T | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | June 30, 2013 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from | to |
Corporate Office Properties Trust | Maryland | 23-2947217 | ||
(State or other jurisdiction of | (IRS Employer | |||
incorporation or organization) | Identification No.) | |||
Corporate Office Properties, L.P. | Delaware | 23-2930022 | ||
(State or other jurisdiction of | (IRS Employer | |||
incorporation or organization) | Identification No.) |
6711 Columbia Gateway Drive, Suite 300, Columbia, MD | 21046 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
• | combined reports better reflect how management and the analyst community view the business as a single operating unit; |
• | combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management; |
• | combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and |
• | combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review. |
• | consolidated financial statements; |
• | the following notes to the consolidated financial statements: |
• | Note 3, Fair Value Measurements of COPT and subsidiaries and COPLP and subsidiaries; and |
• | Note 15, Earnings per Share of COPT and subsidiaries and Earnings per Unit of COPLP and subsidiaries. |
• | “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of COPT”; and |
• | “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of the Operating Partnership.” |
PAGE | ||
Consolidated Financial Statements of Corporate Office Properties Trust | ||
Consolidated Financial Statements of Corporate Office Properties, L.P. | ||
Notes to Consolidated Financial Statements (unaudited) | ||
June 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,703,009 | $ | 2,597,666 | |||
Projects in development or held for future development | 508,295 | 565,378 | |||||
Total properties, net | 3,211,304 | 3,163,044 | |||||
Assets held for sale, net | 136,896 | 140,229 | |||||
Cash and cash equivalents | 9,196 | 10,594 | |||||
Restricted cash and marketable securities | 19,472 | 21,557 | |||||
Accounts receivable (net of allowance for doubtful accounts of $5,216 and $4,694, respectively) | 23,751 | 19,247 | |||||
Deferred rent receivable | 89,811 | 85,802 | |||||
Intangible assets on real estate acquisitions, net | 68,046 | 75,879 | |||||
Deferred leasing and financing costs, net | 57,488 | 59,952 | |||||
Prepaid expenses and other assets | 83,671 | 77,455 | |||||
Total assets | $ | 3,699,635 | $ | 3,653,759 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,093,106 | $ | 2,019,168 | |||
Accounts payable and accrued expenses | 84,181 | 97,922 | |||||
Rents received in advance and security deposits | 24,095 | 27,632 | |||||
Dividends and distributions payable | 28,602 | 28,698 | |||||
Deferred revenue associated with operating leases | 9,649 | 11,995 | |||||
Distributions received in excess of investment in unconsolidated real estate joint venture | 6,420 | 6,420 | |||||
Interest rate derivatives | 3,555 | 6,185 | |||||
Other liabilities | 8,169 | 8,942 | |||||
Total liabilities | 2,257,777 | 2,206,962 | |||||
Commitments and contingencies (Note 16) | |||||||
Redeemable noncontrolling interest | 15,571 | 10,298 | |||||
Equity: | |||||||
Corporate Office Properties Trust’s shareholders’ equity: | |||||||
Preferred Shares of beneficial interest at liquidation preference ($0.01 par value; 25,000,000 shares authorized; shares issued and outstanding of 9,431,667 at June 30, 2013 and 12,821,667 at December 31, 2012) | 249,083 | 333,833 | |||||
Common Shares of beneficial interest ($0.01 par value; 125,000,000 shares authorized, shares issued and outstanding of 85,845,403 at June 30, 2013 and 80,952,986 at December 31, 2012) | 858 | 809 | |||||
Additional paid-in capital | 1,772,470 | 1,653,672 | |||||
Cumulative distributions in excess of net income | (668,892 | ) | (617,455 | ) | |||
Accumulated other comprehensive income (loss) | 3,631 | (5,435 | ) | ||||
Total Corporate Office Properties Trust’s shareholders’ equity | 1,357,150 | 1,365,424 | |||||
Noncontrolling interests in subsidiaries: | |||||||
Common units in COPLP | 49,112 | 52,122 | |||||
Preferred units in COPLP | 8,800 | 8,800 | |||||
Other consolidated entities | 11,225 | 10,153 | |||||
Noncontrolling interests in subsidiaries | 69,137 | 71,075 | |||||
Total equity | 1,426,287 | 1,436,499 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,699,635 | $ | 3,653,759 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 97,266 | $ | 89,954 | $ | 192,186 | $ | 179,347 | |||||||
Tenant recoveries and other real estate operations revenue | 22,463 | 20,715 | 43,901 | 41,522 | |||||||||||
Construction contract and other service revenues | 20,795 | 16,995 | 35,057 | 38,529 | |||||||||||
Total revenues | 140,524 | 127,664 | 271,144 | 259,398 | |||||||||||
Expenses | |||||||||||||||
Property operating expenses | 43,408 | 39,441 | 85,927 | 80,628 | |||||||||||
Depreciation and amortization associated with real estate operations | 28,866 | 28,295 | 57,029 | 56,029 | |||||||||||
Construction contract and other service expenses | 19,382 | 16,285 | 32,859 | 36,892 | |||||||||||
Impairment recoveries | — | — | — | (4,836 | ) | ||||||||||
General, administrative and leasing expenses | 6,583 | 8,851 | 14,403 | 18,420 | |||||||||||
Business development expenses and land carry costs | 1,327 | 1,298 | 2,686 | 2,874 | |||||||||||
Total operating expenses | 99,566 | 94,170 | 192,904 | 190,007 | |||||||||||
Operating income | 40,958 | 33,494 | 78,240 | 69,391 | |||||||||||
Interest expense | (23,302 | ) | (24,239 | ) | (45,609 | ) | (48,670 | ) | |||||||
Interest and other income | 2,006 | 840 | 2,952 | 2,057 | |||||||||||
Loss on early extinguishment of debt | (21,470 | ) | (169 | ) | (26,654 | ) | (169 | ) | |||||||
(Loss) income from continuing operations before equity in income (loss) of unconsolidated entities and income taxes | (1,808 | ) | 9,926 | 8,929 | 22,609 | ||||||||||
Equity in income (loss) of unconsolidated entities | 126 | (187 | ) | 167 | (276 | ) | |||||||||
Income tax expense | (21 | ) | (17 | ) | (37 | ) | (221 | ) | |||||||
(Loss) income from continuing operations | (1,703 | ) | 9,722 | 9,059 | 22,112 | ||||||||||
Discontinued operations | (3,031 | ) | 2,118 | (870 | ) | (37 | ) | ||||||||
(Loss) income before gain on sales of real estate | (4,734 | ) | 11,840 | 8,189 | 22,075 | ||||||||||
Gain on sales of real estate | 329 | 21 | 2,683 | 21 | |||||||||||
Net (loss) income | (4,405 | ) | 11,861 | 10,872 | 22,096 | ||||||||||
Net loss (income) attributable to noncontrolling interests: | |||||||||||||||
Common units in COPLP | 671 | (422 | ) | 242 | (795 | ) | |||||||||
Preferred units in COPLP | (165 | ) | (165 | ) | (330 | ) | (330 | ) | |||||||
Other consolidated entities | (1,466 | ) | 31 | (1,129 | ) | 629 | |||||||||
Net (loss) income attributable to Corporate Office Properties Trust | (5,365 | ) | 11,305 | 9,655 | 21,600 | ||||||||||
Preferred share dividends | (4,885 | ) | (4,167 | ) | (10,991 | ) | (8,192 | ) | |||||||
Issuance costs associated with redeemed preferred shares | (2,904 | ) | — | (2,904 | ) | — | |||||||||
Net (loss) income attributable to Corporate Office Properties Trust common shareholders | $ | (13,154 | ) | $ | 7,138 | $ | (4,240 | ) | $ | 13,408 | |||||
Net (loss) income attributable to Corporate Office Properties Trust: | |||||||||||||||
(Loss) income from continuing operations | $ | (2,398 | ) | $ | 9,284 | $ | 10,593 | $ | 21,594 | ||||||
Discontinued operations, net | (2,967 | ) | 2,021 | (938 | ) | 6 | |||||||||
Net (loss) income attributable to Corporate Office Properties Trust | $ | (5,365 | ) | $ | 11,305 | $ | 9,655 | $ | 21,600 | ||||||
Basic earnings per common share (1) | |||||||||||||||
(Loss) income from continuing operations | $ | (0.12 | ) | $ | 0.07 | $ | (0.04 | ) | $ | 0.18 | |||||
Discontinued operations | (0.04 | ) | 0.03 | (0.01 | ) | — | |||||||||
Net (loss) income attributable to COPT common shareholders | $ | (0.16 | ) | $ | 0.10 | $ | (0.05 | ) | $ | 0.18 | |||||
Diluted earnings per common share (1) | |||||||||||||||
(Loss) income from continuing operations | $ | (0.12 | ) | $ | 0.07 | $ | (0.04 | ) | $ | 0.18 | |||||
Discontinued operations | (0.04 | ) | 0.03 | (0.01 | ) | — | |||||||||
Net (loss) income attributable to COPT common shareholders | $ | (0.16 | ) | $ | 0.10 | $ | (0.05 | ) | $ | 0.18 | |||||
Dividends declared per common share | $ | 0.2750 | $ | 0.2750 | $ | 0.550 | $ | 0.550 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net (loss) income | $ | (4,405 | ) | $ | 11,861 | $ | 10,872 | $ | 22,096 | ||||||
Other comprehensive income (loss) | |||||||||||||||
Unrealized gains (losses) on interest rate derivatives | 7,830 | (2,639 | ) | 8,292 | (4,626 | ) | |||||||||
Losses on interest rate derivatives included in net income | 674 | 928 | 1,332 | 2,402 | |||||||||||
Other comprehensive income (loss) | 8,504 | (1,711 | ) | 9,624 | (2,224 | ) | |||||||||
Comprehensive income | 4,099 | 10,150 | 20,496 | 19,872 | |||||||||||
Comprehensive income attributable to noncontrolling interests | (1,422 | ) | (359 | ) | (1,774 | ) | (254 | ) | |||||||
Comprehensive income attributable to Corporate Office Properties Trust | $ | 2,677 | $ | 9,791 | $ | 18,722 | $ | 19,618 |
Preferred Shares | Common Shares | Additional Paid-in Capital | Cumulative Distributions in Excess of Net Income | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total | |||||||||||||||||||||
Balance at December 31, 2011 (72,011,324 common shares outstanding) | $ | 216,333 | $ | 720 | $ | 1,451,078 | $ | (534,041 | ) | $ | (1,733 | ) | $ | 73,542 | $ | 1,205,899 | |||||||||||
Conversion of common units to common shares (54,550 shares) | — | — | 696 | — | — | (696 | ) | — | |||||||||||||||||||
Preferred shares issued to the public (6,900,000 shares) | 172,500 | — | (6,835 | ) | — | — | — | 165,665 | |||||||||||||||||||
Costs associated with common shares issued to the public | — | — | (5 | ) | — | — | — | (5 | ) | ||||||||||||||||||
Exercise of share options (12,667 shares) | — | — | 189 | — | — | — | 189 | ||||||||||||||||||||
Share-based compensation | — | 1 | 7,180 | — | — | — | 7,181 | ||||||||||||||||||||
Restricted common share redemptions (133,081 shares) | — | — | (3,219 | ) | — | — | — | (3,219 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | 524 | — | — | (524 | ) | — | |||||||||||||||||||
Comprehensive income | — | — | — | 21,600 | (1,984 | ) | 1,413 | 21,029 | |||||||||||||||||||
Dividends | — | — | — | (47,821 | ) | — | — | (47,821 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (2,672 | ) | (2,672 | ) | ||||||||||||||||||
Distributions to noncontrolling interest in other consolidated entities | — | — | — | — | — | (648 | ) | (648 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of noncontrolling interest | — | — | (1,827 | ) | — | — | — | (1,827 | ) | ||||||||||||||||||
Balance at June 30, 2012 (72,084,932 common shares outstanding) | $ | 388,833 | $ | 721 | $ | 1,447,781 | $ | (560,262 | ) | $ | (3,717 | ) | $ | 70,415 | $ | 1,343,771 | |||||||||||
Balance at December 31, 2012 (80,952,986 common shares outstanding) | $ | 333,833 | $ | 809 | $ | 1,653,672 | $ | (617,455 | ) | $ | (5,435 | ) | $ | 71,075 | $ | 1,436,499 | |||||||||||
Conversion of common units to common shares (279,019 shares) | — | 3 | 3,575 | — | — | (3,578 | ) | — | |||||||||||||||||||
Common shares issued to the public (4,485,000 shares) | — | 45 | 117,868 | — | — | — | 117,913 | ||||||||||||||||||||
Redemption of preferred shares (3,390,000 shares) | (84,750 | ) | — | 2,904 | (2,904 | ) | — | — | (84,750 | ) | |||||||||||||||||
Exercise of share options (32,756 shares) | — | — | 636 | — | — | — | 636 | ||||||||||||||||||||
Share-based compensation | — | 1 | 3,847 | — | — | — | 3,848 | ||||||||||||||||||||
Restricted common share redemptions (68,762 shares) | — | — | (1,784 | ) | — | — | — | (1,784 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | (2,495 | ) | — | — | 2,495 | — | |||||||||||||||||||
Comprehensive income | — | — | — | 9,655 | 9,066 | 1,490 | 20,211 | ||||||||||||||||||||
Dividends | — | — | — | (58,188 | ) | — | — | (58,188 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (2,422 | ) | (2,422 | ) | ||||||||||||||||||
Contributions from noncontrolling interests in other consolidated entities | — | — | — | — | — | 85 | 85 | ||||||||||||||||||||
Distributions to noncontrolling interests in other consolidated entities | — | — | — | — | — | (8 | ) | (8 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of noncontrolling interest | — | — | (5,631 | ) | — | — | — | (5,631 | ) | ||||||||||||||||||
Increase in tax benefit from share-based compensation | — | — | (122 | ) | — | — | — | (122 | ) | ||||||||||||||||||
Balance at June 30, 2013 (85,845,403 common shares outstanding) | $ | 249,083 | $ | 858 | $ | 1,772,470 | $ | (668,892 | ) | $ | 3,631 | $ | 69,137 | $ | 1,426,287 |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 233,068 | $ | 248,742 | |||
Construction contract and other service revenues received | 28,898 | 46,933 | |||||
Property operating expenses paid | (75,566 | ) | (76,328 | ) | |||
Construction contract and other service expenses paid | (33,404 | ) | (37,296 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (14,988 | ) | (13,076 | ) | |||
Interest expense paid | (41,825 | ) | (45,435 | ) | |||
Previously accreted interest expense paid | (11,116 | ) | — | ||||
Settlement of interest rate derivatives | — | (29,738 | ) | ||||
Proceeds from sale of trading marketable securities | — | 18,975 | |||||
Exit costs on property dispositions | — | (1,248 | ) | ||||
Payments in connection with early extinguishment of debt | (23,932 | ) | (156 | ) | |||
Interest and other income received | 390 | 529 | |||||
Income taxes paid | 6 | (8 | ) | ||||
Net cash provided by operating activities | 61,531 | 111,894 | |||||
Cash flows from investing activities | |||||||
Purchases of and additions to properties | |||||||
Construction, development and redevelopment | (99,779 | ) | (71,504 | ) | |||
Tenant improvements on operating properties | (10,496 | ) | (13,797 | ) | |||
Other capital improvements on operating properties | (11,738 | ) | (5,514 | ) | |||
Proceeds from dispositions of properties | 12,344 | 130,814 | |||||
Mortgage and other loan receivables funded or acquired | (2,756 | ) | (8,933 | ) | |||
Leasing costs paid | (6,048 | ) | (5,489 | ) | |||
Other | 3,144 | (991 | ) | ||||
Net cash (used in) provided by investing activities | (115,329 | ) | 24,586 | ||||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | 374,000 | 101,000 | |||||
Other debt proceeds | 427,313 | 273,909 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | (226,000 | ) | (568,000 | ) | |||
Scheduled principal amortization | (5,003 | ) | (6,303 | ) | |||
Other debt repayments | (486,803 | ) | (37,035 | ) | |||
Deferred financing costs paid | (2,099 | ) | (2,111 | ) | |||
Net proceeds from issuance of preferred shares | — | 165,902 | |||||
Net proceeds from issuance of common shares | 118,768 | 185 | |||||
Redemption of preferred shares | (84,750 | ) | — | ||||
Common share dividends paid | (45,852 | ) | (49,507 | ) | |||
Preferred share dividends paid | (12,355 | ) | (8,051 | ) | |||
Distributions paid to noncontrolling interests in COPLP | (2,503 | ) | (3,269 | ) | |||
Restricted share redemptions | (1,784 | ) | (3,219 | ) | |||
Other | (532 | ) | (838 | ) | |||
Net cash provided by (used in) financing activities | 52,400 | (137,337 | ) | ||||
Net decrease in cash and cash equivalents | (1,398 | ) | (857 | ) | |||
Cash and cash equivalents | |||||||
Beginning of period | 10,594 | 5,559 | |||||
End of period | $ | 9,196 | $ | 4,702 |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 10,872 | $ | 22,096 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 58,244 | 64,000 | |||||
Impairment losses | 9,052 | 7,693 | |||||
Settlement of previously accreted interest expense | (11,116 | ) | — | ||||
Amortization of deferred financing costs | 2,971 | 3,169 | |||||
Increase in deferred rent receivable | (6,598 | ) | (4,937 | ) | |||
Amortization of net debt discounts | 1,328 | 1,565 | |||||
Gain on sales of real estate | (2,683 | ) | (4,056 | ) | |||
Share-based compensation | 3,296 | 6,559 | |||||
Loss on early extinguishment of debt | 2,722 | — | |||||
Other | (3,634 | ) | (917 | ) | |||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in accounts receivable | (3,222 | ) | 15,031 | ||||
(Increase) decrease in restricted cash and marketable securities | (969 | ) | 14,082 | ||||
Decrease in prepaid expenses and other assets | 5,884 | 18,232 | |||||
Decrease in accounts payable, accrued expenses and other liabilities | (1,079 | ) | (196 | ) | |||
Decrease in rents received in advance and security deposits | (3,537 | ) | (2,424 | ) | |||
Decrease in interest rate derivatives in connection with cash settlement | — | (28,003 | ) | ||||
Net cash provided by operating activities | $ | 61,531 | $ | 111,894 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (12,750 | ) | $ | (12,081 | ) | |
Increase (decrease) in fair value of derivatives applied to accumulated comprehensive income (loss) and noncontrolling interests | $ | 9,592 | $ | (2,255 | ) | ||
Dividends/distribution payable | $ | 28,602 | $ | 24,695 | |||
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares | $ | 3,578 | $ | 696 | |||
Adjustments to noncontrolling interests resulting from changes in COPLP ownership | $ | 2,495 | $ | 524 | |||
Increase in redeemable noncontrolling interest and decrease in shareholders’ equity in connection with adjustment to arrive at fair value of noncontrolling interest | $ | 5,631 | $ | 1,827 |
June 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,703,009 | $ | 2,597,666 | |||
Projects in development or held for future development | 508,295 | 565,378 | |||||
Total properties, net | 3,211,304 | 3,163,044 | |||||
Assets held for sale, net | 136,896 | 140,229 | |||||
Cash and cash equivalents | 9,196 | 10,594 | |||||
Restricted cash and marketable securities | 12,396 | 14,781 | |||||
Accounts receivable (net of allowance for doubtful accounts of $5,216 and $4,694, respectively) | 23,751 | 19,247 | |||||
Deferred rent receivable | 89,811 | 85,802 | |||||
Intangible assets on real estate acquisitions, net | 68,046 | 75,879 | |||||
Deferred leasing and financing costs, net | 57,488 | 59,952 | |||||
Prepaid expenses and other assets | 83,671 | 77,455 | |||||
Total assets | $ | 3,692,559 | $ | 3,646,983 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,093,106 | $ | 2,019,168 | |||
Accounts payable and accrued expenses | 84,181 | 97,922 | |||||
Rents received in advance and security deposits | 24,095 | 27,632 | |||||
Distributions payable | 28,602 | 28,698 | |||||
Deferred revenue associated with operating leases | 9,649 | 11,995 | |||||
Distributions received in excess of investment in unconsolidated real estate joint venture | 6,420 | 6,420 | |||||
Interest rate derivatives | 3,555 | 6,185 | |||||
Other liabilities | 1,093 | 2,166 | |||||
Total liabilities | 2,250,701 | 2,200,186 | |||||
Commitments and contingencies (Note 16) | |||||||
Redeemable noncontrolling interest | 15,571 | 10,298 | |||||
Equity: | |||||||
Corporate Office Properties, L.P.’s equity: | |||||||
Preferred units | |||||||
General partner, 9,431,667 preferred units outstanding at June 30, 2013 and 12,821,667 preferred units outstanding at December 31, 2012 | 249,083 | 333,833 | |||||
Limited partner, 352,000 preferred units outstanding at June 30, 2013 and December 31, 2012 | 8,800 | 8,800 | |||||
Common units, 85,845,403 and 80,952,986 held by the general partner and 3,788,523 and 4,067,542 held by limited partners at June 30, 2013 and December 31, 2012, respectively | 1,153,376 | 1,089,391 | |||||
Accumulated other comprehensive income (loss) | 3,763 | (5,708 | ) | ||||
Total Corporate Office Properties, L.P.’s equity | 1,415,022 | 1,426,316 | |||||
Noncontrolling interests in subsidiaries | 11,265 | 10,183 | |||||
Total equity | 1,426,287 | 1,436,499 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,692,559 | $ | 3,646,983 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 97,266 | $ | 89,954 | $ | 192,186 | $ | 179,347 | |||||||
Tenant recoveries and other real estate operations revenue | 22,463 | 20,715 | 43,901 | 41,522 | |||||||||||
Construction contract and other service revenues | 20,795 | 16,995 | 35,057 | 38,529 | |||||||||||
Total revenues | 140,524 | 127,664 | 271,144 | 259,398 | |||||||||||
Expenses | |||||||||||||||
Property operating expenses | 43,408 | 39,441 | 85,927 | 80,628 | |||||||||||
Depreciation and amortization associated with real estate operations | 28,866 | 28,295 | 57,029 | 56,029 | |||||||||||
Construction contract and other service expenses | 19,382 | 16,285 | 32,859 | 36,892 | |||||||||||
Impairment recoveries | — | — | — | (4,836 | ) | ||||||||||
General, administrative and leasing expenses | 6,583 | 8,851 | 14,403 | 18,420 | |||||||||||
Business development expenses and land carry costs | 1,327 | 1,298 | 2,686 | 2,874 | |||||||||||
Total operating expenses | 99,566 | 94,170 | 192,904 | 190,007 | |||||||||||
Operating income | 40,958 | 33,494 | 78,240 | 69,391 | |||||||||||
Interest expense | (23,302 | ) | (24,239 | ) | (45,609 | ) | (48,670 | ) | |||||||
Interest and other income | 2,006 | 840 | 2,952 | 2,057 | |||||||||||
Loss on early extinguishment of debt | (21,470 | ) | (169 | ) | (26,654 | ) | (169 | ) | |||||||
(Loss) income from continuing operations before equity in income (loss) of unconsolidated entities and income taxes | (1,808 | ) | 9,926 | 8,929 | 22,609 | ||||||||||
Equity in income (loss) of unconsolidated entities | 126 | (187 | ) | 167 | (276 | ) | |||||||||
Income tax expense | (21 | ) | (17 | ) | (37 | ) | (221 | ) | |||||||
(Loss) income from continuing operations | (1,703 | ) | 9,722 | 9,059 | 22,112 | ||||||||||
Discontinued operations | (3,031 | ) | 2,118 | (870 | ) | (37 | ) | ||||||||
(Loss) income before gain on sales of real estate | (4,734 | ) | 11,840 | 8,189 | 22,075 | ||||||||||
Gain on sales of real estate | 329 | 21 | 2,683 | 21 | |||||||||||
Net (loss) income | (4,405 | ) | 11,861 | 10,872 | 22,096 | ||||||||||
Net (income) loss attributable to noncontrolling interests in consolidated entities | (1,473 | ) | 1 | (1,137 | ) | 571 | |||||||||
Net (loss) income attributable to COPLP | (5,878 | ) | 11,862 | 9,735 | 22,667 | ||||||||||
Preferred unit distributions | (5,050 | ) | (4,332 | ) | (11,321 | ) | (8,522 | ) | |||||||
Issuance costs associated with redeemed preferred units | (2,904 | ) | — | (2,904 | ) | — | |||||||||
Net (loss) income attributable to COPLP common unitholders | $ | (13,832 | ) | $ | 7,530 | $ | (4,490 | ) | $ | 14,145 | |||||
Net (loss) income attributable to COPLP: | |||||||||||||||
(Loss) income from continuing operations | $ | (2,782 | ) | $ | 9,753 | $ | 10,703 | $ | 22,719 | ||||||
Discontinued operations, net | (3,096 | ) | 2,109 | (968 | ) | (52 | ) | ||||||||
Net (loss) income attributable to COPLP | $ | (5,878 | ) | $ | 11,862 | $ | 9,735 | $ | 22,667 | ||||||
Basic earnings per common unit (1) | |||||||||||||||
(Loss) income from continuing operations | $ | (0.12 | ) | $ | 0.07 | $ | (0.04 | ) | $ | 0.18 | |||||
Discontinued operations | (0.04 | ) | 0.03 | (0.01 | ) | — | |||||||||
Net (loss) income attributable to COPLP common unitholders | $ | (0.16 | ) | $ | 0.10 | $ | (0.05 | ) | $ | 0.18 | |||||
Diluted earnings per common unit (1) | |||||||||||||||
(Loss) income from continuing operations | $ | (0.12 | ) | $ | 0.07 | $ | (0.04 | ) | $ | 0.18 | |||||
Discontinued operations | (0.04 | ) | 0.03 | (0.01 | ) | — | |||||||||
Net (loss) income attributable to COPLP common unitholders | $ | (0.16 | ) | $ | 0.10 | $ | (0.05 | ) | $ | 0.18 | |||||
Distributions declared per common unit | $ | 0.2750 | $ | 0.2750 | $ | 0.550 | $ | 0.550 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net (loss) income | $ | (4,405 | ) | $ | 11,861 | $ | 10,872 | $ | 22,096 | ||||||
Other comprehensive income (loss) | |||||||||||||||
Unrealized gains (losses) on interest rate derivatives | 7,830 | (2,639 | ) | 8,292 | (4,626 | ) | |||||||||
Losses on interest rate derivatives included in net income | 674 | 928 | 1,332 | 2,402 | |||||||||||
Other comprehensive income (loss) | 8,504 | (1,711 | ) | 9,624 | (2,224 | ) | |||||||||
Comprehensive income | 4,099 | 10,150 | 20,496 | 19,872 | |||||||||||
Comprehensive (income) loss attributable to noncontrolling interests | (1,579 | ) | 108 | (1,289 | ) | 696 | |||||||||
Comprehensive income attributable to Corporate Office Properties, L.P. | $ | 2,520 | $ | 10,258 | $ | 19,207 | $ | 20,568 |
Limited Partner Preferred Units | General Partner Preferred Units | Common Units | ||||||||||||||||||||||||||||||
Units | Amount | Units | Amount | Units | Amount | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||
Balance at December 31, 2011 | 352,000 | $ | 8,800 | 8,121,667 | $ | 216,333 | 76,313,112 | $ | 972,107 | $ | (1,837 | ) | $ | 10,496 | $ | 1,205,899 | ||||||||||||||||
Issuance of preferred units resulting from public issuance of preferred shares | — | — | 6,900,000 | 172,500 | — | (6,835 | ) | — | — | 165,665 | ||||||||||||||||||||||
Costs of common units resulting from public issuance of common shares | — | — | — | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||||||||
Issuance of common units resulting from exercise of share options | — | — | — | — | 12,667 | 189 | — | — | 189 | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | 139,472 | 7,181 | — | — | 7,181 | |||||||||||||||||||||||
Restricted common unit redemptions | — | — | — | — | (133,081 | ) | (3,219 | ) | — | — | (3,219 | ) | ||||||||||||||||||||
Comprehensive income | — | 330 | — | 8,192 | — | 14,145 | (2,099 | ) | 461 | 21,029 | ||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (330 | ) | — | (8,192 | ) | — | (41,971 | ) | — | — | (50,493 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (648 | ) | (648 | ) | |||||||||||||||||||||
Adjustment to arrive at fair value of noncontrolling interest | — | — | — | — | — | (1,827 | ) | — | — | (1,827 | ) | |||||||||||||||||||||
Balance at June 30, 2012 | 352,000 | $ | 8,800 | 15,021,667 | $ | 388,833 | 76,332,170 | $ | 939,765 | $ | (3,936 | ) | $ | 10,309 | $ | 1,343,771 | ||||||||||||||||
Balance at December 31, 2012 | 352,000 | $ | 8,800 | 12,821,667 | $ | 333,833 | 85,020,528 | $ | 1,089,391 | $ | (5,708 | ) | $ | 10,183 | $ | 1,436,499 | ||||||||||||||||
Issuance of common units resulting from public issuance of common shares | — | — | — | — | 4,485,000 | 117,913 | — | — | 117,913 | |||||||||||||||||||||||
Issuance of common units resulting from exercise of share options | — | — | — | — | 32,756 | 636 | — | — | 636 | |||||||||||||||||||||||
Redemption of preferred units resulting from redemption of preferred shares | — | — | (3,390,000 | ) | (84,750 | ) | — | — | — | — | (84,750 | ) | ||||||||||||||||||||
Share-based compensation | — | — | — | — | 164,404 | 3,848 | — | — | 3,848 | |||||||||||||||||||||||
Restricted common unit redemptions | — | — | — | — | (68,762 | ) | (1,784 | ) | — | — | (1,784 | ) | ||||||||||||||||||||
Comprehensive income | — | 330 | — | 10,991 | — | (1,586 | ) | 9,471 | 1,005 | 20,211 | ||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (330 | ) | — | (10,991 | ) | — | (49,289 | ) | — | — | (60,610 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (8 | ) | (8 | ) | |||||||||||||||||||||
Contributions from noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | 85 | 85 | |||||||||||||||||||||||
Adjustment to arrive at fair value of noncontrolling interest | — | — | — | — | — | (5,631 | ) | — | — | (5,631 | ) | |||||||||||||||||||||
Increase in tax benefit from share-based compensation | — | — | — | — | — | (122 | ) | — | — | (122 | ) | |||||||||||||||||||||
Balance at June 30, 2013 | 352,000 | $ | 8,800 | 9,431,667 | $ | 249,083 | 89,633,926 | $ | 1,153,376 | $ | 3,763 | $ | 11,265 | $ | 1,426,287 | |||||||||||||||||
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 233,068 | $ | 248,742 | |||
Construction contract and other service revenues received | 28,898 | 46,933 | |||||
Property operating expenses paid | (75,566 | ) | (76,328 | ) | |||
Construction contract and other service expenses paid | (33,404 | ) | (37,296 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (14,988 | ) | (13,076 | ) | |||
Interest expense paid | (41,825 | ) | (45,435 | ) | |||
Previously accreted interest expense paid | (11,116 | ) | — | ||||
Settlement of interest rate derivatives | — | (29,738 | ) | ||||
Proceeds from sale of trading marketable securities | — | 18,975 | |||||
Exit costs on property dispositions | — | (1,248 | ) | ||||
Payments in connection with early extinguishment of debt | (23,932 | ) | (156 | ) | |||
Interest and other income received | 390 | 529 | |||||
Income taxes paid | 6 | (8 | ) | ||||
Net cash provided by operating activities | 61,531 | 111,894 | |||||
Cash flows from investing activities | |||||||
Purchases of and additions to properties | |||||||
Construction, development and redevelopment | (99,779 | ) | (71,504 | ) | |||
Tenant improvements on operating properties | (10,496 | ) | (13,797 | ) | |||
Other capital improvements on operating properties | (11,738 | ) | (5,514 | ) | |||
Proceeds from dispositions of properties | 12,344 | 130,814 | |||||
Mortgage and other loan receivables funded or acquired | (2,756 | ) | (8,933 | ) | |||
Leasing costs paid | (6,048 | ) | (5,489 | ) | |||
Other | 3,144 | (991 | ) | ||||
Net cash (used in) provided by investing activities | (115,329 | ) | 24,586 | ||||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | 374,000 | 101,000 | |||||
Other debt proceeds | 427,313 | 273,909 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | (226,000 | ) | (568,000 | ) | |||
Scheduled principal amortization | (5,003 | ) | (6,303 | ) | |||
Other debt repayments | (486,803 | ) | (37,035 | ) | |||
Deferred financing costs paid | (2,099 | ) | (2,111 | ) | |||
Net proceeds from issuance of preferred units | — | 165,902 | |||||
Net proceeds from issuance of common units | 118,768 | 185 | |||||
Redemption of preferred units | (84,750 | ) | — | ||||
Common unit distributions paid | (48,025 | ) | (52,446 | ) | |||
Preferred unit distributions paid | (12,685 | ) | (8,381 | ) | |||
Restricted unit redemptions | (1,784 | ) | (3,219 | ) | |||
Other | (532 | ) | (838 | ) | |||
Net cash provided by (used in) financing activities | 52,400 | (137,337 | ) | ||||
Net decrease in cash and cash equivalents | (1,398 | ) | (857 | ) | |||
Cash and cash equivalents | |||||||
Beginning of period | 10,594 | 5,559 | |||||
End of period | $ | 9,196 | $ | 4,702 |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 10,872 | $ | 22,096 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 58,244 | 64,000 | |||||
Impairment losses | 9,052 | 7,693 | |||||
Settlement of previously accreted interest expense | (11,116 | ) | — | ||||
Amortization of deferred financing costs | 2,971 | 3,169 | |||||