ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | March 31, 2016 |
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 13, 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 | ||
March 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,863,262 | $ | 2,920,529 | |||
Projects in development or held for future development | 416,169 | 429,219 | |||||
Total properties, net | 3,279,431 | 3,349,748 | |||||
Assets held for sale, net | 225,897 | 96,782 | |||||
Cash and cash equivalents | 62,489 | 60,310 | |||||
Restricted cash and marketable securities | 7,763 | 7,716 | |||||
Accounts receivable (net of allowance for doubtful accounts of $1,789 and $1,525, respectively) | 28,776 | 29,167 | |||||
Deferred rent receivable (net of allowance of $881 and $1,962, respectively) | 96,936 | 105,484 | |||||
Intangible assets on real estate acquisitions, net | 93,526 | 98,338 | |||||
Deferred leasing costs (net of accumulated amortization of $66,237 and $66,364, respectively) | 44,768 | 53,868 | |||||
Investing receivables | 48,998 | 47,875 | |||||
Prepaid expenses and other assets, net | 49,324 | 60,024 | |||||
Total assets | $ | 3,937,908 | $ | 3,909,312 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,140,212 | $ | 2,077,752 | |||
Accounts payable and accrued expenses | 78,597 | 91,755 | |||||
Rents received in advance and security deposits | 33,457 | 37,148 | |||||
Dividends and distributions payable | 30,217 | 30,178 | |||||
Deferred revenue associated with operating leases | 19,093 | 19,758 | |||||
Interest rate derivatives | 15,072 | 3,160 | |||||
Other liabilities | 15,046 | 13,779 | |||||
Total liabilities | 2,331,694 | 2,273,530 | |||||
Commitments and contingencies (Note 14) | |||||||
Redeemable noncontrolling interests | 22,333 | 19,218 | |||||
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 7,431,667 at March 31, 2016 and December 31, 2015) | 199,083 | 199,083 | |||||
Common Shares of beneficial interest ($0.01 par value; 125,000,000 shares authorized, shares issued and outstanding of 94,661,381 at March 31, 2016 and 94,531,512 at December 31, 2015) | 947 | 945 | |||||
Additional paid-in capital | 2,005,523 | 2,004,507 | |||||
Cumulative distributions in excess of net income | (679,935 | ) | (657,172 | ) | |||
Accumulated other comprehensive loss | (12,862 | ) | (2,838 | ) | |||
Total Corporate Office Properties Trust’s shareholders’ equity | 1,512,756 | 1,544,525 | |||||
Noncontrolling interests in subsidiaries: | |||||||
Common units in COPLP | 51,031 | 52,359 | |||||
Preferred units in COPLP | 8,800 | 8,800 | |||||
Other consolidated entities | 11,294 | 10,880 | |||||
Noncontrolling interests in subsidiaries | 71,125 | 72,039 | |||||
Total equity | 1,583,881 | 1,616,564 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,937,908 | $ | 3,909,312 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenues | |||||||
Rental revenue | $ | 105,382 | $ | 98,238 | |||
Tenant recoveries and other real estate operations revenue | 27,705 | 24,472 | |||||
Construction contract and other service revenues | 11,220 | 38,324 | |||||
Total revenues | 144,307 | 161,034 | |||||
Expenses | |||||||
Property operating expenses | 51,875 | 50,681 | |||||
Depreciation and amortization associated with real estate operations | 34,527 | 31,599 | |||||
Construction contract and other service expenses | 10,694 | 37,498 | |||||
Impairment losses | 2,446 | — | |||||
General, administrative and leasing expenses | 11,883 | 7,891 | |||||
Business development expenses and land carry costs | 2,418 | 2,790 | |||||
Total operating expenses | 113,843 | 130,459 | |||||
Operating income | 30,464 | 30,575 | |||||
Interest expense | (23,559 | ) | (20,838 | ) | |||
Interest and other income | 1,156 | 1,283 | |||||
Gain (loss) on early extinguishment of debt | 17 | (3 | ) | ||||
Income from continuing operations before equity in income of unconsolidated entities and income taxes | 8,078 | 11,017 | |||||
Equity in income of unconsolidated entities | 10 | 25 | |||||
Income tax benefit (expense) | 8 | (55 | ) | ||||
Income from continuing operations | 8,096 | 10,987 | |||||
Discontinued operations | — | (238 | ) | ||||
Income before gain on sales of real estate | 8,096 | 10,749 | |||||
Gain on sales of real estate | — | 3,986 | |||||
Net income | 8,096 | 14,735 | |||||
Net income attributable to noncontrolling interests: | |||||||
Common units in COPLP | (127 | ) | (398 | ) | |||
Preferred units in COPLP | (165 | ) | (165 | ) | |||
Other consolidated entities | (978 | ) | (817 | ) | |||
Net income attributable to COPT | 6,826 | 13,355 | |||||
Preferred share dividends | (3,552 | ) | (3,552 | ) | |||
Net income attributable to COPT common shareholders | $ | 3,274 | $ | 9,803 | |||
Net income attributable to COPT: | |||||||
Income from continuing operations | $ | 6,826 | $ | 13,581 | |||
Discontinued operations, net | — | (226 | ) | ||||
Net income attributable to COPT | $ | 6,826 | $ | 13,355 | |||
Basic earnings per common share (1) | |||||||
Income from continuing operations | $ | 0.03 | $ | 0.10 | |||
Discontinued operations | 0.00 | 0.00 | |||||
Net income attributable to COPT common shareholders | $ | 0.03 | $ | 0.10 | |||
Diluted earnings per common share (1) | |||||||
Income from continuing operations | $ | 0.03 | $ | 0.10 | |||
Discontinued operations | 0.00 | 0.00 | |||||
Net income attributable to COPT common shareholders | $ | 0.03 | $ | 0.10 | |||
Dividends declared per common share | $ | 0.275 | $ | 0.275 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Net income | $ | 8,096 | $ | 14,735 | |||
Other comprehensive loss | |||||||
Unrealized losses on interest rate derivatives | (11,284 | ) | (3,474 | ) | |||
Losses on interest rate derivatives included in interest expense | 870 | 773 | |||||
Other comprehensive loss | (10,414 | ) | (2,701 | ) | |||
Comprehensive (loss) income | (2,318 | ) | 12,034 | ||||
Comprehensive income attributable to noncontrolling interests | (880 | ) | (1,329 | ) | |||
Comprehensive (loss) income attributable to COPT | $ | (3,198 | ) | $ | 10,705 |
Preferred Shares | Common Shares | Additional Paid-in Capital | Cumulative Distributions in Excess of Net Income | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total | |||||||||||||||||||||
Balance at December 31, 2014 (93,255,284 common shares outstanding) | $ | 199,083 | $ | 933 | $ | 1,969,968 | $ | (717,264 | ) | $ | (1,297 | ) | $ | 69,461 | $ | 1,520,884 | |||||||||||
Conversion of common units to common shares (158,000 shares) | — | 2 | 2,120 | — | — | (2,122 | ) | — | |||||||||||||||||||
Common shares issued under at-the-market program (890,241 shares) | — | 9 | 26,526 | — | — | — | 26,535 | ||||||||||||||||||||
Exercise of share options (70,374 shares) | — | — | 1,845 | — | — | — | 1,845 | ||||||||||||||||||||
Share-based compensation (162,370 shares issued, net of redemptions) | — | 1 | 1,828 | — | — | — | 1,829 | ||||||||||||||||||||
Redemption of vested equity awards | — | — | (2,031 | ) | — | — | — | (2,031 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | (475 | ) | — | — | 475 | — | |||||||||||||||||||
Comprehensive income | — | — | — | 13,355 | (2,650 | ) | 767 | 11,472 | |||||||||||||||||||
Dividends | — | — | — | (29,550 | ) | — | — | (29,550 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (1,177 | ) | (1,177 | ) | ||||||||||||||||||
Distributions to noncontrolling interests in other consolidated entities | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | (73 | ) | — | — | — | (73 | ) | ||||||||||||||||||
Balance at March 31, 2015 (94,536,269 common shares outstanding) | $ | 199,083 | $ | 945 | $ | 1,999,708 | $ | (733,459 | ) | $ | (3,947 | ) | $ | 67,400 | $ | 1,529,730 | |||||||||||
Balance at December 31, 2015 (94,531,512 common shares outstanding) | $ | 199,083 | $ | 945 | $ | 2,004,507 | $ | (657,172 | ) | $ | (2,838 | ) | $ | 72,039 | $ | 1,616,564 | |||||||||||
Costs associated with common shares issued to the public | — | — | (5 | ) | — | — | — | (5 | ) | ||||||||||||||||||
Share-based compensation (129,869 shares issued, net of redemptions) | — | 2 | 2,423 | — | — | — | 2,425 | ||||||||||||||||||||
Redemption of vested equity awards | — | — | (1,154 | ) | — | — | — | (1,154 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | 54 | — | — | (54 | ) | — | |||||||||||||||||||
Comprehensive loss | — | — | — | 6,826 | (10,024 | ) | 320 | (2,878 | ) | ||||||||||||||||||
Dividends | — | — | — | (29,589 | ) | — | — | (29,589 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (1,176 | ) | (1,176 | ) | ||||||||||||||||||
Distributions to noncontrolling interests in other consolidated entities | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | (302 | ) | — | — | — | (302 | ) | ||||||||||||||||||
Balance at March 31, 2016 (94,661,381common shares outstanding) | $ | 199,083 | $ | 947 | $ | 2,005,523 | $ | (679,935 | ) | $ | (12,862 | ) | $ | 71,125 | $ | 1,583,881 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 130,059 | $ | 117,521 | |||
Construction contract and other service revenues received | 7,747 | 19,968 | |||||
Property operating expenses paid | (46,084 | ) | (42,768 | ) | |||
Construction contract and other service expenses paid | (10,765 | ) | (27,853 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (12,175 | ) | (12,728 | ) | |||
Interest expense paid | (21,386 | ) | (12,795 | ) | |||
Other | 43 | 545 | |||||
Net cash provided by operating activities | 47,439 | 41,890 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (45,146 | ) | (62,057 | ) | |||
Acquisitions of operating properties and related intangible assets | — | (56,622 | ) | ||||
Tenant improvements on operating properties | (6,388 | ) | (5,520 | ) | |||
Other capital improvements on operating properties | (9,505 | ) | (3,720 | ) | |||
Proceeds from dispositions of properties | 5,452 | 17,424 | |||||
Leasing costs paid | (1,593 | ) | (1,935 | ) | |||
Other | 1,121 | (5,956 | ) | ||||
Net cash used in investing activities | (56,059 | ) | (118,386 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | 88,500 | 150,000 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | (25,000 | ) | (69,000 | ) | |||
Scheduled principal amortization | (1,800 | ) | (1,649 | ) | |||
Other debt repayments | (50 | ) | (50 | ) | |||
Net proceeds from issuance of common shares | (5 | ) | 28,404 | ||||
Common share dividends paid | (26,002 | ) | (25,646 | ) | |||
Preferred share dividends paid | (3,552 | ) | (3,552 | ) | |||
Distributions paid to noncontrolling interests in COPLP | (1,171 | ) | (1,217 | ) | |||
Distributions paid to redeemable noncontrolling interests | (13,848 | ) | (122 | ) | |||
Redemption of vested equity awards | (1,154 | ) | (2,031 | ) | |||
Other | (5,119 | ) | (289 | ) | |||
Net cash provided by financing activities | 10,799 | 74,848 | |||||
Net increase (decrease) in cash and cash equivalents | 2,179 | (1,648 | ) | ||||
Cash and cash equivalents | |||||||
Beginning of period | 60,310 | 6,077 | |||||
End of period | $ | 62,489 | $ | 4,429 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 8,096 | $ | 14,735 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 35,129 | 32,091 | |||||
Impairment losses | 2,446 | 233 | |||||
Losses on interest rate derivatives | 1,551 | — | |||||
Amortization of deferred financing costs and net debt discounts | 1,495 | 1,254 | |||||
Increase in deferred rent receivable | (1,456 | ) | (1,746 | ) | |||
Gain on sales of real estate | — | (3,986 | ) | ||||
Share-based compensation | 2,108 | 1,552 | |||||
Other | (802 | ) | (640 | ) | |||
Operating changes in assets and liabilities: | |||||||
Decrease (increase) in accounts receivable | 409 | (6,918 | ) | ||||
Decrease (increase) in restricted cash and marketable securities | 15 | (1,577 | ) | ||||
Decrease (increase) in prepaid expenses and other assets, net | 5,941 | (6,352 | ) | ||||
(Decrease) increase in accounts payable, accrued expenses and other liabilities | (3,802 | ) | 12,704 | ||||
(Decrease) increase in rents received in advance and security deposits | (3,691 | ) | 540 | ||||
Net cash provided by operating activities | $ | 47,439 | $ | 41,890 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (9,420 | ) | $ | (3,897 | ) | |
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture | $ | 22,600 | $ | — | |||
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest | $ | 6,675 | $ | — | |||
Other liabilities assumed on acquisition of operating properties | $ | — | $ | 5,265 | |||
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests | $ | (10,414 | ) | $ | (2,701 | ) | |
Dividends/distribution payable | $ | 30,217 | $ | 30,174 | |||
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares | $ | — | $ | 2,122 | |||
Adjustments to noncontrolling interests resulting from changes in COPLP ownership | $ | (54 | ) | $ | 475 | ||
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value | $ | 302 | $ | 73 |
March 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,863,262 | $ | 2,920,529 | |||
Projects in development or held for future development | 416,169 | 429,219 | |||||
Total properties, net | 3,279,431 | 3,349,748 | |||||
Assets held for sale, net | 225,897 | 96,782 | |||||
Cash and cash equivalents | 62,489 | 60,310 | |||||
Restricted cash and marketable securities | 2,092 | 1,953 | |||||
Accounts receivable (net of allowance for doubtful accounts of $1,789 and $1,525, respectively) | 28,776 | 29,167 | |||||
Deferred rent receivable (net of allowance of $881 and $1,962, respectively) | 96,936 | 105,484 | |||||
Intangible assets on real estate acquisitions, net | 93,526 | 98,338 | |||||
Deferred leasing costs (net of accumulated amortization of $66,237 and $66,364, respectively) | 44,768 | 53,868 | |||||
Investing receivables | 48,998 | 47,875 | |||||
Prepaid expenses and other assets, net | 49,324 | 60,024 | |||||
Total assets | $ | 3,932,237 | $ | 3,903,549 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 2,140,212 | $ | 2,077,752 | |||
Accounts payable and accrued expenses | 78,597 | 91,755 | |||||
Rents received in advance and security deposits | 33,457 | 37,148 | |||||
Distributions payable | 30,217 | 30,178 | |||||
Deferred revenue associated with operating leases | 19,093 | 19,758 | |||||
Interest rate derivatives | 15,072 | 3,160 | |||||
Other liabilities | 9,375 | 8,016 | |||||
Total liabilities | 2,326,023 | 2,267,767 | |||||
Commitments and contingencies (Note 14) | |||||||
Redeemable noncontrolling interests | 22,333 | 19,218 | |||||
Equity: | |||||||
Corporate Office Properties, L.P.’s equity: | |||||||
Preferred units | |||||||
General partner, preferred units outstanding of 7,431,667 at March 31, 2016 and December 31, 2015 | 199,083 | 199,083 | |||||
Limited partner, 352,000 preferred units outstanding at March 31, 2016 and December 31, 2015 | 8,800 | 8,800 | |||||
Common units, 94,661,381 and 94,531,512 held by the general partner and 3,677,391 held by limited partners at March 31, 2016 and December 31, 2015, respectively | 1,378,061 | 1,400,745 | |||||
Accumulated other comprehensive loss | (13,399 | ) | (2,985 | ) | |||
Total Corporate Office Properties, L.P.’s equity | 1,572,545 | 1,605,643 | |||||
Noncontrolling interests in subsidiaries | 11,336 | 10,921 | |||||
Total equity | 1,583,881 | 1,616,564 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,932,237 | $ | 3,903,549 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenues | |||||||
Rental revenue | $ | 105,382 | $ | 98,238 | |||
Tenant recoveries and other real estate operations revenue | 27,705 | 24,472 | |||||
Construction contract and other service revenues | 11,220 | 38,324 | |||||
Total revenues | 144,307 | 161,034 | |||||
Expenses | |||||||
Property operating expenses | 51,875 | 50,681 | |||||
Depreciation and amortization associated with real estate operations | 34,527 | 31,599 | |||||
Construction contract and other service expenses | 10,694 | 37,498 | |||||
Impairment losses | 2,446 | — | |||||
General, administrative and leasing expenses | 11,883 | 7,891 | |||||
Business development expenses and land carry costs | 2,418 | 2,790 | |||||
Total operating expenses | 113,843 | 130,459 | |||||
Operating income | 30,464 | 30,575 | |||||
Interest expense | (23,559 | ) | (20,838 | ) | |||
Interest and other income | 1,156 | 1,283 | |||||
Gain (loss) on early extinguishment of debt | 17 | (3 | ) | ||||
Income from continuing operations before equity in income of unconsolidated entities and income taxes | 8,078 | 11,017 | |||||
Equity in income of unconsolidated entities | 10 | 25 | |||||
Income tax benefit (expense) | 8 | (55 | ) | ||||
Income from continuing operations | 8,096 | 10,987 | |||||
Discontinued operations | — | (238 | ) | ||||
Income before gain on sales of real estate | 8,096 | 10,749 | |||||
Gain on sales of real estate | — | 3,986 | |||||
Net income | 8,096 | 14,735 | |||||
Net income attributable to noncontrolling interests in consolidated entities | (979 | ) | (818 | ) | |||
Net income attributable to COPLP | 7,117 | 13,917 | |||||
Preferred unit distributions | (3,717 | ) | (3,717 | ) | |||
Net income attributable to COPLP common unitholders | $ | 3,400 | $ | 10,200 | |||
Net income attributable to COPLP: | |||||||
Income from continuing operations | $ | 7,117 | $ | 14,152 | |||
Discontinued operations, net | — | (235 | ) | ||||
Net income attributable to COPLP | $ | 7,117 | $ | 13,917 | |||
Basic earnings per common unit (1) | |||||||
Income from continuing operations | $ | 0.03 | $ | 0.10 | |||
Discontinued operations | 0.00 | 0.00 | |||||
Net income attributable to COPLP common unitholders | $ | 0.03 | $ | 0.10 | |||
Diluted earnings per common unit (1) | |||||||
Income from continuing operations | $ | 0.03 | $ | 0.10 | |||
Discontinued operations | 0.00 | 0.00 | |||||
Net income attributable to COPLP common unitholders | $ | 0.03 | $ | 0.10 | |||
Distributions declared per common unit | $ | 0.275 | $ | 0.275 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Net income | $ | 8,096 | $ | 14,735 | |||
Other comprehensive loss | |||||||
Unrealized losses on interest rate derivatives | (11,284 | ) | (3,474 | ) | |||
Losses on interest rate derivatives included in interest expense | 870 | 773 | |||||
Other comprehensive loss | (10,414 | ) | (2,701 | ) | |||
Comprehensive (loss) income | (2,318 | ) | 12,034 | ||||
Comprehensive income attributable to noncontrolling interests | (979 | ) | (873 | ) | |||
Comprehensive (loss) income attributable to COPLP | $ | (3,297 | ) | $ | 11,161 |
Limited Partner Preferred Units | General Partner Preferred Units | Common Units | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests in Subsidiaries | ||||||||||||||||||||||||||||
Units | Amount | Units | Amount | Units | Amount | Total Equity | ||||||||||||||||||||||||||
Balance at December 31, 2014 | 352,000 | $ | 8,800 | 7,431,667 | $ | 199,083 | 97,092,835 | $ | 1,305,219 | $ | (1,381 | ) | $ | 9,163 | $ | 1,520,884 | ||||||||||||||||
Issuance of common units resulting from common shares issued under at-the-market program | — | — | — | — | 890,241 | 26,535 | — | — | 26,535 | |||||||||||||||||||||||
Issuance of common units resulting from exercise of share options | — | — | — | — | 70,374 | 1,845 | — | — | 1,845 | |||||||||||||||||||||||
Share-based compensation (units net of redemption) | — | — | — | — | 162,370 | 1,829 | — | — | 1,829 | |||||||||||||||||||||||
Redemptions of vested equity awards | — | — | — | — | — | (2,031 | ) | — | — | (2,031 | ) | |||||||||||||||||||||
Comprehensive income | — | 165 | — | 3,552 | — | 10,200 | (2,756 | ) | 311 | 11,472 | ||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (165 | ) | — | (3,552 | ) | — | (27,010 | ) | — | — | (30,727 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (4 | ) | (4 | ) | |||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (73 | ) | — | — | (73 | ) | |||||||||||||||||||||
Balance at March 31, 2015 | 352,000 | $ | 8,800 | 7,431,667 | $ | 199,083 | 98,215,820 | $ | 1,316,514 | $ | (4,137 | ) | $ | 9,470 | $ | 1,529,730 | ||||||||||||||||
Balance at December 31, 2015 | 352,000 | $ | 8,800 | 7,431,667 | $ | 199,083 | 98,208,903 | $ | 1,400,745 | $ | (2,985 | ) | $ | 10,921 | $ | 1,616,564 | ||||||||||||||||
Costs associated with common shares issued to the public | — | — | — | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||||||||
Share-based compensation (units net of redemption) | — | — | — | — | 129,869 | 2,425 | — | — | 2,425 | |||||||||||||||||||||||
Redemptions of vested equity awards | — | — | — | — | — | (1,154 | ) | — | — | (1,154 | ) | |||||||||||||||||||||
Comprehensive loss | — | 165 | — | 3,552 | — | 3,400 | (10,414 | ) | 419 | (2,878 | ) | |||||||||||||||||||||
Distributions to owners of common and preferred units | — | (165 | ) | — | (3,552 | ) | — | (27,048 | ) | — | — | (30,765 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (4 | ) | (4 | ) | |||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (302 | ) | — | — | (302 | ) | |||||||||||||||||||||
Balance at March 31, 2016 | 352,000 | $ | 8,800 | 7,431,667 | $ | 199,083 | 98,338,772 | $ | 1,378,061 | $ | (13,399 | ) | $ | 11,336 | $ | 1,583,881 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 130,059 | $ | 117,521 | |||
Construction contract and other service revenues received | 7,747 | 19,968 | |||||
Property operating expenses paid | (46,084 | ) | (42,768 | ) | |||
Construction contract and other service expenses paid | (10,765 | ) | (27,853 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (12,175 | ) | (12,728 | ) | |||
Interest expense paid | (21,386 | ) | (12,795 | ) | |||
Other | 43 | 545 | |||||
Net cash provided by operating activities | 47,439 | 41,890 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (45,146 | ) | (62,057 | ) | |||
Acquisitions of operating properties and related intangible assets | — | (56,622 | ) | ||||
Tenant improvements on operating properties | (6,388 | ) | (5,520 | ) | |||
Other capital improvements on operating properties | (9,505 | ) | (3,720 | ) | |||
Proceeds from dispositions of properties | 5,452 | 17,424 | |||||
Leasing costs paid | (1,593 | ) | (1,935 | ) | |||
Other | 1,121 | (5,956 | ) | ||||
Net cash used in investing activities | (56,059 | ) | (118,386 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | 88,500 | 150,000 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | (25,000 | ) | (69,000 | ) | |||
Scheduled principal amortization | (1,800 | ) | (1,649 | ) | |||
Other debt repayments | (50 | ) | (50 | ) | |||
Net proceeds from issuance of common units | (5 | ) | 28,404 | ||||
Common unit distributions paid | (27,008 | ) | (26,698 | ) | |||
Preferred unit distributions paid | (3,717 | ) | (3,717 | ) | |||
Redemption of vested equity awards | (1,154 | ) | (2,031 | ) | |||
Distributions paid to redeemable noncontrolling interests | (13,848 | ) | (122 | ) | |||
Other | (5,119 | ) | (289 | ) | |||
Net cash provided by financing activities | 10,799 | 74,848 | |||||
Net increase (decrease) in cash and cash equivalents | 2,179 | (1,648 | ) | ||||
Cash and cash equivalents | |||||||
Beginning of period | 60,310 | 6,077 | |||||
End of period | $ | 62,489 | $ | 4,429 |
For the Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 8,096 | $ | 14,735 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 35,129 | 32,091 | |||||
Impairment losses | 2,446 | 233 | |||||
Losses on interest rate derivatives | 1,551 | — | |||||
Amortization of deferred financing costs and net debt discounts | 1,495 | 1,254 | |||||
Increase in deferred rent receivable | (1,456 | ) | (1,746 | ) | |||
Gain on sales of real estate | — | (3,986 | ) | ||||
Share-based compensation | 2,108 | 1,552 | |||||
Other | (802 | ) | (640 | ) | |||
Operating changes in assets and liabilities: | |||||||
Decrease (increase) in accounts receivable | 409 | (6,918 | ) | ||||
Increase in restricted cash and marketable securities | (77 | ) | (1,523 | ) | |||
Decrease (increase) in prepaid expenses and other assets, net | 5,941 | (6,352 | ) | ||||
(Decrease) increase in accounts payable, accrued expenses and other liabilities | (3,710 | ) | 12,650 | ||||
(Decrease) increase in rents received in advance and security deposits | (3,691 | ) | 540 | ||||
Net cash provided by operating activities | $ | 47,439 | $ | 41,890 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (9,420 | ) | $ | (3,897 | ) | |
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture | $ | 22,600 | $ | — | |||
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest | $ | 6,675 | $ | — | |||
Other liabilities assumed on acquisition of operating properties | $ | — | $ | 5,265 | |||
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests | $ | (10,414 | ) | $ | (2,701 | ) | |
Distributions payable | $ | 30,217 | $ | 30,174 | |||
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value | $ | 302 | $ | 73 |
• | 179 operating office properties totaling 18.3 million square feet, including ten triple-net leased, single-tenant data center properties; |
• | 11 office properties under, or contractually committed for, construction or redevelopment that we estimate will total approximately 1.3 million square feet upon completion, including one partially operational property included above and a property completed but held for future lease to the United States Government; |
• | 1,358 acres of land we control that we believe could be developed into approximately 16.5 million square feet; and |
• | a wholesale data center with a critical load of 19.25 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 | $ | 5,580 | $ | — | $ | — | $ | 5,580 | ||||||||
Other | 91 | — | — | 91 | ||||||||||||
Total assets | $ | 5,671 | $ | — | $ | — | $ | 5,671 | ||||||||
Liabilities: | ||||||||||||||||
Deferred compensation plan liability (2) | $ | — | $ | 5,671 | $ | — | $ | 5,671 | ||||||||
Interest rate derivatives | — | 15,072 | — | 15,072 | ||||||||||||
Total liabilities | $ | — | $ | 20,743 | $ | — | $ | 20,743 |
Description | Quoted Prices in Active Markets for Identical Assets(Level 1) | Significant Other Observable Inputs(Level 2) | Significant Unobservable Inputs(Level 3) | Total | ||||||||||||
Liabilities: | ||||||||||||||||
Interest rate derivatives | $ | — | $ | 15,072 | $ | — | $ | 15,072 |
• | $1.6 million on land in Colorado Springs, Colorado, the carrying amount of which exceeded the estimated fair value less costs to sell. Most of these losses pertained to land we decided to sell during the quarter that was reclassified as held for sale, and the remainder was attributable to further decreases in fair value of properties previously classified as held for sale based on recent bids from and negotiations with prospective buyers; and |
• | $847,000 on operating properties in White Marsh, Maryland (included in our Regional Office segment) classified as held for sale whose carrying amounts exceeded their estimated fair values less costs to sell based on recent negotiations with prospective buyers. |
Fair Values as of March 31, 2016 | |||||||||||||||||
Quoted Prices in | Significant | ||||||||||||||||
Active Markets for | Significant Other | Unobservable | |||||||||||||||
Identical Assets | Observable Inputs | Inputs | |||||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
Assets: | |||||||||||||||||
Assets held for sale, net (1) | $ | — | $ | — | $ | 14,886 | $ | 14,886 |
(1) | Represents estimated fair values less costs to sell. Fair values were derived from bids for the properties that were deemed to be indicative of value. |
March 31, 2016 | December 31, 2015 | ||||||
Land | $ | 464,674 | $ | 463,305 | |||
Buildings and improvements | 3,111,871 | 3,157,587 | |||||
Less: Accumulated depreciation | (713,283 | ) | (700,363 | ) | |||
Operating properties, net | $ | 2,863,262 | $ | 2,920,529 |
March 31, 2016 | December 31, 2015 | ||||||
Land | $ | 220,834 | $ | 207,774 | |||
Development in progress, excluding land | 195,335 | 221,445 | |||||
Projects in development or held for future development | $ | 416,169 | $ | 429,219 |
• | as of March 31, 2016: 13 operating properties in White Marsh, Maryland (included in our Regional Office segment); four operating properties in Greater Philadelphia (included in our Regional Office segment); two operating properties in Hanover, Maryland (included in our Fort Meade/BW Corridor sub-segment); two operating properties in San Antonio (included in our Other segment); and land in Northern Virginia, Colorado Springs and Greater Philadelphia; and |
• | as of December 31, 2015: 13 operating properties in White Marsh, Maryland (included in our Regional Office segment); two operating properties in San Antonio (included in our Other segment); and land in Northern Virginia and Colorado Springs. |
March 31, 2016 | December 31, 2015 | ||||||
Properties, net | $ | 199,481 | $ | 90,188 | |||
Deferred rent receivable | 12,542 | 2,891 | |||||
Intangible assets on real estate acquisitions, net | 1,591 | 1,591 | |||||
Deferred leasing costs, net | 9,228 | 1,391 | |||||
Lease incentives, net | 3,055 | 721 | |||||
Assets held for sale, net | $ | 225,897 | $ | 96,782 |
• | 250 W. Pratt Street, a 367,000 square foot office property in Baltimore, Maryland that was 96.2% leased, for $61.8 million on March 19, 2015; |
• | 2600 Park Tower Drive, a 237,000 square foot office property in Vienna, Virginia (in the Northern Virginia region) that was 100% leased, for $80.5 million on April 15, 2015; and |
• | 100 Light Street, a 558,000 square foot office property in Baltimore, Maryland that was 93.5% leased, and its structured parking garage, 30 Light Street, for $121.2 million on August 7, 2015. In connection with that acquisition, we assumed a $55.0 million mortgage loan with a fair value at assumption of $55.5 million. |
For the Three Months Ended March 31, 2015 | |||
(Unaudited) | |||
Pro forma total revenues | $ | 169,925 | |
Pro forma net income attributable to COPT common shareholders | $ | 10,847 | |
Pro forma EPS: | |||
Basic | $ | 0.11 | |
Diluted | $ | 0.11 |
Nominal | ||||||||||||||||||
Ownership | March 31, 2016 | (1) | ||||||||||||||||
Date | % as of | Total | Encumbered | Total | ||||||||||||||
Acquired | 3/31/2016 | Nature of Activity | Assets | Assets | Liabilities | |||||||||||||
LW Redstone Company, LLC | 3/23/2010 | 85% | Development and operation of real estate (2) | $ | 149,301 | $ | 82,018 | $ | 53,356 | |||||||||
M Square Associates, LLC | 6/26/2007 | 50% | Development and operation of real estate (3) | 56,333 | 47,820 | 37,462 | ||||||||||||
Stevens Investors, LLC | 8/11/2015 | 95% | Development of real estate (4) | 37,724 | — | 6,937 | ||||||||||||
$ | 243,358 | $ | 129,838 | $ | 97,755 |
March 31, 2016 | December 31, 2015 | ||||||
Notes receivable from the City of Huntsville | $ | 45,998 | $ | 44,875 | |||
Other investing loans receivable | 3,000 | 3,000 | |||||
$ | 48,998 | $ | 47,875 |
March 31, 2016 | December 31, 2015 | ||||||
Prepaid expenses | $ | 15,516 | $ | 23,009 | |||
Lease incentives, net | 8,375 | 11,133 | |||||
Furniture, fixtures and equipment, net | 5,669 | 6,004 | |||||
Construction contract costs incurred in excess of billings | 5,232 | 3,261 | |||||
Deferred financing costs, net (1) | 5,182 | 5,867 | |||||
Deferred tax asset, net (2) | 3,474 | 3,467 | |||||
Equity method investments | 1,646 | 1,636 | |||||
Other assets | 4,230 | 5,647 | |||||
Prepaid expenses and other assets, net | $ | 49,324 | $ | 60,024 |
Carrying Value (1) as of | Scheduled Maturity | |||||||||||
March 31, 2016 | December 31, 2015 | Stated Interest Rates as of | as of | |||||||||
March 31, 2016 | March 31, 2016 | |||||||||||
Mortgage and Other Secured Loans: | ||||||||||||
Fixed rate mortgage loans (2) | $ | 279,782 | $ | 281,208 | 3.96% - 7.87% (3) | 2016-2024 | ||||||
Variable rate secured loans | 49,488 | 49,792 | LIBOR + 1.85% - 2.00% (4) |