T | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | September 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 16, 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) | ||
September 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,713,579 | $ | 2,597,666 | |||
Projects in development or held for future development | 526,167 | 565,378 | |||||
Total properties, net | 3,239,746 | 3,163,044 | |||||
Assets held for sale, net | 133,984 | 140,229 | |||||
Cash and cash equivalents | 27,318 | 10,594 | |||||
Restricted cash and marketable securities | 14,698 | 21,557 | |||||
Accounts receivable (net of allowance for doubtful accounts of $5,344 and $4,694, respectively) | 17,724 | 19,247 | |||||
Deferred rent receivable | 90,104 | 85,802 | |||||
Intangible assets on real estate acquisitions, net | 64,372 | 75,879 | |||||
Deferred leasing and financing costs, net | 63,246 | 59,952 | |||||
Mortgage and other investing receivables | 40,321 | 33,396 | |||||
Prepaid expenses and other assets | 64,075 | 44,059 | |||||
Total assets | $ | 3,755,588 | $ | 3,653,759 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,135,031 | $ | 2,019,168 | |||
Accounts payable and accrued expenses | 85,291 | 97,922 | |||||
Rents received in advance and security deposits | 28,539 | 27,632 | |||||
Dividends and distributions payable | 29,077 | 28,698 | |||||
Deferred revenue associated with operating leases | 8,545 | 11,995 | |||||
Distributions received in excess of investment in unconsolidated real estate joint venture | 6,420 | 6,420 | |||||
Interest rate derivatives | 3,595 | 6,185 | |||||
Other liabilities | 8,234 | 8,942 | |||||
Total liabilities | 2,304,732 | 2,206,962 | |||||
Commitments and contingencies (Note 17) | |||||||
Redeemable noncontrolling interest | 16,789 | 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 September 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 87,381,395 at September 30, 2013 and 80,952,986 at December 31, 2012) | 874 | 809 | |||||
Additional paid-in capital | 1,812,801 | 1,653,672 | |||||
Cumulative distributions in excess of net income | (700,368 | ) | (617,455 | ) | |||
Accumulated other comprehensive income (loss) | 2,925 | (5,435 | ) | ||||
Total Corporate Office Properties Trust’s shareholders’ equity | 1,365,315 | 1,365,424 | |||||
Noncontrolling interests in subsidiaries: | |||||||
Common units in COPLP | 50,815 | 52,122 | |||||
Preferred units in COPLP | 8,800 | 8,800 | |||||
Other consolidated entities | 9,137 | 10,153 | |||||
Noncontrolling interests in subsidiaries | 68,752 | 71,075 | |||||
Total equity | 1,434,067 | 1,436,499 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,755,588 | $ | 3,653,759 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 97,442 | $ | 92,287 | $ | 289,628 | $ | 271,634 | |||||||
Tenant recoveries and other real estate operations revenue | 21,598 | 22,075 | 65,499 | 63,597 | |||||||||||
Construction contract and other service revenues | 16,991 | 15,283 | 52,048 | 53,812 | |||||||||||
Total revenues | 136,031 | 129,645 | 407,175 | 389,043 | |||||||||||
Expenses | |||||||||||||||
Property operating expenses | 43,482 | 41,474 | 129,409 | 122,102 | |||||||||||
Depreciation and amortization associated with real estate operations | 29,210 | 28,604 | 86,239 | 84,633 | |||||||||||
Construction contract and other service expenses | 16,306 | 14,410 | 49,165 | 51,302 | |||||||||||
Impairment losses | 16,300 | 46,096 | 16,300 | 41,260 | |||||||||||
General, administrative and leasing expenses | 8,027 | 6,377 | 22,430 | 24,797 | |||||||||||
Business development expenses and land carry costs | 1,383 | 1,632 | 4,069 | 4,506 | |||||||||||
Total operating expenses | 114,708 | 138,593 | 307,612 | 328,600 | |||||||||||
Operating income (loss) | 21,323 | (8,948 | ) | 99,563 | 60,443 | ||||||||||
Interest expense | (21,242 | ) | (23,239 | ) | (66,851 | ) | (71,909 | ) | |||||||
Interest and other (loss) income | (3 | ) | 1,095 | 2,949 | 3,152 | ||||||||||
Loss on early extinguishment of debt | (374 | ) | (768 | ) | (27,028 | ) | (937 | ) | |||||||
(Loss) income from continuing operations before equity in income (loss) of unconsolidated entities and income taxes | (296 | ) | (31,860 | ) | 8,633 | (9,251 | ) | ||||||||
Equity in income (loss) of unconsolidated entities | 44 | (246 | ) | 211 | (522 | ) | |||||||||
Income tax expense | (24 | ) | (106 | ) | (61 | ) | (327 | ) | |||||||
(Loss) income from continuing operations | (276 | ) | (32,212 | ) | 8,783 | (10,100 | ) | ||||||||
Discontinued operations | (1,724 | ) | 11,447 | (2,594 | ) | 11,410 | |||||||||
(Loss) income before gain on sales of real estate | (2,000 | ) | (20,765 | ) | 6,189 | 1,310 | |||||||||
Gain on sales of real estate | — | — | 2,683 | 21 | |||||||||||
Net (loss) income | (2,000 | ) | (20,765 | ) | 8,872 | 1,331 | |||||||||
Net loss (income) attributable to noncontrolling interests: | |||||||||||||||
Common units in COPLP | 232 | 1,533 | 474 | 738 | |||||||||||
Preferred units in COPLP | (165 | ) | (165 | ) | (495 | ) | (495 | ) | |||||||
Other consolidated entities | (1,031 | ) | 235 | (2,160 | ) | 864 | |||||||||
Net (loss) income attributable to COPT | (2,964 | ) | (19,162 | ) | 6,691 | 2,438 | |||||||||
Preferred share dividends | (4,490 | ) | (6,546 | ) | (15,481 | ) | (14,738 | ) | |||||||
Issuance costs associated with redeemed preferred shares | — | (1,827 | ) | (2,904 | ) | (1,827 | ) | ||||||||
Net loss attributable to COPT common shareholders | $ | (7,454 | ) | $ | (27,535 | ) | $ | (11,694 | ) | $ | (14,127 | ) | |||
Net (loss) income attributable to COPT: | |||||||||||||||
(Loss) income from continuing operations | $ | (1,266 | ) | $ | (29,963 | ) | $ | 9,327 | $ | (8,369 | ) | ||||
Discontinued operations, net | (1,698 | ) | 10,801 | (2,636 | ) | 10,807 | |||||||||
Net (loss) income attributable to COPT | $ | (2,964 | ) | $ | (19,162 | ) | $ | 6,691 | $ | 2,438 | |||||
Basic earnings per common share (1) | |||||||||||||||
Loss from continuing operations | $ | (0.07 | ) | $ | (0.54 | ) | $ | (0.11 | ) | $ | (0.35 | ) | |||
Discontinued operations | (0.02 | ) | 0.15 | (0.03 | ) | 0.15 | |||||||||
Net loss attributable to COPT common shareholders | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.14 | ) | $ | (0.20 | ) | |||
Diluted earnings per common share (1) | |||||||||||||||
Loss from continuing operations | $ | (0.07 | ) | $ | (0.54 | ) | $ | (0.11 | ) | $ | (0.35 | ) | |||
Discontinued operations | (0.02 | ) | 0.15 | (0.03 | ) | 0.15 | |||||||||
Net loss attributable to COPT common shareholders | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.14 | ) | $ | (0.20 | ) | |||
Dividends declared per common share | $ | 0.2750 | $ | 0.2750 | $ | 0.8250 | $ | 0.8250 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net (loss) income | $ | (2,000 | ) | $ | (20,765 | ) | $ | 8,872 | $ | 1,331 | |||||
Other comprehensive (loss) income | |||||||||||||||
Unrealized (losses) gains on interest rate derivatives | (2,482 | ) | (2,760 | ) | 5,810 | (7,386 | ) | ||||||||
Losses on interest rate derivatives included in net (loss) income | 689 | 632 | 2,021 | 3,034 | |||||||||||
Equity in other comprehensive income of equity method investee | 1,070 | — | 1,070 | — | |||||||||||
Other comprehensive (loss) income | (723 | ) | (2,128 | ) | 8,901 | (4,352 | ) | ||||||||
Comprehensive (loss) income | (2,723 | ) | (22,893 | ) | 17,773 | (3,021 | ) | ||||||||
Comprehensive (income) loss attributable to noncontrolling interests | (948 | ) | 1,763 | (2,722 | ) | 1,509 | |||||||||
Comprehensive (loss) income attributable to COPT | $ | (3,671 | ) | $ | (21,130 | ) | $ | 15,051 | $ | (1,512 | ) |
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 (94,550 shares) | — | 1 | 1,187 | — | — | (1,188 | ) | — | |||||||||||||||||||
Preferred shares issued to the public (6,900,000 shares) | 172,500 | — | (6,838 | ) | — | — | — | 165,662 | |||||||||||||||||||
Redemption of preferred shares (2,200,000 shares) | (55,000 | ) | — | 1,827 | (1,827 | ) | — | — | (55,000 | ) | |||||||||||||||||
Costs associated with common shares issued to the public | — | — | (5 | ) | — | — | — | (5 | ) | ||||||||||||||||||
Exercise of share options (44,624 shares) | — | — | 666 | — | — | — | 666 | ||||||||||||||||||||
Share-based compensation | — | 1 | 9,191 | — | — | — | 9,192 | ||||||||||||||||||||
Restricted common share redemptions (135,777 shares) | — | — | (3,279 | ) | — | — | — | (3,279 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | 373 | — | — | (373 | ) | — | |||||||||||||||||||
Comprehensive loss | — | — | — | 2,438 | (3,955 | ) | 299 | (1,218 | ) | ||||||||||||||||||
Dividends | — | — | — | (74,203 | ) | — | — | (74,203 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (3,993 | ) | (3,993 | ) | ||||||||||||||||||
Distributions to noncontrolling interest in other consolidated entities | — | — | — | — | — | (648 | ) | (648 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | (2,827 | ) | — | — | — | (2,827 | ) | ||||||||||||||||||
Tax benefit from share-based compensation | — | — | 43 | — | — | — | 43 | ||||||||||||||||||||
Balance at September 30, 2012 (72,157,635 common shares outstanding) | $ | 333,833 | $ | 722 | $ | 1,451,416 | $ | (607,633 | ) | $ | (5,688 | ) | $ | 67,639 | $ | 1,240,289 | |||||||||||
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 | |||||||||||
Redemption of preferred shares (3,390,000 shares) | (84,750 | ) | — | 2,904 | (2,904 | ) | — | — | (84,750 | ) | |||||||||||||||||
Conversion of common units to common shares (310,889 shares) | — | 3 | 3,988 | — | — | (3,991 | ) | — | |||||||||||||||||||
Common shares issued to the public (4,485,000 shares) | — | 45 | 117,916 | — | — | — | 117,961 | ||||||||||||||||||||
Common shares issued under at-the-market program (1,500,000 shares) | — | 15 | 38,432 | — | — | — | 38,447 | ||||||||||||||||||||
Acquisition of property and noncontrolling interest in other consolidated entity for COPLP common units | — | — | (1,296 | ) | — | — | 2,665 | 1,369 | |||||||||||||||||||
Exercise of share options (32,756 shares) | — | — | 642 | — | — | — | 642 | ||||||||||||||||||||
Share-based compensation | — | 2 | 5,700 | — | — | — | 5,702 | ||||||||||||||||||||
Restricted common share redemptions (71,523 shares) | — | — | (1,848 | ) | — | — | — | (1,848 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | (773 | ) | — | — | 773 | — | |||||||||||||||||||
Comprehensive income | — | — | — | 6,691 | 8,360 | 1,834 | 16,885 | ||||||||||||||||||||
Dividends | — | — | — | (86,700 | ) | — | — | (86,700 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (3,681 | ) | (3,681 | ) | ||||||||||||||||||
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 redeemable noncontrolling interest | — | — | (6,414 | ) | — | — | — | (6,414 | ) | ||||||||||||||||||
Tax benefit from share-based compensation | — | — | (122 | ) | — | — | — | (122 | ) | ||||||||||||||||||
Balance at September 30, 2013 (87,381,395 common shares outstanding) | $ | 249,083 | $ | 874 | $ | 1,812,801 | $ | (700,368 | ) | $ | 2,925 | $ | 68,752 | $ | 1,434,067 |
For the Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 359,431 | $ | 363,877 | |||
Construction contract and other service revenues received | 48,877 | 58,637 | |||||
Property operating expenses paid | (133,799 | ) | (133,375 | ) | |||
Construction contract and other service expenses paid | (53,191 | ) | (50,438 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (20,681 | ) | (18,526 | ) | |||
Interest expense paid | (59,052 | ) | (63,811 | ) | |||
Previously accreted interest expense paid | (11,116 | ) | — | ||||
Settlement of interest rate derivatives | — | (29,738 | ) | ||||
Proceeds from sale of trading marketable securities | 298 | 18,975 | |||||
Exit costs on property dispositions | (186 | ) | (4,066 | ) | |||
Payments in connection with early extinguishment of debt | (23,969 | ) | (2,637 | ) | |||
Interest and other income received | 391 | 786 | |||||
Income taxes paid | 6 | (8 | ) | ||||
Net cash provided by operating activities | 107,009 | 139,676 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (156,820 | ) | (107,621 | ) | |||
Tenant improvements on operating properties | (15,868 | ) | (20,924 | ) | |||
Other capital improvements on operating properties | (17,528 | ) | (9,571 | ) | |||
Acquisitions of operating properties | — | (48,308 | ) | ||||
Proceeds from dispositions of properties | 12,447 | 290,607 | |||||
Mortgage and other loan receivables funded or acquired | (4,111 | ) | (11,603 | ) | |||
Leasing costs paid | (9,366 | ) | (7,289 | ) | |||
Other | 4,401 | (1,527 | ) | ||||
Net cash (used in) provided by investing activities | (186,845 | ) | 83,764 | ||||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | 457,000 | 262,000 | |||||
Unsecured senior notes | 592,413 | — | |||||
Other debt proceeds | 82,886 | 399,296 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | (457,000 | ) | (844,000 | ) | |||
Scheduled principal amortization | (7,229 | ) | (9,094 | ) | |||
Other debt repayments | (542,532 | ) | (51,850 | ) | |||
Deferred financing costs paid | (9,001 | ) | (3,210 | ) | |||
Net proceeds from issuance of preferred shares | — | 165,662 | |||||
Net proceeds from issuance of common shares | 157,307 | 661 | |||||
Redemption of preferred shares | (84,750 | ) | (55,000 | ) | |||
Common share dividends paid | (69,451 | ) | (69,325 | ) | |||
Preferred share dividends paid | (16,845 | ) | (12,345 | ) | |||
Distributions paid to noncontrolling interests in COPLP | (3,705 | ) | (4,510 | ) | |||
Restricted share redemptions | (1,848 | ) | (3,279 | ) | |||
Other | (685 | ) | 1,004 | ||||
Net cash provided by (used in) financing activities | 96,560 | (223,990 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 16,724 | (550 | ) | ||||
Cash and cash equivalents | |||||||
Beginning of period | 10,594 | 5,559 | |||||
End of period | $ | 27,318 | $ | 5,009 |
For the Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 8,872 | $ | 1,331 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 87,956 | 95,248 | |||||
Impairment losses | 30,940 | 60,593 | |||||
Settlement of previously accreted interest expense | (11,116 | ) | — | ||||
Amortization of deferred financing costs | 4,292 | 4,696 | |||||
Increase in deferred rent receivable | (7,995 | ) | (7,939 | ) | |||
Amortization of net debt discounts | 1,207 | 2,357 | |||||
Gain on sales of real estate | (2,683 | ) | (20,969 | ) | |||
Share-based compensation | 4,869 | 8,262 | |||||
Loss (gain) on early extinguishment of debt | 3,059 | (3,436 | ) | ||||
Other | (2,284 | ) | (459 | ) | |||
Changes in operating assets and liabilities: | |||||||
Decrease in accounts receivable | 1,523 | 10,063 | |||||
Decrease in restricted cash and marketable securities | 418 | 15,051 | |||||
(Increase) decrease in prepaid expenses and other assets | (12,974 | ) | 1,532 | ||||
Increase in accounts payable, accrued expenses and other liabilities | 18 | 4,124 | |||||
Increase (decrease) in rents received in advance and security deposits | 907 | (2,775 | ) | ||||
Decrease in interest rate derivatives in connection with cash settlement | — | (28,003 | ) | ||||
Net cash provided by operating activities | $ | 107,009 | $ | 139,676 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (13,094 | ) | $ | (11,627 | ) | |
Decrease in property in connection with surrender of property in settlement of debt | $ | — | $ | 12,812 | |||
Decrease in debt in connection with surrender of property in settlement of debt | $ | — | $ | 16,304 | |||
Increase (decrease) in fair value of derivatives applied to accumulated other comprehensive income (loss) and noncontrolling interests | $ | 7,785 | $ | (4,398 | ) | ||
Equity in other comprehensive income of an equity method investee | $ | 1,070 | $ | — | |||
Dividends/distributions payable | $ | 29,077 | $ | 26,954 | |||
COPLP common units issued to acquire property and noncontrolling interest in other consolidated entity | $ | 5,194 | $ | — | |||
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares | $ | 3,991 | $ | 1,188 | |||
Adjustments to noncontrolling interests resulting from changes in COPLP ownership | $ | 773 | $ | 373 | |||
Increase in redeemable noncontrolling interest and decrease in shareholders’ equity to carry redeemable noncontrolling interest at fair value | $ | 6,414 | $ | 2,827 |
September 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,713,579 | $ | 2,597,666 | |||
Projects in development or held for future development | 526,167 | 565,378 | |||||
Total properties, net | 3,239,746 | 3,163,044 | |||||
Assets held for sale, net | 133,984 | 140,229 | |||||
Cash and cash equivalents | 27,318 | 10,594 | |||||
Restricted cash and marketable securities | 7,517 | 14,781 | |||||
Accounts receivable (net of allowance for doubtful accounts of $5,344 and $4,694, respectively) | 17,724 | 19,247 | |||||
Deferred rent receivable | 90,104 | 85,802 | |||||
Intangible assets on real estate acquisitions, net | 64,372 | 75,879 | |||||
Deferred leasing and financing costs, net | 63,246 | 59,952 | |||||
Mortgage and other investing receivables | 40,321 | 33,396 | |||||
Prepaid expenses and other assets | 64,075 | 44,059 | |||||
Total assets | $ | 3,748,407 | $ | 3,646,983 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,135,031 | $ | 2,019,168 | |||
Accounts payable and accrued expenses | 85,291 | 97,922 | |||||
Rents received in advance and security deposits | 28,539 | 27,632 | |||||
Distributions payable | 29,077 | 28,698 | |||||
Deferred revenue associated with operating leases | 8,545 | 11,995 | |||||
Distributions received in excess of investment in unconsolidated real estate joint venture | 6,420 | 6,420 | |||||
Interest rate derivatives | 3,595 | 6,185 | |||||
Other liabilities | 1,053 | 2,166 | |||||
Total liabilities | 2,297,551 | 2,200,186 | |||||
Commitments and contingencies (Note 17) | |||||||
Redeemable noncontrolling interest | 16,789 | 10,298 | |||||
Equity: | |||||||
Corporate Office Properties, L.P.’s equity: | |||||||
Preferred units | |||||||
General partner, 9,431,667 preferred units outstanding at September 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 September 30, 2013 and December 31, 2012 | 8,800 | 8,800 | |||||
Common units, 87,381,395 and 80,952,986 held by the general partner and 3,978,154 and 4,067,542 held by limited partners at September 30, 2013 and December 31, 2012, respectively | 1,163,977 | 1,089,391 | |||||
Accumulated other comprehensive income (loss) | 3,026 | (5,708 | ) | ||||
Total Corporate Office Properties, L.P.’s equity | 1,424,886 | 1,426,316 | |||||
Noncontrolling interests in subsidiaries | 9,181 | 10,183 | |||||
Total equity | 1,434,067 | 1,436,499 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,748,407 | $ | 3,646,983 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 97,442 | $ | 92,287 | $ | 289,628 | $ | 271,634 | |||||||
Tenant recoveries and other real estate operations revenue | 21,598 | 22,075 | 65,499 | 63,597 | |||||||||||
Construction contract and other service revenues | 16,991 | 15,283 | 52,048 | 53,812 | |||||||||||
Total revenues | 136,031 | 129,645 | 407,175 | 389,043 | |||||||||||
Expenses | |||||||||||||||
Property operating expenses | 43,482 | 41,474 | 129,409 | 122,102 | |||||||||||
Depreciation and amortization associated with real estate operations | 29,210 | 28,604 | 86,239 | 84,633 | |||||||||||
Construction contract and other service expenses | 16,306 | 14,410 | 49,165 | 51,302 | |||||||||||
Impairment losses | 16,300 | 46,096 | 16,300 | 41,260 | |||||||||||
General, administrative and leasing expenses | 8,027 | 6,377 | 22,430 | 24,797 | |||||||||||
Business development expenses and land carry costs | 1,383 | 1,632 | 4,069 | 4,506 | |||||||||||
Total operating expenses | 114,708 | 138,593 | 307,612 | 328,600 | |||||||||||
Operating income (loss) | 21,323 | (8,948 | ) | 99,563 | 60,443 | ||||||||||
Interest expense | (21,242 | ) | (23,239 | ) | (66,851 | ) | (71,909 | ) | |||||||
Interest and other (loss) income | (3 | ) | 1,095 | 2,949 | 3,152 | ||||||||||
Loss on early extinguishment of debt | (374 | ) | (768 | ) | (27,028 | ) | (937 | ) | |||||||
(Loss) income from continuing operations before equity in income (loss) of unconsolidated entities and income taxes | (296 | ) | (31,860 | ) | 8,633 | (9,251 | ) | ||||||||
Equity in income (loss) of unconsolidated entities | 44 | (246 | ) | 211 | (522 | ) | |||||||||
Income tax expense | (24 | ) | (106 | ) | (61 | ) | (327 | ) | |||||||
(Loss) income from continuing operations | (276 | ) | (32,212 | ) | 8,783 | (10,100 | ) | ||||||||
Discontinued operations | (1,724 | ) | 11,447 | (2,594 | ) | 11,410 | |||||||||
(Loss) income before gain on sales of real estate | (2,000 | ) | (20,765 | ) | 6,189 | 1,310 | |||||||||
Gain on sales of real estate | — | — | 2,683 | 21 | |||||||||||
Net (loss) income | (2,000 | ) | (20,765 | ) | 8,872 | 1,331 | |||||||||
Net (income) loss attributable to noncontrolling interests in consolidated entities | (1,035 | ) | (404 | ) | (2,172 | ) | 167 | ||||||||
Net (loss) income attributable to COPLP | (3,035 | ) | (21,169 | ) | 6,700 | 1,498 | |||||||||
Preferred unit distributions | (4,655 | ) | (6,711 | ) | (15,976 | ) | (15,233 | ) | |||||||
Issuance costs associated with redeemed preferred units | — | (1,827 | ) | (2,904 | ) | (1,827 | ) | ||||||||
Net loss attributable to COPLP common unitholders | $ | (7,690 | ) | $ | (29,707 | ) | $ | (12,180 | ) | $ | (15,562 | ) | |||
Net (loss) income attributable to COPLP: | |||||||||||||||
(Loss) income from continuing operations | $ | (1,262 | ) | $ | (31,969 | ) | $ | 9,441 | $ | (9,250 | ) | ||||
Discontinued operations, net | (1,773 | ) | 10,800 | (2,741 | ) | 10,748 | |||||||||
Net (loss) income attributable to COPLP | $ | (3,035 | ) | $ | (21,169 | ) | $ | 6,700 | $ | 1,498 | |||||
Basic earnings per common unit (1) | |||||||||||||||
Loss from continuing operations | $ | (0.07 | ) | $ | (0.54 | ) | $ | (0.11 | ) | $ | (0.35 | ) | |||
Discontinued operations | (0.02 | ) | 0.15 | (0.03 | ) | 0.14 | |||||||||
Net loss attributable to COPLP common unitholders | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.14 | ) | $ | (0.21 | ) | |||
Diluted earnings per common unit (1) | |||||||||||||||
Loss from continuing operations | $ | (0.07 | ) | $ | (0.54 | ) | $ | (0.11 | ) | $ | (0.35 | ) | |||
Discontinued operations | (0.02 | ) | 0.15 | (0.03 | ) | 0.14 | |||||||||
Net loss attributable to COPLP common unitholders | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.14 | ) | $ | (0.21 | ) | |||
Distributions declared per common unit | $ | 0.2750 | $ | 0.2750 | $ | 0.8250 | $ | 0.8250 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net (loss) income | $ | (2,000 | ) | $ | (20,765 | ) | $ | 8,872 | $ | 1,331 | |||||
Other comprehensive (loss) income | |||||||||||||||
Unrealized (losses) gains on interest rate derivatives | (2,482 | ) | (2,760 | ) | 5,810 | (7,386 | ) | ||||||||
Losses on interest rate derivatives included in net (loss) income | 689 | 632 | 2,021 | 3,034 | |||||||||||
Equity in other comprehensive income of equity method investee | 1,070 | — | 1,070 | — | |||||||||||
Other comprehensive (loss) income | (723 | ) | (2,128 | ) | 8,901 | (4,352 | ) | ||||||||
Comprehensive (loss) income | (2,723 | ) | (22,893 | ) | 17,773 | (3,021 | ) | ||||||||
Comprehensive (income) loss attributable to noncontrolling interests | (1,050 | ) | (360 | ) | (2,339 | ) | 336 | ||||||||
Comprehensive (loss) income attributable to COPLP | $ | (3,773 | ) | $ | (23,253 | ) | $ | 15,434 | $ | (2,685 | ) |
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 | — | (6,838 | ) | — | — | 165,662 | ||||||||||||||||||||||
Redemption of preferred units resulting from redemption of preferred shares | — | — | (2,200,000 | ) | (55,000 | ) | — | — | — | — | (55,000 | ) | ||||||||||||||||||||
Costs of common units resulting from public issuance of common shares | — | — | — | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||||||||
Issuance of common units resulting from exercise of share options | — | — | — | — | 44,624 | 666 | — | — | 666 | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | 142,914 | 9,192 | — | — | 9,192 | |||||||||||||||||||||||
Restricted common unit redemptions | — | — | — | — | (135,777 | ) | (3,279 | ) | — | — | (3,279 | ) | ||||||||||||||||||||
Comprehensive loss | — | 495 | — | 14,738 | — | (13,735 | ) | (4,182 | ) | 1,466 | (1,218 | ) | ||||||||||||||||||||
Distributions to owners of common and preferred units | — | (495 | ) | — | (14,738 | ) | — | (62,963 | ) | — | — | (78,196 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (648 | ) | (648 | ) | |||||||||||||||||||||
COPT contribution to COPLP of distribution from subsidiary | — | — | — | — | — | 1,602 | — | (1,602 | ) | — | ||||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (2,827 | ) | — | — | (2,827 | ) | |||||||||||||||||||||
Tax benefit from share-based compensation | — | — | — | — | — | 43 | — | — | 43 | |||||||||||||||||||||||
Balance at September 30, 2012 | 352,000 | $ | 8,800 | 12,821,667 | $ | 333,833 | 76,364,873 | $ | 893,963 | $ | (6,019 | ) | $ | 9,712 | $ | 1,240,289 | ||||||||||||||||
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 | ||||||||||||||||
Redemption of preferred units resulting from redemption of preferred shares | — | — | (3,390,000 | ) | (84,750 | ) | — | — | — | — | (84,750 | ) | ||||||||||||||||||||
Issuance of common units resulting from public issuance of common shares | — | — | — | — | 4,485,000 | 117,961 | — | — | 117,961 | |||||||||||||||||||||||
Issuance of common units resulting from common shares issued under at-the-market program | — | — | — | — | 1,500,000 | 38,447 | — | — | 38,447 | |||||||||||||||||||||||
Acquisition of property and noncontrolling interest in subsidiary for COPLP common units | — | — | — | — | 221,501 | 3,899 | — | (2,530 | ) | 1,369 | ||||||||||||||||||||||
Issuance of common units resulting from exercise of share options | — | — | — | — | 32,756 | 642 | — | — | 642 | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | 171,287 | 5,702 | — | — | 5,702 | |||||||||||||||||||||||
Restricted common unit redemptions | — | — | — | — | (71,523 | ) | (1,848 | ) | — | — | (1,848 | ) | ||||||||||||||||||||
Comprehensive income | — | 495 | — | 15,481 | — | (9,276 | ) | 8,734 | 1,451 | 16,885 | ||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (495 | ) | — | (15,481 | ) | — | (74,405 | ) | — | — | (90,381 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (8 | ) | (8 | ) | |||||||||||||||||||||
Contributions from noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | 85 | 85 | |||||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (6,414 | ) | — | — | (6,414 | ) | |||||||||||||||||||||
Tax benefit from share-based compensation | — | — | — | — | — | (122 | ) | — | — | (122 | ) | |||||||||||||||||||||
Balance at September 30, 2013 | 352,000 | $ | 8,800 | 9,431,667 | $ | 249,083 | 91,359,549 | $ | 1,163,977 | $ | 3,026 | $ | 9,181 | $ | 1,434,067 |
For the Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 359,431 | $ | 363,877 | |||
Construction contract and other service revenues received | 48,877 | 58,637 | |||||
Property operating expenses paid | (133,799 | ) | (133,375 | ) | |||
Construction contract and other service expenses paid | (53,191 | ) | (50,438 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (20,681 | ) | (18,526 | ) | |||
Interest expense paid | (59,052 | ) | (63,811 | ) | |||
Previously accreted interest expense paid | (11,116 | ) | — | ||||
Settlement of interest rate derivatives | — | (29,738 | ) | ||||
Proceeds from sale of trading marketable securities |