T | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | March 31, 2014 |
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) | ||
March 31, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,729,003 | $ | 2,702,693 | |||
Projects in development or held for future development | 495,625 | 511,608 | |||||
Total properties, net | 3,224,628 | 3,214,301 | |||||
Cash and cash equivalents | 18,374 | 54,373 | |||||
Restricted cash and marketable securities | 10,965 | 11,448 | |||||
Accounts receivable (net of allowance for doubtful accounts of $2,353 and $2,976, respectively) | 30,152 | 27,000 | |||||
Deferred rent receivable (net of allowance of $1,495 and $2,126, respectively) | 91,082 | 89,456 | |||||
Intangible assets on real estate acquisitions, net | 55,678 | 59,258 | |||||
Deferred leasing and financing costs, net | 65,855 | 66,267 | |||||
Mortgage and other investing receivables | 55,231 | 53,663 | |||||
Prepaid expenses and other assets | 53,932 | 54,186 | |||||
Total assets | $ | 3,605,897 | $ | 3,629,952 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 1,931,831 | $ | 1,927,703 | |||
Accounts payable and accrued expenses | 97,451 | 98,785 | |||||
Rents received in advance and security deposits | 28,267 | 31,492 | |||||
Dividends and distributions payable | 29,122 | 29,080 | |||||
Deferred revenue associated with operating leases | 12,281 | 10,369 | |||||
Interest rate derivatives | 3,196 | 3,309 | |||||
Other liabilities | 13,060 | 14,207 | |||||
Total liabilities | 2,115,208 | 2,114,945 | |||||
Commitments and contingencies (Note 17) | |||||||
Redeemable noncontrolling interest | 17,654 | 17,758 | |||||
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; 9,431,667 shares issued and outstanding) | 249,083 | 249,083 | |||||
Common Shares of beneficial interest ($0.01 par value; 125,000,000 shares authorized, shares issued and outstanding of 87,594,931 at March 31, 2014 and 87,394,512 at December 31, 2013) | 876 | 874 | |||||
Additional paid-in capital | 1,816,467 | 1,814,015 | |||||
Cumulative distributions in excess of net income | (665,708 | ) | (641,868 | ) | |||
Accumulated other comprehensive income | 2,072 | 3,480 | |||||
Total Corporate Office Properties Trust’s shareholders’ equity | 1,402,790 | 1,425,584 | |||||
Noncontrolling interests in subsidiaries: | |||||||
Common units in COPLP | 51,757 | 53,468 | |||||
Preferred units in COPLP | 8,800 | 8,800 | |||||
Other consolidated entities | 9,688 | 9,397 | |||||
Noncontrolling interests in subsidiaries | 70,245 | 71,665 | |||||
Total equity | 1,473,035 | 1,497,249 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,605,897 | $ | 3,629,952 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Revenues | |||||||
Rental revenue | $ | 98,035 | $ | 91,849 | |||
Tenant recoveries and other real estate operations revenue | 26,842 | 20,108 | |||||
Construction contract and other service revenues | 21,790 | 14,262 | |||||
Total revenues | 146,667 | 126,219 | |||||
Expenses | |||||||
Property operating expenses | 49,772 | 40,388 | |||||
Depreciation and amortization associated with real estate operations | 43,596 | 27,010 | |||||
Construction contract and other service expenses | 18,624 | 13,477 | |||||
General, administrative and leasing expenses | 8,143 | 7,820 | |||||
Business development expenses and land carry costs | 1,326 | 1,359 | |||||
Total operating expenses | 121,461 | 90,054 | |||||
Operating income | 25,206 | 36,165 | |||||
Interest expense | (20,827 | ) | (20,290 | ) | |||
Interest and other income | 1,285 | 946 | |||||
Loss on early extinguishment of debt | — | (5,184 | ) | ||||
Income from continuing operations before equity in income of unconsolidated entities and income taxes | 5,664 | 11,637 | |||||
Equity in income of unconsolidated entities | 60 | 41 | |||||
Income tax expense | (64 | ) | (16 | ) | |||
Income from continuing operations | 5,660 | 11,662 | |||||
Discontinued operations | 11 | 1,261 | |||||
Income before gain on sales of real estate | 5,671 | 12,923 | |||||
Gain on sales of real estate | — | 2,354 | |||||
Net income | 5,671 | 15,277 | |||||
Net (income) loss attributable to noncontrolling interests: | |||||||
Common units in COPLP | (16 | ) | (429 | ) | |||
Preferred units in COPLP | (165 | ) | (165 | ) | |||
Other consolidated entities | (749 | ) | 337 | ||||
Net income attributable to COPT | 4,741 | 15,020 | |||||
Preferred share dividends | (4,490 | ) | (6,106 | ) | |||
Net income attributable to COPT common shareholders | $ | 251 | $ | 8,914 | |||
Net income attributable to COPT: | |||||||
Income from continuing operations | $ | 4,728 | $ | 13,849 | |||
Discontinued operations, net | 13 | 1,171 | |||||
Net income attributable to COPT | $ | 4,741 | $ | 15,020 | |||
Basic earnings per common share (1) | |||||||
Income from continuing operations | $ | 0.00 | $ | 0.09 | |||
Discontinued operations | 0.00 | 0.02 | |||||
Net income attributable to COPT common shareholders | $ | 0.00 | $ | 0.11 | |||
Diluted earnings per common share (1) | |||||||
Income from continuing operations | $ | 0.00 | $ | 0.09 | |||
Discontinued operations | 0.00 | 0.02 | |||||
Net income attributable to COPT common shareholders | $ | 0.00 | $ | 0.11 | |||
Dividends declared per common share | $ | 0.275 | $ | 0.275 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net income | $ | 5,671 | $ | 15,277 | |||
Other comprehensive income | |||||||
Unrealized (losses) gains on interest rate derivatives | (2,123 | ) | 462 | ||||
Losses on interest rate derivatives included in interest expense | 695 | 658 | |||||
Other comprehensive (loss) income | (1,428 | ) | 1,120 | ||||
Comprehensive income | 4,243 | 16,397 | |||||
Comprehensive income attributable to noncontrolling interests | (911 | ) | (352 | ) | |||
Comprehensive income attributable to COPT | $ | 3,332 | $ | 16,045 |
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, 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 (248,644 shares) | — | 3 | 3,172 | — | — | (3,175 | ) | — | |||||||||||||||||||
Common shares issued to the public (4,485,000 shares) | — | 45 | 117,868 | — | — | — | 117,913 | ||||||||||||||||||||
Exercise of share options (16,453 shares) | — | — | 301 | — | — | — | 301 | ||||||||||||||||||||
Share-based compensation | — | 1 | 1,999 | — | — | — | 2,000 | ||||||||||||||||||||
Restricted common share redemptions (60,960 shares) | — | — | (1,576 | ) | — | — | — | (1,576 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | (2,229 | ) | — | — | 2,229 | — | |||||||||||||||||||
Comprehensive income | — | — | — | 15,020 | 1,025 | 1,142 | 17,187 | ||||||||||||||||||||
Dividends | — | — | — | (29,699 | ) | — | — | (29,699 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (1,215 | ) | (1,215 | ) | ||||||||||||||||||
Contributions from noncontrolling interests in other consolidated entities | — | — | — | — | — | 85 | 85 | ||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | (848 | ) | — | — | — | (848 | ) | ||||||||||||||||||
Tax loss from share-based compensation | — | — | (104 | ) | — | — | — | (104 | ) | ||||||||||||||||||
Balance at March 31, 2013 (85,758,438 common shares outstanding) | $ | 333,833 | $ | 858 | $ | 1,772,255 | $ | (632,134 | ) | $ | (4,410 | ) | $ | 70,141 | $ | 1,540,543 | |||||||||||
Balance at December 31, 2013 (87,394,512 common shares outstanding) | $ | 249,083 | $ | 874 | $ | 1,814,015 | $ | (641,868 | ) | $ | 3,480 | $ | 71,665 | $ | 1,497,249 | ||||||||||||
Conversion of common units to common shares (48,498 shares) | — | — | 651 | — | — | (651 | ) | — | |||||||||||||||||||
Exercise of share options (26,614 shares) | — | — | 568 | — | — | — | 568 | ||||||||||||||||||||
Share-based compensation | — | 2 | 1,854 | — | — | — | 1,856 | ||||||||||||||||||||
Restricted common share redemptions (40,965 shares) | — | — | (1,092 | ) | — | — | — | (1,092 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | (69 | ) | — | — | 69 | — | |||||||||||||||||||
Comprehensive income | — | — | — | 4,741 | (1,408 | ) | 408 | 3,741 | |||||||||||||||||||
Dividends | — | — | — | (28,581 | ) | — | — | (28,581 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (1,246 | ) | (1,246 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | 540 | — | — | — | 540 | ||||||||||||||||||||
Balance at March 31, 2014 (87,594,931 common shares outstanding) | $ | 249,083 | $ | 876 | $ | 1,816,467 | $ | (665,708 | ) | $ | 2,072 | $ | 70,245 | $ | 1,473,035 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 116,386 | $ | 119,348 | |||
Construction contract and other service revenues received | 17,289 | 15,695 | |||||
Property operating expenses paid | (42,739 | ) | (38,865 | ) | |||
Construction contract and other service expenses paid | (11,397 | ) | (15,588 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (9,906 | ) | (8,521 | ) | |||
Interest expense paid | (18,403 | ) | (18,018 | ) | |||
Previously accreted interest expense paid | — | (2,263 | ) | ||||
Payments in connection with early extinguishment of debt | (101 | ) | (4,803 | ) | |||
Interest and other income received | 217 | 320 | |||||
Income taxes refund | 192 | 6 | |||||
Net cash provided by operating activities | 51,538 | 47,311 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (42,625 | ) | (44,361 | ) | |||
Tenant improvements on operating properties | (4,357 | ) | (5,263 | ) | |||
Other capital improvements on operating properties | (9,115 | ) | (9,327 | ) | |||
Mortgage and other loan receivables funded | (395 | ) | (2,231 | ) | |||
Leasing costs paid | (4,422 | ) | (3,436 | ) | |||
Other | 59 | 4,442 | |||||
Net cash used in investing activities | (60,855 | ) | (60,176 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | — | 99,000 | |||||
Other debt proceeds | 5,700 | 68,132 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | — | (99,000 | ) | ||||
Scheduled principal amortization | (1,855 | ) | (2,512 | ) | |||
Other debt repayments | (50 | ) | (125,877 | ) | |||
Deferred financing costs paid | (9 | ) | (1,109 | ) | |||
Net proceeds from issuance of common shares | 568 | 118,389 | |||||
Common share dividends paid | (24,036 | ) | (22,276 | ) | |||
Preferred share dividends paid | (4,490 | ) | (6,106 | ) | |||
Distributions paid to noncontrolling interests in COPLP | (1,253 | ) | (1,370 | ) | |||
Restricted share redemptions | (1,092 | ) | (1,576 | ) | |||
Other | (165 | ) | 85 | ||||
Net cash (used in) provided by financing activities | (26,682 | ) | 25,780 | ||||
Net (decrease) increase in cash and cash equivalents | (35,999 | ) | 12,915 | ||||
Cash and cash equivalents | |||||||
Beginning of period | 54,373 | 10,594 | |||||
End of period | $ | 18,374 | $ | 23,509 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 5,671 | $ | 15,277 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 44,101 | 28,782 | |||||
Impairment losses | 1 | 1,857 | |||||
Settlement of previously accreted interest expense | — | (2,263 | ) | ||||
Amortization of deferred financing costs | 1,167 | 1,528 | |||||
Decrease (increase) in deferred rent receivable | 398 | (4,236 | ) | ||||
Amortization of net debt discounts | 171 | 710 | |||||
Loss (gain) on sales of real estate | 4 | (2,354 | ) | ||||
Share-based compensation | 1,555 | 1,649 | |||||
Loss on early extinguishment of debt | (78 | ) | 381 | ||||
Other | (1,032 | ) | (580 | ) | |||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in accounts receivable | (1,769 | ) | 6,342 | ||||
Decrease in restricted cash and marketable securities | 283 | 201 | |||||
(Increase) decrease in prepaid expenses and other assets | (494 | ) | 4,180 | ||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | 4,785 | (2,555 | ) | ||||
Decrease in rents received in advance and security deposits | (3,225 | ) | (1,608 | ) | |||
Net cash provided by operating activities | $ | 51,538 | $ | 47,311 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (7,985 | ) | $ | (5,353 | ) | |
(Decrease) increase in fair value of derivatives applied to accumulated other comprehensive income (loss) and noncontrolling interests | $ | (1,443 | ) | $ | 1,105 | ||
Dividends/distribution payable | $ | 29,122 | $ | 29,947 | |||
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares | $ | 651 | $ | 3,175 | |||
Adjustments to noncontrolling interests resulting from changes in COPLP ownership | $ | 69 | $ | 2,229 | |||
(Decrease) increase in redeemable noncontrolling interest and (increase) decrease in shareholders’ equity to carry redeemable noncontrolling interest at fair value | $ | (540 | ) | $ | 848 |
March 31, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,729,003 | $ | 2,702,693 | |||
Projects in development or held for future development | 495,625 | 511,608 | |||||
Total properties, net | 3,224,628 | 3,214,301 | |||||
Cash and cash equivalents | 18,374 | 54,373 | |||||
Restricted cash and marketable securities | 3,400 | 3,981 | |||||
Accounts receivable (net of allowance for doubtful accounts of $2,353 and $2,976, respectively) | 30,152 | 27,000 | |||||
Deferred rent receivable (net of allowance of $1,495 and $2,126, respectively) | 91,082 | 89,456 | |||||
Intangible assets on real estate acquisitions, net | 55,678 | 59,258 | |||||
Deferred leasing and financing costs, net | 65,855 | 66,267 | |||||
Mortgage and other investing receivables | 55,231 | 53,663 | |||||
Prepaid expenses and other assets | 53,932 | 54,186 | |||||
Total assets | $ | 3,598,332 | $ | 3,622,485 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 1,931,831 | $ | 1,927,703 | |||
Accounts payable and accrued expenses | 97,451 | 98,785 | |||||
Rents received in advance and security deposits | 28,267 | 31,492 | |||||
Distributions payable | 29,122 | 29,080 | |||||
Deferred revenue associated with operating leases | 12,281 | 10,369 | |||||
Interest rate derivatives | 3,196 | 3,309 | |||||
Other liabilities | 5,495 | 6,740 | |||||
Total liabilities | 2,107,643 | 2,107,478 | |||||
Commitments and contingencies (Note 17) | |||||||
Redeemable noncontrolling interest | 17,654 | 17,758 | |||||
Equity: | |||||||
Corporate Office Properties, L.P.’s equity: | |||||||
Preferred units | |||||||
General partner, 9,431,667 preferred units outstanding at March 31, 2014 and December 31, 2013 | 249,083 | 249,083 | |||||
Limited partner, 352,000 preferred units outstanding at March 31, 2014 and December 31, 2013 | 8,800 | 8,800 | |||||
Common units, 87,594,931 and 87,394,512 held by the general partner and 3,929,202 and 3,977,700 held by limited partners at March 31, 2014 and December 31, 2013, respectively | 1,203,297 | 1,226,318 | |||||
Accumulated other comprehensive income | 2,133 | 3,605 | |||||
Total Corporate Office Properties, L.P.’s equity | 1,463,313 | 1,487,806 | |||||
Noncontrolling interests in subsidiaries | 9,722 | 9,443 | |||||
Total equity | 1,473,035 | 1,497,249 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,598,332 | $ | 3,622,485 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Revenues | |||||||
Rental revenue | $ | 98,035 | $ | 91,849 | |||
Tenant recoveries and other real estate operations revenue | 26,842 | 20,108 | |||||
Construction contract and other service revenues | 21,790 | 14,262 | |||||
Total revenues | 146,667 | 126,219 | |||||
Expenses | |||||||
Property operating expenses | 49,772 | 40,388 | |||||
Depreciation and amortization associated with real estate operations | 43,596 | 27,010 | |||||
Construction contract and other service expenses | 18,624 | 13,477 | |||||
General, administrative and leasing expenses | 8,143 | 7,820 | |||||
Business development expenses and land carry costs | 1,326 | 1,359 | |||||
Total operating expenses | 121,461 | 90,054 | |||||
Operating income | 25,206 | 36,165 | |||||
Interest expense | (20,827 | ) | (20,290 | ) | |||
Interest and other income | 1,285 | 946 | |||||
Loss on early extinguishment of debt | — | (5,184 | ) | ||||
Income from continuing operations before equity in income of unconsolidated entities and income taxes | 5,664 | 11,637 | |||||
Equity in income of unconsolidated entities | 60 | 41 | |||||
Income tax expense | (64 | ) | (16 | ) | |||
Income from continuing operations | 5,660 | 11,662 | |||||
Discontinued operations | 11 | 1,261 | |||||
Income before gain on sales of real estate | 5,671 | 12,923 | |||||
Gain on sales of real estate | — | 2,354 | |||||
Net income | 5,671 | 15,277 | |||||
Net (income) loss attributable to noncontrolling interests in consolidated entities | (737 | ) | 336 | ||||
Net income attributable to COPLP | 4,934 | 15,613 | |||||
Preferred unit distributions | (4,655 | ) | (6,271 | ) | |||
Net loss attributable to COPLP common unitholders | $ | 279 | $ | 9,342 | |||
Net income attributable to COPLP: | |||||||
Income from continuing operations | $ | 4,921 | $ | 14,385 | |||
Discontinued operations, net | 13 | 1,228 | |||||
Net income attributable to COPLP | $ | 4,934 | $ | 15,613 | |||
Basic earnings per common unit (1) | |||||||
Income from continuing operations | $ | 0.00 | $ | 0.09 | |||
Discontinued operations | 0.00 | 0.02 | |||||
Net income attributable to COPLP common unitholders | $ | 0.00 | $ | 0.11 | |||
Diluted earnings per common unit (1) | |||||||
Income from continuing operations | $ | 0.00 | $ | 0.09 | |||
Discontinued operations | 0.00 | 0.02 | |||||
Net income attributable to COPLP common unitholders | $ | 0.00 | $ | 0.11 | |||
Distributions declared per common unit | $ | 0.275 | $ | 0.275 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net income | $ | 5,671 | $ | 15,277 | |||
Other comprehensive income | |||||||
Unrealized (losses) gains on interest rate derivatives | (2,123 | ) | 462 | ||||
Losses on interest rate derivatives included in interest expense | 695 | 658 | |||||
Other comprehensive (loss) income | (1,428 | ) | 1,120 | ||||
Comprehensive income | 4,243 | 16,397 | |||||
Comprehensive (income) loss attributable to noncontrolling interests | (782 | ) | 290 | ||||
Comprehensive income attributable to COPLP | $ | 3,461 | $ | 16,687 |
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, 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 | — | — | — | — | 16,453 | 301 | — | — | 301 | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | 116,315 | 2,000 | — | — | 2,000 | |||||||||||||||||||||||
Restricted common unit redemptions | — | — | — | — | (60,960 | ) | (1,576 | ) | — | — | (1,576 | ) | ||||||||||||||||||||
Comprehensive loss | — | 165 | — | 6,106 | — | 9,342 | 1,074 | 500 | 17,187 | |||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (165 | ) | — | (6,106 | ) | — | (24,643 | ) | — | — | (30,914 | ) | |||||||||||||||||||
Contributions from noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | 85 | 85 | |||||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (848 | ) | — | — | (848 | ) | |||||||||||||||||||||
Tax loss from share-based compensation | — | — | — | — | — | (104 | ) | — | — | (104 | ) | |||||||||||||||||||||
Balance at March 31, 2013 | 352,000 | $ | 8,800 | 12,821,667 | $ | 333,833 | 89,577,336 | $ | 1,191,776 | $ | (4,634 | ) | $ | 10,768 | $ | 1,540,543 | ||||||||||||||||
Balance at December 31, 2013 | 352,000 | $ | 8,800 | 9,431,667 | $ | 249,083 | 91,372,212 | $ | 1,226,318 | $ | 3,605 | $ | 9,443 | $ | 1,497,249 | |||||||||||||||||
Issuance of common units resulting from exercise of share options | — | — | — | — | 26,614 | 568 | — | — | 568 | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | 166,272 | 1,856 | — | — | 1,856 | |||||||||||||||||||||||
Restricted common unit redemptions | — | — | — | — | (40,965 | ) | (1,092 | ) | — | — | (1,092 | ) | ||||||||||||||||||||
Comprehensive income | — | 165 | — | 4,490 | — | 279 | (1,472 | ) | 279 | 3,741 | ||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (165 | ) | — | (4,490 | ) | — | (25,172 | ) | — | — | (29,827 | ) | |||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | 540 | — | — | 540 | |||||||||||||||||||||||
Balance at March 31, 2014 | 352,000 | $ | 8,800 | 9,431,667 | $ | 249,083 | 91,524,133 | $ | 1,203,297 | $ | 2,133 | $ | 9,722 | $ | 1,473,035 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 116,386 | $ | 119,348 | |||
Construction contract and other service revenues received | 17,289 | 15,695 | |||||
Property operating expenses paid | (42,739 | ) | (38,865 | ) | |||
Construction contract and other service expenses paid | (11,397 | ) | (15,588 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (9,906 | ) | (8,521 | ) | |||
Interest expense paid | (18,403 | ) | (18,018 | ) | |||
Previously accreted interest expense paid | — | (2,263 | ) | ||||
Payments in connection with early extinguishment of debt | (101 | ) | (4,803 | ) | |||
Interest and other income received | 217 | 320 | |||||
Income taxes refund | 192 | 6 | |||||
Net cash provided by operating activities | 51,538 | 47,311 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (42,625 | ) | (44,361 | ) | |||
Tenant improvements on operating properties | (4,357 | ) | (5,263 | ) | |||
Other capital improvements on operating properties | (9,115 | ) | (9,327 | ) | |||
Mortgage and other loan receivables funded | (395 | ) | (2,231 | ) | |||
Leasing costs paid | (4,422 | ) | (3,436 | ) | |||
Other | 59 | 4,442 | |||||
Net cash used in investing activities | (60,855 | ) | (60,176 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | — | 99,000 | |||||
Other debt proceeds | 5,700 | 68,132 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | — | (99,000 | ) | ||||
Scheduled principal amortization | (1,855 | ) | (2,512 | ) | |||
Other debt repayments | (50 | ) | (125,877 | ) | |||
Deferred financing costs paid | (9 | ) | (1,109 | ) | |||
Net proceeds from issuance of common units | 568 | 118,389 | |||||
Common unit distributions paid | (25,124 | ) | (23,481 | ) | |||
Preferred unit distributions paid | (4,655 | ) | (6,271 | ) | |||
Restricted unit redemptions | (1,092 | ) | (1,576 | ) | |||
Other | (165 | ) | 85 | ||||
Net cash (used in) provided by financing activities | (26,682 | ) | 25,780 | ||||
Net (decrease) increase in cash and cash equivalents | (35,999 | ) | 12,915 | ||||
Cash and cash equivalents | |||||||
Beginning of period | 54,373 | 10,594 | |||||
End of period | $ | 18,374 | $ | 23,509 |
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 5,671 | $ | 15,277 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 44,101 | 28,782 | |||||
Impairment losses | 1 | 1,857 | |||||
Settlement of previously accreted interest expense | — | (2,263 | ) | ||||
Amortization of deferred financing costs | 1,167 | 1,528 | |||||
Decrease (increase) in deferred rent receivable | 398 | (4,236 | ) | ||||
Amortization of net debt discounts | 171 | 710 | |||||
Loss (gain) on sales of real estate | 4 | (2,354 | ) | ||||
Share-based compensation | 1,555 | 1,649 | |||||
Loss on early extinguishment of debt | (78 | ) | 381 | ||||
Other | (1,032 | ) | (580 | ) | |||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in accounts receivable | (1,769 | ) | 6,342 | ||||
Decrease in restricted cash and marketable securities | 381 | 483 | |||||
(Increase) decrease in prepaid expenses and other assets | (494 | ) | 4,180 | ||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | 4,687 | (2,837 | ) | ||||
Decrease in rents received in advance and security deposits | (3,225 | ) | (1,608 | ) | |||
Net cash provided by operating activities | $ | 51,538 | $ | 47,311 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (7,985 | ) | $ | (5,353 | ) | |
(Decrease) increase in fair value of derivatives applied to accumulated other comprehensive income (loss) and noncontrolling interests | $ | (1,443 | ) | $ | 1,105 | ||
Distributions payable | $ | 29,122 | $ | 29,947 | |||
(Decrease) increase in redeemable noncontrolling interest and (increase) decrease in equity to carry redeemable noncontrolling interest at fair value | $ | (540 | ) | $ | 848 |
• | 183 operating office properties totaling 17.5 million square feet; |
• | 12 office properties under, or contractually committed for, construction or redevelopment that we estimate will total approximately 1.6 million square feet upon completion, including two partially operational properties included above; |
• | land held or under pre-construction totaling 1,716 acres (including 56 acres controlled but not owned) that we believe are potentially developable into approximately 19.7 million square feet; and |
• | a partially operational, wholesale data center which upon completion and stabilization is expected to have a critical load of 18 megawatts. |
Description | Quoted Prices in Active Markets for Identical Assets(Level 1) | Significant Other Observable Inputs(Level 2) | Significant Unobservable Inputs(Level 3) | Total | ||||||||||||
Assets: | ||||||||||||||||
Marketable securities in deferred compensation plan (1) | ||||||||||||||||
Mutual funds | $ | 7,249 | $ | — | $ | — | $ | 7,249 | ||||||||
Common stocks | 115 | — | — | 115 | ||||||||||||
Other | 201 | — | — | 201 | ||||||||||||
Interest rate derivatives (2) | — | 5,038 | — | 5,038 | ||||||||||||
Warrants to purchase common stock (2) | — | 537 | — | 537 | ||||||||||||
Total Assets | $ | 7,565 | $ | 5,575 | $ | — | $ | 13,140 | ||||||||
Liabilities: | ||||||||||||||||
Deferred compensation plan liability (3) | $ | — | $ | 7,565 | $ | — | $ | 7,565 | ||||||||
Interest rate derivatives | — | 3,196 | — | 3,196 | ||||||||||||
Total Liabilities | $ | — | $ | 10,761 | $ | — | $ | 10,761 | ||||||||
Redeemable noncontrolling interest | $ | — | $ | — | $ | 17,654 | $ | 17,654 |
Description | Quoted Prices in Active Markets for Identical Assets(Level 1) | Significant Other Observable Inputs(Level 2) | Significant Unobservable Inputs(Level 3) | Total | ||||||||||||
Assets: | ||||||||||||||||
Interest rate derivatives (1) | $ | — | $ | 5,038 | $ | — | $ | 5,038 | ||||||||
Warrants to purchase common stock (1) | — | 537 | — | 537 | ||||||||||||
Total Assets | $ | — | $ | 5,575 | $ | — | $ | 5,575 | ||||||||
Liabilities: | ||||||||||||||||
Interest rate derivatives | $ | — | $ | 3,196 | $ | — | $ | 3,196 | ||||||||
Redeemable noncontrolling interest | $ | — | $ | — | $ | 17,654 | $ | 17,654 |
Fair Value of Property Held as of March 31, 2013 | Impairment Losses | |||||||||||||||||||
Quoted Prices in | Significant | Recognized in | ||||||||||||||||||
Active Markets for | Significant Other | Unobservable | Three Months | |||||||||||||||||
Identical Assets | Observable Inputs | Inputs | Ended | |||||||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | Total | March 31, 2013 | |||||||||||||||
Assets: | ||||||||||||||||||||
Properties, net | $ | — | $ | — | $ | 7,250 | $ | 7,250 | $ | 1,857 |
Valuation Technique | Fair Value on Measurement Date | Unobservable Input | Range (Weighted Average) | |||||
Bids for property indicative of value | $ | 7,250 | Indicative bid | (1) |
March 31, 2014 | December 31, 2013 | ||||||
Land | $ | 436,381 | $ | 430,472 | |||
Buildings and improvements | 2,927,800 | 2,869,870 | |||||
Less: accumulated depreciation | (635,178 | ) | (597,649 | ) | |||
Operating properties, net | $ | 2,729,003 | $ | 2,702,693 |
March 31, 2014 | December 31, 2013 | ||||||
Land | $ | 238,904 | $ | 245,676 | |||
Construction in progress, excluding land | 256,721 | 265,932 | |||||
Projects in development or held for future development | $ | 495,625 | $ | 511,608 |
Nominal | ||||||||||||||||||
Ownership | March 31, 2014 | (1) | ||||||||||||||||
Date | % as of | Total | Encumbered | Total | ||||||||||||||
Acquired | 3/31/2014 | Nature of Activity | Assets | Assets | Liabilities | |||||||||||||
LW Redstone Company, LLC | 3/23/2010 | 85% | Operates four buildings and developing others (2) | $ | 135,231 | $ | 68,360 | $ | 36,272 | |||||||||
M Square Associates, LLC | 6/26/2007 | 50% | Operates two buildings and developing others (3) | 60,728 | 48,358 | 40,536 | ||||||||||||
COPT-FD Indian Head, LLC | 10/23/2006 | 75% | Holding land parcel (4) | 6,436 | — | — | ||||||||||||
$ | 202,395 | $ | 116,718 | $ | 76,808 |
(1) | Excludes amounts eliminated in consolidation. |
(2) | This joint venture’s property is in Huntsville, Alabama. |
(3) | This joint venture’s properties are in College Park, Maryland (in the Baltimore/Washington Corridor). |
(4) | This joint venture’s property is in Charles County, Maryland. In 2012, the joint venture exercised its option under a development agreement to require Charles County to repurchase the land parcel at its original acquisition cost. Under the terms of the agreement with Charles County, the repurchase is expected to occur by August 2014. |
March 31, 2014 | December 31, 2013 | ||||||
Notes receivable from City of Huntsville | $ | 45,381 | $ | 44,055 | |||
Mortgage loan receivable | 9,850 | 9,608 | |||||
$ | 55,231 | $ | 53,663 |
March 31, 2014 | December 31, 2013 | ||||||
Prepaid expenses | $ | 13,813 | $ | 19,308 | |||
Lease incentives | 11,900 | 8,435 | |||||
Furniture, fixtures and equipment, net | 7,068 | 6,556 | |||||
Interest rate derivatives | 5,038 | 6,594 | |||||
Construction contract costs incurred in excess of billings | 4,990 | 2,462 | |||||
Deferred tax asset, net (1) | 4,241 | 4,305 | |||||
Other equity method investments | 2,266 | 2,258 | |||||
Other assets | 4,616 | 4,268 | |||||
Prepaid expenses and other assets | $ | 53,932 | $ | 54,186 |
Maximum | |||||||||||||||
Availability at | Carrying Value at | Scheduled Maturity | |||||||||||||
March 31, 2014 | March 31, 2014 | December 31, 2013 | Stated Interest Rates as of | as of | |||||||||||
March 31, 2014 | March 31, 2014 | ||||||||||||||
Mortgage and Other Secured Loans: |