumulated amortization of real estate intangibles and deferred leasing costs

215,651

 

 

212,547

 

COPT’s share of liabilities of unconsolidated real estate JVs

50,957

 

 

50,734

 

COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs

10,640

 

 

8,164

 

Less: Property - operating lease liabilities

(26,382)

 

 

(17,317)

 

Less: Property - finance lease liabilities

(28)

 

 

(702)

 

Less: Cash and cash equivalents

(11,458)

 

 

(14,733)

 

Less: COPT’s share of cash of unconsolidated real estate JVs

(538)

 

 

(498)

 

Adjusted book

$

5,454,472

 

 

$

5,099,768

 

 

 

 

 

Reconciliation of debt outstanding to net debt and net debt plus preferred equity

 

 

 

Debt outstanding (excluding net debt discounts and deferred financing costs)

$

2,247,523

 

 

1,893,057

 

Less: Cash and cash equivalents

(11,458)

 

 

(14,733)

 

Less: COPT’s share of cash of unconsolidated real estate JVs

(538)

 

 

(498)

 

Net debt

$

2,235,527

 

 

$

1,877,826

 

Preferred equity

8,800

 

 

8,800

 

Net debt plus preferred equity

$

2,244,327

 

 

$

1,886,626

 

 

IR Contacts:
Stephanie Krewson-Kelly
443-285-5453
stephanie.kelly@copt.com

Michelle Layne
443-285-5452
michelle.layne@copt.com

Source: Corporate Office Properties Trust

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