Exhibit 99.1

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Corporate Office Properties Trust
Summary Description

The Company: Corporate Office Properties Trust (the “Company” or “COPT”) is a self-managed real estate investment trust (“REIT”). COPT is listed on the New York Stock Exchange under the symbol “OFC” and is an S&P MidCap 400 Company. We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what we believe are growing, durable, priority missions; we refer to these properties as Defense/IT Locations. We also own a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics; these properties are included in a segment referred to as Regional Office Properties. As of December 31, 2019, we derived 88% of our core portfolio annualized rental revenue from Defense/IT Locations and 12% from Regional Office Properties. As of December 31, 2019, our core portfolio of 168 office and data center shell properties, including 15 owned through unconsolidated joint ventures, encompassed 19.0 million square feet and was 94.6% leased. As of the same date, we also owned a wholesale data center with a critical load of 19.25 megawatts that was 76.9% leased.
Management:
Investor Relations:
Stephen E. Budorick, President & CEO
Stephanie M. Krewson-Kelly, VP of IR
Paul R. Adkins, EVP & COO
443-285-5453, stephanie.kelly@copt.com
Anthony Mifsud, EVP & CFO
Michelle Layne, Manager of IR
 
443-285-5452, michelle.layne@copt.com
 
Corporate Credit Rating: Fitch: BBB- Stable; Moody’s: Baa3 Stable; and S&P: BBB- Positive

Disclosure Statement: This supplemental package contains forward-looking statements within the meaning of the Federal securities laws. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology.  Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate.  Although we believe that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, we can give no assurance that these expectations, estimates and projections will be achieved.  Future events and actual results may differ materially from those discussed in the forward-looking statements and we undertake no obligation to update or supplement any forward-looking statements.  The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. 

1


Corporate Office Properties Trust
Equity Research Coverage
 
Firm
 
Senior Analyst
 
Phone
 
Email
Bank of America Merrill Lynch
 
Jamie Feldman
 
646-855-5808
 
james.feldman@baml.com
BTIG
 
Tom Catherwood
 
212-738-6410
 
tcatherwood@btig.com
Capital One Securities
 
Chris Lucas
 
571-633-8151
 
christopher.lucas@capitalone.com
Citigroup Global Markets
 
Manny Korchman
 
212-816-1382
 
emmanuel.korchman@citi.com
Evercore ISI
 
Steve Sakwa
 
212-446-9462
 
steve.sakwa@evercoreisi.com
Green Street Advisors
 
Daniel Ismail
 
949-640-8780
 
dismail@greenst.com
Jefferies & Co.
 
Jonathan Petersen
 
212-284-1705
 
jpetersen@jefferies.com
JP Morgan
 
Tony Paolone
 
212-622-6682
 
anthony.paolone@jpmorgan.com
KeyBanc Capital Markets
 
Craig Mailman
 
917-368-2316
 
cmailman@key.com
Mizuho Securities USA Inc.
 
Tayo Okusanya
 
646-949-9672
 
omotayo.okusanya@mizuhogroup.com
Raymond James
 
Bill Crow
 
727-567-2594
 
bill.crow@raymondjames.com
Robert W. Baird & Co., Inc.
 
Dave Rodgers
 
216-737-7341
 
drodgers@rwbaird.com
SMBC Nikko Securities America, Inc.
 
Rich Anderson
 
917-262-2795
 
randerson@smbcnikko-si.com
Stifel Financial Corp.
 
John Guinee
 
443-224-1307
 
jwguinee@stifel.com
SunTrust Robinson Humphrey, Inc.
 
Michael Lewis
 
212-319-5659
 
michael.lewis@suntrust.com
Wells Fargo Securities
 
Blaine Heck
 
443-263-6529
 
blaine.heck@wellsfargo.com
 
With the exception of Green Street Advisors, the above-listed firms are those whose analysts publish research material on the Company and whose estimates of our FFO per share can be tracked through Thomson’s First Call Corporation. Any opinions, estimates, or forecasts the above analysts make regarding COPT’s future performance are their own and do not represent the views, estimates, or forecasts of COPT’s management.

2


Corporate Office Properties Trust
Selected Financial Summary Data
(in thousands, except per share data)
 
 
Page
 
Three Months Ended
 
Year Ended
SUMMARY OF RESULTS 
 
Refer.
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Net income
 
6
 
$
44,877

 
$
23,246

 
$
109,563

 
$
22,318

 
$
18,456

 
$
200,004

 
$
78,643

NOI from real estate operations
 
13
 
$
82,504

 
$
82,621

 
$
86,136

 
$
83,764

 
$
80,738

 
$
335,025

 
$
321,036

Same Properties NOI
 
16
 
$
72,243

 
$
71,790

 
$
71,521

 
$
70,010

 
$
69,689

 
$
285,564

 
$
277,996

Same Properties cash NOI
 
17
 
$
73,708

 
$
71,177

 
$
71,781

 
$
69,278

 
$
69,377

 
$
285,944

 
$
275,094

Adjusted EBITDA
 
10
 
$
76,024

 
$
77,523

 
$
80,280

 
$
77,450

 
$
75,200

 
$
311,277

 
$
300,247

Diluted AFFO avail. to common share and unit holders
 
9
 
$
40,270

 
$
42,794

 
$
46,961

 
$
46,648

 
$
42,755

 
$
176,247

 
$
160,264

Dividend per common share
 
N/A
 
$
0.275

 
$
0.275

 
$
0.275

 
$
0.275

 
$
0.275

 
$
1.100

 
$
1.100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share - diluted:
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 
EPS
 
8
 
$
0.38

 
$
0.19

 
$
0.95

 
$
0.19

 
$
0.16

 
$
1.71

 
$
0.69

FFO - Nareit
 
8
 
$
0.49

 
$
0.51

 
$
0.52

 
$
0.50

 
$
0.49

 
$
2.02

 
$
1.99

FFO - as adjusted for comparability
 
8
 
$
0.50

 
$
0.51

 
$
0.52

 
$
0.50

 
$
0.50

 
$
2.03

 
$
2.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerators for diluted per share amounts:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
6
 
$
42,664

 
$
21,139

 
$
107,512

 
$
20,773

 
$
16,906

 
$
191,201

 
$
71,839

Diluted FFO available to common share and unit holders
 
7
 
$
56,032

 
$
57,255

 
$
58,913

 
$
56,740

 
$
54,195

 
$
228,514

 
$
214,303

Diluted FFO available to common share and unit holders, as adjusted for comparability
 
7
 
$
56,330

 
$
57,430

 
$
59,222

 
$
56,788

 
$
54,974

 
$
229,344

 
$
215,800

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payout ratios:
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Diluted FFO
 
N/A
 
55.6
%
 
54.2
%
 
52.7
%
 
54.7
%
 
56.4
%
 
54.4
%
 
55.4
%
Diluted FFO - as adjusted for comparability
 
N/A
 
55.3
%
 
54.1
%
 
52.4
%
 
54.7
%
 
55.6
%
 
54.2
%
 
55.0
%
Diluted AFFO
 
N/A
 
77.3
%
 
72.6
%
 
66.1
%
 
66.6
%
 
71.5
%
 
70.5
%
 
74.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CAPITALIZATION
 
 
 
 

 
 

 
 
 
 

 
 

 
 

 
 
Total Market Capitalization
 
29
 
$
5,182,065

 
$
5,259,182

 
$
4,794,853

 
$
4,992,411

 
$
4,193,726

 
 
 
 
Total Equity Market Capitalization
 
29
 
$
3,339,258

 
$
3,384,363

 
$
2,997,549

 
$
3,102,491

 
$
2,355,222

 
 
 
 
Gross debt
 
30
 
$
1,893,057

 
$
1,920,179

 
$
1,827,304

 
$
1,919,920

 
$
1,868,504

 
 
 
 
Net debt to adjusted book
 
32
 
36.8
%
 
37.3
%
 
36.1
%
 
38.8
%
 
38.9
%
 
N/A

 
N/A

Net debt plus preferred equity to adjusted book
 
32
 
37.0
%
 
37.5
%
 
36.2
%
 
39.0
%
 
39.1
%
 
N/A

 
N/A

Adjusted EBITDA fixed charge coverage ratio
 
32
 
3.7
x
 
3.7
x
 
3.7
x
 
3.6
x
 
3.6
x
 
3.7
x
 
3.6
x
Net debt to in-place adjusted EBITDA ratio
 
32
 
6.1
x
 
6.1
x
 
5.7
x
 
6.2
x
 
6.0
x
 
N/A

 
N/A

Net debt plus pref. equity to in-place adj. EBITDA ratio
 
32
 
6.1
x
 
6.1
x
 
5.7
x
 
6.2
x
 
6.0
x
 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



3


Corporate Office Properties Trust
Selected Portfolio Data (1)
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Operating Office and Data Center Shell Properties
 
 
 
 
 
 
 
 
 
# of Properties
 
 
 
 
 
 
 
 
 
Total Portfolio
170

 
169

 
169
 
165

 
163

Consolidated Portfolio
155

 
156

 
156
 
159

 
157

Core Portfolio
168

 
167

 
167
 
163

 
161

Same Properties
147

 
147

 
147
 
147

 
147

 
 
 
 
 
 
 
 
 
 
% Occupied
 
 
 
 
 
 
 
 
 
Total Portfolio
92.9
%
 
92.7
%
 
92.7
%
 
92.6
%
 
93.0
%
Consolidated Portfolio
91.9
%
 
91.7
%
 
91.8
%
 
92.2
%
 
92.6
%
Core Portfolio
93.1
%
 
92.8
%
 
92.9
%
 
92.8
%
 
93.1
%
Same Properties
91.9
%
 
91.7
%
 
91.8
%
 
92.0
%
 
92.6
%
 
 
 
 
 
 
 
 
 
 
% Leased
 
 
 
 
 
 
 
 
 
Total Portfolio
94.4
%
 
94.3
%
 
93.9
%
 
93.5
%
 
93.9
%
Consolidated Portfolio
93.6
%
 
93.6
%
 
93.1
%
 
93.1
%
 
93.5
%
Core Portfolio
94.6
%
 
94.5
%
 
94.1
%
 
93.7
%
 
94.0
%
Same Properties
93.7
%
 
93.7
%
 
93.2
%
 
92.9
%
 
93.5
%
 
 
 
 
 
 
 
 
 
 
Square Feet (in thousands)
 
 
 
 
 
 
 
 
 
Total Portfolio
19,173

 
18,956

 
18,945

 
18,338

 
18,094

Consolidated Portfolio
16,739

 
16,818

 
16,807

 
17,374

 
17,132

Core Portfolio
19,016

 
18,799

 
18,788

 
18,181

 
17,937

Same Properties
15,890

 
15,891

 
15,891

 
15,891

 
15,891

 
 
 
 
 
 
 
 
 
 
Wholesale Data Center
 
 
 
 
 
 
 
 
 
Megawatts Operational
19.25

 
19.25

 
19.25

 
19.25

 
19.25

% Leased
76.9
%
 
82.1
%
 
82.1
%
 
87.6
%
 
87.6
%

(1)
Total and core portfolio and same properties include properties owned through unconsolidated real estate joint ventures (see page 34).

4


Corporate Office Properties Trust
Consolidated Balance Sheets
(dollars in thousands)
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Assets
 

 
 

 
 

 
 

 
 

Properties, net:
 

 
 

 
 

 
 

 
 

Operating properties, net
$
2,772,647

 
$
2,713,900

 
$
2,719,585

 
$
2,865,829

 
$
2,847,265

Development and redevelopment in progress, including land (1)
274,639

 
259,489

 
185,007

 
146,514

 
139,304

Land held (1)
293,600

 
285,434

 
289,780

 
290,659

 
264,057

Total properties, net
3,340,886

 
3,258,823

 
3,194,372

 
3,303,002

 
3,250,626

Property - operating right-of-use assets (2)
27,864

 
27,325

 
27,434

 
27,569

 

Property - finance right-of-use assets (2)
40,458

 
40,467

 
40,476

 
40,488

 

Assets held for sale, net

 
61,728

 
54,448

 

 

Cash and cash equivalents
14,733

 
34,005

 
46,282

 
7,780

 
8,066

Investment in unconsolidated real estate joint ventures
51,949

 
49,408

 
65,336

 
39,359

 
39,845

Accounts receivable
35,444

 
37,623

 
58,189

 
25,261

 
26,277

Deferred rent receivable
87,736

 
88,001

 
86,707

 
91,304

 
89,350

Intangible assets on real estate acquisitions, net
27,392

 
29,454

 
31,162

 
33,172

 
43,470

Deferred leasing costs, net
58,392

 
55,839

 
52,227

 
51,736

 
50,191

Investing receivables
73,523

 
72,114

 
70,656

 
69,390

 
56,982

Prepaid expenses and other assets, net
96,076

 
100,582

 
76,180

 
86,798

 
91,198

Total assets
$
3,854,453

 
$
3,855,369

 
$
3,803,469

 
$
3,775,859

 
$
3,656,005

Liabilities and equity
 

 
 

 
 

 
 

 
 

Liabilities:
 

 
 

 
 

 
 

 
 

Debt
$
1,831,139

 
$
1,862,301

 
$
1,784,362

 
$
1,876,149

 
$
1,823,909

Accounts payable and accrued expenses
148,746

 
141,242

 
152,196

 
112,076

 
92,855

Rents received in advance and security deposits
33,620

 
27,975

 
27,477

 
25,635

 
30,079

Dividends and distributions payable
31,263

 
31,345

 
31,346

 
31,346

 
30,856

Deferred revenue associated with operating leases
7,361

 
7,665

 
8,161

 
8,415

 
9,125

Property - operating lease liabilities (2)
17,317

 
16,686

 
16,640

 
16,619

 

Interest rate derivatives
25,682

 
34,825

 
23,547

 
11,894

 
5,459

Other liabilities
10,649

 
8,706

 
10,826

 
10,162

 
10,414

Total liabilities
2,105,777

 
2,130,745

 
2,054,555

 
2,092,296

 
2,002,697

Redeemable noncontrolling interests
29,431

 
28,677

 
29,803

 
27,385

 
26,260

Equity:
 

 
 

 
 

 
 
 
 
COPT’s shareholders’ equity:
 

 
 

 
 

 
 
 
 
Common shares
1,121

 
1,121

 
1,119

 
1,119

 
1,102

Additional paid-in capital
2,481,558

 
2,480,083

 
2,475,293

 
2,475,497

 
2,431,355

Cumulative distributions in excess of net income
(778,275
)
 
(790,235
)
 
(780,667
)
 
(856,703
)
 
(846,808
)
Accumulated other comprehensive (loss) income
(25,444
)
 
(34,580
)
 
(23,465
)
 
(9,538
)
 
(238
)
Total COPT’s shareholders’ equity
1,678,960

 
1,656,389

 
1,672,280

 
1,610,375

 
1,585,411

Noncontrolling interests in subsidiaries:
 

 
 

 
 

 
 

 
 

Common units in the Operating Partnership
19,597

 
19,365

 
21,039

 
20,167

 
19,168

Preferred units in the Operating Partnership
8,800

 
8,800

 
8,800

 
8,800

 
8,800

Other consolidated entities
11,888

 
11,393

 
16,992

 
16,836

 
13,669

Total noncontrolling interests in subsidiaries
40,285

 
39,558

 
46,831

 
45,803

 
41,637

Total equity
1,719,245

 
1,695,947

 
1,719,111

 
1,656,178

 
1,627,048

Total liabilities, redeemable noncontrolling interests and equity
$
3,854,453

 
$
3,855,369

 
$
3,803,469

 
$
3,775,859

 
$
3,656,005

(1)
Refer to pages 25, 26 and 28 for detail.
(2)
Applicable to periods subsequent to 12/31/18 in connection with our adoption of lease accounting guidance effective 1/1/19 without adjustments to prior reporting periods.

5


Corporate Office Properties Trust
Consolidated Statements of Operations
(in thousands, except per share data)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Revenues
 

 
 

 
 

 
 

 
 

 
 
 
 
Lease revenue
$
130,693

 
$
129,461

 
$
131,415

 
$
130,903

 
$
129,596

 
$
522,472

 
$
512,327

Other property revenue
1,275

 
1,273

 
1,356

 
1,087

 
1,229

 
4,991

 
4,926

Construction contract and other service revenues
25,817

 
28,697

 
42,299

 
16,950

 
7,657

 
113,763

 
60,859

Total revenues
157,785

 
159,431

 
175,070

 
148,940

 
138,482

 
641,226

 
578,112

Operating expenses
 

 
 

 
 

 
 

 
 

 
 
 
 
Property operating expenses
51,098

 
49,714

 
47,886

 
49,445

 
51,298

 
198,143

 
201,035

Depreciation and amortization associated with real estate operations
32,779

 
34,692

 
34,802

 
34,796

 
36,219

 
137,069

 
137,116

Construction contract and other service expenses
24,832

 
27,802

 
41,002

 
16,326

 
7,111

 
109,962

 
58,326

Impairment losses
2

 
327

 

 

 
2,367

 
329

 
2,367

General and administrative expenses
7,043

 
6,105

 
7,650

 
6,719

 
5,105

 
27,517

 
22,829

Leasing expenses
2,293

 
1,824

 
1,736

 
2,032

 
1,976

 
7,885

 
6,071

Business development expenses and land carry costs
1,292

 
964

 
870

 
1,113

 
1,425

 
4,239

 
5,840

Total operating expenses
119,339

 
121,428

 
133,946

 
110,431

 
105,501

 
485,144

 
433,584

Interest expense
(16,777
)
 
(17,126
)
 
(18,475
)
 
(18,674
)
 
(18,475
)
 
(71,052
)
 
(75,385
)
Interest and other income
1,917

 
1,842

 
1,849

 
2,286

 
74

 
7,894

 
4,358

Gain on sales of real estate
20,761

 

 
84,469

 

 
2,367

 
105,230

 
2,340

Loss on early extinguishment of debt

 

 

 

 
(258
)
 

 
(258
)
Income before equity in income of unconsolidated entities and income taxes
44,347

 
22,719

 
108,967

 
22,121

 
16,689

 
198,154

 
75,583

Equity in income of unconsolidated entities
426

 
396

 
420

 
391

 
1,577

 
1,633

 
2,697

Income tax benefit (expense)
104

 
131

 
176

 
(194
)
 
190

 
217

 
363

Net income
44,877

 
23,246

 
109,563

 
22,318

 
18,456

 
200,004

 
78,643

Net income attributable to noncontrolling interests:
 

 
 

 
 

 
 

 
 

 
 
 
 
Common units in the Operating Partnership
(500
)
 
(267
)
 
(1,339
)
 
(257
)
 
(210
)
 
(2,363
)
 
(1,742
)
Preferred units in the Operating Partnership
(77
)
 
(157
)
 
(165
)
 
(165
)
 
(165
)
 
(564
)
 
(660
)
Other consolidated entities
(1,515
)
 
(1,565
)
 
(1,268
)
 
(1,037
)
 
(1,061
)
 
(5,385
)
 
(3,940
)
Net income attributable to COPT common shareholders
$
42,785

 
$
21,257

 
$
106,791

 
$
20,859

 
$
17,020

 
$
191,692

 
$
72,301

Distributions on dilutive convertible preferred units

 

 
165

 

 

 

 

Redeemable noncontrolling interests
33

 

 
902

 

 

 
132

 

Amount allocable to share-based compensation awards
(154
)
 
(118
)
 
(346
)
 
(86
)
 
(114
)
 
(623
)
 
(462
)
Numerator for diluted EPS
$
42,664

 
$
21,139

 
$
107,512

 
$
20,773

 
$
16,906

 
$
191,201

 
$
71,839




6


Corporate Office Properties Trust
Funds from Operations
(in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Net income
$
44,877

 
$
23,246

 
$
109,563

 
$
22,318

 
$
18,456

 
$
200,004

 
$
78,643

Real estate-related depreciation and amortization
32,779

 
34,692

 
34,802

 
34,796

 
36,219

 
137,069

 
137,116

Impairment losses on real estate
2

 
327

 

 

 
2,367

 
329

 
2,367

Gain on sales of real estate
(20,761
)
 

 
(84,469
)
 

 
(2,367
)
 
(105,230
)
 
(2,340
)
Depreciation and amortization on unconsolidated real estate JVs (1)
781

 
790

 
566

 
566

 
565

 
2,703

 
2,256

FFO - per Nareit (2)(3)
57,678

 
59,055

 
60,462

 
57,680

 
55,240

 
234,875

 
218,042

Noncontrolling interests - preferred units in the Operating Partnership
(77
)
 
(157
)
 
(165
)
 
(165
)
 
(165
)
 
(564
)
 
(660
)
FFO allocable to other noncontrolling interests (4)
(1,436
)
 
(1,429
)
 
(1,188
)
 
(971
)
 
(1,011
)
 
(5,024
)
 
(3,768
)
Basic and diluted FFO allocable to share-based compensation awards
(243
)
 
(248
)
 
(229
)
 
(185
)
 
(200
)
 
(905
)
 
(851
)
Basic FFO available to common share and common unit holders (3)
55,922

 
57,221

 
58,880

 
56,359

 
53,864

 
228,382

 
212,763

Distributions on dilutive preferred units in the Operating Partnership
77

 

 

 

 

 

 

Redeemable noncontrolling interests
33

 
34

 
33

 
381

 
331

 
132

 
1,540

Diluted FFO available to common share and common unit holders (3)
56,032

 
57,255

 
58,913

 
56,740

 
54,195

 
228,514

 
214,303

Loss on early extinguishment of debt

 

 

 

 
258

 

 
258

Demolition costs on redevelopment and nonrecurring improvements
104

 

 

 
44

 
163

 
148

 
462

Executive transition costs

 

 

 
4

 
371

 
4

 
793

Non-comparable professional and legal expenses
195

 
175

 
311

 

 

 
681

 

Diluted FFO comparability adjustments allocable to share-based compensation awards
(1
)
 

 
(2
)
 

 
(13
)
 
(3
)
 
(16
)
Diluted FFO available to common share and common unit holders, as adjusted for comparability (3)
$
56,330

 
$
57,430

 
$
59,222

 
$
56,788

 
$
54,974

 
$
229,344

 
$
215,800


(1)
FFO adjustment pertaining to COPT’s share of unconsolidated real estate joint ventures reported on page 34.
(2)
See reconciliation on page 35 for components of FFO per Nareit.
(3)
Refer to the section entitled “Definitions” for a definition of this measure.
(4)
Pertains to noncontrolling interests in consolidated real estate joint ventures reported on page 33.

7


Corporate Office Properties Trust
Diluted Share and Unit Computations
(in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
EPS Denominator:
 

 
 

 
 

 
 

 
 

 
 
 
 
Weighted average common shares - basic
111,670

 
111,582

 
111,557

 
109,951

 
108,528

 
111,196

 
103,946

Dilutive effect of share-based compensation awards
293

 
361

 
310

 
267

 
45

 
308

 
134

Dilutive effect of forward equity sale agreements

 

 

 

 

 

 
45

Dilutive effect of redeemable noncontrolling interests
108

 

 
1,062

 

 

 
119

 

Dilutive convertible preferred units

 

 
176

 

 

 

 

Weighted average common shares - diluted
112,071

 
111,943

 
113,105

 
110,218

 
108,573

 
111,623

 
104,125

Diluted EPS
$
0.38

 
$
0.19

 
$
0.95

 
$
0.19

 
$
0.16

 
$
1.71

 
$
0.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares for period ended:
 

 
 

 
 

 
 

 
 

 
 

 
 

Common shares
111,670

 
111,582

 
111,557

 
109,951

 
108,528

 
111,196

 
103,946

Dilutive effect of share-based compensation awards
293

 
361

 
310

 
302

 
45

 
308

 
134

Dilutive effect of forward equity sale agreements

 

 

 

 

 

 
45

Common units
1,228

 
1,312

 
1,327

 
1,331

 
1,345

 
1,299

 
2,468

Redeemable noncontrolling interests
108

 
109

 
136

 
1,013

 
1,126

 
119

 
936

Dilutive convertible preferred units
176

 

 

 

 

 

 

Denominator for diluted FFO per share and as adjusted for comparability
113,475

 
113,364

 
113,330

 
112,597

 
111,044

 
112,922

 
107,529

Weighted average common units
(1,228
)
 
(1,312
)
 
(1,327
)
 
(1,331
)
 
(1,345
)
 
(1,299
)
 
(2,468
)
Redeemable noncontrolling interests

 
(109
)
 
926

 
(1,013
)
 
(1,126
)
 

 
(936
)
Anti-dilutive EPS effect of share-based compensation awards

 

 

 
(35
)
 

 

 

Dilutive convertible preferred units
(176
)
 

 
176

 

 

 

 

Denominator for diluted EPS
112,071

 
111,943

 
113,105

 
110,218

 
108,573

 
111,623

 
104,125

Diluted FFO per share - Nareit
$
0.49

 
$
0.51

 
$
0.52

 
$
0.50

 
$
0.49

 
$
2.02

 
$
1.99

Diluted FFO per share - as adjusted for comparability
$
0.50

 
$
0.51

 
$
0.52

 
$
0.50

 
$
0.50

 
$
2.03

 
$
2.01






8


Corporate Office Properties Trust
Adjusted Funds from Operations
(in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Diluted FFO available to common share and common unit holders, as adjusted for comparability
$
56,330

 
$
57,430

 
$
59,222

 
$
56,788

 
$
54,974

 
$
229,344

 
$
215,800

Straight line rent adjustments and lease incentive amortization
1,386

 
(515
)
 
1,051

 
(1,667
)
 
(46
)
 
255

 
(1,487
)
Amortization of intangibles included in NOI
(174
)
 
(59
)
 
(50
)
 
62

 
153

 
(221
)
 
893

Share-based compensation, net of amounts capitalized
1,735

 
1,697

 
1,623

 
1,673

 
1,601

 
6,728

 
6,193

Amortization of deferred financing costs
541

 
538

 
529

 
528

 
550

 
2,136

 
1,954

Amortization of net debt discounts, net of amounts capitalized
382

 
377

 
374

 
370

 
365

 
1,503

 
1,439

Accum. other comprehensive loss on derivatives amortized to expense

 
12

 
33

 
34

 
34

 
79

 
135

Replacement capital expenditures (1)
(19,862
)
 
(16,752
)
 
(16,002
)
 
(11,173
)
 
(14,848
)
 
(63,789
)
 
(64,784
)
Other diluted AFFO adjustments associated with real estate JVs (2)
(68
)
 
66

 
181

 
33

 
(28
)
 
212

 
121

Diluted AFFO available to common share and common unit holders (“diluted AFFO”)
$
40,270

 
$
42,794

 
$
46,961

 
$
46,648

 
$
42,755

 
$
176,247

 
$
160,264

Replacement capital expenditures (1)
 

 
 

 
 

 
 

 
 

 
 
 
 
Tenant improvements and incentives
$
11,447

 
$
10,880

 
$
8,568

 
$
7,152

 
$
7,876

 
$
38,047

 
$
37,502

Building improvements
8,826

 
8,908

 
4,333

 
4,531

 
9,306

 
26,598

 
22,977

Leasing costs
2,998

 
2,722

 
2,761

 
3,182

 
3,800

 
11,663

 
9,847

Net (exclusions from) additions to tenant improvements and incentives
(426
)
 
(2,156
)
 
1,759

 
(1,469
)
 
(2,131
)
 
(2,292
)
 
1,577

Excluded building improvements
(2,983
)
 
(3,602
)
 
(1,419
)
 
(2,223
)
 
(3,984
)
 
(10,227
)
 
(7,073
)
Excluded leasing costs

 

 

 

 
(19
)
 

 
(46
)
Replacement capital expenditures
$
19,862

 
$
16,752

 
$
16,002

 
$
11,173

 
$
14,848

 
$
63,789

 
$
64,784

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Refer to the section entitled “Definitions” for a definition of this measure.
 
 
 
 
(2) AFFO adjustments pertaining to noncontrolling interests on consolidated joint ventures reported on page 33 and COPTs share of unconsolidated real estate joint ventures reported on page 34.
 
 
 
 

9


Corporate Office Properties Trust
EBITDAre and Adjusted EBITDA
(in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Net income
$
44,877

 
$
23,246

 
$
109,563

 
$
22,318

 
$
18,456

 
$
200,004

 
$
78,643

Interest expense
16,777

 
17,126

 
18,475

 
18,674

 
18,475

 
71,052

 
75,385

Income tax (benefit) expense
(104
)
 
(131
)
 
(176
)
 
194

 
(190
)
 
(217
)
 
(363
)
Depreciation of furniture, fixtures and equipment
438

 
467

 
496

 
433

 
404

 
1,834

 
1,947

Real estate-related depreciation and amortization
32,779

 
34,692

 
34,802

 
34,796

 
36,219

 
137,069

 
137,116

Impairment losses on real estate
2

 
327

 

 

 
2,367

 
329

 
2,367

Gain on sales of real estate
(20,761
)
 

 
(84,469
)
 

 
(2,367
)
 
(105,230
)
 
(2,340
)
Adjustments from unconsolidated real estate JVs (1)
1,206

 
1,202

 
830

 
827

 
832

 
4,065

 
3,314

EBITDAre
75,214

 
76,929

 
79,521

 
77,242

 
74,196

 
$
308,906

 
$
296,069

Loss on early extinguishment of debt

 

 

 

 
258

 

 
258

Net gain on other investments
(1
)
 

 
(12
)
 
(388
)
 
(449
)
 
(401
)
 
(449
)
Business development expenses
512

 
419

 
460

 
548

 
661

 
1,939

 
3,114

Non-comparable professional and legal expenses
195

 
175

 
311

 

 

 
681

 

Demolition costs on redevelopment and nonrecurring improvements
104

 

 

 
44

 
163

 
148

 
462

Executive transition costs

 

 

 
4

 
371

 
4

 
793

Adjusted EBITDA
76,024

 
77,523

 
80,280

 
77,450

 
75,200

 
$
311,277

 
$
300,247

Proforma NOI adjustment for property changes within period
463

 

 
(1,981
)
 
252

 
2,052

 
 
 
 
Change in collectability of deferred rental revenue
928

 

 

 

 

 
 
 
 
In-place adjusted EBITDA
$
77,415

 
$
77,523

 
$
78,299

 
$
77,702

 
$
77,252

 
 
 
 

(1) Includes COPT’s share of adjusted EBITDA adjustments in unconsolidated real estate joint ventures (see page 34).

10



Corporate Office Properties Trust
Office and Data Center Shell Properties by Segment (1) - 12/31/19
(square feet in thousands)
 
 
# of
Properties
 
Operational
Square Feet
 
% Occupied
 
% Leased
Core Portfolio: (2)
 
 
 
 
 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
Fort Meade/Baltimore Washington (“BW”) Corridor:
 
 

 
 

 
 

 
 

National Business Park
 
31

 
3,823

 
90.1
%
 
90.6
%
Howard County
 
35

 
2,849

 
94.1
%
 
95.5
%
Other
 
22

 
1,624

 
95.0
%
 
96.7
%
Total Fort Meade/BW Corridor
 
88

 
8,296

 
92.4
%
 
93.5
%
Northern Virginia (“NoVA”) Defense/IT
 
13

 
1,993

 
82.4
%
 
87.7
%
Lackland AFB (San Antonio, Texas)
 
7

 
953

 
100.0
%
 
100.0
%
Navy Support
 
21

 
1,242

 
92.5
%
 
95.1
%
Redstone Arsenal (Huntsville, Alabama)
 
10

 
806

 
99.3
%
 
99.7
%
Data Center Shells:
 
 
 
 
 
 
 
 
Consolidated Properties
 
7

 
1,309

 
100.0
%
 
100.0
%
Unconsolidated JV Properties (3)
 
15

 
2,435

 
100.0
%
 
100.0
%
Total Defense/IT Locations
 
161

 
17,034

 
93.7
%
 
95.0
%
Regional Office
 
7

 
1,982

 
88.1
%
 
90.9
%
Core Portfolio
 
168

 
19,016

 
93.1
%
 
94.6
%
Other Properties
 
2

 
157

 
73.0
%
 
73.0
%
Total Portfolio
 
170

 
19,173

 
92.9
%
 
94.4
%
Consolidated Portfolio
 
155

 
16,739

 
91.9
%
 
93.6
%

(1)
This presentation sets forth core portfolio data by segment followed by data for the remainder of the portfolio.
(2)
Represents Defense/IT Locations and Regional Office properties.
(3)
See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.




11


Corporate Office Properties Trust
NOI from Real Estate Operations and Occupancy by Property Grouping - 12/31/19
(dollars and square feet in thousands)
 
 
As of Period End
 
 
 
 
 
 
# of Office and Data Center Shell
Properties
 
Operational Square Feet
 
% Occupied (1)
 
% Leased (1)
 
Annualized
Rental Revenue (2)
 
% of Total
Annualized
Rental Revenue (2)
 
NOI from Real Estate Operations
Property Grouping
 
 
 
 
 
 
 
Three Months Ended
 
Year Ended
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Properties: (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
 
139

 
14,769

 
91.6%
 
93.5%
 
$
459,831

 
91.3
%
 
$
70,613

 
$
279,120

Unconsolidated real estate JV (4)
 
6

 
964

 
100.0%
 
100.0%
 
5,619

 
1.1
%
 
1,214

 
4,852

Total Same Properties in Core Portfolio
 
145

 
15,733

 
92.1%
 
93.9%
 
465,450

 
92.4
%
 
71,827

 
283,972

Properties Placed in Service (5)
 
14

 
1,812

 
95.9%
 
95.9%
 
33,230

 
6.6
%
 
6,047

 
20,020

Properties contributed to uncons. real estate JV (4)(6)
 
9

 
1,471

 
100.0%
 
100.0%
 
2,099

 
0.4
%
 
1,221

 
11,067

Wholesale Data Center and Other
 
N/A

 
N/A

 
N/A
 
N/A
 
N/A

 
N/A

 
2,993

 
18,374

Total Core Portfolio
 
168

 
19,016

 
93.1%
 
94.6%
 
500,779

 
99.4
%
 
82,088

 
333,433

Other Properties (Same Properties)
 
2

 
157

 
73.0%
 
73.0%
 
2,807

 
0.6
%
 
416

 
1,592

Total Portfolio
 
170

 
19,173

 
92.9%
 
94.4%
 
$
503,586

 
100.0
%
 
$
82,504

 
$
335,025

Consolidated Portfolio
 
155

 
16,739

 
91.9%
 
93.6%
 
$
495,868

 
98.5
%
 
$
80,870

 
$
329,320

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of Period End
 
 
 
 
 
 
# of Office and Data Center Shell
Properties
 
Operational Square Feet
 
% Occupied (1)
 
% Leased (1)
 
Annualized
Rental Revenue (2)
 
% of Core
Annualized
Rental Revenue (2)
 
NOI from Real Estate Operations
Property Grouping
 
 
 
 
 
 
 
Three Months Ended
 
Year Ended
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense/IT Locations (6)(7):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
 
146

 
14,599

 
92.6%
 
94.2%
 
$
435,064

 
86.9
%
 
$
70,636

 
$
281,683

Unconsolidated real estate JVs (4)
 
15

 
2,435

 
100.0%
 
100.0%
 
7,718

 
1.5
%
 
1,634

 
5,705

Total Defense/IT Locations
 
161

 
17,034

 
93.7%
 
95.0%
 
442,782

 
88.4
%
 
72,270

 
287,388

Regional Office
 
7

 
1,982

 
88.1%
 
90.9%
 
57,997

 
11.6
%
 
6,919

 
29,929

Wholesale Data Center and Other
 
N/A

 
N/A

 
N/A
 
N/A
 
N/A

 
N/A

 
2,899

 
16,116

Total Core Portfolio
 
168

 
19,016

 
93.1%
 
94.6%
 
$
500,779


100.0
%
 
$
82,088

 
$
333,433

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Percentages calculated based on operational square feet.
(2)
Excludes Annualized Rental Revenue from our wholesale data center, DC-6, of $21.8 million as of 12/31/19. With regard to properties owned through unconsolidated real estate joint ventures, we include the portion of Annualized Rental Revenue allocable to COPT’s ownership interest.
(3)
Includes office and data center shell properties stably owned and 100% operational since at least 1/1/18. Our number of Same Properties decreased by three since 9/30/19 due to two properties sold to an unconsolidated JV on 12/5/19 and the removal from service of our DC-3 property on 10/1/19.
(4)
See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.
(5)
Newly developed or redeveloped properties placed in service that were not fully operational by 1/1/18.
(6)
Includes nine data center shell properties in which we sold a 90% interest and retained a 10% interest through a newly-formed unconsolidated real estate joint venture in 2019 (seven on 6/20/19 and two on 12/5/19) (see page 24).
(7)
For the nine data center shell properties in which we sold a 90% interest and retained a 10% interest through a newly-formed unconsolidated real estate joint venture in 2019, the activity associated with these properties prior to their sale to the joint venture is included in consolidated properties and the activity thereafter is included in unconsolidated real estate JVs.

12


Corporate Office Properties Trust
Consolidated Real Estate Revenues and NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Consolidated real estate revenues
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
65,003

 
$
63,436

 
$
61,659

 
$
62,683

 
$
62,756

 
$
252,781

 
$
248,927

NoVA Defense/IT
13,448

 
13,551

 
13,912

 
14,831

 
13,879

 
55,742

 
53,518

Lackland Air Force Base
14,772

 
12,703

 
12,104

 
11,561

 
11,207

 
51,140

 
46,286

Navy Support
8,136

 
8,183

 
8,185

 
8,155

 
8,031

 
32,659

 
31,927

Redstone Arsenal
4,515

 
4,171

 
3,968

 
3,939

 
3,726

 
16,593

 
14,745

Data Center Shells-Consolidated
4,680

 
5,913

 
8,624

 
7,354

 
7,175

 
26,571

 
25,650

Total Defense/IT Locations
110,554

 
107,957

 
108,452

 
108,523

 
106,774

 
435,486

 
421,053

Regional Office
14,252

 
15,508

 
15,018

 
14,833

 
15,329

 
59,611

 
61,181

Wholesale Data Center
6,409

 
6,565

 
8,560

 
7,871

 
7,929

 
29,405

 
31,892

Other
753

 
704

 
741

 
763

 
793

 
2,961

 
3,127

Consolidated real estate revenues
$
131,968

 
$
130,734

 
$
132,771

 
$
131,990

 
$
130,825

 
$
527,463

 
$
517,253

 
 
 
 
NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
44,610

 
$
42,693

 
$
42,315

 
$
40,348

 
$
41,331

 
$
169,966

 
$
165,952

NoVA Defense/IT
8,620

 
8,586

 
9,218

 
9,539

 
8,699

 
35,963

 
33,188

Lackland Air Force Base
5,486

 
5,554

 
5,456

 
5,602

 
4,843

 
22,098

 
19,398

Navy Support
4,828

 
4,602

 
4,899

 
4,751

 
4,438

 
19,080

 
18,391

Redstone Arsenal
2,744

 
2,454

 
2,369

 
2,400

 
2,194

 
9,967

 
8,695

Data Center Shells:
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
4,348

 
5,395

 
7,865

 
7,001

 
6,117

 
24,609

 
22,425

COPT’s share of unconsolidated real estate JVs (1)
1,634

 
1,601

 
1,251

 
1,219

 
1,211

 
5,705

 
4,818

Total Defense/IT Locations
72,270

 
70,885

 
73,373

 
70,860

 
68,833

 
287,388

 
272,867

Regional Office
6,919

 
8,165

 
7,428

 
7,417

 
7,548

 
29,929

 
30,928

Wholesale Data Center
3,026

 
3,191

 
4,942

 
5,033

 
3,960

 
16,192

 
15,550

Other
289

 
380

 
393

 
454

 
397

 
1,516

 
1,691

NOI from real estate operations
$
82,504

 
$
82,621

 
$
86,136

 
$
83,764

 
$
80,738

 
$
335,025

 
$
321,036

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)     See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

13


Corporate Office Properties Trust
Cash NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Cash NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
43,939

 
$
42,604

 
$
42,180

 
$
40,256

 
$
41,027

 
$
168,979

 
$
163,975

NoVA Defense/IT
8,963

 
8,064

 
8,771

 
8,757

 
8,773

 
34,555

 
32,697

Lackland Air Force Base
5,906

 
5,839

 
5,731

 
5,383

 
5,157

 
22,859

 
20,260

Navy Support
4,987

 
4,808

 
5,113

 
4,785

 
4,508

 
19,693

 
18,943

Redstone Arsenal
2,377

 
2,220

 
2,302

 
2,330

 
2,219

 
9,229

 
8,807

Data Center Shells:
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
3,762

 
4,857

 
7,247

 
6,462

 
5,688

 
22,328

 
20,370

COPT’s share of unconsolidated real estate JVs (1)
1,553

 
1,513

 
1,202

 
1,160

 
1,154

 
5,428

 
4,564

Total Defense/IT Locations
71,487

 
69,905

 
72,546

 
69,133

 
68,526

 
283,071

 
269,616

Regional Office
7,606

 
7,356

 
7,367

 
6,990

 
6,990

 
29,319

 
28,457

Wholesale Data Center
3,162

 
3,231

 
3,945

 
4,698

 
3,601

 
15,036

 
13,845

Other
292

 
380

 
465

 
525

 
435

 
1,662

 
1,813

Cash NOI from real estate operations
82,547

 
80,872

 
84,323

 
81,346

 
79,552

 
329,088

 
313,731

Straight line rent adjustments and lease incentive amortization
(1,488
)
 
235

 
(1,274
)
 
1,505

 
(40
)
 
(1,022
)
 
833

Amortization of acquired above- and below-market rents
197

 
82

 
73

 
(40
)
 
(97
)
 
312

 
(671
)
Amortization of below-market cost arrangements
(23
)
 
(23
)
 
(23
)
 
(23
)
 
(56
)
 
(92
)
 
(222
)
Lease termination fees, gross
436

 
841

 
2,458

 
521

 
906

 
4,256

 
3,662

Tenant funded landlord assets and lease incentives
754

 
526

 
530

 
396

 
416

 
2,206

 
3,449

Cash NOI adjustments in unconsolidated real estate JVs
81

 
88

 
49

 
59

 
57

 
277

 
254

NOI from real estate operations
$
82,504

 
$
82,621

 
$
86,136

 
$
83,764

 
$
80,738

 
$
335,025

 
$
321,036

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

14


Corporate Office Properties Trust
Same Properties (1) Average Occupancy Rates by Segment 
(square feet in thousands)
 
# of Properties
 
Operational Square Feet
 
Three Months Ended
 
Year Ended
 
 
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
84

 
7,948

 
92.9
%
 
92.3
%
 
91.3
%
 
91.2
%
 
92.3
%
 
91.9
%
 
91.7
%
NoVA Defense/IT
13

 
1,993

 
82.4
%
 
83.9
%
 
88.5
%
 
91.3
%
 
85.8
%
 
86.5
%
 
83.5
%
Lackland Air Force Base
7

 
953

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Navy Support
21

 
1,242

 
92.4
%
 
90.9
%
 
90.8
%
 
89.5
%
 
89.8
%
 
90.9
%
 
88.2
%
Redstone Arsenal
7

 
651

 
99.2
%
 
99.2
%
 
98.4
%
 
98.5
%
 
99.0
%
 
98.8
%
 
98.5
%
Data Center Shells (2)
6

 
964

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Total Defense/IT Locations
138

 
13,751

 
92.6
%
 
92.3
%
 
92.4
%
 
92.6
%
 
92.5
%
 
92.5
%
 
91.7
%
Regional Office
7

 
1,982

 
88.0
%
 
88.6
%
 
88.9
%
 
88.1
%
 
89.3
%
 
88.4
%
 
88.1
%
Core Portfolio Same Properties
145

 
15,733

 
92.0
%
 
91.8
%
 
91.9
%
 
92.1
%
 
92.1
%
 
92.0
%
 
91.2
%
Other Same Properties
2

 
157

 
72.4
%
 
72.1
%
 
72.7
%
 
73.7
%
 
77.2
%
 
72.7
%
 
79.6
%
Total Same Properties
147

 
15,890

 
91.8
%
 
91.7
%
 
91.7
%
 
91.9
%
 
91.9
%
 
91.8
%
 
91.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Same Properties (1) Period End Occupancy Rates by Segment 
(square feet in thousands)
 
# of Properties
 
Operational Square Feet
 
Three Months Ended
 
 
 
 
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
 
 
 
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
84

 
7,948

 
93.0
%
 
92.6
%
 
91.4
%
 
91.1
%
 
92.1
%
 
 
 
 
NoVA Defense/IT
13

 
1,993

 
82.4
%
 
82.3
%
 
87.6
%
 
91.7
%
 
91.3
%
 
 
 
 
Lackland Air Force Base
7

 
953

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
Navy Support
21

 
1,242

 
92.5
%
 
91.7
%
 
90.9
%
 
90.9
%
 
90.5
%
 
 
 
 
Redstone Arsenal
7

 
651

 
99.2
%
 
99.2
%
 
98.6
%
 
98.3
%
 
99.0
%
 
 
 
 
Data Center Shells (2)
6

 
964

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
Total Defense/IT Locations
138

 
13,751

 
92.7
%
 
92.4
%
 
92.3
%
 
92.7
%
 
93.3
%
 
 
 
 
Regional Office
7

 
1,982

 
88.1
%
 
88.6
%
 
89.3
%
 
88.3
%
 
89.2
%
 
 
 
 
Core Portfolio Same Properties
145

 
15,733

 
92.1
%
 
91.9
%
 
92.0
%
 
92.2
%
 
92.8
%
 
 
 
 
Other Same Properties
2

 
157

 
73.0
%
 
72.1
%
 
72.1
%
 
73.7
%
 
77.2
%
 
 
 
 
Total Same Properties
147

 
15,890

 
91.9
%
 
91.7
%
 
91.8
%
 
92.0
%
 
92.6
%
 
 
 
 

(1)
Includes office and data center shell properties stably owned and 100% operational since at least 1/1/18.
(2)
Properties owned through an unconsolidated real estate joint venture. See page 34 for additional disclosure.


15


Corporate Office Properties Trust
Same Properties Real Estate Revenues and NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Same Properties real estate revenues
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
63,017

 
$
61,832

 
$
60,051

 
$
61,119

 
$
61,331

 
$
246,019

 
$
242,570

NoVA Defense/IT
13,448

 
13,551

 
13,912

 
14,831

 
13,879

 
55,742

 
53,508

Lackland Air Force Base
14,144

 
12,074

 
11,479

 
10,928

 
11,200

 
48,625

 
46,279

Navy Support
8,135

 
8,183

 
8,185

 
8,155

 
8,031

 
32,658

 
31,927

Redstone Arsenal
3,895

 
3,868

 
3,793

 
3,785

 
3,696

 
15,341

 
14,714

Total Defense/IT Locations
102,639

 
99,508

 
97,420

 
98,818

 
98,137

 
398,385

 
388,998

Regional Office
14,251

 
15,509

 
15,018

 
14,833

 
15,300

 
59,611

 
61,033

Other Properties
753

 
704

 
741

 
760

 
821

 
2,958

 
3,135

Same Properties real estate revenues
$
117,643

 
$
115,721

 
$
113,179

 
$
114,411

 
$
114,258

 
$
460,954

 
$
453,166

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Properties NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
43,176

 
$
41,672

 
$
41,279

 
$
39,380

 
$
40,378

 
$
165,507

 
$
160,960

NoVA Defense/IT
8,619

 
8,586

 
9,219

 
9,539

 
8,699

 
35,963

 
33,169

Lackland Air Force Base
4,868

 
4,936

 
4,841

 
4,972

 
4,837

 
19,617

 
19,392

Navy Support
4,828

 
4,602

 
4,899

 
4,751

 
4,438

 
19,080

 
18,391

Redstone Arsenal
2,295

 
2,236

 
2,264

 
2,321

 
2,171

 
9,116

 
8,672

Data Center Shells (1)
1,214

 
1,214

 
1,205

 
1,219

 
1,211

 
4,852

 
4,818

Total Defense/IT Locations
65,000

 
63,246

 
63,707

 
62,182

 
61,734

 
254,135

 
245,402

Regional Office
6,918

 
8,163

 
7,430

 
7,417

 
7,500

 
29,928

 
30,784

Other Properties
325

 
381

 
384

 
411

 
455

 
1,501

 
1,810

Same Properties NOI
$
72,243

 
$
71,790

 
$
71,521

 
$
70,010

 
$
69,689

 
$
285,564

 
$
277,996


(1)     Represents COPT’s share of unconsolidated real estate JV. See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

16


Corporate Office Properties Trust
Same Properties Cash NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Same Properties cash NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
43,001

 
$
41,841

 
$
41,393

 
$
39,419

 
$
40,126

 
$
165,654

 
$
159,592

NoVA Defense/IT
8,963

 
8,064

 
8,771

 
8,757

 
8,774

 
34,555

 
32,680

Lackland Air Force Base
5,333

 
5,266

 
5,161

 
5,293

 
5,157

 
21,053

 
20,260

Navy Support
4,987

 
4,808

 
5,113

 
4,785

 
4,508

 
19,693

 
18,943

Redstone Arsenal
2,311

 
2,291

 
2,359

 
2,391

 
2,224

 
9,352

 
8,811

Data Center Shells (1)
1,180

 
1,171

 
1,160

 
1,160

 
1,154

 
4,671

 
4,564

Total Defense/IT Locations
65,775

 
63,441

 
63,957

 
61,805

 
61,943

 
254,978

 
244,850

Regional Office
7,606

 
7,355

 
7,368

 
6,990

 
6,943

 
29,319

 
28,314

Other Properties
327

 
381

 
456

 
483

 
491

 
1,647

 
1,930

Same Properties cash NOI
73,708

 
71,177

 
71,781

 
69,278

 
69,377

 
285,944

 
275,094

Straight line rent adjustments and lease incentive amortization
(2,838
)
 
(830
)
 
(1,163
)
 
(173
)
 
(907
)
 
(5,004
)
 
(3,111
)
Amortization of acquired above- and below-market rents
197

 
82

 
73

 
(40
)
 
(97
)
 
312

 
(671
)
Amortization of below-market cost arrangements
(23
)
 
(23
)
 
(23
)
 
(23
)
 
(56
)
 
(92
)
 
(222
)
Lease termination fees, gross
417

 
823

 
285

 
521

 
906

 
2,046

 
3,231

Tenant funded landlord assets and lease incentives
748

 
519

 
522

 
388

 
409

 
2,177

 
3,421

Cash NOI adjustments in unconsolidated real estate JV (1)
34

 
42

 
46

 
59

 
57

 
181

 
254

Same Properties NOI
$
72,243

 
$
71,790

 
$
71,521

 
$
70,010

 
$
69,689

 
$
285,564

 
$
277,996

Percentage change in total Same Properties cash NOI (2)
6.2
%
 
 
 
 
 
 
 
 
 
3.9
%
 
 
Percentage change in Defense/IT Locations Same Properties cash NOI (2)
6.2
%
 
 
 
 
 
 
 
 
 
4.1
%
 
 

(1)
Represents COPT’s share of unconsolidated real estate JV. See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.
(2)
Represents the change between the current period and the same period in the prior year.

17


Corporate Office Properties Trust
Leasing - Office and Data Center Shell Portfolio (1)
Quarter Ended 12/31/19
(square feet in thousands)
 
Defense/IT Locations
 
 
 
 
 
 
 
Ft Meade/BW Corridor
 
NoVA Defense/IT
 
Navy Support
 
Redstone Arsenal
 
Total Defense/IT Locations
 
Regional Office
 
Other
 
 Total
Renewed Space
 

 
 

 
 
 
 

 
 
 
 

 
 
 
 

Leased Square Feet
245

 

 
63

 

 
308

 
3

 
28

 
339

Expiring Square Feet
281

 

 
63

 

 
344

 
33

 
28

 
404

Vacating Square Feet
36

 

 

 

 
36

 
29

 

 
65

Retention Rate (% based upon square feet)
87.1
 %
 
%
 
100.0
 %
 
%
 
89.5
 %
 
10.0
%
 
100.0
%
 
83.8
 %
Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
4.12

 
$

 
$
3.62

 
$

 
$
4.02

 
$
0.46

 
$
1.73

 
$
3.80

Weighted Average Lease Term in Years
7.3

 

 
3.6

 

 
6.5

 
1.2

 
2.1

 
6.1

Average Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Average Rent
$
29.56

 
$

 
$
23.64

 
$

 
$
28.34

 
$
26.89

 
$
21.60

 
$
27.78

Expiring Average Rent
$
29.58

 
$

 
$
23.22

 
$

 
$
28.28

 
$
26.86

 
$
19.80

 
$
27.57

Change in Average Rent
(0.1
)%
 
%
 
1.8
 %
 
%
 
0.2
 %
 
0.1
%
 
9.1
%
 
0.8
 %
Cash Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Cash Rent
$
28.71

 
$

 
$
23.48

 
$

 
$
27.64

 
$
26.86

 
$
22.00

 
$
27.17

Expiring Cash Rent
$
32.10

 
$

 
$
24.33

 
$

 
$
30.50

 
$
26.86

 
$
20.60

 
$
29.66

Change in Cash Rent
(10.6
)%
 
%
 
(3.5
)%
 
%
 
(9.4
)%
 
%
 
6.8
%
 
(8.4
)%
Average Escalations Per Year
2.4
 %
 
%
 
2.7
 %
 
%
 
2.4
 %
 
4.0
%
 
%
 
2.3
 %
New Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Development and Redevelopment Space
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
25

 

 

 
113

 
138

 
20

 

 
158

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
8.36

 
$

 
$

 
$
7.24

 
$
7.44

 
$
13.43

 
$

 
$
8.21

Weighted Average Lease Term in Years
10.6

 

 

 
11.7

 
11.5

 
16.3

 

 
12.1

Average Rent Per Square Foot
$
34.87

 
$

 
$

 
$
23.85

 
$
25.85

 
$
89.55

 
$

 
$
34.01

Cash Rent Per Square Foot
$
33.50

 
$

 
$

 
$
23.28

 
$
25.14

 
$
85.70

 
$

 
$
32.89

Vacant Space (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
99

 
20

 
26

 

 
144

 
17

 
1

 
162

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
6.40

 
$
13.49

 
$
3.72

 
$

 
$
6.89

 
$
12.82

 
$
1.67

 
$
7.46

Weighted Average Lease Term in Years
6.8

 
5.0

 
7.2

 

 
6.6

 
6.9

 
3.0

 
6.6

Average Rent Per Square Foot
$
28.79

 
$
42.30

 
$
23.34

 
$

 
$
29.66

 
$
35.66

 
$
25.76

 
$
30.25

Cash Rent Per Square Foot
$
28.50

 
$
40.12

 
$
21.74

 
$

 
$
28.89

 
$
34.39

 
$
25.00

 
$
29.43

Total Square Feet Leased
369

 
20

 
89

 
113

 
590

 
40

 
29

 
659

Average Escalations Per Year
2.4
 %
 
2.8
%
 
2.6
 %
 
1.5
%
 
2.2
 %
 
2.4
%
 
0.2
%
 
2.2
 %
Average Escalations Excl. Data Center Shells
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.2
 %
(1)
Activity is exclusive of owner occupied space, leases with less than a one-year term and expirations associated with space removed from service. Weighted average lease term is based on the lease term defined in the lease assuming no exercise of early termination rights. Committed costs for leasing are reported above in the period of lease execution. Actual capital expenditures for leasing are reported on page 9 in the period such costs are incurred.
(2)
Committed costs include tenant improvements and leasing commissions and exclude free rent concession.
(3)
Vacant space includes acquired first generation space, vacated second generation space and leases executed on developed and redeveloped space previously placed in service.

18


Corporate Office Properties Trust
Leasing - Office and Data Center Shell Portfolio (1)
Year Ended 12/31/19
(square feet in thousands)
 
Defense/IT Locations
 
 
 
 
 
 
 
Ft Meade/BW Corridor
 
NoVA Defense/IT
 
Navy Support
 
Redstone Arsenal
 
Data Center Shells
 
Total Defense/IT Locations
 
Regional Office
 
Other
 
Total
Renewed Space
 

 
 

 
 
 
 

 
 
 
 
 
 

 
 
 
 

Leased Square Feet
1,172

 
11

 
317

 
276

 

 
1,776

 
45

 
42

 
1,863

Expiring Square Feet
1,392

 
217

 
361

 
276

 

 
2,245

 
137

 
48

 
2,430

Vacating Square Feet
219

 
205

 
45

 

 

 
469

 
93

 
6

 
567

Retention Rate (% based upon square feet)
84.2
 %
 
5.3
 %
 
87.6
 %
 
100.0
%
 
%
 
79.1
 %
 
32.5
 %
 
88.4
%
 
76.7
 %
Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
2.75

 
$
1.31

 
$
3.30

 
$
0.84

 
$

 
$
2.54

 
$
2.49

 
$
1.89

 
$
2.53

Weighted Average Lease Term in Years
4.7

 
5.3

 
4.1

 
1.5

 

 
4.1

 
2.7

 
2.4

 
4.1

Average Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Average Rent
$
33.95

 
$
31.58

 
$
28.89

 
$
22.19

 
$

 
$
31.21

 
$
36.96

 
$
22.38

 
$
31.15

Expiring Average Rent
$
34.32

 
$
35.00

 
$
28.98

 
$
21.79

 
$

 
$
31.43

 
$
33.66

 
$
20.33

 
$
31.23

Change in Average Rent
(1.1
)%
 
(9.8
)%
 
(0.3
)%
 
1.8
%
 
%
 
(0.7
)%
 
9.8
 %
 
10.1
%
 
(0.3
)%
Cash Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Cash Rent
$
33.68

 
$
32.29

 
$
28.44

 
$
22.18

 
$

 
$
30.95

 
$
36.01

 
$
22.41

 
$
30.88

Expiring Cash Rent
$
36.27

 
$
38.43

 
$
30.25

 
$
21.91

 
$

 
$
32.99

 
$
36.23

 
$
21.34

 
$
32.80

Change in Cash Rent
(7.1
)%
 
(16.0
)%
 
(6.0
)%
 
1.2
%
 
%
 
(6.2
)%
 
(0.6
)%
 
5.0
%
 
(5.8
)%
Average Escalations Per Year
2.4
 %
 
2.5
 %
 
2.6
 %
 
2.6
%
 
%
 
2.4
 %
 
2.9
 %
 
0.1
%
 
2.4
 %
New Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Development and Redevelopment Space
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
144

 
348

 

 
548

 
1,164

 
2,205

 
20

 

 
2,225

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
10.06

 
$
2.55

 
$

 
$
5.82

 
$

 
$
2.51

 
$
13.43

 
$

 
$
2.61

Weighted Average Lease Term in Years
7.6

 
12.0

 

 
9.0

 
15.1

 
12.6

 
16.3

 

 
12.6

Average Rent Per Square Foot
$
29.35

 
$
41.46

 
$

 
$
19.61

 
$
21.64

 
$
24.77

 
$
89.55

 
$

 
$
25.36

Cash Rent Per Square Foot
$
28.27

 
$
41.46

 
$

 
$
18.93

 
$
18.94

 
$
23.10

 
$
85.70

 
$

 
$
23.68

Vacant Space (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
442

 
122

 
93

 
6

 

 
664

 
115

 
5

 
784

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
5.20

 
$
10.07

 
$
5.04

 
$
20.29

 
$

 
$
6.22

 
$
10.23

 
$
1.08

 
$
6.77

Weighted Average Lease Term in Years
5.4

 
8.0

 
5.9

 
5.6

 

 
6.0

 
8.9

 
2.3

 
6.4

Average Rent Per Square Foot
$
28.97

 
$
33.25

 
$
24.66

 
$
25.47

 
$

 
$
29.12

 
$
34.09

 
$
22.83

 
$
29.81

Cash Rent Per Square Foot
$
29.26

 
$
31.93

 
$
24.03

 
$
24.76

 
$

 
$
28.98

 
$
32.58

 
$
22.40

 
$
29.46

Total Square Feet Leased
1,759

 
482

 
410

 
830

 
1,164

 
4,644

 
180

 
47

 
4,872

Average Escalations Per Year
2.5
 %
 
0.3
 %
 
2.6
 %
 
2.5
%
 
2.3
%
 
2.1
 %
 
2.4
 %
 
0.4
%
 
2.1
 %
Average Escalations Excl. Data Center Shells
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.0
 %
(1)
Activity is exclusive of owner occupied space, leases with less than a one-year term and expirations associated with space removed from service. Weighted average lease term is based on the lease term defined in the lease assuming no exercise of early termination rights. Committed costs for leasing are reported above in the period of lease execution. Actual capital expenditures for leasing are reported on page 9 in the period such costs are incurred.
(2)
Committed costs include tenant improvements and leasing commissions and exclude free rent concession.
(3)
Vacant space includes acquired first generation space, vacated second generation space and leases executed on developed and redeveloped space previously placed in service.

19


Corporate Office Properties Trust
Lease Expiration Analysis as of 12/31/19 (1)
(dollars and square feet in thousands, except per square foot amounts)

Office and Data Center Shells
Segment of Lease and Year of Expiration (2)
 
Square Footage of Leases Expiring
 
Annualized Rental
Revenue of Expiring Leases (3)
 
% of Core/Total
Annualized 
Rental
Revenue
Expiring (3)(4)
 
Annualized Rental
Revenue of
Expiring Leases per
Occupied Sq. Foot (3)
 
 
 
 
 
 
 
 
 
Core Portfolio
 
 
 
 
 
 
 
 
Ft Meade/BW Corridor
 
895

 
$
30,932

 
6.2
%
 
$
34.48

NoVA Defense/IT
 
121

 
3,553

 
0.7
%
 
29.24

Lackland Air Force Base
 
250

 
11,834

 
2.4
%
 
47.34

Navy Support
 
150

 
4,266

 
0.9
%
 
28.36

Redstone Arsenal
 
11

 
261

 
0.1
%
 
23.41

Regional Office
 
77

 
2,533

 
0.5
%
 
33.03

2020
 
1,504

 
53,380

 
10.7
%
 
35.42

Ft Meade/BW Corridor
 
1,047

 
36,571

 
7.3
%
 
34.92

NoVA Defense/IT
 
108

 
3,124

 
0.6
%
 
29.03

Navy Support
 
263

 
7,489

 
1.5
%
 
28.50

Redstone Arsenal
 
397

 
8,800

 
1.8
%
 
22.17

Regional Office
 
41

 
1,310

 
0.3
%
 
31.97

2021
 
1,856

 
57,295

 
11.5
%
 
30.88

Ft Meade/BW Corridor
 
800

 
26,417

 
5.3
%
 
33.00

NoVA Defense/IT
 
135

 
4,524

 
0.9
%
 
33.42

Navy Support
 
177

 
4,639

 
0.9
%
 
26.23

Redstone Arsenal
 
33

 
790

 
0.2
%
 
23.84

Regional Office
 
492

 
16,946

 
3.4
%
 
34.42

2022
 
1,637

 
53,316

 
10.6
%
 
32.54

Ft Meade/BW Corridor
 
1,402

 
49,256

 
9.8
%
 
35.13

NoVA Defense/IT
 
144

 
4,673

 
0.9
%
 
32.36

Navy Support
 
183

 
5,396

 
1.1
%
 
29.44

Redstone Arsenal
 
7

 
167

 
%
 
24.01

Regional Office
 
139

 
4,180

 
0.8
%
 
30.00

2023
 
1,875

 
63,672

 
12.7
%
 
33.94

Ft Meade/BW Corridor
 
1,178

 
42,005

 
8.4
%
 
35.64

NoVA Defense/IT
 
460

 
15,228

 
3.0
%
 
33.07

Navy Support
 
218

 
4,402

 
0.9
%
 
20.22

Redstone Arsenal
 
75

 
1,698

 
0.3
%
 
22.66

Data Center Shells-Unconsolidated JV Properties
 
546

 
3,135

 
0.6
%
 
11.48

Regional Office
 
146

 
4,199

 
0.8
%
 
28.73

2024
 
2,623

 
70,666

 
14.1
%
 
28.13

Thereafter
 
 
 
 
 
 
 
 
Consolidated Properties
 
6,317

 
197,867

 
39.6
%
 
30.92

Unconsolidated JV Properties
 
1,889

 
4,583

 
0.9
%
 
12.87

Core Portfolio
 
17,701

 
$
500,779

 
100.0
%
 
$
29.52


20


Segment of Lease and Year of Expiration (2)
 
Square Footage of Leases Expiring
 
Annualized Rental
Revenue of Expiring Leases (3)
 
% of Core/Total
Annualized 
Rental
Revenue
Expiring (3)(4)
 
Annualized Rental
Revenue of
Expiring Leases per
Occupied Sq. Foot (3)
 
 
 
 
 
 
 
 
 
Core Portfolio
 
17,701

 
$
500,779

 
99.4
%
 
$
29.52

Other Properties
 
115

 
2,807

 
0.6
%
 
24.46

Total Portfolio
 
17,816

 
$
503,586

 
100.0
%
 
$
31.28

Consolidated Portfolio
 
15,381

 
$
495,868

 
 
 
 
Unconsolidated JV Properties
 
2,435

 
$
7,718

 
 
 
 
 
 
 
 
 
 
 
 
 

Note: As of 12/31/19, the weighted average lease term was 5.2 years for the core portfolio, 5.1 years for the total portfolio and 4.9 years for the consolidated portfolio.

Wholesale Data Center
Year of Expiration
 
Critical Load (MW)
 
Annualized Rental
Revenue of
Expiring Leases (3)
2020
 
13.30

 
$
18,539

2021
 
0.15

 
413

2022
 
1.11

 
2,104

2023
 
0.25

 
453

2024
 

 
10

Thereafter
 

 
233

 
 
14.81

 
$
21,752


(1)
This expiration analysis reflects occupied space of our total portfolio (including consolidated and unconsolidated properties) and includes the effect of early renewals completed on existing leases but excludes the effect of new tenant leases on square feet yet to commence as of 12/31/19 of 281,966 for the core portfolio. With regard to properties owned through unconsolidated real estate joint ventures, the amounts reported above reflect 100% of the properties’ square footage but only reflect the portion of Annualized Rental Revenue that was allocable to COPT’s ownership interest.
(2)
A number of our leases are subject to certain early termination provisions.  The year of lease expiration is based on the lease term determined in accordance with GAAP.
(3)
Total Annualized Rental Revenue is the monthly contractual base rent as of 12/31/19 (ignoring free rent then in effect) multiplied by 12 plus the estimated annualized expense reimbursements under existing leases. The amounts reported above for Annualized Rental Revenue include the portion of properties owned through unconsolidated real estate joint ventures that was allocable to COPT’s ownership interest.
(4)
Amounts reported represent the percentage of our core portfolio for components of such portfolio while other amounts represent the percentage of our total portfolio.

21


Corporate Office Properties Trust
2020 Core Portfolio Quarterly Lease Expiration Analysis as of 12/31/19 (1)
(dollars and square feet in thousands, except per square foot amounts)
Segment of Lease and Quarter of Expiration (2)
 
Square Footage of Leases Expiring
 
Annualized Rental
Revenue of Expiring Leases (3)
 
% of Core Annualized 
Rental Revenue Expiring (3)(4)
 
Annualized Rental Revenue of Expiring Leases per Occupied Sq. Foot
Core Portfolio
 
 
 
 
 
 
 
 
Ft Meade/BW Corridor
 
238

 
$
6,897

 
1.4
%
 
$
28.54

Navy Support
 
9

 
124

 
%
 
13.94

Q1 2020
 
247

 
7,021

 
1.4
%
 
28.02

Ft Meade/BW Corridor
 
364

 
13,642

 
2.7
%
 
37.52

NoVA Defense/IT
 
14

 
332

 
0.1
%
 
23.97

Navy Support
 
16

 
468

 
0.1
%
 
29.69

Regional Office
 
29

 
924

 
0.2
%
 
32.21

Q2 2020
 
423

 
15,366

 
3.1
%
 
36.42

Ft Meade/BW Corridor
 
192

 
6,762

 
1.4
%
 
35.18

NoVA Defense/IT
 
11

 
334

 
0.1
%
 
31.04

Navy Support
 
91

 
2,562

 
0.5
%
 
28.01

Regional Office
 
20

 
568

 
0.1
%
 
28.56

Q3 2020
 
314

 
10,226

 
2.1
%
 
32.53

Ft Meade/BW Corridor
 
100

 
3,632

 
0.7
%
 
36.22
NoVA Defense/IT
 
97

 
2,887

 
0.6
%
 
29.80

Lackland Air Force Base
 
250

 
11,834

 
2.4
%
 
47.34

Navy Support
 
34

 
1,112

 
0.2
%
 
32.43

Redstone Arsenal
 
11

 
261

 
0.1
%
 
23.41

Regional Office
 
28

 
1,041

 
0.2
%
 
37.05

Q4 2020
 
520

 
20,767

 
4.2
%
 
39.88

 
 
 
 
 
 
 
 
 
 
 
1,504

 
$
53,380

 
10.7
%
 
$
35.42

 
 
 
 
 
 
 
 
 

(1)
This expiration analysis reflects occupied space of our total portfolio (including consolidated and unconsolidated properties) and includes the effect of early renewals completed on existing leases but excludes the effect of new tenant leases on square feet yet to commence as of 12/31/19.
(2)
A number of our leases are subject to certain early termination provisions.  The period of lease expiration is based on the lease term determined in accordance with GAAP.
(3)
Total Annualized Rental Revenue is the monthly contractual base rent as of 12/31/19 (ignoring free rent then in effect) multiplied by 12 plus the estimated annualized expense reimbursements under existing leases.
(4)
Amounts reported represent the percentage of our core portfolio.

22


Corporate Office Properties Trust
Top 20 Tenants as of 12/31/19 (1)
(dollars and square feet in thousands)
Tenant
 
 
Total
Annualized
Rental Revenue (2)
 
%
of Total
Annualized 
Rental Revenue (2)
 
Occupied Square Feet in Office and Data Center Shells
 
Weighted
Average
Remaining Lease Term in Office and Data Center Shells (3)
United States Government
(4)
 
$
181,898

 
34.6
%
 
4,409

 
4.6

Fortune 500 Company
 
 
41,255

 
7.9
%
 
3,744

 
8.6

General Dynamics Corporation
 
 
26,000

 
4.9
%
 
725

 
3.9

The Boeing Company
 
 
16,810

 
3.2
%
 
609

 
1.9

CACI International Inc
 
 
13,171

 
2.5
%
 
339

 
4.6

Northrop Grumman Corporation
 
 
11,617

 
2.2
%
 
422

 
2.0

CareFirst Inc.
 
 
11,086

 
2.1
%
 
312

 
3.1

Booz Allen Hamilton, Inc.
 
 
10,957

 
2.1
%
 
298

 
1.8

Wells Fargo & Company
 
 
6,712

 
1.3
%
 
176

 
8.7

AT&T Corporation
 
 
6,587

 
1.3
%
 
317

 
9.7

University of Maryland
 
 
6,428

 
1.2
%
 
218

 
5.1

Miles and Stockbridge, PC
 
 
5,702

 
1.1
%
 
160

 
7.7

Kratos Defense and Security Solutions
 
 
5,245

 
1.0
%
 
131

 
0.3

Science Applications International Corp.
 
 
5,101

 
1.0
%
 
136

 
2.3

The Raytheon Company
 
 
5,079

 
1.0
%
 
136

 
2.5

Jacobs Engineering Group Inc.
 
 
5,070

 
1.0
%
 
165

 
6.1

Transamerica Life Insurance Company
 
 
4,889

 
0.9
%
 
140

 
2.0

Peraton Inc.
 
 
4,474

 
0.9
%
 
135

 
6.9

The MITRE Corporation
 
 
3,870

 
0.7
%
 
118

 
4.6

Mantech International Corp.
 
 
3,834

 
0.7
%
 
135

 
4.1

Subtotal Top 20 Tenants
 
 
375,785

 
71.6
%
 
12,825

 
5.6

All remaining tenants
 
 
149,553

 
28.4
%
 
4,991

 
4.0

Total/Weighted Average
 
 
$
525,338

 
100.0
%
 
17,816

 
5.1


(1)
Includes Annualized Rental Revenue (“ARR”) in our portfolio of operating office and data center shells and our wholesale data center. For properties owned through unconsolidated real estate joint ventures, includes COPT’s share of those properties’ ARR of $7.7 million (see page 34 for additional information).
(2)
Total ARR is the monthly contractual base rent as of 12/31/19, multiplied by 12, plus the estimated annualized expense reimbursements under existing leases. With regard to properties owned through unconsolidated real estate joint ventures, the amounts reported above reflect 100% of the properties’ square footage but only reflect the portion of ARR that was allocable to COPT’s ownership interest.
(3)
Weighted average remaining lease term is based on the lease term determined in accordance with GAAP for our office and data center shell properties (i.e., excluding the effect of our wholesale data center leases). The weighting of the lease term was computed based on occupied square feet.
(4)
Substantially all of our government leases are subject to early termination provisions which are customary in government leases. As of 12/31/19, $5.3 million in ARR (or 2.9% of our ARR from the United States Government and 1.0% of our total ARR) was through the General Services Administration (GSA).



23



Corporate Office Properties Trust
Property Dispositions
(dollars and square feet in thousands)
Property
 
Property Segment
 
Location
 
# of Properties
 
Operational Square Feet
 
Transaction
Date
 
% Occupied on Transaction Date
 
Transaction 
Price (1)
Quarter Ended 6/30/19
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90% interest in DC 15, 16, 17, 18, 19, 20 and 23
 
Data Center Shells
 
Northern Virginia
 
7

 
1,174

 
6/20/19
 
100.0%
 
$
238,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended 12/31/19
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90% interest in DC 21 and 22
 
Data Center Shells
 
Northern Virginia
 
2

 
297

 
12/5/2019
 
100.0%
 
72,054

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2019 Dispositions
 
 
 
9

 
1,471

 
 
 
 
 
$
310,554


(1)
We sold a 90% interest in these properties based on an aggregate property value of $345.1 million ($265.0 million on the 6/20/19 transaction and $80.1 million on the 12/5/19 one) and retained a 10% interest in the properties through a newly-formed joint venture. The joint venture obtained $202.5 million in non-recourse mortgage loans on the properties, resulting in additional net proceeds to us of $20.1 million.


24


Corporate Office Properties Trust
Summary of Development Projects as of 12/31/19 (1)
(dollars and square feet in thousands) 
 
 
 
 
Total Rentable Square Feet
% Leased as of 1/31/20
as of 12/31/19 (2)
Actual or Anticipated Shell Completion Date
 Anticipated Operational Date (3)
 
Anticipated Total Cost
Cost to Date
Cost to Date Placed in Service
 
 
Property and Segment
Location
 
Fort Meade/BW Corridor:
 
 
 
 
 
 
 
 
 
 
4600 River Road
College Park, Maryland
 
102

25%
$
30,509

$
8,928

$

3Q 20
3Q 21
 
 
 
 
 
 
 
 
 
 
 
 
Redstone Arsenal:
 
 
 
 
 
 
 
 
7500 Advanced Gateway
Huntsville, Alabama
 
135

100%
19,118

7,195


2Q 20
2Q 20
 
7600 Advanced Gateway
Huntsville, Alabama
 
126

100%
14,239

2,543


2Q 20
2Q 20
 
100 Secured Gateway
Huntsville, Alabama
 
250

16%
58,600

25,763


2Q 20
2Q 21
 
8600 Advanced Gateway
Huntsville, Alabama
 
105

100%
27,680

4,931


4Q 20
4Q 20
 
8000 Rideout Road
Huntsville, Alabama
 
100

0%
25,200

2,564


4Q 20
4Q 21
 
6000 Redstone Gateway
Huntsville, Alabama
 
40

79%
9,526

788


4Q 20
4Q 21
 
Subtotal / Average
 
 
756

58%
154,363

43,784


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data Center Shells:
 
 
 
 
 
 
 
 
 
 
P2 A
Northern Virginia
 
230

100%
54,270

46,610


1Q 20
1Q 20
 
Oak Grove A
Northern Virginia
 
216

100%
48,295

29,420


2Q 20
2Q 20
 
P2 B
Northern Virginia
 
274

100%
64,636

32,115


3Q 20
3Q 20
 
P2 C
Northern Virginia
 
230

100%
51,120

18,727


1Q 21
1Q 21
 
Subtotal / Average
 
 
950

100%
218,321

126,872


 
 
 
 
 
 
 
 
 
 
 
 
 
 
NoVA Defense/IT:
 
 
 
 
 
 
 
 
 
 
NOVA Office C
Chantilly, Virginia
 
348

100%
106,219

20,870

2,794

2Q 22
2Q 22
 
 
 
 
 
 
 
 
 
 
 
 
Regional Office:
 
 
 
 
 
 
 
 
 
 
2100 L Street
Washington, DC
 
190

53%
174,000

126,112


2Q 20
2Q 21
 
Total Under Development
 
 
2,346

79%
$
683,412

$
326,566

$
2,794

 
 

(1)
Includes properties under, or contractually committed for, development as of 12/31/19.
(2)
Cost includes land, development, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable.
(3)
Anticipated operational date is the earlier of the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.


25


Corporate Office Properties Trust
Summary of Redevelopment Projects as of 12/31/19
(dollars and square feet in thousands) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property Segment
Total Rentable Square Feet
% Leased as of 12/31/19
as of 12/31/19 (1)
Actual or Anticipated Completion Date
 Anticipated Operational Date (2)
 
 
Historical Basis, Net
Incremental Redevelopment Cost
Anticipated Total Cost
 Cost to Date
Cost to Date Placed in Service
 
 
Property and Location
 
6950 Columbia Gateway
Columbia, Maryland (3)
 
Ft Meade/BW Corridor
106

80%
$
9,778

$
15,777

$
25,555

$
23,276

$
22,028

2Q 19
2Q 20
 

(1)
Cost includes land, development, leasing costs and allocated portion of shared infrastructure.
(2)
Anticipated operational date is the earlier of the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.
(3)
Although classified as under redevelopment, 85,000 square feet were operational as of 12/31/19.


26


Corporate Office Properties Trust
Development and Redevelopment Placed in Service as of 12/31/19
(square feet in thousands)
 
 
 
Total Property
 
Square Feet Placed in Service
Space Placed in Service % Leased as of 12/31/19
 
Property Segment
% Leased as of 12/31/19
Rentable Square Feet
 
Prior Year
2019
Property and Location
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total 2019
5801 University Research Court
College Park, Maryland
Ft Meade/BW Corridor
100%
71

 
60

11




11

100%
IN 1
Northern Virginia
Data Center Shells
100%
149

 

149




149

100%
4100 Market Street
Huntsville, Alabama
Redstone Arsenal
100%
36

 

21


7

8

36

100%
MP 1
Northern Virginia
Data Center Shells
100%
216

 


216



216

100%
DC 23
Northern Virginia (1)
Data Center Shells
100%
149

 


149



149

100%
IN 2
Northern Virginia
Data Center Shells
100%
216

 


216



216

100%
4000 Market Street
Huntsville, Alabama
Redstone Arsenal
100%
43

 
18


15

10


25

100%
6950 Columbia Gateway
Columbia, Maryland
Ft Meade/BW Corridor
80%
106

 


10


75

85

100%
8800 Redstone Gateway
Huntsville, Alabama
Redstone Arsenal
100%
76

 




76

76

100%
Oak Grove B
Northern Virginia
Data Center Shells
100%
216

 




216

216

100%
Total Development/Redevelopment Placed in Service
98%
1,278

 
78

181

606

17

375

1,179

100%

(1)
Subsequent to being placed in service, we sold a 90% interest in this property by contributing it into a newly-formed, unconsolidated joint venture on 6/20/19.

27


Corporate Office Properties Trust
Summary of Land Owned/Controlled as of 12/31/19 (1)
(square feet in thousands)
Location
Acres
 
Estimated Developable Square Feet
 
Carrying Amount
Land owned/controlled for future development
 
 
 
 
 
Defense/IT Locations:
 

 
 

 
 
Fort Meade/BW Corridor:
 
 
 
 
 
National Business Park
196

 
2,106

 
 
Howard County
19

 
290

 
 
Other
126

 
1,338

 
 
Total Fort Meade/BW Corridor
341

 
3,734

 
 
NoVA Defense/IT
52

 
1,618

 
 
Lackland AFB
49

 
785

 
 
Navy Support
44

 
109

 
 
Redstone Arsenal (2)
366

 
3,227

 
 
Data Center Shells
53

 
934

 
 
Total Defense/IT Locations
905

 
10,407

 
 
Regional Office
10

 
900

 
 
Total land owned/controlled for future development
915

 
11,307

 
$
290,571

 
 
 
 
 
 
Other land owned/controlled
43

 
638

 
3,412

Land held, net
958

 
11,945

 
$
293,983


(1)
This land inventory schedule includes properties under ground lease to us and excludes all properties listed as development or redevelopment as detailed on pages 25 and 26. The costs associated with the land included on this summary are reported on our consolidated balance sheet in the line entitled “land held.”
(2)
This land is controlled under a long-term master lease agreement to LW Redstone Company, LLC, a consolidated joint venture (see page 33). As this land is developed in the future, the joint venture will execute site-specific leases under the master lease agreement. Rental payments will commence under the site-specific leases as cash rents under tenant leases commence at the respective properties.


28


Corporate Office Properties Trust
Capitalization Overview
(dollars, shares and units in thousands)


 
 
Wtd. Avg. Maturity (Years)
 
Stated Rate
 
Effective Rate
(1)(2)
 
Gross Debt Balance at
 
 
 
 
 
12/31/19
Debt
 
 
 
 
 
 
Secured debt
 
4.0

 
4.06
%
 
4.01
%
 
$
214,546

Unsecured debt
 
3.4

 
3.93
%
 
4.08
%
 
1,628,261

Total Consolidated Debt
3.5

 
3.94
%
 
4.07
%
 
$
1,842,807

 
 
 
 
 
 
 
 
 
Fixed rate debt (2)
 
3.7

 
4.30
%
 
4.22
%
 
$
1,618,739

Variable rate debt
 
3.0

 
2.99
%
 
3.00
%
 
224,068

Total Consolidated Debt
 
 
 
 
 
 
 
$
1,842,807

 
 
 
 
 
 
 
 
 
Preferred Equity
 
 
Redeemable
 
 
 
3.5% Series I Convertible Preferred Units (3)
 
Jan-20

 
 
 
$
8,800

 
 
 
 
 
 
 
 
 
Common Equity (4)
 
 
 
 
 
 
 
 
Common Shares
 
 
 
 
 
 
 
112,069

Common Units
 
 
 
 
 
 
 
1,289

Total Common Shares and Units
 
 
 
 
 
113,358

 
 
 
 
 
 
 
 
 
Closing Common Share Price on 12/31/19
 
 
 
$
29.38

Common Equity Market Capitalization
 
 
 
$
3,330,458

 
 
 
 
 
Total Equity Market Capitalization
 
 
 
$
3,339,258

 
 
 
 
 
Total Market Capitalization
 
 
 
$
5,182,065

 
 
 
 
 
(1) Excludes the effect of deferred financing cost amortization.
(2) Includes the effect of interest rate swaps with notional amounts of $273.6 million that hedge the risk of changes in interest rates on variable rate debt.
(3) 352,000 units outstanding with a liquidation preference of $25 per unit, and convertible into 176,000 common units.
(4) Excludes unvested share-based compensation awards subject to market conditions.

 
 
Investment Grade Ratings & Outlook
 
Latest Affirmation
 
Fitch
 
BBB-
Stable
 
10/7/19
 
Moodys
 
Baa3
Stable
 
11/20/18
 
Standard & Poors
BBB-
Positive
 
6/21/19
chart-d2356297b7e35c5d9dda01.jpgchart-b3f97044ff3150aa94fa01.jpg

29


Corporate Office Properties Trust
Summary of Outstanding Debt as of 12/31/19
(dollars in thousands)
Unsecured Debt
Stated Rate
 
Amount Outstanding
Maturity Date
 
 
Secured Debt
Stated Rate
 
Amount Outstanding
Balloon Payment Due Upon Maturity
Maturity Date
 
Revolving Credit Facility
L + 1.10%

 
$
177,000

Mar-23
(1)(2)
 
7200 & 7400 Redstone Gateway (3)
L + 1.85%

 
$
12,438

$
12,132

Oct-20
 
Senior Unsecured Notes
 
 
 
 
 
 
7740 Milestone Parkway
3.96
%
 
17,352

15,902

Feb-23
 
3.70% due 2021
3.70
%
 
$
300,000

Jun-21
 
 
100 & 30 Light Street
4.32
%
 
51,527

47,676

Jun-23
 
3.60% due 2023
3.60
%
 
350,000

May-23
 
 
1000, 1200 & 1100 Redstone
 
 
 
 
 
 
5.25% due 2024
5.25
%
 
250,000

Feb-24
 
 
Gateway (3)
4.47
%
(4)
32,875

27,649

Jun-24
 
5.00% due 2025
5.00
%
 
300,000

Jul-25
 
 
M-Square:
 
 
 
 
 
 
Subtotal - Senior Unsecured Notes
4.32
%
 
$
1,200,000

 
 
 
5825 & 5850 University Research
 
 
 
 
 
 
 
 
 
 
 
 
 
Court (3)
3.82
%
 
42,086

35,603

Jun-26
 
Unsecured Bank Term Loans
 
 
 
 
 
 
5801 University Research Court (2)(3)
L + 1.45%

 
11,200

10,020

Aug-26
 
2022 Maturity
L + 1.25%

 
$
250,000

Dec-22
(2)
 
2100 L Street (2)(3)
L + 2.35%

 
47,068

47,068

Sept-22
(5)
Other Unsecured Debt
0.00
%
 
1,261

May-26
 
 
Total Secured Debt
4.06
%
 
$
214,546

 
 
 
Total Unsecured Debt
3.93
%
 
$
1,628,261

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Unsecured Debt
3.93
%
 
$
1,628,261

 
 
 
 
 
 
 
 
 
 
Total Secured Debt
4.06
%
 
214,546

 
 
 
 
 
 
 
 
 
 
Consolidated Debt
3.94
%
 
$
1,842,807

 
 
 
 
 
 
 
 
 
 
Net discounts and deferred
 
 
 
 
 
 
 
 
 
 
 
 
 
financing costs
 
 
(11,668
)
 
 
 
 
 
 
 
 
 
 
Debt, per balance sheet
 
 
$
1,831,139

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Debt
 
 
$
1,842,807

 
 
 
 
 
 
 
 
 
 
COPT’s share of unconsolid. JV gross debt (6)
 
50,250

 
 
 
 
 
 
 
 
 
 
Gross debt
 
 
$
1,893,057

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The Company’s $800 million Revolving Credit Facility matures in March 2023 and may be extended for two six-month periods, at our option.
(2)
Pre-payable anytime without penalty.
(3)
These properties are owned through consolidated joint ventures.
(4)
Represents the weighted average rate of three loans on the properties.
(5)
The loan maturity may be extended by one year, provided certain conditions are met.
(6)
See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

30


Corporate Office Properties Trust
Summary of Outstanding Debt as of 12/31/19 (continued)

chart-9777d3fddb3f56b2a69.jpg
chart-5a52ab47d0445e6f9bda01.jpgchart-87851e43abd45a20b16.jpg
(1) Revolving Credit Facility maturity of $177.0 million scheduled for 2023 is presented assuming our exercise of two six-month extension options.
(2) Includes the effect of interest rate swaps in effect that hedge the risk of changes in interest rates on variable rate debt.

31


Corporate Office Properties Trust
Debt Analysis
(dollars and square feet in thousands)
 
 
 
 
 
As of and for Three Months Ended
 
 
 
As of and for Three Months Ended
Senior Note Covenants (1)
 
Required
 
12/31/19
 
Line of Credit & Term Loan Covenants (1)
Required
 
12/31/19
Total Debt / Total Assets
 
< 60%
 
37.4%
 
Total Debt / Total Assets
< 60%
 
34.0%
Secured Debt / Total Assets
 
< 40%
 
4.6%
 
Secured Debt / Total Assets
< 40%
 
4.3%
Debt Service Coverage
 
> 1.5x
 
4.2x
 
Adjusted EBITDA / Fixed Charges
> 1.5x
 
3.6x
Unencumbered Assets / Unsecured Debt
 
> 150%
 
271.6%
 
Unsecured Debt / Unencumbered Assets
< 60%
 
33.3%
 
 
 
 
 
 
 
Unencumbered Adjusted NOI / Unsecured Interest Expense
> 1.75x
 
4.2x
 
 
 
 
 
 
 
 
 
 
 
 
Debt Ratios
 
Source
 
 
 
Unencumbered Portfolio Analysis
 
 
 
Gross debt
 
 
p. 30
 
$
1,893,057

 
# of unencumbered properties
147

Adjusted book
 
p. 37
 
$
5,099,768

 
% of total portfolio
86
%
Net debt / adjusted book ratio
 
 
 
36.8
%

Unencumbered square feet in-service
 
15,532

Net debt plus pref. equity / adj. book ratio
 
 
 
37.0
%
 
% of total portfolio
 
81
%
Net debt
 
 
p. 37
 
$
1,877,826

 
NOI from unencumbered real estate operations
 
$
73,772

Net debt plus preferred equity
 
 
p. 37
 
$
1,886,626

 
% of total NOI from real estate operations
 
89
%
In-place adjusted EBITDA
 
p. 10
 
$
77,415

 
Adjusted EBITDA from unencumbered real estate operations
 
$
67,459

Net debt / in-place adjusted EBITDA ratio
6.1
x
 
% of total adjusted EBITDA from real estate operations
 
89
%
Net debt plus pref. equity / in-place adj. EBITDA ratio
6.1
x
 
Unencumbered adjusted book
 
$
4,510,643

Denominator for debt service coverage
 
p. 36
 
$
17,280

 
% of total adjusted book
 
88
%
Denominator for fixed charge coverage
 
p. 36
 
$
20,824

 
 
 


Adjusted EBITDA
 
p. 10
 
$
76,024

 
 
 
 
Adjusted EBITDA debt service coverage ratio
 
 
4.4
x
 
 
 
 
Adjusted EBITDA fixed charge coverage ratio
 
 
3.7
x
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The covenants are calculated as defined in the applicable agreements, and the calculations differ between those agreements.


32


Corporate Office Properties Trust
Consolidated Real Estate Joint Ventures as of 12/31/19
(dollars and square feet in thousands)

Operating Properties
Operational
Square Feet
% Occupied
% Leased
NOI for the Three Months Ended 12/31/19 (1)
NOI for the Year Ended 12/31/19 (1)
Total Assets (2)
Venture Level Debt
% COPT Owned
Suburban Maryland:
 

 
 
 
 
 

 

 
M Square Associates, LLC (3 properties)
313

99.6%
99.6%
$
1,955

$
6,873

$
71,411

$
53,286

50%
Huntsville, Alabama:
 
 
 
 
 
 
 
 
LW Redstone Company, LLC (9 properties)
668

99.6%
100.0%
2,328

8,250

124,901

45,313

85%
Total/Average
981

99.6%
99.9%
$
4,283

$
15,123

$
196,312

$
98,599

 
 
        
Non-operating Properties
Estimated Developable Square Feet
 
 
Total Assets (2)
Venture Level Debt
% COPT Owned
Suburban Maryland:
 

 
 
 

 

 
M Square Research Park
450

 
 
$
16,504

$

50%
Huntsville, Alabama:
 

 
 
 

 

 
Redstone Gateway (3)
3,983

 
 
124,974


85%
Washington, DC:
 
 
 
 
 
 
Stevens Place
190

 
 
126,603

47,068

95%
Total
4,623

 
 
$
268,081

$
47,068

 
 
(1)
Represents NOI of the joint venture operating properties before allocation to joint venture partners.
(2)
Total assets includes the assets of the consolidated joint venture plus any outside investment basis.
(3)
Total assets include $59.4 million due from the City of Huntsville (including accrued interest) in connection with infrastructure costs funded by the joint venture.

33


Corporate Office Properties Trust
Unconsolidated Real Estate Joint Ventures as of 12/31/19
(dollars and square feet in thousands) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joint venture information
DC Shell JV formed 7/21/16
 
DC Shell JV formed 6/20/19 (1)
 
 
 
 
 
 
 
 
 
 
 
 
COPT ownership %
50
%
 
10
%
 
 
 
 
 
 
 
 
 
 
 
 
COPT’s investment
$
37,816

 
$
14,133

 
 
 
 
 
 
 
 
 
 
 
 
# of Properties
6

 
9

 
 
 
 
 
 
 
 
 
 
 
 
Square Feet
964

 
1,471

 
 
 
 
 
 
 
 
 
 
 
 
% Occupied
100
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
COPT’s share of annualized rental revenue
$
5,619

 
$
2,099

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet information
DC Shell JV formed 7/21/16
 
DC Shell JV formed 6/20/19
 
Total
 
COPT’s Share (1)
 
 
 
 
 
 
 
 
Operating properties, net
$
121,038

 
$
315,427

 
$
436,465

 
$
92,062

 
 
 
 
 
 
 
 
Total assets
$
135,564

 
$
349,010

 
$
484,574

 
$
102,683

 
 
 
 
 
 
 
 
Debt
$
59,693

 
$
200,729

 
$
260,422

 
$
49,920

 
 
 
 
 
 
 
 
Total liabilities
$
59,932

 
$
207,680

 
$
267,612

 
$
50,734

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended 12/31/19
 
Year Ended 12/31/19
Operating information
DC Shell JV formed 7/21/16
 
DC Shell JV formed 6/20/19
 
Total
 
COPT’s Share (1)
 
DC Shell JV formed 7/21/16
 
DC Shell JV formed 6/20/19
 
Total
 
COPT’s Share (1)
Revenue
$
2,937

 
$
4,709

 
$
7,646

 
$
1,939

 
$
11,761

 
$
9,537

 
$
21,298

 
$
6,834

Operating expenses
(511
)
 
(504
)
 
(1,015
)
 
(305
)
 
(2,059
)
 
(999
)
 
(3,058
)
 
(1,129
)
NOI and EBITDA
2,426

 
4,205

 
6,631

 
1,634

 
9,702

 
8,538

 
18,240

 
5,705

Interest expense
(533
)
 
(1,585
)
 
(2,118
)
 
(425
)
 
(2,115
)
 
(3,046
)
 
(5,161
)
 
(1,362
)
Depreciation and amortization
(1,132
)
 
(2,154
)
 
(3,286
)
 
(781
)
 
(4,529
)
 
(4,392
)
 
(8,921
)
 
(2,703
)
Net income
$
761

 
$
466

 
$
1,227

 
$
428

 
$
3,058

 
$
1,100

 
$
4,158

 
$
1,640

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI (per above)
$
2,426

 
$
4,205

 
$
6,631

 
$
1,634

 
$
9,702

 
$
8,538

 
$
18,240

 
$
5,705

Tenant funded landlord assets

 

 

 

 
(32
)
 

 
(32
)
 
(16
)
Straight line rent adjustments
(66
)
 
(323
)
 
(389
)
 
(67
)
 
(328
)
 
(660
)
 
(988
)
 
(231
)
Amortization of acquired above- and below-market rents

 
(142
)
 
(142
)
 
(14
)
 

 
(299
)
 
(299
)
 
(30
)
Cash NOI
$
2,360

 
$
3,740

 
$
6,100

 
$
1,553

 
$
9,342

 
$
7,579

 
$
16,921

 
$
5,428

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) This JV acquired seven properties from us on 6/20/19 and an additional two properties on 12/5/19.
(2) Represents the portion allocable to our ownership interest.


34



Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures
(dollars in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
NOI from real estate operations (1)
 

 
 

 
 

 
 

 
 

 
 
 
 
Real estate revenues (2)
$
131,968

 
$
130,734

 
$
132,771

 
$
131,990

 
$
130,825

 
$
527,463

 
$
517,253

Property operating expenses (2)
(51,098
)
 
(49,714
)
 
(47,886
)
 
(49,445
)
 
(51,298
)
 
(198,143
)
 
(201,035
)
COPT’s share of NOI in unconsolidated real estate JVs (3)
1,634

 
1,601

 
1,251

 
1,219

 
1,211

 
5,705

 
4,818

NOI from real estate operations
82,504

 
82,621

 
86,136

 
83,764

 
80,738

 
335,025

 
321,036

General and administrative expenses
(7,043
)
 
(6,105
)
 
(7,650
)
 
(6,719
)
 
(5,105
)
 
(27,517
)
 
(22,829
)
Leasing expenses
(2,293
)
 
(1,824
)
 
(1,736
)
 
(2,032
)
 
(1,976
)
 
(7,885
)
 
(6,071
)
Business development expenses and land carry costs
(1,292
)
 
(964
)
 
(870
)
 
(1,113
)
 
(1,425
)
 
(4,239
)
 
(5,840
)
NOI from construction contracts and other service operations
985

 
895

 
1,297

 
624

 
546

 
3,801

 
2,533

Equity in (loss) income of unconsolidated non-real estate entities
(2
)
 
(3
)
 
(1
)
 
(1
)
 
1,198

 
(7
)
 
1,193

Interest and other income
1,917

 
1,842

 
1,849

 
2,286

 
74

 
7,894

 
4,358

Loss on early extinguishment of debt

 

 

 

 
(258
)
 

 
(258
)
Interest expense
(16,777
)
 
(17,126
)
 
(18,475
)
 
(18,674
)
 
(18,475
)
 
(71,052
)
 
(75,385
)
COPT’s share of interest expense of unconsolidated real estate JVs (3)
(425
)
 
(412
)
 
(264
)
 
(261
)
 
(267
)
 
(1,362
)
 
(1,058
)
Income tax benefit (expense)
104

 
131

 
176

 
(194
)
 
190

 
217

 
363

FFO - per Nareit (1)
$
57,678

 
$
59,055

 
$
60,462

 
$
57,680

 
$
55,240

 
$
234,875

 
$
218,042

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed contractual payments
$
101,116

 
$
102,389

 
$
104,193

 
$
104,644

 
$
102,900

 
$
412,342

 
$
404,940

Variable lease payments
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease termination fees
436

 
841

 
2,458

 
521

 
906

 
4,256

 
3,662

Other variable lease payments (4)
29,141

 
26,231

 
24,764

 
25,738

 
25,790

 
105,874

 
103,725

Lease revenue
130,693

 
129,461

 
131,415

 
130,903

 
129,596

 
522,472

 
512,327

Other property revenue
1,275

 
1,273

 
1,356

 
1,087

 
1,229

 
4,991

 
4,926

Real estate revenues
$
131,968

 
$
130,734

 
$
132,771

 
$
131,990

 
$
130,825

 
$
527,463

 
$
517,253

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for credit losses (recoveries) (2)
$
579

 
$
39

 
$
(2
)
 
$
70

 
$
39

 
$
686

 
$
339

(1)
Refer to section entitled “Definitions” for a definition of this measure.
(2)
Provision for credit losses is included in real estate revenues in 2019 and property operating expenses in prior periods.
(3)
See page 34 for a schedule of the related components.
(4)
Represents primarily lease revenue associated with property operating expense reimbursements from tenants.

35


Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures (continued)
(dollars in thousands)
 
Three Months Ended
 
Year Ended
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Total interest expense
$
16,777

 
$
17,126

 
$
18,475

 
$
18,674

 
$
18,475

 
$
71,052

 
$
75,385

Less: Amortization of deferred financing costs
(541
)
 
(538
)
 
(529
)
 
(528
)
 
(550
)
 
(2,136
)
 
(1,954
)
Less: Amortization of net debt discounts, net of amounts capitalized
(382
)
 
(377
)
 
(374
)
 
(370
)
 
(365
)
 
(1,503
)
 
(1,439
)
Less: Accum. other comprehensive loss on derivatives amortized to expense

 
(12
)
 
(33
)
 
(34
)
 
(34
)
 
(79
)
 
(135
)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs
416

 
403

 
258

 
255

 
260

 
1,332

 
1,034

Denominator for interest coverage
16,270

 
16,602

 
17,797

 
17,997

 
17,786

 
68,666

 
72,891

Scheduled principal amortization
1,010

 
1,107

 
1,095

 
1,098

 
1,079

 
4,310

 
4,240

Denominator for debt service coverage
17,280

 
17,709

 
18,892

 
19,095

 
18,865

 
72,976

 
77,131

Capitalized interest
3,467

 
2,927

 
2,388

 
2,004

 
1,748

 
10,786

 
5,929

Preferred unit distributions
77

 
157

 
165

 
165

 
165

 
564

 
660

Denominator for fixed charge coverage
$
20,824

 
$
20,793

 
$
21,445

 
$
21,264

 
$
20,778

 
$
84,326

 
$
83,720

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred unit distributions
$
77

 
$
157

 
$
165

 
$
165

 
$
165

 
$
564

 
$
660

Common share dividends - unrestricted shares and deferred shares
30,724

 
30,721

 
30,693

 
30,685

 
30,206

 
122,823

 
116,285

Common share dividends - restricted shares and deferred shares
102

 
103

 
63

 
68

 
114

 
336

 
462

Common unit distributions - unrestricted units
337

 
338

 
365

 
365

 
367

 
1,405

 
2,498

Common unit distributions - restricted units
22

 
22

 
23

 
20

 

 
87

 

Total dividends/distributions
$
31,262

 
$
31,341

 
$
31,309

 
$
31,303

 
$
30,852

 
$
125,215

 
$
119,905

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common share dividends - unrestricted shares and deferred shares
$
30,724

 
$
30,721

 
$
30,693

 
$
30,685

 
$
30,206

 
$
122,823

 
$
116,285

Common unit distributions - unrestricted units
337

 
338

 
365

 
365

 
367

 
1,405

 
2,498

Distributions on dilutive preferred units
77

 

 

 

 

 

 

Dividends and distributions for payout ratios
$
31,138

 
$
31,059

 
$
31,058

 
$
31,050

 
$
30,573

 
$
124,228

 
$
118,783

 
 
 
 
 
 
 
 
 
 
 
 
 
 

36


Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures (continued)
(dollars in thousands)
 
Three Months Ended
 
 
 
 
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
 
 
 
Total assets
$
3,854,453

 
$
3,855,369

 
$
3,803,469

 
$
3,775,859

 
$
3,656,005

 
 
 
 
Accumulated depreciation
1,007,120

 
979,353

 
949,111

 
927,266

 
897,903

 
 
 
 
Accumulated depreciation included in assets held for sale

 
1,397

 
1,397

 

 

 
 
 
 
Accumulated amort. of real estate intangibles and deferred leasing costs
212,547

 
212,222

 
210,183

 
208,973

 
204,882

 
 
 
 
Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale

 
4

 
4

 

 

 
 
 
 
COPT’s share of liabilities of unconsolidated real estate JVs
50,734

 
46,061

 
30,588

 
30,156

 
29,917

 
 
 
 
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
8,164

 
7,376

 
6,578

 
6,012

 
5,446

 
 
 
 
Less: Property - operating lease liabilities
(17,317
)
 
(16,686
)
 
(16,640
)
 
(16,619
)
 

 
 
 
 
Less: Property - finance lease liabilities
(702
)
 
(702
)
 
(712
)
 
(716
)
 
(660
)
 
 
 
 
Less: Cash and cash equivalents
(14,733
)
 
(34,005
)
 
(46,282
)
 
(7,780
)
 
(8,066
)
 
 
 
 
Less: COPT’s share of cash of unconsolidated real estate JVs
(498
)
 
(505
)
 
(406
)
 
(377
)
 
(293
)
 
 
 
 
Adjusted book
$
5,099,768

 
$
5,049,884

 
$
4,937,290

 
$
4,922,774

 
$
4,785,134

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross debt (page 30)
$
1,893,057

 
$
1,920,179

 
$
1,827,304

 
$
1,919,920

 
$
1,868,504

 


 


Less: Cash and cash equivalents
(14,733
)
 
(34,005
)
 
(46,282
)
 
(7,780
)
 
(8,066
)
 


 


Less: COPT’s share of cash of unconsolidated real estate JVs
(498
)
 
(505
)
 
(406
)
 
(377
)
 
(293
)
 
 
 
 
Net debt
$
1,877,826

 
$
1,885,669

 
$
1,780,616

 
$
1,911,763

 
$
1,860,145

 


 


Preferred equity
8,800

 
8,800

 
8,800

 
8,800

 
8,800

 
 
 
 
Net debt plus preferred equity
$
1,886,626

 
$
1,894,469

 
$
1,789,416

 
$
1,920,563

 
$
1,868,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



37



Corporate Office Properties Trust
Definitions

Non-GAAP Measures

We believe that the measures defined below that are not determined in accordance with generally accepted accounting principles (“GAAP”) are helpful to investors in measuring our performance and comparing it to that of other real estate investment trusts (“REITs”).  Since these measures exclude certain items includable in their respective most comparable GAAP measures, reliance on the measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are weighed in balance with other GAAP and non-GAAP measures.  These measures should not be used as an alternative to the respective most comparable GAAP measures when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.
 
Adjusted book
Defined as total assets presented on our consolidated balance sheet, net of lease liabilities associated with property right-of-use assets, and excluding the effect of cash and cash equivalents, accumulated depreciation on real estate properties, accumulated amortization of intangible assets on real estate acquisitions, accumulated amortization of deferred leasing costs, disposed properties included in assets held for sale, unconsolidated real estate joint ventures (“JVs”) cash and cash equivalents, liabilities and accumulated depreciation and amortization (of real estate intangibles and deferred leasing costs) allocable to our ownership interest in the JVs and the effect of properties serving as collateral for debt in default that we extinguished (or intend to extinguish) via conveyance of such properties.

Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) 
Adjusted EBITDA is net income adjusted for the effects of interest expense, depreciation and amortization, impairment losses, gain on sales of real estate, gain or loss on early extinguishment of debt, net gain or loss on other investments, operating property acquisition costs, income taxes, business development expenses, demolition costs on redevelopment and nonrecurring improvements, executive transition costs and certain other expenses that we believe are not closely correlated with our operating performance.  Adjusted EBITDA also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JV. While EBITDA (earnings before interest, taxes, depreciation and amortization) is a universally-defined supplemental measure, Adjusted EBITDA incorporates additional adjustments for gains and losses from investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. We believe that adjusted EBITDA is a useful supplemental measure for assessing our un-levered performance.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.
 
Amortization of acquisition intangibles included in NOI 
Represents the amortization of intangible asset and liability categories that is included in net operating income, including amortization of above- or below-market leases and above- or below-market cost arrangements.

Basic FFO available to common share and common unit holders (“Basic FFO”) 
This measure is FFO adjusted to subtract (1) preferred share dividends, (2) income attributable to noncontrolling interests through ownership of preferred units in Corporate Office Properties, L.P. (the “Operating Partnership”) or interests in other consolidated entities not owned by us, (3) depreciation and amortization allocable to noncontrolling interests in other consolidated entities, (4) Basic FFO allocable to share-based compensation awards and (5) issuance costs associated with redeemed preferred shares.  With these adjustments, Basic FFO represents FFO available to common shareholders and holders of common units in the Operating Partnership (“common units”).  Common units are substantially similar to our common shares of beneficial interest (“common shares”) and are exchangeable into common shares, subject to certain conditions.  We believe that Basic FFO is useful to investors due to the close correlation of common units to common shares.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.


38



Corporate Office Properties Trust
Definitions

Cash net operating income (“Cash NOI”) 
Defined as NOI from real estate operations adjusted to eliminate the effects of: straight-line rental adjustments, amortization of tenant incentives, amortization of acquisition intangibles included in FFO and NOI (including above- and below-market leases and above- or below-market cost arrangements), lease termination fees from tenants to terminate their lease obligations prior to the end of the agreed upon lease terms and rental revenue recognized under GAAP resulting from landlord assets and lease incentives funded by tenants.  Cash NOI also includes adjustments to NOI from real estate operations for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. Under GAAP, rental revenue is recognized evenly over the term of tenant leases (through straight-line rental adjustments and amortization of tenant incentives), which, given the long term nature of our leases, does not align with the economics of when tenant payments are due to us under the arrangements.  Also under GAAP, when a property is acquired, we allocate the acquisition to certain intangible components, which are then amortized into NOI over their estimated lives, even though the resulting revenue adjustments are not reflective of our lease economics.  In addition, revenue from lease termination fees and tenant-funded landlord improvements, absent an adjustment from us, would result in large one-time lump sum amounts in Cash NOI that we do not believe are reflective of a property’s long-term value.  We believe that Cash NOI is a useful supplemental measure of operating performance for a REIT’s operating real estate because it makes adjustments to NOI for the above stated items to be more reflective of the economics of when tenant payments are due to us under our leases and the value of our properties.  As is the case with NOI, the measure is useful in our opinion in evaluating and comparing the performance of geographic segments, Same Properties groupings and individual properties.  We believe that NOI from real estate operations, our segment performance measure, is the most directly comparable GAAP measure to this non-GAAP measure.

COPT’s share of NOI from unconsolidated real estate JVs
Represents the net of revenues and property operating expenses of real estate operations owned through unconsolidated JVs that are allocable to COPT’s ownership interest. This measure is included in the computation of NOI, our segment performance measure, as discussed below.

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) 
Defined as Diluted FFO, as adjusted for comparability, adjusted for the following: (1) the elimination of the effect of (a) noncash rental revenues and property operating expenses (comprised of straight-line rental adjustments, which includes the amortization of recurring tenant incentives, and amortization of acquisition intangibles included in FFO and NOI, both of which are described under “Cash NOI” above), (b) share-based compensation, net of amounts capitalized, (c) amortization of deferred financing costs, (d) amortization of debt discounts and premiums and (e) amortization of settlements of debt hedges; and (2) replacement capital expenditures (defined below).  Diluted AFFO also includes adjustments to Diluted FFO, as adjusted for comparability for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that Diluted AFFO is a useful supplemental measure of operating performance for a REIT because it incorporates adjustments for: certain revenue and expenses that are not associated with cash to or from us during the period; and certain capital expenditures for operating properties incurred during the period that do require cash outlays.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Diluted FFO available to common share and common unit holders (“Diluted FFO”) 
Diluted FFO is Basic FFO adjusted to add back any changes in Basic FFO that would result from the assumed conversion of securities that are convertible or exchangeable into common shares.  The computation of Diluted FFO assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period.  We believe that Diluted FFO is useful to investors because it is the numerator used to compute Diluted FFO per share, discussed below.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

39



Corporate Office Properties Trust
Definitions

 
Diluted FFO available to common share and common unit holders, as adjusted for comparability (“Diluted FFO, as adjusted for comparability”)
Defined as Diluted FFO or FFO adjusted to exclude: operating property acquisition costs; gain or loss on early extinguishment of debt; FFO associated with properties that secured non-recourse debt on which we defaulted and, subsequently, extinguished via conveyance of such properties (including property NOI, interest expense and gains on debt extinguishment); loss on interest rate derivatives; demolition costs on redevelopment and nonrecurring improvements; executive transition costs, accounting charges for original issuance costs associated with redeemed preferred shares and certain other expenses that we believe are not closely correlated with our operating performance.  Diluted FFO, as adjusted for comparability also includes adjustments to Diluted FFO for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe this to be a useful supplemental measure alongside Diluted FFO as it excludes gains and losses from certain investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. The adjustment for FFO associated with properties securing non-recourse debt on which we defaulted pertains to the periods subsequent to our default on the loan’s payment terms, which was the result of our decision to not support payments on the loan since the estimated fair value of the properties was less than the loan balance. While we continued as the legal owner of the properties during this period, all cash flows produced by them went directly to the lender and we did not fund any debt service shortfalls, which included incremental additional interest under the default rate. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.
 
Diluted FFO per share 
Diluted FFO per share is (1) Diluted FFO divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  The computation of Diluted FFO per share assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period.  We believe that Diluted FFO per share is useful to investors because it provides investors with a further context for evaluating our FFO results in the same manner that investors use earnings per share (“EPS”) in evaluating net income available to common shareholders.  We believe that diluted EPS is the most directly comparable GAAP measure to this non-GAAP measure.
 
Diluted FFO per share, as adjusted for comparability 
Defined as (1) Diluted FFO available to common share and common unit holders, as adjusted for comparability divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  The computation of this measure assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase the per share measure in a given period.  We believe this to be a useful supplemental measure alongside Diluted FFO per share as it excludes gains and losses from investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. We believe that diluted EPS is the most directly comparable GAAP measure to this non-GAAP measure.
 
Earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”) 
Defined as net income adjusted for the effects of interest expense, depreciation and amortization, gains on sales and impairment losses of real estate and income taxes. EBITDAre also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. While EBITDA (earnings before interest, taxes, depreciation and amortization) is a universally-defined supplemental measure, EBITDAre incorporates additional adjustments for gains and losses from investing activities related to our investments in operating properties. We believe that EBITDAre is a useful supplemental measure for assessing our un-levered performance. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.


40



Corporate Office Properties Trust
Definitions

Funds from operations (“FFO” or “FFO per Nareit”)
Defined as net income computed using GAAP, excluding gains on sales and impairment losses of real estate (net of associated income tax) and real estate-related depreciation and amortization. FFO also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that we use the National Association of Real Estate Investment Trust’s (“Nareit”) definition of FFO, although others may interpret the definition differently and, accordingly, our presentation of FFO may differ from those of other REITs.  We believe that FFO is useful to management and investors as a supplemental measure of operating performance because, by excluding gains on sales and impairment losses of real estate (net of associated income tax) and real estate-related depreciation and amortization, FFO can help one compare our operating performance between periods.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Gross debt
Defined as total consolidated outstanding debt, which is debt reported per our balance sheet adjusted to exclude net discounts and premiums and deferred financing costs, as further adjusted to include outstanding debt of unconsolidated real estate JVs that were allocable to our ownership interest in the JVs.

In-place adjusted EBITDA
Defined as Adjusted EBITDA, as further adjusted for: (1) the removal of NOI pertaining to properties in the quarterly periods in which such properties were disposed or removed from service; (2) the addition of pro forma adjustments to NOI for (a) properties acquired or placed in service subsequent to the commencement of a quarter made in order to reflect a full quarter of ownership/operations and (b) significant mid-quarter occupancy changes associated with properties recently placed in service with no occupancy; and (3) certain adjustments to deferred rental revenue associated with changes in our assessment of collectability that we believe are not closely correlated with our operating performance. The measure also includes adjustments to Adjusted EBITDA for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that in-place adjusted EBITDA is a useful supplemental measure of performance for assessing our un-levered performance, as further adjusted for changes in operating properties subsequent to the commencement of a quarter.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Net debt
Defined as Gross debt (total outstanding debt reported per our balance sheet as adjusted to exclude net discounts and premiums and deferred financing costs), as adjusted to subtract cash and cash equivalents as of the end of the period and debt in default that was extinguished via conveyance of properties. The measure also includes adjustments to Gross debt for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs.

Net debt plus preferred equity
Defined as Net debt plus the total liquidation preference of our outstanding preferred equity.

Net debt to Adjusted book and Net debt plus preferred equity to Adjusted book
These measures divide either Net debt or Net debt plus preferred equity (defined above) by Adjusted book (defined above).

Net debt to in-place adjusted EBITDA ratio and Net debt plus preferred equity to in-place adjusted EBITDA ratio
Defined as Net debt or Net debt plus preferred equity (as defined above) divided by in-place adjusted EBITDA (defined above) for the three month period that is annualized by multiplying by four.


41



Corporate Office Properties Trust
Definitions

Net operating income from real estate operations (“NOI”)
NOI, which is our segment performance measure, includes: consolidated real estate revenues; consolidated property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate JVs that are allocable to COPT’s ownership interest in the JVs. We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core real estate operations that is unaffected by depreciation, amortization, financing and general, administrative and leasing expenses; we believe this measure is particularly useful in evaluating the performance of geographic segments, Same Properties groupings and individual properties. 

NOI debt service coverage ratio and Adjusted EBITDA debt service coverage ratio 
These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains or losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties) and scheduled principal amortization on mortgage loans.
 
NOI fixed charge coverage ratio and Adjusted EBITDA fixed charge coverage ratio 
These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of (1) interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains or losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties), (2) scheduled principal amortization on mortgage loans, (3) capitalized interest, (4) dividends on preferred shares and (5) distributions on preferred units in the Operating Partnership not owned by us.
 
NOI interest coverage ratio and Adjusted EBITDA interest coverage ratio 
These measures divide either NOI from real estate operations or Adjusted EBITDA by interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains on losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties).

Payout ratios based on: Diluted FFO; Diluted FFO, as adjusted for comparability; and Diluted AFFO 
These payout ratios are defined as (1) the sum of dividends on unrestricted common shares and distributions to holders of interests in the Operating Partnership (excluding unvested share-based compensation awards) and dividends on convertible preferred shares when such distributions and dividends are included in Diluted FFO divided by (2) the respective non-GAAP measures on which the payout ratios are based.

Replacement capital expenditures 
Replacement capital expenditures are defined as tenant improvements and incentives, building improvements and leasing costs incurred during the period for operating properties that are not (1) items contemplated prior to the acquisition of a property, (2) improvements associated with the expansion of a building or its improvements, (3) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class B office), (4) capital improvements that represent the addition of something new to the property rather than the replacement of something (for example, the addition of a new heating and air conditioning unit that is not replacing one that was previously there) or (5) replacements of significant components of a building after the building has reached the end of its original useful life. Replacement capital expenditures excludes expenditures of operating properties included in disposition plans during the period that were already sold or are held for future disposition. For cash tenant incentives not due to the tenant for a period exceeding three months past the date on which such incentives were incurred, we recognize such incentives as replacement capital expenditures in the periods such incentives are due to the tenant. Replacement capital expenditures, which is included in the computation of Diluted AFFO, is intended to represent non-transformative capital expenditures of existing properties held for long-term investment. We believe that the excluded expenditures are more closely associated with our investing activities than the performance of our operating portfolio.


42



Corporate Office Properties Trust
Definitions

Same Properties NOI and Same Properties cash NOI
Defined as NOI, or Cash NOI, from real estate operations of Same Properties.  We believe that these are important supplemental measures of operating performance of Same Properties for the same reasons discussed above for NOI from real estate operations and Cash NOI.

Other Definitions
 
Acquisition Costs — Transaction costs expensed in connection with executed or anticipated acquisitions of operating properties.
 
Annualized Rental Revenue — The monthly contractual base rent as of the reporting date multiplied by 12, plus the estimated annualized expense reimbursements under existing leases for occupied space. With regard to properties owned through unconsolidated real estate JVs, we include the portion of Annualized Rental Revenue allocable to COPT’s ownership interest.

Average escalations — Leasing statistic used to report average increase in rental rates over lease terms for leases with a term of greater than one-year.
 
Development Properties — Properties under, or contractually committed for, development.

Core Portfolio — Represents Defense/IT Locations and Regional Office properties.

Defense/IT Locations — Represents properties in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and IT related activities servicing what we believe are growing, durable, priority missions.

First Generation Space — Newly-developed or redeveloped space that has never been occupied.
 
Operational Space — The portion of a property in operations (excludes portion under development or redevelopment).

Redevelopment Properties — Properties previously in operations on which activities to substantially renovate such properties were underway or approved.

Regional Office Properties — Includes office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics.

Same Properties — Operating office and data center shell properties stably owned and 100% operational since at least 1/1/18.
 
Second Generation Space — Space leased that has been previously occupied.
 
Total Portfolio — Operating properties, including ones owned through unconsolidated real estate JVs.

43


logo2dtd021015a01a14.jpg
6711 Columbia Gateway Drive, Suite 300
Columbia, Maryland 21046
Telephone 443-285-5400
Facsimile 443-285-7650
www.copt.com
NYSE: OFC
 
 
 
NEWS RELEASE
 
 
 
FOR IMMEDIATE RELEASE
IR Contacts:
 
 
Stephanie Krewson-Kelly
Michelle Layne
 
443-285-5453
443-285-5452
 
stephanie.kelly@copt.com
michelle.layne@copt.com

COPT Reports Fourth Quarter and Full Year 2019 Results
__________________________________________________________________________

EPS Exceeded Guidance; FFO per Share Achieved Mid-Point of Updated Guidance
Same-Property Cash NOI Growth of 6.2% in 4Q19 and 3.9% for the Full Year Exceeded Guidance

Core Portfolio 93.1% Occupied & 94.6% Leased

1.2 Million SF of 100% Leased Developments Placed into Service During 2019

2.3 Million SF Under Development are 79% Leased
__________________________________________________________________________

Record Leasing Volumes
Total Leasing of 659,000 SF in 4Q and
Record Total Leasing of 4.9 Million SF for the Full Year - 600,000 SF Higher than Prior Record Set in 2010

Development Leasing of 158,000 SF in 4Q19; Record 2.2 Million SF for the Year

U.S. Government Total New Leasing Volume of 586,000 SF During 2019,
Including 164,000 SF of Vacancy Leasing

Strong Vacancy Leasing of 784,000 SF During the Year

Strong Tenant Retention of 84% in 4Q19 Exceeded Guidance; 77% for the Year Met Expectations
__________________________________________________________________________

COLUMBIA, MD February 6, 2020 - Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the fourth quarter and full year ended December 31, 2019.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Fourth quarter and full year FFO per share met the mid-points of our updated guidance ranges, and strong demand throughout our Defense/IT Locations translated into record leasing for new developments, strong vacancy leasing, and near-record leasing with the U.S. Government. Our 2.2 million square feet of development leasing exceeded our prior annual record set in 2012 by 1 million square feet, and we executed 586,000 square feet of development and vacancy leasing with the U.S. Government, our second-best year ever.” He continued, “We believe that this strong leasing achievement, combined with the $357 million of equity raised and the 1.2 million square feet of 100% leased developments placed into service during 2019, position our Company to deliver 1.5%-3.5% FFO per share growth in 2020, and robust FFO growth in 2021.”


i


Financial Highlights

4th Quarter Financial Results:
Diluted earnings per share (“EPS”) was $0.38 for the quarter ended December 31, 2019 as compared to $0.16 for the fourth quarter of 2018.

Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, of $0.49 for the fourth quarter of 2019 equaled fourth quarter 2018 results.

FFOPS, as adjusted for comparability, was $0.50 for the fourth quarter of 2019, equal to fourth quarter 2018 results.

Full Year 2019 Financial Results:
EPS for the year ended December 31, 2019 was $1.71, which included $105.2 million of gains on the sale of a 90% interest in nine data center shell properties during the year as compared to 2018 EPS of $0.69.

Per Nareit’s definition, FFOPS for 2019 was $2.02 as compared to $1.99 for 2018.

FFOPS, as adjusted for comparability, for 2019 was $2.03 as compared to $2.01 for 2018.

Adjustments for comparability encompass items such as demolition costs of redevelopment, executive transition costs, and non-comparable professional and legal expenses.

Operating Performance Highlights

Operating Portfolio Summary:
At December 31, 2019, the Company’s core portfolio of 168 operating office and data center shell properties was 93.1% occupied and 94.6% leased.

During the quarter and the year, the Company placed into service 375,000 and 1.2 million respective square feet that were 100% leased.

Same-Property Performance:
At December 31, 2019, COPT’s same-property portfolio of 147 buildings was 91.9% occupied and 93.7% leased.

For the quarter and year ended December 31, 2019, the Company’s same-property cash NOI increased 6.2% and 3.9%, respectively, over the prior year’s comparable periods.

Leasing:
Total Square Feet Leased: For the quarter ended December 31, 2019, the Company leased 659,000 total square feet, including 339,000 square feet of renewals, 162,000 square feet of new leases on vacant space, and 158,000 square feet in development projects.

For the year ended December 31, 2019, the Company leased 4.9 million total square feet, including 1.9 million square feet of renewals, 784,000 square feet of new leases on vacant space, and 2.2 million square feet in development projects.

Renewal Rates: During the quarter and year ended December 31, 2019, the Company respectively renewed 84% and 77% of total expiring square feet.

Cash Rent Spreads & Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2019, cash rents on renewed space decreased 8.4% and 5.8%, respectively. For the same time periods, average annual escalations on renewing leases were 2.3% and 2.4%, respectively.


ii


Lease Terms: In the fourth quarter, lease terms averaged 6.1 years on renewing leases, 6.6 years on new leasing of vacant space, and 12.1 years on development leasing. For the year, lease terms averaged 4.1 years on renewing leases, 6.4 years on new leasing of vacant space, and 12.6 years on development leasing.

Investment Activity Highlights

Development & Redevelopment Projects:
Development Pipeline: At January 31, 2020, the Company’s development pipeline consisted of 13 properties totaling 2.3 million square feet that were 79% leased. These projects have a total estimated cost of $683.4 million, of which $326.6 million has been incurred.

Redevelopment: At December 31, 2019, one project was under redevelopment totaling 106,000 square feet that was 80% leased. The Company has invested $23.3 million of the $25.6 million anticipated total cost.

Balance Sheet and Capital Transaction Highlights

As of December 31, 2019, the Company’s net debt plus preferred equity to adjusted book ratio was 37.0% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 6.1x. For the quarter and year ended December 31, 2019, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.7x.

As of December 31, 2019, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate was 4.07%; additionally, 87.8% of the Company’s debt was subject to fixed interest rates and the consolidated debt portfolio had a weighted average maturity of 3.5 years.

During the quarter ended March 31, 2019, the Company issued the remaining 1.6 million common shares under its 2017 forward equity sale agreements for net proceeds of $46.5 million.

During the year, the Company sold a 90% interest in nine single-tenant data center shell properties through the Blackstone Real Estate Income Trust, Inc. (“BREIT”)-COPT joint venture formed in June 2019. The Company received a total of $310.6 million of proceeds in 2019, plus an additional $20.1 million in net proceeds associated with the joint venture entering into non-recourse mortgage loans on the properties.

Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its fourth quarter and year end 2019 conference call, the details of which are provided below. The accompanying slide presentation can be viewed on and downloaded from the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Conference Call Information
Management will discuss fourth quarter and year end 2019 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date: Friday, February 7, 2020
Time: 12:00 p.m. Eastern Time
Telephone Number: (within the U.S.) 855-463-9057
Telephone Number: (outside the U.S.) 661-378-9894
Passcode: 8794749

The conference call will also be available via live webcast in the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Replay Information
A replay of the conference call will be immediately available via webcast on the Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, February 7, through 3:00

iii


p.m. Eastern Time on Friday, February 21. To access the replay within the United States, please call 855-859-2056; to access it from outside the United States, please call 404-537-3406. In either case, use passcode 8794749.

Definitions
For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.

About COPT
COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what it believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of December 31, 2019, the Company derived 88% of its core portfolio annualized rental revenue from Defense/IT Locations and 12% from its Regional Office Properties. As of the same date and including 15 buildings owned through unconsolidated joint ventures, COPT’s core portfolio of 168 office and data center shell properties encompassed 19.0 million square feet and was 94.6% leased; the Company also owned one wholesale data center with a critical load of 19.25 megawatts that was 76.9% leased.

Forward-Looking Information
This press release may contain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although the Company believes that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements and the Company undertakes no obligation to update or supplement any forward-looking statements.

The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

iv



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(in thousands, except per share data)


 
For the Three Months Ended December 31,
 
For the Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Revenues
 

 
 

 
 
 
 
Revenues from real estate operations
$
131,968

 
$
130,825

 
$
527,463

 
$
517,253

Construction contract and other service revenues
25,817

 
7,657

 
113,763

 
60,859

Total revenues
157,785

 
138,482

 
641,226

 
578,112

Operating expenses
 

 
 

 
 
 
 
Property operating expenses
51,098

 
51,298

 
198,143

 
201,035

Depreciation and amortization associated with real estate operations
32,779

 
36,219

 
137,069

 
137,116

Construction contract and other service expenses
24,832

 
7,111

 
109,962

 
58,326

Impairment losses
2

 
2,367

 
329

 
2,367

General and administrative expenses
7,043

 
5,105

 
27,517

 
22,829

Leasing expenses
2,293

 
1,976

 
7,885

 
6,071

Business development expenses and land carry costs
1,292

 
1,425

 
4,239

 
5,840

Total operating expenses
119,339

 
105,501

 
485,144

 
433,584

Interest expense
(16,777
)
 
(18,475
)
 
(71,052
)
 
(75,385
)
Interest and other income
1,917

 
74

 
7,894

 
4,358

Gain on sales of real estate
20,761

 
2,367

 
105,230

 
2,340

Loss on early extinguishment of debt

 
(258
)
 

 
(258
)
Income before equity in income of unconsolidated entities and income taxes
44,347

 
16,689

 
198,154

 
75,583

Equity in income of unconsolidated entities
426

 
1,577

 
1,633

 
2,697

Income tax benefit
104

 
190

 
217

 
363

Net income
44,877

 
18,456

 
200,004

 
78,643

Net income attributable to noncontrolling interests:
 

 
 

 
 
 
 
Common units in the Operating Partnership (“OP”)
(500
)
 
(210
)
 
(2,363
)
 
(1,742
)
Preferred units in the OP
(77
)
 
(165
)
 
(564
)
 
(660
)
Other consolidated entities
(1,515
)
 
(1,061
)
 
(5,385
)
 
(3,940
)
Net income attributable to COPT common shareholders
$
42,785

 
$
17,020

 
$
191,692

 
$
72,301

 
 
 
 
 
 
 
 
Earnings per share (“EPS”) computation:
 

 
 

 
 
 
 
Numerator for diluted EPS:
 

 
 

 
 
 
 
Net income attributable to COPT common shareholders
$
42,785

 
$
17,020

 
$
191,692

 
$
72,301

Redeemable noncontrolling interests
33

 

 
132

 

Amount allocable to share-based compensation awards
(154
)
 
(114
)
 
(623
)
 
(462
)
Numerator for diluted EPS
$
42,664

 
$
16,906

 
$
191,201

 
$
71,839

Denominator:
 

 
 

 
 
 
 
Weighted average common shares - basic
111,670

 
108,528

 
111,196

 
103,946

Dilutive effect of share-based compensation awards
293

 
45

 
308

 
134

Dilutive effect of redeemable noncontrolling interests
108

 

 
119

 

Dilutive effect of forward equity sale agreements

 

 

 
45

Weighted average common shares - diluted
112,071

 
108,573

 
111,623

 
104,125

Diluted EPS
$
0.38

 
$
0.16

 
$
1.71

 
$
0.69


v



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(in thousands, except per share data)

 
For the Three Months Ended December 31,
 
For the Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Net income
$
44,877

 
$
18,456

 
$
200,004

 
$
78,643

Real estate-related depreciation and amortization
32,779

 
36,219

 
137,069

 
137,116

Impairment losses on real estate
2

 
2,367

 
329

 
2,367

Gain on sales of real estate
(20,761
)
 
(2,367
)
 
(105,230
)
 
(2,340
)
Depreciation and amortization on unconsolidated real estate JVs
781

 
565

 
2,703

 
2,256

Funds from operations (“FFO”)
57,678

 
55,240

 
234,875

 
218,042

Noncontrolling interests - preferred units in the OP
(77
)
 
(165
)
 
(564
)
 
(660
)
FFO allocable to other noncontrolling interests
(1,436
)
 
(1,011
)
 
(5,024
)
 
(3,768
)
Basic and diluted FFO allocable to share-based compensation awards
(243
)
 
(200
)
 
(905
)
 
(851
)
Basic FFO available to common share and common unit holders (“Basic FFO”)
55,922

 
53,864

 
228,382

 
212,763

Distributions on dilutive preferred units in the OP
77

 

 

 

Redeemable noncontrolling interests
33

 
331

 
132

 
1,540

Diluted FFO available to common share and common unit holders (“Diluted FFO”)
56,032

 
54,195

 
228,514

 
214,303

Loss on early extinguishment of debt

 
258

 

 
258

Demolition costs on redevelopment and nonrecurring improvements
104

 
163

 
148

 
462

Executive transition costs

 
371

 
4

 
793

Non-comparable professional and legal expenses
195

 

 
681

 

Diluted FFO comparability adjustments allocable to share-based compensation awards
(1
)
 
(13
)
 
(3
)
 
(16
)
Diluted FFO available to common share and common unit holders, as adjusted for comparability
56,330

 
54,974

 
229,344

 
215,800

Straight line rent adjustments and lease incentive amortization
1,386

 
(46
)
 
255

 
(1,487
)
Amortization of intangibles included in net operating income
(174
)
 
153

 
(221
)
 
893

Share-based compensation, net of amounts capitalized
1,735

 
1,601

 
6,728

 
6,193

Amortization of deferred financing costs
541

 
550

 
2,136

 
1,954

Amortization of net debt discounts, net of amounts capitalized
382

 
365

 
1,503

 
1,439

Accum. other comprehensive loss on derivatives amortized to expense

 
34

 
79

 
135

Replacement capital expenditures
(19,862
)
 
(14,848
)
 
(63,789
)
 
(64,784
)
Other diluted AFFO adjustments associated with real estate JVs
(68
)
 
(28
)
 
212

 
121

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)
$
40,270

 
$
42,755

 
$
176,247

 
$
160,264

Diluted FFO per share
$
0.49

 
$
0.49

 
$
2.02

 
$
1.99

Diluted FFO per share, as adjusted for comparability
$
0.50

 
$
0.50

 
$
2.03

 
$
2.01

Dividends/distributions per common share/unit
$
0.275

 
$
0.275

 
$
1.100

 
$
1.100



vi



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)

 
December 31,
2019
 
December 31,
2018
Balance Sheet Data
 

 
 

Properties, net of accumulated depreciation
$
3,340,886

 
$
3,250,626

Total assets
3,854,453

 
3,656,005

Debt, per balance sheet
1,831,139

 
1,823,909

Total liabilities
2,105,777

 
2,002,697

Redeemable noncontrolling interest
29,431

 
26,260

Equity
1,719,245

 
1,627,048

Net debt to adjusted book
36.8
%
 
38.9
%
 
 
 
 
Core Portfolio Data (as of period end) (1)
 

 
 

Number of operating properties
168

 
161

Total net rentable square feet owned (in thousands)
19,016

 
17,937

% Occupied
93.1
%
 
93.1
%
% Leased
94.6
%
 
94.0
%
 
 
 
 
 
For the Three Months Ended December 31,
 
For the Years Ended December 31,
2019
 
2018
 
2019
 
2018
Payout ratios
 

 
 

 
 

 
 

Diluted FFO
55.6
%
 
56.4
%
 
54.4
%
 
55.4
%
Diluted FFO, as adjusted for comparability
55.3
%
 
55.6
%
 
54.2
%
 
55.0
%
Diluted AFFO
77.3
%
 
71.5
%
 
70.5
%
 
74.1
%
Adjusted EBITDA fixed charge coverage ratio
3.7
x
 
3.6
x
 
3.7
x
 
3.6
x
Net debt to in-place adjusted EBITDA ratio (2)
6.1
x
 
6.0
x
 
N/A

 
N/A

Net debt plus preferred equity to in-place adjusted EBITDA ratio (3)
6.1
x
 
6.0
x
 
N/A

 
N/A

 
 
 
 
 
 
 
 
Reconciliation of denominators for per share measures
 
 

 
 
 
 
Denominator for diluted EPS
112,071

 
108,573

 
111,623

 
104,125

Weighted average common units
1,228

 
1,345

 
1,299

 
2,468

Redeemable noncontrolling interests

 
1,126

 

 
936

Dilutive convertible preferred units
176

 

 

 

Denominator for diluted FFO per share and as adjusted for comparability
113,475

 
111,044

 
112,922

 
107,529

 
 
 
 
 
 
 
 

(1)
Represents Defense/IT Locations and Regional Office properties.
(2)
Represents net debt as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).
(3)
Represents net debt plus the total liquidation preference of preferred equity as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).


vii



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)

 
For the Three Months Ended December 31,
 
For the Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Reconciliation of common share dividends to dividends and distributions for payout ratios
 

 
 

 
 
 
 
Common share dividends - unrestricted shares and deferred shares
$
30,724

 
$
30,206

 
$
122,823

 
$
116,285

Common unit distributions - unrestricted units
337

 
367

 
1,405

 
2,498

Distributions on dilutive preferred units
$
77

 
$

 
$

 
$

Dividends and distributions for payout ratios
$
31,138

 
$
30,573

 
$
124,228

 
$
118,783

 
 
 
 
 
 
 
 
Reconciliation of GAAP net income to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA and in-place adjusted EBITDA
 

 
 

 
 

 
 

Net income
$
44,877

 
$
18,456

 
$
200,004

 
$
78,643

Interest expense
16,777

 
18,475

 
71,052

 
75,385

Income tax benefit
(104
)
 
(190
)
 
(217
)
 
(363
)
Depreciation of furniture, fixtures and equipment
438

 
404

 
1,834

 
1,947

Real estate-related depreciation and amortization
32,779

 
36,219

 
137,069

 
137,116

Impairment losses on real estate
2

 
2,367

 
329

 
2,367

Gain on sales of real estate
(20,761
)
 
(2,367
)
 
(105,230
)
 
(2,340
)
Adjustments from unconsolidated real estate JVs
1,206

 
832

 
4,065

 
3,314

EBITDAre
75,214

 
74,196

 
308,906

 
296,069

Loss on early extinguishment of debt

 
258

 

 
258

Net gain on other investments
(1
)
 
(449
)
 
(401
)
 
(449
)
Business development expenses
512

 
661

 
1,939

 
3,114

Non-comparable professional and legal expenses
195

 

 
681

 

Demolition costs on redevelopment and nonrecurring improvements
104

 
163

 
148

 
462

Executive transition costs

 
371

 
4

 
793

Adjusted EBITDA
76,024

 
75,200

 
$
311,277

 
$
300,247

Proforma net operating income adjustment for property changes within period
463

 
2,052

 
 
 
 
Change in collectability of deferred rental revenue
928

 

 
 
 
 
In-place adjusted EBITDA
$
77,415

 
$
77,252

 

 

 
 
 
 
 
 
 
 
Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA
 

 
 

 
 

 
 

Interest expense
$
16,777

 
$
18,475

 
$
71,052

 
$
75,385

Less: Amortization of deferred financing costs
(541
)
 
(550
)
 
(2,136
)
 
(1,954
)
Less: Amortization of net debt discounts, net of amounts capitalized
(382
)
 
(365
)
 
(1,503
)
 
(1,439
)
Less: Accum. other comprehensive loss on derivatives amortized to expense

 
(34
)
 
(79
)
 
(135
)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs
416

 
260

 
1,332

 
1,034

Scheduled principal amortization
1,010

 
1,079

 
4,310

 
4,240

Capitalized interest
3,467

 
1,748

 
10,786

 
5,929

Preferred unit distributions
77

 
165

 
564

 
660

Denominator for fixed charge coverage-Adjusted EBITDA
$
20,824

 
$
20,778

 
$
84,326

 
$
83,720

 
 
 
 
 
 
 
 

viii



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)

 
For the Three Months Ended December 31,
 
For the Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures
 
 
 
 
 
 
 
Tenant improvements and incentives
$
11,447

 
$
7,876

 
$
38,047

 
$
37,502

Building improvements
8,826

 
9,306

 
26,598

 
22,977

Leasing costs
2,998

 
3,800

 
11,663

 
9,847

Net (exclusions from) additions to tenant improvements and incentives
(426
)
 
(2,131
)
 
(2,292
)
 
1,577

Excluded building improvements
(2,983
)
 
(3,984
)
 
(10,227
)
 
(7,073
)
Excluded leasing costs

 
(19
)
 

 
(46
)
Replacement capital expenditures
$
19,862

 
$
14,848

 
$
63,789

 
$
64,784

 
 
 
 
 
 
 
 
Same Properties cash NOI
$
73,708

 
$
69,377

 
$
285,944

 
$
275,094

Straight line rent adjustments and lease incentive amortization
(2,838
)
 
(907
)
 
(5,004
)
 
(3,111
)
Amortization of acquired above- and below-market rents
197

 
(97
)
 
312

 
(671
)
Amortization of below-market cost arrangements
(23
)
 
(56
)
 
(92
)
 
(222
)
Lease termination fees, gross
417

 
906

 
2,046

 
3,231

Tenant funded landlord assets and lease incentives
748

 
409

 
2,177

 
3,421

Cash NOI adjustments in unconsolidated real estate JV
34

 
57

 
181

 
254

Same Properties NOI
$
72,243

 
$
69,689

 
$
285,564

 
$
277,996

 
 
 
 
 
 
 
 
 
December 31,
2019
 
December 31,
2018
Reconciliation of total assets to adjusted book
 

 
 

Total assets
$
3,854,453

 
$
3,656,005

Accumulated depreciation
1,007,120

 
897,903

Accumulated amortization of real estate intangibles and deferred leasing costs
212,547

 
204,882

COPT’s share of liabilities of unconsolidated real estate JVs
50,734

 
29,917

COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
8,164

 
5,446

Less: Property - operating lease liabilities
(17,317
)
 

Less: Property - finance lease liabilities
(702
)
 
(660
)
Less: Cash and cash equivalents
(14,733
)
 
(8,066
)
Less: COPT’s share of cash of unconsolidated real estate JVs
(498
)
 
(293
)
Adjusted book
$
5,099,768

 
$
4,785,134

 
 
 
 
Reconciliation of debt outstanding to net debt and net debt plus preferred equity
 
 
 
Debt outstanding (excluding net debt discounts and deferred financing costs)
$
1,893,057

 
$
1,868,504

Less: Cash and cash equivalents
(14,733
)
 
(8,066
)
Less: COPT’s share of cash of unconsolidated real estate JVs
(498
)
 
(293
)
Net debt
$
1,877,826

 
$
1,860,145

Preferred equity
8,800

 
8,800

Net debt plus preferred equity
$
1,886,626

 
$
1,868,945


ix