ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | September 30, 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 ý | 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 ý | 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 COPLP.” |
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, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,757,207 | $ | 2,702,693 | |||
Projects in development or held for future development | 513,949 | 511,608 | |||||
Total properties, net | 3,271,156 | 3,214,301 | |||||
Cash and cash equivalents | 40,018 | 54,373 | |||||
Restricted cash and marketable securities | 14,371 | 11,448 | |||||
Accounts receivable (net of allowance for doubtful accounts of $750 and $2,976, respectively) | 20,180 | 27,000 | |||||
Deferred rent receivable (net of allowance of $1,426 and $2,126, respectively) | 95,405 | 89,456 | |||||
Intangible assets on real estate acquisitions, net | 48,300 | 59,258 | |||||
Deferred leasing and financing costs, net | 65,009 | 66,267 | |||||
Mortgage and other investing receivables | 50,886 | 53,663 | |||||
Prepaid expenses and other assets | 74,863 | 54,186 | |||||
Total assets | $ | 3,680,188 | $ | 3,629,952 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,049,992 | $ | 1,927,703 | |||
Accounts payable and accrued expenses | 123,893 | 98,785 | |||||
Rents received in advance and security deposits | 33,075 | 31,492 | |||||
Dividends and distributions payable | 28,344 | 29,080 | |||||
Deferred revenue associated with operating leases | 13,420 | 10,369 | |||||
Interest rate derivatives | 2,236 | 3,309 | |||||
Other liabilities | 13,288 | 14,207 | |||||
Total liabilities | 2,264,248 | 2,114,945 | |||||
Commitments and contingencies (Note 17) | |||||||
Redeemable noncontrolling interest | 18,436 | 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; issued and outstanding of 7,431,667 at September 30, 2014 and 9,431,667 at December 31, 2013) | 199,083 | 249,083 | |||||
Common Shares of beneficial interest ($0.01 par value; 125,000,000 shares authorized, shares issued and outstanding of 87,711,731 at September 30, 2014 and 87,394,512 at December 31, 2013) | 877 | 874 | |||||
Additional paid-in capital | 1,822,283 | 1,814,015 | |||||
Cumulative distributions in excess of net income | (692,978 | ) | (641,868 | ) | |||
Accumulated other comprehensive income | 871 | 3,480 | |||||
Total Corporate Office Properties Trust’s shareholders’ equity | 1,330,136 | 1,425,584 | |||||
Noncontrolling interests in subsidiaries: | |||||||
Common units in COPLP | 49,781 | 53,468 | |||||
Preferred units in COPLP | 8,800 | 8,800 | |||||
Other consolidated entities | 8,787 | 9,397 | |||||
Noncontrolling interests in subsidiaries | 67,368 | 71,665 | |||||
Total equity | 1,397,504 | 1,497,249 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,680,188 | $ | 3,629,952 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 96,207 | $ | 94,641 | $ | 288,574 | $ | 280,911 | |||||||
Tenant recoveries and other real estate operations revenue | 22,069 | 20,180 | 70,538 | 61,599 | |||||||||||
Construction contract and other service revenues | 34,739 | 16,991 | 80,390 | 52,048 | |||||||||||
Total revenues | 153,015 | 131,812 | 439,502 | 394,558 | |||||||||||
Expenses | |||||||||||||||
Property operating expenses | 43,056 | 41,361 | 136,600 | 123,082 | |||||||||||
Depreciation and amortization associated with real estate operations | 30,237 | 28,205 | 104,728 | 82,888 | |||||||||||
Construction contract and other service expenses | 33,593 | 16,306 | 75,353 | 49,165 | |||||||||||
Impairment losses | 66 | 5,857 | 1,368 | 5,857 | |||||||||||
General, administrative and leasing expenses | 7,211 | 8,027 | 22,882 | 22,430 | |||||||||||
Business development expenses and land carry costs | 1,430 | 1,383 | 4,107 | 4,069 | |||||||||||
Total operating expenses | 115,593 | 101,139 | 345,038 | 287,491 | |||||||||||
Operating income | 37,422 | 30,673 | 94,464 | 107,067 | |||||||||||
Interest expense | (24,802 | ) | (19,342 | ) | (69,107 | ) | (60,734 | ) | |||||||
Interest and other income (loss) | 1,191 | (3 | ) | 3,775 | 2,949 | ||||||||||
Loss on early extinguishment of debt | (176 | ) | (374 | ) | (446 | ) | (27,028 | ) | |||||||
Income from continuing operations before equity in income of unconsolidated entities and income taxes | 13,635 | 10,954 | 28,686 | 22,254 | |||||||||||
Equity in income of unconsolidated entities | 193 | 44 | 206 | 211 | |||||||||||
Income tax expense | (101 | ) | (24 | ) | (257 | ) | (61 | ) | |||||||
Income from continuing operations | 13,727 | 10,974 | 28,635 | 22,404 | |||||||||||
Discontinued operations | 191 | (12,974 | ) | 4 | (16,215 | ) | |||||||||
Income (loss) before gain on sales of real estate | 13,918 | (2,000 | ) | 28,639 | 6,189 | ||||||||||
Gain on sales of real estate | 10,630 | — | 10,630 | 2,683 | |||||||||||
Net income (loss) | 24,548 | (2,000 | ) | 39,269 | 8,872 | ||||||||||
Net (income) loss attributable to noncontrolling interests: | |||||||||||||||
Common units in COPLP | (768 | ) | 232 | (942 | ) | 474 | |||||||||
Preferred units in COPLP | (165 | ) | (165 | ) | (495 | ) | (495 | ) | |||||||
Other consolidated entities | (895 | ) | (1,031 | ) | (2,481 | ) | (2,160 | ) | |||||||
Net income (loss) attributable to COPT | 22,720 | (2,964 | ) | 35,351 | 6,691 | ||||||||||
Preferred share dividends | (3,553 | ) | (4,490 | ) | (12,387 | ) | (15,481 | ) | |||||||
Issuance costs associated with redeemed preferred shares | — | — | (1,769 | ) | (2,904 | ) | |||||||||
Net income (loss) attributable to COPT common shareholders | $ | 19,167 | $ | (7,454 | ) | $ | 21,195 | $ | (11,694 | ) | |||||
Net income (loss) attributable to COPT: | |||||||||||||||
Income from continuing operations | $ | 22,537 | $ | 9,518 | $ | 35,342 | $ | 22,377 | |||||||
Discontinued operations, net | 183 | (12,482 | ) | 9 | (15,686 | ) | |||||||||
Net income (loss) attributable to COPT | $ | 22,720 | $ | (2,964 | ) | $ | 35,351 | $ | 6,691 | ||||||
Basic earnings per common share (1) | |||||||||||||||
Income from continuing operations | $ | 0.22 | $ | 0.06 | $ | 0.24 | $ | 0.04 | |||||||
Discontinued operations | 0.00 | (0.15 | ) | 0.00 | (0.18 | ) | |||||||||
Net income (loss) attributable to COPT common shareholders | $ | 0.22 | $ | (0.09 | ) | $ | 0.24 | $ | (0.14 | ) | |||||
Diluted earnings per common share (1) | |||||||||||||||
Income from continuing operations | $ | 0.22 | $ | 0.06 | $ | 0.24 | $ | 0.04 | |||||||
Discontinued operations | 0.00 | (0.15 | ) | 0.00 | (0.18 | ) | |||||||||
Net income (loss) attributable to COPT common shareholders | $ | 0.22 | $ | (0.09 | ) | $ | 0.24 | $ | (0.14 | ) | |||||
Dividends declared per common share | $ | 0.275 | $ | 0.275 | $ | 0.825 | $ | 0.825 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income (loss) | $ | 24,548 | $ | (2,000 | ) | $ | 39,269 | $ | 8,872 | ||||||
Other comprehensive income (loss) | |||||||||||||||
Unrealized gains (losses) on interest rate derivatives | 1,015 | (2,482 | ) | (4,738 | ) | 5,810 | |||||||||
Losses on interest rate derivatives included in interest expense | 756 | 689 | 2,170 | 2,021 | |||||||||||
Equity in other comprehensive income of equity method investee | — | 1,070 | — | 1,070 | |||||||||||
Other comprehensive income (loss) | 1,771 | (723 | ) | (2,568 | ) | 8,901 | |||||||||
Comprehensive income (loss) | 26,319 | (2,723 | ) | 36,701 | 17,773 | ||||||||||
Comprehensive income attributable to noncontrolling interests | (1,968 | ) | (948 | ) | (3,960 | ) | (2,722 | ) | |||||||
Comprehensive income (loss) attributable to COPT | $ | 24,351 | $ | (3,671 | ) | $ | 32,741 | $ | 15,051 |
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 | |||||||||||
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 interest in other consolidated entities | — | — | — | — | — | (8 | ) | (8 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | (6,414 | ) | — | — | — | (6,414 | ) | ||||||||||||||||||
Tax loss 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 | ||||||||||||
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 | ||||||||||||
Redemption of preferred shares (2,000,000 shares) | (50,000 | ) | — | 1,769 | (1,769 | ) | — | — | (50,000 | ) | |||||||||||||||||
Conversion of common units to common shares (117,149 shares) | — | 1 | 1,544 | — | — | (1,545 | ) | — | |||||||||||||||||||
Costs associated with common shares issued to the public | — | — | (7 | ) | — | — | — | (7 | ) | ||||||||||||||||||
Exercise of share options (57,888 shares) | — | — | 1,359 | — | — | — | 1,359 | ||||||||||||||||||||
Share-based compensation | — | 2 | 5,247 | — | — | — | 5,249 | ||||||||||||||||||||
Restricted common share redemptions (51,681 shares) | — | — | (1,389 | ) | — | — | — | (1,389 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | (248 | ) | — | — | 248 | — | |||||||||||||||||||
Comprehensive income | — | — | — | 35,351 | (2,609 | ) | 2,313 | 35,055 | |||||||||||||||||||
Dividends | — | — | — | (84,692 | ) | — | — | (84,692 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (3,710 | ) | (3,710 | ) | ||||||||||||||||||
Contributions from noncontrolling interests in other consolidated entities | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||
Distributions to noncontrolling interests in other consolidated entities | — | — | — | — | — | (1,606 | ) | (1,606 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | (7 | ) | — | — | — | (7 | ) | ||||||||||||||||||
Balance at September 30, 2014 (87,711,731 common shares outstanding) | $ | 199,083 | $ | 877 | $ | 1,822,283 | $ | (692,978 | ) | $ | 871 | $ | 67,368 | $ | 1,397,504 |
For the Nine Months Ended September 30, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 358,212 | $ | 359,431 | |||
Construction contract and other service revenues received | 62,170 | 48,877 | |||||
Property operating expenses paid | (141,489 | ) | (133,799 | ) | |||
Construction contract and other service expenses paid | (58,218 | ) | (53,191 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (22,288 | ) | (20,681 | ) | |||
Interest expense paid | (54,683 | ) | (59,052 | ) | |||
Previously accreted interest expense paid | — | (11,116 | ) | ||||
Proceeds from sale of trading marketable securities | — | 298 | |||||
Exit costs on property dispositions | — | (186 | ) | ||||
Payments in connection with early extinguishment of debt | (104 | ) | (23,969 | ) | |||
Interest and other income received | 448 | 391 | |||||
Income taxes refunded | 200 | 6 | |||||
Net cash provided by operating activities | 144,248 | 107,009 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (150,862 | ) | (156,820 | ) | |||
Tenant improvements on operating properties | (17,754 | ) | (15,868 | ) | |||
Other capital improvements on operating properties | (21,179 | ) | (17,528 | ) | |||
Proceeds from dispositions of properties | 57,973 | 12,447 | |||||
Mortgage and other loan receivables funded | (3,610 | ) | (4,111 | ) | |||
Mortgage and other loan receivables payments received | 10,278 | 144 | |||||
Leasing costs paid | (10,549 | ) | (9,366 | ) | |||
Other | (1,343 | ) | 4,257 | ||||
Net cash used in investing activities | (137,046 | ) | (186,845 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | 115,000 | 457,000 | |||||
Unsecured senior notes | 297,342 | 592,413 | |||||
Other debt proceeds | 11,569 | 82,886 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | (115,000 | ) | (457,000 | ) | |||
Scheduled principal amortization | (4,914 | ) | (7,229 | ) | |||
Other debt repayments | (183,059 | ) | (542,532 | ) | |||
Deferred financing costs paid | (694 | ) | (9,001 | ) | |||
Net proceeds from issuance of common shares | 1,352 | 157,307 | |||||
Redemption of preferred shares | (50,000 | ) | (84,750 | ) | |||
Common share dividends paid | (72,217 | ) | (69,451 | ) | |||
Preferred share dividends paid | (13,179 | ) | (16,845 | ) | |||
Distributions paid to noncontrolling interests in COPLP | (3,786 | ) | (3,705 | ) | |||
Restricted share redemptions | (1,389 | ) | (1,848 | ) | |||
Other | (2,582 | ) | (685 | ) | |||
Net cash (used in) provided by financing activities | (21,557 | ) | 96,560 | ||||
Net (decrease) increase in cash and cash equivalents | (14,355 | ) | 16,724 | ||||
Cash and cash equivalents | |||||||
Beginning of period | 54,373 | 10,594 | |||||
End of period | $ | 40,018 | $ | 27,318 |
For the Nine Months Ended September 30, | |||||||
2014 | 2013 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 39,269 | $ | 8,872 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 106,619 | 87,956 | |||||
Impairment losses | 1,371 | 30,940 | |||||
Settlement of previously accreted interest expense | — | (11,116 | ) | ||||
Amortization of deferred financing costs | 3,646 | 4,292 | |||||
Increase in deferred rent receivable | (2,738 | ) | (7,995 | ) | |||
Amortization of net debt discounts | 659 | 1,207 | |||||
Gain on sales of real estate | (10,654 | ) | (2,683 | ) | |||
Share-based compensation | 4,563 | 4,869 | |||||
Loss on early extinguishment of debt | 458 | 3,059 | |||||
Other | (2,446 | ) | (2,284 | ) | |||
Changes in operating assets and liabilities: | |||||||
Decrease in accounts receivable | 6,815 | 1,523 | |||||
(Increase) decrease in restricted cash and marketable securities | (2,591 | ) | 418 | ||||
Increase in prepaid expenses and other assets | (26,553 | ) | (12,974 | ) | |||
Increase in accounts payable, accrued expenses and other liabilities | 24,247 | 18 | |||||
Increase in rents received in advance and security deposits | 1,583 | 907 | |||||
Net cash provided by operating activities | $ | 144,248 | $ | 107,009 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (174 | ) | $ | (13,094 | ) | |
(Decrease) increase in fair value of derivatives applied to accumulated other comprehensive income (loss) and noncontrolling interests | $ | (2,613 | ) | $ | 7,785 | ||
Equity in other comprehensive income of an equity method investee | $ | — | $ | 1,070 | |||
Dividends/distribution payable | $ | 28,344 | $ | 29,077 | |||
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 | $ | 1,545 | $ | 3,991 | |||
Adjustments to noncontrolling interests resulting from changes in COPLP ownership | $ | 248 | $ | 773 | |||
Increase in redeemable noncontrolling interest and decrease in shareholders’ equity to carry redeemable noncontrolling interest at fair value | $ | 7 | $ | 6,414 |
September 30, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,757,207 | $ | 2,702,693 | |||
Projects in development or held for future development | 513,949 | 511,608 | |||||
Total properties, net | 3,271,156 | 3,214,301 | |||||
Cash and cash equivalents | 40,018 | 54,373 | |||||
Restricted cash and marketable securities | 6,871 | 3,981 | |||||
Accounts receivable (net of allowance for doubtful accounts of $750 and $2,976, respectively) | 20,180 | 27,000 | |||||
Deferred rent receivable (net of allowance of $1,426 and $2,126, respectively) | 95,405 | 89,456 | |||||
Intangible assets on real estate acquisitions, net | 48,300 | 59,258 | |||||
Deferred leasing and financing costs, net | 65,009 | 66,267 | |||||
Mortgage and other investing receivables | 50,886 | 53,663 | |||||
Prepaid expenses and other assets | 74,863 | 54,186 | |||||
Total assets | $ | 3,672,688 | $ | 3,622,485 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,049,992 | $ | 1,927,703 | |||
Accounts payable and accrued expenses | 123,893 | 98,785 | |||||
Rents received in advance and security deposits | 33,075 | 31,492 | |||||
Distributions payable | 28,344 | 29,080 | |||||
Deferred revenue associated with operating leases | 13,420 | 10,369 | |||||
Interest rate derivatives | 2,236 | 3,309 | |||||
Other liabilities | 5,788 | 6,740 | |||||
Total liabilities | 2,256,748 | 2,107,478 | |||||
Commitments and contingencies (Note 17) | |||||||
Redeemable noncontrolling interest | 18,436 | 17,758 | |||||
Equity: | |||||||
Corporate Office Properties, L.P.’s equity: | |||||||
Preferred units | |||||||
General partner, preferred units outstanding of 7,431,667 at September 30, 2014 and 9,431,667 at December 31, 2013 | 199,083 | 249,083 | |||||
Limited partner, 352,000 preferred units outstanding at September 30, 2014 and December 31, 2013 | 8,800 | 8,800 | |||||
Common units, 87,711,731 and 87,394,512 held by the general partner and 3,860,551 and 3,977,700 held by limited partners at September 30, 2014 and December 31, 2013, respectively | 1,179,919 | 1,226,318 | |||||
Accumulated other comprehensive income | 879 | 3,605 | |||||
Total Corporate Office Properties, L.P.’s equity | 1,388,681 | 1,487,806 | |||||
Noncontrolling interests in subsidiaries | 8,823 | 9,443 | |||||
Total equity | 1,397,504 | 1,497,249 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,672,688 | $ | 3,622,485 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 96,207 | $ | 94,641 | $ | 288,574 | $ | 280,911 | |||||||
Tenant recoveries and other real estate operations revenue | 22,069 | 20,180 | 70,538 | 61,599 | |||||||||||
Construction contract and other service revenues | 34,739 | 16,991 | 80,390 | 52,048 | |||||||||||
Total revenues | 153,015 | 131,812 | 439,502 | 394,558 | |||||||||||
Expenses | |||||||||||||||
Property operating expenses | 43,056 | 41,361 | 136,600 | 123,082 | |||||||||||
Depreciation and amortization associated with real estate operations | 30,237 | 28,205 | 104,728 | 82,888 | |||||||||||
Construction contract and other service expenses | 33,593 | 16,306 | 75,353 | 49,165 | |||||||||||
Impairment losses | 66 | 5,857 | 1,368 | 5,857 | |||||||||||
General, administrative and leasing expenses | 7,211 | 8,027 | 22,882 | 22,430 | |||||||||||
Business development expenses and land carry costs | 1,430 | 1,383 | 4,107 | 4,069 | |||||||||||
Total operating expenses | 115,593 | 101,139 | 345,038 | 287,491 | |||||||||||
Operating income | 37,422 | 30,673 | 94,464 | 107,067 | |||||||||||
Interest expense | (24,802 | ) | (19,342 | ) | (69,107 | ) | (60,734 | ) | |||||||
Interest and other income (loss) | 1,191 | (3 | ) | 3,775 | 2,949 | ||||||||||
Loss on early extinguishment of debt | (176 | ) | (374 | ) | (446 | ) | (27,028 | ) | |||||||
Income from continuing operations before equity in income of unconsolidated entities and income taxes | 13,635 | 10,954 | 28,686 | 22,254 | |||||||||||
Equity in income of unconsolidated entities | 193 | 44 | 206 | 211 | |||||||||||
Income tax expense | (101 | ) | (24 | ) | (257 | ) | (61 | ) | |||||||
Income from continuing operations | 13,727 | 10,974 | 28,635 | 22,404 | |||||||||||
Discontinued operations | 191 | (12,974 | ) | 4 | (16,215 | ) | |||||||||
Income (loss) before gain on sales of real estate | 13,918 | (2,000 | ) | 28,639 | 6,189 | ||||||||||
Gain on sales of real estate | 10,630 | — | 10,630 | 2,683 | |||||||||||
Net income (loss) | 24,548 | (2,000 | ) | 39,269 | 8,872 | ||||||||||
Net income attributable to noncontrolling interests in consolidated entities | (897 | ) | (1,035 | ) | (2,471 | ) | (2,172 | ) | |||||||
Net income (loss) attributable to COPLP | 23,651 | (3,035 | ) | 36,798 | 6,700 | ||||||||||
Preferred unit distributions | (3,718 | ) | (4,655 | ) | (12,882 | ) | (15,976 | ) | |||||||
Issuance costs associated with redeemed preferred units | — | — | (1,769 | ) | (2,904 | ) | |||||||||
Net income (loss) attributable to COPLP common unitholders | $ | 19,933 | $ | (7,690 | ) | $ | 22,147 | $ | (12,180 | ) | |||||
Net income (loss) attributable to COPLP: | |||||||||||||||
Income from continuing operations | $ | 23,460 | $ | 9,988 | $ | 36,789 | $ | 23,062 | |||||||
Discontinued operations, net | 191 | (13,023 | ) | 9 | (16,362 | ) | |||||||||
Net income (loss) attributable to COPLP | $ | 23,651 | $ | (3,035 | ) | $ | 36,798 | $ | 6,700 | ||||||
Basic earnings per common unit (1) | |||||||||||||||
Income from continuing operations | $ | 0.22 | $ | 0.06 | $ | 0.24 | $ | 0.04 | |||||||
Discontinued operations | 0.00 | (0.15 | ) | 0.00 | (0.18 | ) | |||||||||
Net income (loss) attributable to COPLP common unitholders | $ | 0.22 | $ | (0.09 | ) | $ | 0.24 | $ | (0.14 | ) | |||||
Diluted earnings per common unit (1) | |||||||||||||||
Income from continuing operations | $ | 0.22 | $ | 0.06 | $ | 0.24 | $ | 0.04 | |||||||
Discontinued operations | 0.00 | (0.15 | ) | 0.00 | (0.18 | ) | |||||||||
Net income (loss) attributable to COPLP common unitholders | $ | 0.22 | $ | (0.09 | ) | $ | 0.24 | $ | (0.14 | ) | |||||
Distributions declared per common unit | $ | 0.275 | $ | 0.275 | $ | 0.825 | $ | 0.825 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income (loss) | $ | 24,548 | $ | (2,000 | ) | $ | 39,269 | $ | 8,872 | ||||||
Other comprehensive income (loss) | |||||||||||||||
Unrealized gains (losses) on interest rate derivatives | 1,015 | (2,482 | ) | (4,738 | ) | 5,810 | |||||||||
Losses on interest rate derivatives included in interest expense | 756 | 689 | 2,170 | 2,021 | |||||||||||
Equity in other comprehensive income of equity method investee | — | 1,070 | — | 1,070 | |||||||||||
Other comprehensive income (loss) | 1,771 | (723 | ) | (2,568 | ) | 8,901 | |||||||||
Comprehensive income (loss) | 26,319 | (2,723 | ) | 36,701 | 17,773 | ||||||||||
Comprehensive income attributable to noncontrolling interests | (964 | ) | (1,050 | ) | (2,630 | ) | (2,339 | ) | |||||||
Comprehensive income (loss) attributable to COPLP | $ | 25,355 | $ | (3,773 | ) | $ | 34,071 | $ | 15,434 |
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 | ||||||||||||||||
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 loss | — | 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 loss 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 | |||||||||||||||||
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 | |||||||||||||||||
Redemption of preferred units resulting from redemption of preferred shares | — | — | (2,000,000 | ) | (50,000 | ) | — | — | — | — | (50,000 | ) | ||||||||||||||||||||
Costs associated with common shares issued to the public | — | — | — | — | — | (7 | ) | — | — | (7 | ) | |||||||||||||||||||||
Issuance of common units resulting from exercise of share options | — | — | — | — | 57,888 | 1,359 | — | — | 1,359 | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | 193,863 | 5,249 | — | — | 5,249 | |||||||||||||||||||||||
Restricted common unit redemptions | — | — | — | — | (51,681 | ) | (1,389 | ) | — | — | (1,389 | ) | ||||||||||||||||||||
Comprehensive income | — | 495 | — | 12,387 | — | 23,916 | (2,726 | ) | 983 | 35,055 | ||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (495 | ) | — | (12,387 | ) | — | (75,520 | ) | — | — | (88,402 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (1,606 | ) | (1,606 | ) | |||||||||||||||||||||
Contributions from noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | 3 | 3 | |||||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (7 | ) | — | — | (7 | ) | |||||||||||||||||||||
Balance at September 30, 2014 | 352,000 | $ | 8,800 | 7,431,667 | $ | 199,083 | 91,572,282 | $ | 1,179,919 | $ | 879 | $ | 8,823 | $ | 1,397,504 |
For the Nine Months Ended September 30, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 358,212 | $ | 359,431 | |||
Construction contract and other service revenues received | 62,170 | 48,877 | |||||
Property operating expenses paid | (141,489 | ) | (133,799 | ) | |||
Construction contract and other service expenses paid | (58,218 | ) | (53,191 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (22,288 | ) | (20,681 | ) | |||
Interest expense paid | (54,683 | ) | (59,052 | ) | |||
Previously accreted interest expense paid | — | (11,116 | ) | ||||
Proceeds from sale of trading marketable securities | — | 298 | |||||
Exit costs on property dispositions | — | (186 | ) | ||||
Payments in connection with early extinguishment of debt | (104 | ) | (23,969 | ) | |||
Interest and other income received | 448 | 391 | |||||
Income taxes refunded | 200 | 6 | |||||
Net cash provided by operating activities | 144,248 | 107,009 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (150,862 | ) | (156,820 | ) | |||
Tenant improvements on operating properties | (17,754 | ) | (15,868 | ) | |||
Other capital improvements on operating properties | (21,179 | ) | (17,528 | ) | |||
Proceeds from dispositions of properties | 57,973 | 12,447 | |||||
Mortgage and other loan receivables funded | (3,610 | ) | (4,111 | ) | |||
Mortgage and other loan receivables payments received | 10,278 | 144 | |||||
Leasing costs paid | (10,549 | ) | (9,366 | ) | |||
Other | (1,343 | ) | 4,257 | ||||
Net cash used in investing activities | (137,046 | ) | (186,845 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | 115,000 | 457,000 | |||||
Unsecured senior notes | 297,342 | 592,413 | |||||
Other debt proceeds | 11,569 | 82,886 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | (115,000 | ) | (457,000 | ) | |||
Scheduled principal amortization | (4,914 | ) | (7,229 | ) | |||
Other debt repayments | (183,059 | ) | (542,532 | ) | |||
Deferred financing costs paid | (694 | ) | (9,001 | ) | |||
Net proceeds from issuance of common units |