QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K


CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 26, 2001

CORPORATE OFFICE PROPERTIES TRUST
(Exact name of registrant as specified in its charter)


Maryland

 

0-20047

 

23-2947217
(State or other jurisdiction of
incorporation)
  (Commission File Number)   (IRS Employer
Identification Number)

8815 Centre Park Drive, Suite 400
Columbia, Maryland 21045
(Address of principal executive offices)

(410) 730-9092
(Registrant's telephone number, including area code)




Item 7. Financial Statements and Exhibits

    The information contained in the attached exhibit is unaudited and should be read in conjunction with the Registrant's annual and quarterly reports filed with the Securities and Exchange Commission.

Exhibit Number

  Description

99.1   Supplemental information dated June 30, 2001 for Corporate Office Properties Trust.

Item 9. Regulation FD Disclosure

    In connection with its release of earnings on July 25, 2001, the Registrant is making available certain additional information pertaining to its properties and operations as of and for the period ended June 30, 2001. This information is filed herewith as Exhibit 99.1 and is incorporated herein by reference.


SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 26, 2001

    CORPORATE OFFICE PROPERTIES TRUST

 

 

By:

/s/ 
RANDALL M. GRIFFIN   
Name: Randall M. Griffin
Title: President and Chief Operating Officer

 

 

By:

/s/ 
ROGER A. WAESCHE, JR.   
Name: Roger A. Waesche, Jr.
Title: Chief Financial Officer

2



Supplemental Information
(Unaudited)


June 30, 2001


LOGO




Corporate Office Properties Trust
Index to Supplemental Information (Unaudited)
June 30, 2001

 
  Page
Highlights and Discussion    
  Reporting Period Highlights—Second Quarter 2001   1
  Subsequent Events   2

Financial Statements

 

 
  Quarterly Selected Financial Summary Data   3
  Quarterly Consolidated Balance Sheets   4
  Quarterly Consolidated Statements of Operations and Funds From Operations (FFO)   5
  Quarterly Consolidated Statements of Operations and FFO per Diluted Share   6
  Quarterly Consolidated Statements of Operations and FFO as a Percentage of Total Revenues   7

Selected Financial Analyses

 

 
  Quarterly Equity Analysis   8
  Quarterly Valuation Analysis   9
  Quarterly Debt Analysis   10
  Quarterly Operating Ratios   11
  Quarterly Dividend Analysis   12
  Investor Composition and Analyst Coverage   13
  Debt Maturity Schedule—June 30, 2001   14

Portfolio Summary

 

 
  Property Summary by Region—June 30, 2001   15
  Property Occupancy Rates by Region by Quarter   18
  Top Twenty Office Tenants as of June 30, 2001   19
  Total Rental Revenue and Net Operating Income by Geographic Region by Quarter   20
  Same Office Property Cash and GAAP Net Operating Income by Quarter   21
  Office Lease Expiration Analysis by Year   22
  Year to Date and Quarterly Office Renewal Analysis   23
  Acquisition and Disposition Summary as of June 30, 2001   25
  Development Summary as of June 30, 2001   26

To Members of the Investment Community:

    We prepared this supplemental information package to provide you with additional detail on our properties and operations. The information in this package is unaudited, filed with the Securities and Exchange Commission and should be read in conjunction with our quarterly and annual reports. If you have any questions or comments, please contact Ms. Sara L. Grootwassink, Vice President, Finance and Investor Relations at (410) 992-7324 or sara.grootwassink@copt.com.

Reporting Period Highlights—Second Quarter 2001

Financial Results

Financing and Capital Transactions

Operations

1


Acquisition / Disposition

Development

Subsequent Events

Note: This supplemental information contains "forward looking" statements, as defined in the Private Securities Litigation Reform Act of 1995, that are based on the Company's current expectations, estimates and projections about future events and financial trends affecting the financial condition of the business. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. These statements are not guarantees of future performance, events or results and involve potential risks and uncertainties. Accordingly, actual results may differ materially. The Company undertakes no obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For further information, please refer to the Company's filings with the Securities and Exchange Commission.

2



Quarterly Selected Financial Summary Data

(Dollars in thousands)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Total Revenues from Real Estate Operations   $ 28,711   $ 28,851   $ 27,609   $ 27,656   $ 26,417  

Net Operating Income from Real Estate Operations

 

 

20,153

 

 

20,385

 

 

19,469

 

 

19,606

 

 

18,980

 

EBITDA

 

 

20,471

 

 

19,490

 

 

19,298

 

 

18,559

 

 

17,772

 

Net Income before Preferred Dividends

 

 

5,081

 

 

3,726

 

 

4,087

 

 

3,685

 

 

3,712

 

Preferred Dividends

 

 

(1,613

)

 

(881

)

 

(782

)

 

(781

)

 

(1,119

)
   
 
 
 
 
 

Net Income Available to Common Shareholders

 

$

3,468

 

$

2,845

 

$

3,305

 

$

2,904

 

$

2,593

 
   
 
 
 
 
 

Funds From Operations (FFO)—Diluted

 

$

10,560

 

$

10,102

 

$

9,804

 

$

9,550

 

$

9,250

 

FFO per diluted share

 

$

0.32

 

$

0.31

 

$

0.31

 

$

0.30

 

$

0.29

 

Adjusted FFO—Diluted(A)

 

$

8,591

 

$

8,296

 

$

8,228

 

$

6,691

 

$

7,634

 

Adjusted FFO per diluted share

 

$

0.26

 

$

0.25

 

$

0.26

 

$

0.23

 

$

0.24

 

Payout Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO—Diluted(B)

 

 

62.43

%

 

64.87

%

 

65.67

%

 

67.42

%

 

66.02

%

AFFO—Diluted(C)

 

 

76.73

%

 

78.99

%

 

78.25

%

 

87.68

%

 

80.00

%

Total Dividends/Distributions

 

$

8,069

 

$

7,334

 

$

7,220

 

$

7,220

 

$

6,888

 

(A)
For the quarter ended September 30, 2000, the Series C convertible preferred units were anti-dilutive for AFFO calculations. Thus, in computing AFFO, the quarterly dividend of $572 was included in the numerator and the related 2,421 of Series C convertible preferred units (as if already converted into common shares) were excluded from the denominator.

(B)
Computed by dividing total dividends/distributions (except for dividends on Series B and Series E Cumulative Redeemable Preferred Shares which are subtracted to calculate FFO) by FFO diluted.

(C)
Computed by dividing total dividends/distributions (except for dividends on Series B and Series E Cumulative Redeemable Preferred Shares which are subtracted to calculate AFFO) by AFFO diluted. In addition, for the quarter ended September 30, 2000, the quarterly Series C preferred unit dividend of $572 was excluded from the numerator.

3



Quarterly Consolidated Balance Sheets

(Dollars in thousands except per share data)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Assets                                
Investment in real estate:                                
  Land—operational   $ 142,461   $ 140,620   $ 140,018   $ 136,723   $ 141,646  
  Land—development     24,488     24,683     19,069     21,888     15,888  
  Construction in progress     30,066     22,228     17,489     21,579     20,300  
  Buildings and improvements     624,635     615,586     604,666     585,067     575,531  
  Investment in and advances to real estate joint ventures     12,009     6,877     3,616     8,606      
  Less: accumulated depreciation     (41,659 )   (37,652 )   (33,271 )   (29,460 )   (25,490 )
   
 
 
 
 
 
    Net investment in real estate     792,000     772,342     751,587     744,403     727,875  
 
Cash and cash equivalents

 

 

2,962

 

 

3,806

 

 

4,981

 

 

3,259

 

 

630

 
  Restricted cash     9,633     4,468     2,703     2,007     2,903  
  Accounts receivable, net     4,855     5,519     3,245     3,571     3,386  
  Investment in and advances to other unconsolidated entities     2,041     2,159     6,124     4,074     4,095  
  Deferred rent receivable     9,804     9,335     8,644     7,882     6,010  
  Deferred charges, net     16,357     15,550     12,905     12,667     10,953  
  Prepaid and other assets     9,383     6,726     4,501     6,836     4,197  
  Furniture, fixtures and equipment, net of accumulated depreciation     1,772     1,807     147     166     185  
   
 
 
 
 
 
    Total assets   $ 848,807   $ 821,712   $ 794,837   $ 784,865   $ 760,234  
   
 
 
 
 
 
Liabilities and beneficiaries' equity                                
Liabilities:                                
  Mortgage loans payable   $ 475,999   $ 478,913   $ 474,349   $ 465,696   $ 436,679  
  Accounts payable and accrued expenses     13,361     10,889     10,227     6,435     11,245  
  Rents received in advance and security deposits     4,023     4,236     3,883     5,351     4,277  
  Dividends/distributions payable     7,918     7,203     7,090     7,090     6,757  
  Fair value of derivatives     2,232     1,993              
  Other liabilities     10,637     10,243              
   
 
 
 
 
 
    Total liabilities     514,170     513,477     495,549     484,572     458,958  
   
 
 
 
 
 
Minority interests:                                
  Preferred Units in the Operating Partnership     24,367     24,367     24,367     24,367     24,367  
  Common Units in the Operating Partnership     78,900     80,467     81,069     81,402     78,720  
  Other consolidated partnership     224     166     124     115     109  
   
 
 
 
 
 
    Total minority interests     103,491     105,000     105,560     105,884     103,196  
   
 
 
 
 
 
Commitments and contingencies                          

Beneficiaries' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Shares ($0.01 par value; 5,000,000 authorized);                                
    1,025,000 designated as Series A Convertible Preferred Shares of beneficial interest (1 share issued as of June 30, 2001)                     10  
    1,725,000 designated as Series B Cumulative Redeemable Preferred Shares of beneficial interest (1,250,000 shares issued as of June 30, 2001)     13     13     12     12     12  
    544,000 designated as Series D Cumulative Redeemable Preferred Shares of beneficial interest (544,000 shares issued as of June 30, 2001)     5     5              
    1,150,000 designated as Series E Cumulative Redeemable Preferred Shares of beneficial interest (1,150,000 shares issued as of June 30, 2001)     11                  
  Common Shares of beneficial interest ($0.01 par value; 45,000,000 authorized, 20,692,663 shares issued as of June 30, 2001)     208     207     206     206     187  
  Treasury Shares, at cost (166,600 shares as of June 30, 2001)     (1,415 )   (1,415 )   (1,415 )   (1,415 )   (1,415 )
Additional paid-in capital     249,617     221,682     209,388     209,384     211,978  
Accumulated deficit     (12,776 )   (12,222 )   (11,064 )   (10,379 )   (9,293 )
Value of unearned restricted Common Share grants     (3,042 )   (3,042 )   (3,399 )   (3,399 )   (3,399 )
Accumulated comprehensive loss     (1,475 )   (1,993 )            
   
 
 
 
 
 
  Total beneficiaries' equity     231,146     203,235     193,728     194,409     198,080  
   
 
 
 
 
 
  Total beneficiaries' equity and minority interests     334,637     308,235     299,288     300,293     301,276  
   
 
 
 
 
 
  Total liabilities and beneficiaries' equity   $ 848,807   $ 821,712   $ 794,837   $ 784,865   $ 760,234  
   
 
 
 
 
 

Note:   Prior to January 1, 2001, other unconsolidated entities include Corporate Office Services, Inc. (COS); Corporate Office Management, Inc. (COMI); Corporate Development Services, LLC (CDS); MediTract, LLC; Corporate Management Services, LLC (CMS); Corporate Realty Management, LLC (CRM); and Martin G. Knott and Associates, LLC (MGK). Subsequent to January 1, 2001, other unconsolidated entities consist solely of Meditract, LLC and Paragon Smart Technologies, LLC.

4


Quarterly Consolidated Statements of Operations and Funds From Operations (FFO)

(Dollars and units in thousands)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Revenues                                
  Rental revenue   $ 25,960   $ 25,619   $ 24,269   $ 23,980   $ 23,154  
  Tenant recoveries and other revenue     2,751     3,232     3,340     3,676     3,263  
   
 
 
 
 
 
    Total Revenues from Real Estate Operations     28,711     28,851     27,609     27,656     26,417  

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Property operating     3,492     3,448     3,220     3,596     3,049  
  Repairs and maintenance     3,595     3,518     3,491     3,018     3,065  
  Real estate taxes     1,471     1,500     1,429     1,436     1,323  
   
 
 
 
 
 
    Total Property Expenses from Real Estate Operations     8,558     8,466     8,140     8,050     7,437  

Net Operating Income from Real Estate Operations

 

 

20,153

 

 

20,385

 

 

19,469

 

 

19,606

 

 

18,980

 
 
General and administrative

 

 

(1,329

)

 

(1,446

)

 

(1,040

)

 

(1,319

)

 

(1,160

)
  Equity in income of unconsol. real estate joint ventures     124     30              
  Earnings from service companies     143     (329 )            
  Income from real estate services     1,380     850     1,067     383      
  Equity in (loss) income of other unconsolidated entities             (198 )   (111 )   (48 )
   
 
 
 
 
 
EBITDA     20,471     19,490     19,298     18,559     17,772  
 
Interest expense

 

 

(7,762

)

 

(8,194

)

 

(8,266

)

 

(7,850

)

 

(7,404

)
  Series B & E Preferred Share dividends     (1,477 )   (781 )   (782 )   (781 )   (780 )
  Amortization of deferred financing costs     (546 )   (383 )   (416 )   (349 )   (311 )
  Income tax (expense) benefit     (44 )   122              
  Income on options assumed to be converted         (61 )            
  Depreciation on unconsolidated real estate entities     70     (4 )   (4 )   (3 )   (3 )
  Minority interestholders' share of operations     (58 )   4     (9 )   (6 )   (4 )
  Depreciation of corporate FF&E     (94 )   (91 )   (17 )   (20 )   (20 )
   
 
 
 
 
 
Funds From Operations (FFO)—Diluted     10,560     10,102     9,804     9,550     9,250  
 
Depreciation and other amortization

 

 

(4,863

)

 

(4,809

)

 

(4,485

)

 

(4,275

)

 

(4,287

)
  Gain on property sales     416         50         57  
  Loss on early extinguishment of debt     (99 )   (106 )   (2 )   (109 )   (42 )
  Cumulative effect adjustment for accounting change         (263 )            
  Income on options assumed to be converted         61              
  Depreciation on unconsolidated real estate entities     (70 )   4     4     3     3  
  Minority interestholders' share of operations     58     (4 )   9     6     4  
  Series B & E Preferred Share dividends     1,477     781     782     781     780  
   
 
 
 
 
 
Income Before Minority Interests and Preferred Share dividends     7,479     5,766     6,162     5,956     5,765  

Minority Interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Units in Operating Partnership     (572 )   (572 )   (572 )   (572 )   (548 )
  Common Units in Operating Partnership     (1,768 )   (1,472 )   (1,494 )   (1,693 )   (1,501 )
  Other consolidated partnership     (58 )   4     (9 )   (6 )   (4 )

Preferred Share dividends

 

 

(1,613

)

 

(881

)

 

(782

)

 

(781

)

 

(1,119

)
   
 
 
 
 
 
Net Income Available to Common Shareholders   $ 3,468   $ 2,845   $ 3,305   $ 2,904   $ 2,593  
   
 
 
 
 
 
Funds From Operations (FFO)—Diluted   $ 10,560   $ 10,102   $ 9,804   $ 9,550   $ 9,250  
  Preferred Units in Operating Partnership(1)                 (572 )    
  Straight line rents     (816 )   (690 )   (800 )   (1,872 )   (693 )
  Non-incremental capital expenditures     (1,153 )   (1,116 )   (776 )   (415 )   (923 )
   
 
 
 
 
 
Adjusted Funds from Operations—Diluted   $ 8,591   $ 8,296   $ 8,228   $ 6,691   $ 7,634  
   
 
 
 
 
 
  Preferred dividends/distributions(2)     2,185     1,453     1,353     1,353     1,668  
  Common dividends/distributions     5,884     5,881     5,867     5,867     5,220  
   
 
 
 
 
 
Total Dividends/Distributions   $ 8,069   $ 7,334   $ 7,220   $ 7,220   $ 6,888  
   
 
 
 
 
 

(1)
For the quarter ended September 30, 2000, the Series C convertible preferred units were anti-dilutive for AFFO calculations. Thus, in computing AFFO, the quarterly dividend of $572 was included in the numerator and the related 2,421 of Series C convertible preferred units (as if already converted into common shares) were excluded from the denominator.

(2)
Includes Series B and E Cumulative Redeemable Preferred Share dividends deducted for FFO/AFFO computations.

5



Quarterly Consolidated Statements of Operations and FFO per Diluted Share

(Shares in thousands)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Revenues                                
  Rental revenue   $ 0.78   $ 0.78   $ 0.76   $ 0.75   $ 0.71  
  Tenant recoveries and other revenue     0.08     0.10     0.10     0.11     0.10  
   
 
 
 
 
 
    Total Revenues from Real Estate Operations     0.86     0.88     0.86     0.86     0.82  

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Property operating     0.10     0.10     0.10     0.11     0.09  
  Repairs and maintenance     0.11     0.11     0.11     0.09     0.09  
  Real estate taxes     0.04     0.05     0.04     0.04     0.04  
   
 
 
 
 
 
    Total Property Expenses from Real Estate Operations     0.26     0.26     0.25     0.25     0.23  

Net Operating Income from Real Estate Operations

 

 

0.60

 

 

0.62

 

 

0.61

 

 

0.61

 

 

0.59

 
  General and administrative     (0.04 )   (0.04 )   (0.03 )   (0.04 )   (0.04 )
  Equity in income of unconsol. real estate joint ventures     0.00     0.00              
  Earnings from service companies     0.00     (0.01 )            
  Income from real estate services     0.04     0.03     0.03     0.01      
  Equity in (loss) income of other unconsolidated entities             (0.01 )   (0.00 )   (0.00 )
   
 
 
 
 
 
EBITDA     0.61     0.59     0.60     0.58     0.55  
 
Interest expense

 

 

(0.23

)

 

(0.25

)

 

(0.26

)

 

(0.25

)

 

(0.23

)
  Series B & E Preferred Share dividends     (0.04 )   (0.02 )   (0.02 )   (0.02 )   (0.02 )
  Amortization of deferred financing costs     (0.02 )   (0.01 )   (0.01 )   (0.01 )   (0.01 )
  Income tax (expense) benefit     (0.00 )   0.00              
  Income on options assumed to be converted         (0.00 )            
  Depreciation on unconsolidated real estate entities     0.00     (0.00 )   (0.00 )   (0.00 )   (0.00 )
  Minority interestholders' share of operations     (0.00 )   0.00     (0.00 )   (0.00 )   (0.00 )
  Depreciation of corporate FF&E     (0.00 )   (0.00 )   (0.00 )   (0.00 )   (0.00 )
   
 
 
 
 
 
Funds From Operations (FFO)—Diluted     0.32     0.31     0.31     0.30     0.29  
 
Depreciation and other amortization

 

 

(0.15

)

 

(0.15

)

 

(0.14

)

 

(0.13

)

 

(0.13

)
  Gain on property sales     0.01         0.00         0.00  
  Loss on early extinguishment of debt     (0.00 )   (0.00 )   (0.00 )   (0.00 )   (0.00 )
  Cumulative effect adjustment for accounting change         (0.01 )            
  Income on options assumed to be converted         0.00              
  Depreciation on unconsolidated real estate entities     (0.00 )   0.00     0.00     0.00     0.00  
  Minority interestholders' share of operations     0.00     (0.00 )   0.00     0.00     0.00  
  Series B & E Preferred Share dividends     0.04     0.02     0.02     0.02     0.02  
   
 
 
 
 
 
Income Before Minority Interests and Preferred Share dividends     0.22     0.18     0.19     0.19     0.18  

Minority Interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Units in Operating Partnership     (0.02 )   (0.02 )   (0.02 )   (0.02 )   (0.02 )
  Common Units in Operating Partnership     (0.05 )   (0.04 )   (0.05 )   (0.05 )   (0.05 )
  Other consolidated partnership     (0.00 )   0.00     (0.00 )   (0.00 )   (0.00 )

Preferred Share dividends

 

 

(0.05

)

 

(0.03

)

 

(0.02

)

 

(0.02

)

 

(0.03

)
   
 
 
 
 
 
Net Income Available to Common Shareholders   $ 0.10   $ 0.09   $ 0.10   $ 0.09   $ 0.08  
   
 
 
 
 
 
Funds From Operations (FFO)—Diluted   $ 0.32   $ 0.31   $ 0.31   $ 0.30   $ 0.29  
  Preferred Units in Operating Partnership                 (0.02 )    
  Straight line rents     (0.02 )   (0.02 )   (0.02 )   (0.06 )   (0.02 )
  Non-incremental capital expenditures     (0.03 )   (0.03 )   (0.02 )   (0.01 )   (0.03 )
   
 
 
 
 
 
  Adjusted Funds from Operations—Diluted   $ 0.26   $ 0.25   $ 0.26   $ 0.23   $ 0.24  
   
 
 
 
 
 
For FFO Computations:                                
Weighted Average Converted Preferred Shares/Units     3,618     3,299     2,421     2,421     4,642  
Weighted Average Common Shares/Units Outstanding     29,746     29,643     29,611     29,561     27,750  
   
 
 
 
 
 
Weighted Average Diluted Shares Outstanding     33,364     32,942     32,032     31,982     32,393  
   
 
 
 
 
 
For AFFO Computations:                                
Weighted Average Converted Preferred Shares/Units     3,618     3,299     2,421         4,642  
Weighted Average Common Shares/Units Outstanding     29,746     29,643     29,611     29,561     27,750  
   
 
 
 
 
 
Weighted Average Diluted Shares Outstanding     33,364     32,942     32,032     29,561     32,393  
   
 
 
 
 
 

6


Quarterly Consolidated Statements of Operations and FFO as a Percentage of Total Revenues

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Revenues                      
  Rental revenue   90  % 89  % 88  % 87  % 88  %
  Tenant recoveries and other revenue   10  % 11  % 12  % 13  % 12  %
   
 
 
 
 
 
    Total Revenues from Real Estate Operations   100  % 100  % 100  % 100  % 100  %

Expenses

 

 

 

 

 

 

 

 

 

 

 
  Property operating   12  % 12  % 12  % 13  % 12  %
  Repairs and maintenance   13  % 12  % 13  % 11  % 12  %
  Real estate taxes   % % % % %
   
 
 
 
 
 
    Total Property Expenses from Real Estate Operations   30  % 29  % 29  % 29  % 28  %

Net Operating Income from Real Estate Operations

 

70 

%

71 

%

71 

%

71 

%

72 

%
 
General and administrative

 

(5

)%

(5

)%

(4

)%

(5

)%

(4

)%
  Equity in income of unconsol. real estate joint ventures   % % % % %
  Earnings from service companies   % (1 )% % % %
  Income from real estate services   % % % % %
  Equity in (loss) income of other unconsolidated entities   % % (1 )% (0 )% (0 )%
   
 
 
 
 
 
EBITDA   71  % 68  % 70  % 67  % 67  %
 
Interest expense

 

(27

)%

(28

)%

(30

)%

(28

)%

(28

)%
  Series B & E Preferred Share dividends   (5 )% (3 )% (3 )% (3 )% (3 )%
  Amortization of deferred financing costs   (2 )% (1 )% (2 )% (1 )% (1 )%
  Income tax (expense) benefit   (0 )% % % % %
  Income on options assumed to be converted   % (0 )% % % %
  Depreciation on unconsolidated real estate entities   % (0 )% (0 )% (0 )% (0 )%
  Minority interestholders' share of operations   (0 )% % (0 )% (0 )% (0 )%
  Depreciation of corporate FF&E   (0 )% (0 )% (0 )% (0 )% (0 )%
   
 
 
 
 
 
Funds From Operations (FFO)—Diluted   37  % 35  % 36  % 35  % 35  %
 
Depreciation and other amortization

 

(17

)%

(17

)%

(16

)%

(15

)%

(16

)%
  Gain on property sales   % % % % %
  Loss on early extinguishment of debt   (0 )% (0 )% (0 )% (0 )% (0 )%
  Cumulative effect adjustment for accounting change   % (1 )% % % %
  Income on options assumed to be converted   % % % % %
  Depreciation on unconsolidated real estate entities   (0 )% % % % %
  Minority interestholders' share of operations   % (0 )% % % %
  Series B & E Preferred Share dividends   % % % % %
   
 
 
 
 
 
Income Before Minority Interests and Preferred Share dividends   26  % 20  % 22  % 22  % 22  %

Minority Interests:

 

 

 

 

 

 

 

 

 

 

 
  Preferred Units in Operating Partnership   (2 )% (2 )% (2 )% (2 )% (2 )%
  Common Units in Operating Partnership   (6 )% (5 )% (5 )% (6 )% (6 )%
  Other consolidated partnership   (0 )% % (0 )% (0 )% (0 )%

Preferred Share dividends

 

(6

)%

(3

)%

(3

)%

(3

)%

(4

)%
   
 
 
 
 
 
Net Income Available to Common Shareholders   12  % 10  % 12  % 11  % 10  %
   
 
 
 
 
 

Funds From Operations (FFO)—Diluted

 

37 

%

35 

%

36 

%

35 

%

35 

%
  Preferred Units in Operating Partnership   % % % (2 )% %
  Straight line rents   (3 )% (2 )% (3 )% (7 )% (3 )%
  Non-incremental capital expenditures   (4 )% (4 )% (3 )% (2 )% (3 )%
   
 
 
 
 
 
Adjusted Funds from Operations—Diluted   30  % 29  % 30  % 24  % 29  %
   
 
 
 
 
 

7



Quarterly Equity Analysis

(Amounts in thousands, except per share data, share prices and ratios)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Common Equity—End of Quarter                                
  Common Shares(1)     20,526     20,429     20,409     20,407     18,544  
  Common Units     9,307     9,388     9,388     9,388     9,388  
   
 
 
 
 
 
  Total     29,833     29,817     29,797     29,795     27,932  
   
 
 
 
 
 
Convertible Preferred Equity—End of Quarter                                
  Convertible Series A Preferred Shares Outstanding(2)     0     0     0     0     984  
  Conversion Ratio     1.8748     1.8748     1.8748     1.8748     1.8748  
  Common Shares Issued Assuming Conversion     0     0     0     0     1,845  
  Preferred Share Liquidation Preference   $ 25.00   $ 25.00   $ 25.00   $ 25.00   $ 25.00  
 
Convertible Series D Preferred Shares Outstanding(3)

 

 

544

 

 

544

 

 

n/a

 

 

n/a

 

 

n/a

 
  Conversion Ratio     2.2000     2.2000     n/a     n/a     n/a  
  Common Shares Issued Assuming Conversion     1,197     1,197     n/a     n/a     n/a  
  Preferred Share Liquidation Preference   $ 25.00   $ 25.00     n/a     n/a     n/a  
 
Convertible Series C Preferred Units Outstanding(4)

 

 

1,017

 

 

1,017

 

 

1,017

 

 

1,017

 

 

975

 
  Conversion Ratio     2.3810     2.3810     2.3810     2.3810     2.3810  
  Common Units Issued Assuming Conversion     2,421     2,421     2,421     2,421     2,321  
  Preferred Share Liquidation Preference   $ 25.00   $ 25.00   $ 25.00   $ 25.00   $ 25.00  

Perpetual Preferred Equity—End of Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Redeemable Series B Shares Outstanding     1,250     1,250     1,250     1,250     1,250  
  Preferred Share Liquidation Preference   $ 25.00   $ 25.00   $ 25.00   $ 25.00   $ 25.00  
 
Redeemable Series E Shares Outstanding(5)

 

 

1,150

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 
  Preferred Share Liquidation Preference   $ 25.00     n/a     n/a     n/a     n/a  

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Weighted Average Common Shares Outstanding     20,077     19,982     19,947     19,934     18,014  
  Weighted Average Preferred Shares Outstanding Assuming Conversion     1,197     878             1,845  
  Weighted Average Dilutive Options     334     273     276     239     180  
  Weighted Average Dilutive Warrants(4)                     476  
  Weighted Average Common Units     9,335     9,388     9,388     9,388     9,556  
  Weighted Average Preferred Units Assuming Conversion     2,421     2,421     2,421     2,421     2,321  
   
 
 
 
 
 
Weighted Avg. Shares/Units Outstanding Assuming Conversion of Preferred Shares/Units     33,364     32,942     32,032     31,982     32,393  
   
 
 
 
 
 
Common Shares Trading Volume                                
  Average Daily Volume (Shares)     24     21     13     20     22  
  Average Daily Volume (Dollars in thousands)   $ 237.66   $ 198.00   $ 122.20   $ 188.38   $ 187.74  
  As a Percentage of Common Shares     0.1 %   0.1 %   0.1 %   0.1 %   0.1 %

Common Share Price Range

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Quarterly High   $ 10.60   $ 9.98   $ 10.00   $ 10.13   $ 9.25  
  Quarterly Low   $ 9.36   $ 9.03   $ 8.94   $ 8.75   $ 8.00  
  Quarterly Average   $ 10.10   $ 9.59   $ 9.63   $ 9.39   $ 8.72  
 
End of Quarter

 

$

10.00

 

$

9.51

 

$

9.94

 

$

9.94

 

$

9.19

 

Capitalization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Liquidation Value of Preferred Shares/Units   $ 99,017   $ 70,267   $ 56,667   $ 56,667   $ 80,224  
  Market Value of Common Shares/Units     298,330     283,560     296,106     296,088     256,625  
   
 
 
 
 
 
  Total Equity Market Capitalization   $ 397,347   $ 353,826   $ 352,773   $ 352,754   $ 336,850  
   
 
 
 
 
 
  Total Debt   $ 475,999   $ 478,913   $ 474,349   $ 465,696   $ 436,679  
   
 
 
 
 
 
  Total Market Capitalization   $ 873,346   $ 832,739   $ 827,122   $ 818,450   $ 773,529  
   
 
 
 
 
 
Debt to Total Market Capitalization     54.5 %   57.5 %   57.3 %   56.9 %   56.5 %

Debt to Undepreciated Book Value of Real Estate Assets

 

 

57.1

%

 

59.1

%

 

60.4

%

 

60.0

%

 

58.0

%

(1)
Net of 166,600 treasury shares as of June 30, 2001.

(2)
On September 28, 2000, all Convertible Series A preferred shares except for 1 share were converted into common shares.

(3)
We issued 544,000 Convertible Series D preferred shares on January 25, 2001.

(4)
Eliminated a warrant to acquire a maximum of 476,200 common units in exchange for the issuance of 42,000 Series C convertible preferred units in July 2000.

(5)
We issued 1,150,000 Cumulative Redeemable Series E preferred shares on April 6, 2001.

8



Quarterly Valuation Analysis

(Dollars in thousands except per share data and ratios)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
PRICING MULTIPLES                                
NOI Multiple
(Market value of Common Equity + Avg. Preferred
Share/Units+ Avg. Total Debt) / Ann. NOI
    10.82x     10.17x     10.54x     10.25x     10.10x  

EBITDA Multiple
(Market value of Common Equity + Avg. Preferred
Share/Units + Avg. Total Debt) / Ann. EBITDA

 

 

10.66x

 

 

10.64x

 

 

10.63x

 

 

10.83x

 

 

10.79x

 

FFO Multiple
(Quarter End Common Share Price / Ann. FFO—diluted)

 

 

7.90x

 

 

7.75x

 

 

8.12x

 

 

8.32x

 

 

8.04x

 

AFFO Multiple
(Quarter End Common Share Price / Ann. AFFO—diluted)

 

 

9.71x

 

 

9.44x

 

 

9.67x

 

 

10.98x

 

 

9.75x

 

NOI Yield
(Ann. NOI / (Market value of Common Equity + Avg. Preferred Share/Units + Avg. Debt))

 

 

9.24

%

 

9.83

%

 

9.49

%

 

9.76

%

 

9.90

%

EBITDA Yield
(Ann. EBITDA / (Market value of Common Equity + Avg. Preferred Share/Units + Avg. Debt))

 

 

9.38

%

 

9.40

%

 

9.41

%

 

9.24

%

 

9.27

%

FFO Yield
(Ann. FFO / Quarter End Common Share Price)

 

 

12.66

%

 

12.90

%

 

12.32

%

 

12.02

%

 

12.43

%

AFFO Yield
(Ann. AFFO / Quarter End Common Share Price)

 

 

10.30

%

 

10.59

%

 

10.34

%

 

9.11

%

 

10.26

%

Total Market Capitalization Per Square Foot
((Market Value of Common Stock + Preferred Share/Units + Total Debt) / GLA)(1)

 

$

129.22

 

$

124.70

 

$

127.79

 

$

128.86

 

$

121.76

 

RETURNS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield on Real Estate Owned—NOI
(Ann. NOI / Avg. Adjusted Gross Real Estate Investment)(2)

 

 

10.54

%

 

10.85

%

 

10.58

%

 

10.86

%

 

10.86

%

Yield on Real Estate Owned—EBITDA
(Ann. EBITDA / Avg. Adjusted Gross Real Estate Investment)(2)

 

 

10.71

%

 

10.37

%

 

10.49

%

 

10.28

%

 

10.17

%

Return on Book Value of Average
Equity & Minority Interest
(Ann. EBTDA / Avg. Equity & Minority Interest)

 

 

15.82

%

 

14.87

%

 

14.72

%

 

14.24

%

 

13.69

%

(1)
Excludes square footage of assets under development, under construction or held in a joint venture.

(2)
Excludes land-development, construction in progress and investment in development real estate joint ventures as these assets are not yet income generating.

9



Quarterly Debt Analysis

(Dollars in thousands)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Debt Outstanding                                
  Mortgage Loans   $ 409,670   $ 356,872   $ 329,955   $ 338,063   $ 313,325  
  Construction Loans     13,099     18,950     33,058     25,586     38,669  
  Revolving Credit Facility         29,091     29,091     4,761      
  Secured Revolving Credit Facility     53,230     74,000     82,245     97,285     84,685  
   
 
 
 
 
 
    $ 475,999   $ 478,913   $ 474,349   $ 465,695   $ 436,679  
   
 
 
 
 
 

Average Outstanding Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Mortgage Loans   $ 377,222   $ 344,023   $ 325,971   $ 319,745   $ 318,249  
  Construction Loans     10,436     26,967     28,277     37,700     34,145  
  Revolving Credit Facility     28,445     29,091     22,545     2,381      
  Secured Revolving Credit Facility     59,123     75,507     90,910     91,239     77,794  
   
 
 
 
 
 
    $ 475,226   $ 475,588   $ 467,703   $ 451,065   $ 430,188  
   
 
 
 
 
 

Interest Rate Structure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Fixed   $ 305,431   $ 240,501   $ 201,715   $ 305,614   $ 277,575  
  Variable         13,412     147,634     60,081     109,104  
  Variable Subject to Interest Rate Protection(1—4)     170,568     225,000     125,000     100,000     50,000  
   
 
 
 
 
 
    $ 475,999   $ 478,913   $ 474,349   $ 465,695   $ 436,679  
   
 
 
 
 
 
 
% of Fixed Rate Loans(A)

 

 

64.17

%

 

50.22

%

 

42.52

%

 

65.63

%

 

63.56

%
  % of Variable Rate Loans     35.83 %   49.78 %   57.48 %   34.37 %   36.44 %
   
 
 
 
 
 
      100.00 %   100.00 %   100.00 %   100.00 %   100.00 %
   
 
 
 
 
 
(A) Excludes interest rate protection agreements.                                

Average Interests Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Mortgage & Construction Loans     7.31 %   7.44 %   7.84 %   7.62 %   7.52 %
  Revolving Credit Facility     6.71 %   7.31 %   8.17 %   8.12 %   n/a  
  Secured Revolving Credit Facility     6.93 %   7.85 %   8.38 %   8.33 %   8.11 %
  Total Weighted Average     7.22 %   7.50 %   7.96 %   7.64 %   7.58 %

Debt Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Debt to Total Market Capitalization     54.5 %   57.5 %   57.3 %   56.9 %   56.5 %
Debt to Undepreciated Book Value of Real Estate Assets     57.1 %   59.1 %   60.4 %   60.0 %   58.0 %

Coverage Ratios (excluding capitalized interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Interest Coverage—NOI
(NOI / Interest)
    2.60 x   2.49 x   2.36 x   2.50 x   2.56 x
Interest Coverage—EBITDA
(EBITDA / Interest)
    2.64 x   2.38 x   2.33 x   2.36 x   2.40 x
Interest Coverage—EBITDA—YTD
(EBITDA / Interest—Year-to-date)
    2.50 x   2.38 x   2.38 x   2.40 x   2.42 x
Debt Service Coverage—NOI
(NOI / (Interest + Principal Amortization))
    2.28 x   2.23 x   2.09 x   2.23 x   2.32 x
Debt Service Coverage—EBITDA
(EBITDA / (Interest + Principal Amortization))
    2.32 x   2.13 x   2.07 x   2.11 x   2.17 x
Fixed Charge Coverage—NOI
(NOI / (Interest + Preferred Distribution))
    2.03 x   2.11 x   2.02 x   2.13 x   2.09 x
Fixed Charge Coverage—EBITDA
(EBITDA / (Interest + Preferred Distribution))
    2.06 x   2.02 x   2.01 x   2.02 x   1.96 x

(1)
We purchased a $50 million 2-year cap on LIBOR at a rate of 7.7% which expires May 31, 2002.

(2)
We purchased a $50 million 1-year cap on LIBOR at a rate of 7.0% which expires October 13, 2001.

(3)
We purchased a $25 million 1-year cap on LIBOR at a rate of 7.0% which expires October 13, 2001.

(4)
We executed a $100 million notional amount swap exchanging 30-day floating LIBOR for LIBOR of 5.76% over a two-year period which expires January 2, 2003.

10



Quarterly Operating Ratios

(Dollars in thousands except per share data and ratios)

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
OPERATING RATIOS                                

NOI as a % of Real Estate Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
(NOI / (Rental Revenue + Oper. Expense Reimb.))

 

 

70.19

%

 

70.66

%

 

70.52

%

 

70.89

%

 

71.85

%


EBITDA as a % of Real Estate Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
(EBITDA / (Rental Revenue + Oper. Expense Reimb.))

 

 

71.30

%

 

67.55

%

 

69.90

%

 

67.11

%

 

67.27

%


G&A as a % of Real Estate Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
(G&A / (Rental Revenue + Oper. Expense Reimb.))

 

 

4.63

%

 

5.01

%

 

3.77

%

 

4.77

%

 

4.39

%


G&A as a % of EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
(G&A / EBITDA)

 

 

6.49

%

 

7.42

%

 

5.39

%

 

7.11

%

 

6.53

%
 

Quarter end occupancy for operating portfolio

 

 

96.92

%

 

96.95

%

 

97.03

%

 

97.33

%

 

96.66

%
  Quarter end % leased for operating portfolio     97.60 %   98.39 %   98.17 %   98.30 %   98.40 %
 

Non-Incremental Capital Expenditures

 

$

1,153

 

$

1,116

 

$

776

 

$

415

 

$

923

 
  Non-Incremental Capital Expenditures per average square feet   $ 0.36   $ 0.34   $ 0.12   $ 0.07   $ 0.15  
  Non-Incremental Capital Expenditures per Diluted Share   $ 0.03   $ 0.03   $ 0.02   $ 0.01   $ 0.03  
  Non-Incremental Capital Expenditures as a % of NOI     5.72 %   5.47 %   3.99 %   2.12 %   4.86 %

11



Quarterly Dividend Analysis

 
  2001
  2000
 
 
  June 30
  March 31
  December 31
  September 30
  June 30
 
Common Share Dividends                                
  Dividends per share/unit   $ 0.20   $ 0.20   $ 0.20   $ 0.20   $ 0.19  
  Increase over prior quarter     0.0 %   0.0 %   0.0 %   5.3 %   0.0 %
  Increase over prior year     5.3 %   5.3 %   5.3 %   5.3 %   5.6 %

Common Dividend Payout Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Payout—FFO—Diluted
((Dividend + Distributions)/FFO)
    62.4 %   64.9 %   65.7 %   67.4 %   66.0 %
  Payout—AFFO—Diluted
(Dividend /FAD)
    76.7 %   79.0 %   78.3 %   87.7 %   80.0 %
  Dividend Coverage—FFO—Diluted
(FFO /dividends)
    1.60x     1.54x     1.52x     1.48x     1.51x  
  Dividend Coverage—AFFO—Diluted
(AFFO /dividends)
    1.30x     1.27x     1.28x     1.14x     1.25x  

Common Dividend Yields

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Dividend Yield     8.00 %   8.41 %   8.05 %   8.05 %   8.27 %

Series C Preferred Unit Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Unit Distributions Per Share   $ 0.5625   $ 0.5625   $ 0.5625   $ 0.5625   $ 0.5625  
  Preferred Unit Distributions Yield     9.00 %   9.00 %   9.00 %   9.00 %   9.00 %
  Quarter End Liquidation Preference   $ 25.00   $ 25.00   $ 25.00   $ 25.00   $ 25.00  

Series A Preferred Share Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Share Dividends Per Share   $ 0.34375   $ 0.34375   $ 0.34375   $ 0.34375   $ 0.34375  
  Preferred Share Dividend Yield     5.50 %   5.50 %   5.50 %   5.50 %   5.50 %
  Quarter End Liquidation Preference   $ 25.00   $ 25.00   $ 25.00   $ 25.00   $ 25.00  

Series B Preferred Share Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Share Dividends Per Share   $ 0.6250   $ 0.6250   $ 0.6250   $ 0.6250   $ 0.6250  
  Preferred Share Dividend Yield     10.00 %   10.00 %   10.00 %   10.00 %   10.00 %
  Quarter End Liquidation Preference   $ 25.00   $ 25.00   $ 25.00   $ 25.00   $ 25.00  

Series D Preferred Share Dividends(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Share Dividends Per Share   $ 0.2500   $ 0.2500     n/a     n/a     n/a  
  Preferred Share Dividend Yield     4.00 %   4.00 %   n/a     n/a     n/a  
  Quarter End Liquidation Preference   $ 25.00   $ 25.00     n/a     n/a     n/a  

Series E Preferred Share Dividends(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred Share Dividends Per Share   $ 0.6406     n/a     n/a     n/a     n/a  
  Preferred Share Dividend Yield     10.25 %   n/a     n/a     n/a     n/a  
  Quarter End Liquidation Preference   $ 25.00     n/a     n/a     n/a     n/a  

(1)
We issued 544,000 of Series D Convertible Preferred Shares on January 25, 2001. Dividend was prorated based upon the number of days outstanding from date of issuance through quarter end. Prorated dividend was $.1833 per share.

(2)
We issued 1,150,000 of Series E Cumulative Redeemable Preferred Shares on April 6, 2001. Dividend was prorated based upon the number of days outstanding from date of issuance through quarter end. Prorated dividend was $.6050 per share.

12



Investor Composition and Analyst Coverage
(as of June 30, 2001)

SHAREHOLDER CLASSIFICATION

  Common
Shares

  Common
Units

  As if Converted
Preferred
Shares / Units

  Total
  Fully Diluted
Ownership
% of Total

 
Constellation Real Estate, Inc.   8,876,171     2   8,876,173   26.54 %
Insiders   1,123,628   7,837,937     8,961,565   26.79 %
Institutional Ownership   3,456,876       3,456,876   10.33 %
Other / Retail   7,069,388   1,469,080   3,617,472   12,155,940   36.34 %
   
 
 
 
 
 
    20,526,063   9,307,017   3,617,474   33,450,554   100.00 %
   
 
 
 
 
 
RESEARCH COVERAGE

 
June 30,
2001

  March 31,
2001

  December 31,
2000

  September 30,
2000

  June 30,
2000

A. G. Edwards   x   x   x   x    
Credit Suisse First Boston   x   x   x   x   x
Deutsche Banc Alex. Brown   x   x   x        
Ferris, Baker Watts, Incorporated   x   x            
Janney Montgomery Scott   x   x   x   x   x
Johnston, Lemon                   x
Legg Mason Wood Walker, Inc.   x   x   x   x   x
McDonald Investments   x   x   x   x   x
Prudential Securities Incorporated               x   x
Tucker Anthony Cleary Gull                   x

Source: Institutional ownership was obtained from filed Forms 13(f) as of March 31, 2001 per Vickers Stock Research Corporation.

13


Debt Maturity Schedule—June 30, 2001
(Dollars in thousands)

 
  Mortgages
  Construction Loans(1)
   
   
   
Year of Maturity

  Monthly
Amortization

  Due on
Maturity

  Monthly
Amortization

  Due on
Maturity(2)

  Term Credit
Facility(3)

  $125,000 Secured
Revolving
Credit Facility

  Total Scheduled Payments
  2001     2,519             2,000             4,519
  2002     5,530         158         90,954         96,642
  2003     5,676     12,719     181     5,780             24,356
  2004     5,800     25,762         4,980         53,230     89,772
  2005     5,848     16,368                     22,216
  2006     5,661     59,975                     65,636
  2007     4,669     6,142                     10,811
  2008     3,062     142,879                     145,941
  2009     273     15,833                     16,106
   
 
 
 
 
 
 
      $ 39,038   $ 279,678   $ 339   $ 12,760   $ 90,954   $ 53,230   $ 475,999
   
 
 
 
 
 
 

Notes:

(1)
The construction loan balances as of June 30 represent the outstanding balances as of that date.

(2)
We have the right to extend construction loans of $6,018 and $5,081, for a one-year period subject to certain conditions, upon maturity in 2002 and 2003, respectively. The above table reflects the maturities in 2003 and 2004, respectively, as if the loans had been extended.

(3)
The Term Credit Facility was extended through October 13, 2001. We have the right to extend for another one-year period, subject to certain conditions. This loan has been presented as maturing in October 2002 in the above table.

We have obtained interest rate protection agreements as follows:

14



Property Summary by Region—June 30, 2001

 
  Operating
Property
Count

  Owned or Joint
Venture
(JV)

  Submarket
  State
  Year
Built or
Renovated

  Single
Story (S) or
Multi-story
(M)

  Rentable
Square Feet

  Anticipated
Rentable
Square Feet
Development

Office Properties                                
Baltimore /Washington Corridor                                
131 National Business Parkway   1   Owned   BWI Airport   MD   1990   M   68,906    
132 National Business Parkway   2   Owned   BWI Airport   MD   2000   M   117,568    
133 National Business Parkway   3   Owned   BWI Airport   MD   1997   M   88,666    
134 National Business Parkway   4   Owned   BWI Airport   MD   1999   M   93,482    
135 National Business Parkway   5   Owned   BWI Airport   MD   1998   M   86,863    
141 National Business Parkway   6   Owned   BWI Airport   MD   1990   M   86,964    
2721 Phoenix Road (221 NBP)   7   Owned   BWI Airport   MD   2000   M   117,890    
2701 Phoenix Road (201 NBP)       JV   BWI Airport   MD       M       118,000
2711 Phoenix Road (211 NBP)       JV   BWI Airport   MD       M       150,000
1099 Winterson Road   8   Owned   BWI Airport   MD   1988   M   70,938    
1190 Winterson Road   9   Owned   BWI Airport   MD   1987   M   68,567    
1199 Winterson Road   10   Owned   BWI Airport   MD   1988   M   96,636    
1201 Winterson Road   11   Owned   BWI Airport   MD   1985   M   67,903    
1331 Ashton Road   12   Owned   BWI Airport   MD   1989   S   29,936    
1334 Ashton Road   13   Owned   BWI Airport   MD   1989   S   37,565    
1340 Ashton Road   14   Owned   BWI Airport   MD   1989   S   46,400    
1341 Ashton Road   15   Owned   BWI Airport   MD   1989   S   15,841    
1343 Ashton Road   16   Owned   BWI Airport   MD   1989   S   9,962    
1344 Ashton Road   17   Owned   BWI Airport   MD   1989   M   16,865    
1350 Dorsey Road   18   Owned   BWI Airport   MD   1989   S   19,992    
2730 Hercules Road   19   Owned   BWI Airport   MD   1990   M   240,336    
7240 Parkway Drive   20   Owned   BWI Airport   MD   1985   M   73,500    
7318 Parkway Drive   21   Owned   BWI Airport   MD   1984   S   59,204    
7321 Parkway Drive   22   Owned   BWI Airport   MD   1984   S   39,822    
7467 Ridge Road   23   Owned   BWI Airport   MD   1990   M   73,756    
800 International Drive   24   Owned   BWI Airport   MD   1988   S   50,979    
849 International Drive   25   Owned   BWI Airport   MD   1988   M   68,186    
881 Elkridge Landing Road   26   Owned   BWI Airport   MD   1986   M   73,572    
891 Elkridge Landing Road   27   JV   BWI Airport   MD   2001   M   56,489    
900 Elkridge Landing Road   28   Owned   BWI Airport   MD   1982   M   97,139    
900 International Drive   29   Owned   BWI Airport   MD   1986   S   57,140    
901 Elkridge Landing Road   30   JV   BWI Airport   MD   2001   M   56,847    
911 Elkridge Landing Road   31   Owned   BWI Airport   MD   1985   M   68,296    
920 Elkridge Landing Road   32   JV   BWI Airport   MD   2001   M   96,566    
921 Elkridge Landing Road   33   Owned   BWI Airport   MD   1983   M   54,057    
930 International Drive   34   Owned   BWI Airport   MD   1986   S   57,140    
938 Elkridge Landing Road   35   JV   BWI Airport   MD   2001   M   52,988    
939 Elkridge Landing Road   36   Owned   BWI Airport   MD   1983   M   53,031    
940 Elkridge Landing Road   37   JV   BWI Airport   MD   2001   M   51,704    
999 Corporate Boulevard   38   Owned   BWI Airport   MD   2000   M   67,351    
1302 Concourse Drive   39   Owned   BWI Airport   MD   1996   M   84,607    
1304 Concourse Drive       Owned   BWI Airport   MD       M       100,000
1306 Concourse Drive   40   Owned   BWI Airport   MD   1990   M   114,046    
1615 and 1629 Thames Street   41   Owned   Baltimore City   MD   1989   M   103,683    
9690 Deereco Road   42   Owned   North Baltimore County   MD   1988   M   133,737    
375 West Padonia Road   43   Owned   North Baltimore County   MD   1986   M   100,804    
9140 Route 108   44   Owned   Howard County Perimeter   MD   1974/1985   S   150,000    

15


6700 Alexander Bell Drive   45   Owned   Howard County Perimeter   MD   1988   M   75,635    
6708 Alexander Bell Drive   46   Owned   Howard County Perimeter   MD   1988   M   35,040    
6716 Alexander Bell Drive   47   Owned   Howard County Perimeter   MD   1990   M   52,002    
6724 Alexander Bell Drive       Owned   Howard County Perimeter   MD               30,855
6740 Alexander Bell Drive   48   Owned   Howard County Perimeter   MD   1992   M   61,878    
6750 Alexander Bell Drive   49   Owned   Howard County Perimeter   MD   2001   M   78,460    
6760 Alexander Bell Drive   50   Owned   Howard County Perimeter   MD   1991   M   37,248    
6940 Columbia Gateway Drive   51   Owned   Howard County Perimeter   MD   1999   M   108,737    
6950 Columbia Gateway Drive   52   Owned   Howard County Perimeter   MD   1998   M   107,778    
6731 Columbia Gateway Drive       Owned   Howard County Perimeter   MD       M       122,889
Montpelier Research Phase I   53   JV   Howard County Perimeter   MD   2001   S   43,785    
Robert Fulton Drive—Phase I       JV   Howard County Perimeter   MD       M       144,350
7200 Riverwood Drive   54   Owned   Howard County Perimeter   MD   1986   S   160,000    
8815 Centre Park Drive   55   Owned   Howard County Perimeter   MD   1987   M   53,782    
14502 Greenview Drive   56   Owned   Laurel   MD   1988   M   71,873    
14504 Greenview Drive   57   Owned   Laurel   MD   1985   M   69,194    
4260 Forbes Boulevard       JV   Lanham   MD               54,692
6009-6011 Oxon Hill Road   58   Owned   Southern Prince George's County   MD   1990   M   181,768    
                           
 
  Total Baltimore / Washington Corridor:   4,413,104   720,786
                           
 
Greater Philadelphia                                
751 Jolly Road   1   Owned   Blue Bell   PA   1966/1991   M   112,958    
753 Jolly Road   2   Owned   Blue Bell   PA   1960/1992-94   M   419,472    
760 Jolly Road   3   Owned   Blue Bell   PA   1974/1994   M   208,854    
785 Jolly Road   4   Owned   Blue Bell   PA   1970/1996   M   219,065    
                           
 
  Total Greater Philadelphia:   960,349  
                           
 

Greater Harrisburg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
2601 Market Place   1   Owned   East Shore   PA   1989   M   67,743    
2605 Interstate Drive   2   Owned   East Shore   PA   1990   M   84,404    
6375 Flank Drive   3   Owned   East Shore   PA   2000   S   19,783    
6385 Flank Drive   4   Owned   East Shore   PA   1995   S   32,800    
75 Shannon Road   5   Owned   East Shore   PA   1999   S   20,887    
85 Shannon Road   6   Owned   East Shore   PA   1999   S   12,863    
95 Shannon Road   7   Owned   East Shore   PA   1999   S   21,976    
6340 Flank Drive   8   Owned   East Shore   PA   1988   S   68,200    
6345 Flank Drive   9   Owned   East Shore   PA   1989   S   69,443    
6360 Flank Drive   10   Owned   East Shore   PA   1988   S   46,500    
6380 Flank Drive   11   Owned   East Shore   PA   1991   S   32,000    
6400 Flank Drive   12   Owned   East Shore   PA   1992   S   52,439    
6405 Flank Drive   13   Owned   East Shore   PA   1991   S   32,000    
5035 Ritter Road   14   Owned   West Shore   PA   1988   S   56,556    
5070 Ritter Road—Building A   15   Owned   West Shore   PA   1989   S   32,309    
5070 Ritter Road—Building B   16   Owned   West Shore   PA   1989   S   28,000    
                           
 
  Total Greater Harrisburg:   677,903  
                           
 

16



Northern/Central New Jersey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
101 Interchange Plaza   1   Owned   Exit 8A—Cranbury   NJ   1985   M   43,621    
104 Interchange Plaza   2   Owned   Exit 8A—Cranbury   NJ   1990   M   47,677    
2 Centre Drive   3   Owned   Exit 8A—Cranbury   NJ   1989   S   16,132    
429 Ridge Road   4   Owned   Exit 8A—Cranbury   NJ   1966/1996   M   142,385    
431 Ridge Road   5   Owned   Exit 8A—Cranbury   NJ   1958/1998   S   170,000    
437 Ridge Road   6   Owned   Exit 8A—Cranbury   NJ   1962/1996   S   30,000    
47 Commerce   7   Owned   Exit 8A—Cranbury   NJ   1992/1998   S   41,398    
7 Centre Drive   8   Owned   Exit 8A—Cranbury   NJ   1989   S   19,466    
8 Centre Drive   9   Owned   Exit 8A—Cranbury   NJ   1986   S   16,199    
68 Culver Road   10   Owned   Exit 8A—Cranbury   NJ   2000   M   57,280    
4301 Route 1   11   Owned   Monmouth Junction   NJ   1986   M   61,300    
695 Route 46   12   Owned   Wayne   NJ   1990   M   157,394    
710 Route 46   13   Owned   Wayne   NJ   1985   M   102,002  
                           
 
  Total Northern / Central New Jersey:   904,854  
                           
 
TOTAL OFFICE PROPERTIES   91                       6,956,210   720,786
                           
 

Retail Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114 National Business Parkway

 

 

 

Owned

 

BWI Airport

 

MD

 

 

 

S

 


 

10,000
                           
 
            # of Operating Buildings:   0            
                           
 
  TOTAL RETAIL PROPERTIES     10,000
                           
 

TOTAL PORTFOLIO

 

91

 

 

 

# of Operating Buildings:

 

0

 

 

 

6,956,210

 

730,786
                           
 

17



Property Occupancy Rates by Region by Quarter

 
  Office
   
   
   
 
 
  Greater
Philadelphia

  Baltimore/
Washington
Corridor

  Northern/
Central
New Jersey

  Greater
Harrisburg

  Total
Office

  Retail
  Total
Portfolio

 
June 30, 2001                              

Number of Buildings

 

4

 

58

 

13

 

16

 

91

 


 

91

 
Rentable Square Feet   960,349   4,413,104   904,854   677,903   6,956,210     6,956,210  
Percent Occupied   100.00 % 97.96 % 94.19 % 89.41 % 96.92 % 0 % 96.92 %

March 31, 2001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

4

 

55

 

14

 

16

 

89

 


 

89

 
Rentable Square Feet   960,349   4,258,610   970,048   677,458   6,866,465     6,866,465  
Percent Occupied   100.00 % 97.76 % 94.03 % 91.75 % 96.95 % 0 % 96.95 %

December 31, 2000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

4

 

49

 

14

 

16

 

83

 


 

83

 
Rentable Square Feet   960,349   3,864,766   970,048   677,468   6,472,631     6,472,631  
Percent Occupied   100.00 % 97.84 % 93.07 % 93.86 % 97.03 % 0 % 97.03 %

September 30, 2000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

4

 

47

 

15

 

15

 

81

 

1

 

82

 
Rentable Square Feet   960,349   3,594,058   990,385   657,685   6,202,477   149,191   6,351,668  
Percent Occupied   100.00 % 97.79 % 96.08 % 92.82 % 97.33 % 97.04 % 97.33 %

June 30, 2000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

4

 

47

 

15

 

15

 

81

 

1

 

82

 
Rentable Square Feet   960,349   3,595,118   990,808   657,685   6,203,960   149,191   6,353,151  
Percent Occupied   100.00 % 97.38 % 92.15 % 94.47 % 96.64 % 97.41 % 96.66 %

18



Top Twenty Office Tenants as of June 30, 2001

(Dollars and Square Feet in thousands)

Tenant

   
  Number of
Leases

  Total
Occupied
Square Feet

  Percentage of
Total
Occupied
Square Feet

  Total
Rental
Revenue(1)

  Percentage of
Total
Rental
Revenue

  Weighted
Average
Remaining
Lease Term(2)

United States of America   (3 ) 19   960   14.2 % $ 17,098   14.8 % 4.7
AT&T Local Services   (4 ),(5) 6   415   6.2 %   8,380   7.2 % 7.3
Unisys   (6 ) 3   741   11.0 %   7,297   6.3 % 8.0
Ciena Corporation       5   298   4.4 %   3,806   3.3 % 3.9
Magellan Behavioral Health, Inc.       2   151   2.2 %   3,259   2.8 % 2.6
Booz Allen Hamilton       3   128   1.9 %   2,440   2.1 % 2.5
Johns Hopkins University   (4 ) 4   124   1.8 %   2,432   2.1 % 5.1
General Dynamics Government Corp.       2   102   1.5 %   2,370   2.1 % 9.1
Merck & Co., Inc.   (6 ) 1   219   3.2 %   2,193   1.9 % 8.0
Bookham Technology, Inc.       1   150   2.2 %   1,870   1.6 % 6.6
Commonwealth of Pennsylvania   (4 ) 8   150   2.2 %   1,861   1.6 % 2.1
Sun Microsystems, Inc.       2   61   0.9 %   1,403   1.2 % 4.5
Credit Management Solutions, Inc.       1   71   1.1 %   1,381   1.2 % 7.4
Deutsche Banc Alex. Brown       1   84   1.3 %   1,338   1.2 % 2.9
Mentor Technologies       1   59   0.9 %   1,307   1.1 % 1.8
Ameritrade Holding Corporation       1   62   0.9 %   1,304   1.1 % 9.0
Raytheon E-Systems   (4 ) 3   65   1.0 %   1,189   1.0 % 2.0
Computer Sciences Corporation       1   55   0.8 %   1,174   1.0 % 0.8
RAG American Coal Holding       1   48   0.7 %   1,093   1.0 % 8.9
Aerotek, Inc.       3   67   1.0 %   1,089   1.0 % 1.3
       
 
 
 
 
   
Subtotal Top 20 Office Tenants       68   4,010   59.4 %   64,284   55.6 % 5.4
All remaining tenants       358   2,732   40.6 %   51,381   44.4 % 3.3
       
 
 
 
 
 
Total/Weighted Average       426   6,742   100.0 % $ 115,665   100.0 % 4.5
       
 
 
 
 
 

(1)
Total Rental Revenue is the monthly contractual base rent as of June 30, 2001 multiplied by 12 plus the estimated annualized expense reimbursements under existing office leases.

(2)
The weighting of the lease term was computed using Total Rental Revenue.

(3)
Many of our government leases are subject to early termination provisions which are customary to government leases. The weighted average remaining lease term was computed assuming no exercise of such early termination rights.

(4)
Includes affiliated organizations or agencies.

(5)
AT&T Local Services subleases 173,072 square feet under 2 leases which expire March 30, 2002. Effective April 1, 2002, this same 173,072 square feet will become directly leased by AT&T Local Services with expiration dates ranging from 2006 and 2009. The above weighted average lease term reflects the expiration date of these direct leases.

(6)
Merck & Co., Inc. subleases 219,065 rentable square feet from Unisys' 960,349 leased rentable square feet.

19



Total Rental Revenue by Geographic Region by Quarter(1)
(Dollars in thousands)

 
  2001
  2000
 
  June 30
  March 31
  December 31
  September 30
  June 30
Office Properties:                              

Greater Philadelphia

 

$

2,506

 

$

2,506

 

$

2,506

 

$

2,506

 

$

2,506
Baltimore/Washington Corridor     18,654     18,573     17,224     17,197     16,297
Northern/Central New Jersey     4,998     4,922     5,311     5,326     4,969
Greater Harrisburg     2,483     2,789     2,271     2,228     2,275
   
 
 
 
 
  Total Office Properties     28,641     28,790     27,312     27,257     26,047
   
 
 
 
 
Retail Properties:                              
 
Total Retail Properties

 

 


 

 


 

 

72

 

 

261

 

 

279
   
 
 
 
 
Total Regional Rental Revenue   $ 28,641   $ 28,790   $ 27,384   $ 27,518   $ 26,326
   
 
 
 
 

(1)
Rental revenue represents GAAP revenue including operating expense reimbursements, straight line rent adjustments and tenant services income.


Net Operating Income by Geographic Region by Quarter
(Dollars in thousands)

 
  2001
  2000
 
  June 30
  March 31
  December 31
  September 30
  June 30
Office Properties:                              

Greater Philadelphia

 

$

2,469

 

$

2,486

 

$

2,481

 

$

2,482

 

$

2,482
Baltimore/Washington Corridor     12,704     12,614     11,571     11,664     11,528
Northern/Central New Jersey     3,173     3,028     3,418     3,458     3,014
Greater Harrisburg     1,736     2,195     1,718     1,683     1,645
   
 
 
 
 
  Total Office Properties     20,082     20,323     19,188     19,287     18,669
   
 
 
 
 
Retail Properties:                              
 
Total Retail Properties

 

 


 

 


 

 

55

 

 

179

 

 

222
   
 
 
 
 
    Total Regional NOI   $ 20,082   $ 20,323   $ 19,243   $ 19,466   $ 18,891
   
 
 
 
 
Other income / expenses, net     71     62     226     140     89
   
 
 
 
 
    Total NOI   $ 20,153   $ 20,385   $ 19,469   $ 19,606   $ 18,980
   
 
 
 
 

20



Same Office Property Cash Net Operating Income by Quarter (1)
(Dollars in thousands)

 
  2001
  2000
 
  June 30
  March 31
  December 31
  September 30
  June 30
Office Properties:(2)                              

Greater Philadelphia

 

$

2,364

 

$

2,363

 

$

2,363

 

$

2,361

 

$

2,317
Baltimore/Washington Corridor     10,456     10,357     10,321     10,030     10,327
Northern/Central New Jersey     2,566     2,446     2,614     2,578     2,192
Greater Harrisburg     1,606     1,690     1,592     1,654     1,565
   
 
 
 
 
  Total Office Properties   $ 16,992   $ 16,856   $ 16,890   $ 16,623   $ 16,401
   
 
 
 
 


Same Office Property GAAP Net Operating Income by Quarter(1)
(Dollars in thousands)

 
  2001
  2000
 
  June 30
  March 31
  December 31
  September 30
  June 30
Office Properties:(2)                              

Greater Philadelphia

 

$

2,497

 

$

2,497

 

$

2,497

 

$

2,495

 

$

2,497
Baltimore/Washington Corridor     10,683     10,628     10,544     10,523     10,710
Northern/Central New Jersey     2,645     2,521     2,769     2,634     2,244
Greater Harrisburg     1,634     1,722     1,629     1,691     1,613
   
 
 
 
 
  Total Office Properties   $ 17,459   $ 17,368   $ 17,439   $ 17,343   $ 17,064
   
 
 
 
 

(1)
Net operating income for same office properties has been presented on a GAAP basis and a modified cash basis which removes the effect of straight-line rents from the GAAP net operating income.

(2)
Same office properties include buildings owned for a minimum of five reporting quarters.

21



Office Lease Expiration
Analysis by Year

Year of
Lease
Expiration(1)

  Number
of Leases
Expiring

  Square
Footage
of Leases
Expiring

  Percentage of
Total Occupied
Square Feet

  Total Rental
Revenue of
Expiring
Leases(2)

  Percentage
of Total
Rental
Revenue
Expiring

  Total Rental
Revenue of
Expiring Leases
per Occupied
Square Foot

 
   
   
   
  ($000s)

   
   
2001   37   281,808   4.2 % $ 5,042   4.4 % $ 17.89
2002   92   1,029,331   15.3 %   17,621   15.2 %   17.12
2003   89   775,724   11.5 %   14,618   12.6 %   18.84
2004   62   693,029   10.3 %   13,118   11.3 %   18.93
2005   63   702,217   10.4 %   13,611   11.8 %   19.38
2006   40   520,808   7.7 %   9,553   8.3 %   18.34
2007   10   393,924   5.8 %   6,246   5.4 %   15.86
2008   10   706,309   10.5 %   12,574   10.9 %   17.80
2009   13   1,223,320   18.1 %   14,387   12.4 %   11.76
2010   9   389,475   5.8 %   8,273   7.2 %   21.24
2011   1   26,051   0.4 %   622   0.5 %   23.88
   
 
 
 
 
     
Total/Weighted Average   426   6,741,996   100.0%   $ 115,665   100.0%   $ 17.61
   
 
 
 
 
     

NOTE: As of June 30, 2001, the weighted average lease term is 4.5 years.

(1)
Many of our government leases are subject to certain early termination provisions which are customary to government leases. The year of lease expiration was computed assuming no exercise of such early termination rights.

(2)
Total Rental Revenue is the monthly contractual base rent as of June 30, 2001 multiplied by 12 plus the estimated annualized expense reimbursements under existing office leases.

22


Year to Date Office Renewal Analysis

 
  Greater
Philadelphia

  Baltimore/
Washington
Corridor

  Northern/
Central
New Jersey

  Greater
Harrisburg

  Total
Office

 
For Six Months Ended June 30, 2001:                                
 
Expiring Square Feet

 

 


 

 

254,755

 

 

24,188

 

 

49,325

 

 

328,268

 
  Vacated Square Feet         18,137     6,050     33,026     57,213  
  Renewed Square Feet         236,618     18,138     16,299     271,055  
  Retention Rate (% based upon square feet)     0.00 %   92.88 %   74.99 %   33.04 %   82.57 %

Renewal & Retenanted Space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Increase in Base Rent—Straight-line     0.00 %   24.01 %   36.52 %   1.74 %   23.84 %
  Increase in Total Rent—Straight-line     0.00 %   20.00 %   31.32 %   2.37 %   19.95 %
 
Increase in Base Rent—Cash

 

 

0.00

%

 

17.67

%

 

32.91

%

 

(5.35

)%

 

17.74

%
  Increase in Total Rent—Cash     0.00 %   14.37 %   28.04 %   (3.84 )%   14.52 %
 
Average Capital Cost per Square Foot

 

$


 

$

5.30

 

$

13.53

 

$

5.30

 

$

6.07

 

Quarterly Office Renewal Analysis

 
  Greater Philadelphia
  Baltimore/ Washington Corridor
  Northern/ Central New Jersey
  Greater Harrisburg
  Total Office
 
Quarter Ended June 30, 2001:                                
 
Expiring Square Feet

 

 


 

 

174,078

 

 

22,678

 

 

45,325

 

 

242,081

 
  Vacated Square Feet         16,922     6,050     33,026     55,998  
  Renewed Square Feet         157,156     16,628     12,299     186,083  
  Retention Rate (% based upon square feet)     0.00 %   90.28 %   73.32 %   27.14 %   76.87 %

Renewal & Retenanted Space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Increase in Base Rent—Straight-line     0.00 %   24.86 %   38.02 %   13.69 %   26.15 %
  Increase in Total Rent—Straight-line     0.00 %   19.76 %   32.98 %   10.21 %   21.02 %
 
Increase in Base Rent—Cash

 

 

0.00

%

 

19.81

%

 

34.23

%

 

4.57

%

 

21.00

%
  Increase in Total Rent—Cash     0.00 %   15.52 %   29.50 %   2.37 %   16.63 %
  Average Capital Cost per Square Foot   $   $ 3.87   $ 14.05   $ 6.50   $ 5.58  

Quarter Ended March 31, 2001:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
Expiring Square Feet

 

 


 

 

80,677

 

 

1,510

 

 

4,000

 

 

86,187

 
  Vacated Square Feet         1,215             1,215  
  Renewed Square Feet         79,462     1,510     4,000     84,972  
  Retention Rate (% based upon square feet)     0.00 %   98.49 %   100.00 %   100.00 %   98.59 %

Renewal & Retenanted Space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Increase in Base Rent—Straight-line     0.00 %   23.01 %   2.78 %   (28.63 )%   20.44 %
  Increase in Total Rent—Straight-line     0.00 %   20.31 %   2.03 %   (18.63 )%   18.20 %
 
Increase in Base Rent—Cash

 

 

0.00

%

 

15.15

%

 

2.78

%

 

(30.74

)%

 

12.95

%
  Increase in Total Rent—Cash     0.00 %   12.84 %   2.03 %   (20.55 )%   11.12 %
  Average Capital Cost per Square Foot   $   $ 7.20   $ 0.42   $ 1.70   $ 6.88  
Quarter Ended December 31, 2000:                                
 
Expiring Square Feet

 

 


 

 

75,372

 

 

3,174

 

 

6,623

 

 

85,169

 
  Vacated Square Feet         29,132             29,132  
  Renewed Square Feet         46,240     3,174     6,623     56,037  
  Retention Rate (% based upon square feet)     0.00 %   61.35 %   100.00 %   100.00 %   65.80 %

Renewal & Retenanted Space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Increase in Base Rent—Straight-line     0.00 %   24.55 %   21.47 %   (17.49 )%   17.74 %
  Increase in Total Rent—Straight-line     0.00 %   15.08 %   11.19 %   (9.98 )%   10.57 %
 
Increase in Base Rent—Cash

 

 

0.00

%

 

18.45

%

 

20.00

%

 

(18.85

)%

 

13.19

%
  Increase in Total Rent—Cash     0.00 %   9.73 %   10.01 %   (11.15 )%   6.66 %
 
Average Capital Cost per Square Foot

 

$


 

$

10.27

 

$

17.92

 

$

1.10

 

$

9.72

 

23



Quarter Ended September 30, 2000:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
Expiring Square Feet

 

 


 

 

186,061

 

 

116,771

 

 

6,757

 

 

309,589

 
  Vacated Square Feet         50,043     40,094     6,757     96,894  
  Renewed Square Feet         136,018     76,677         212,695  
  Retention Rate (% based upon square feet)     0.00 %   73.10 %   65.66 %   0.00 %   68.70 %

Renewal & Retenanted Space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Increase in Base Rent—Straight-line     0.00 %   6.31 %   32.53 %   0.00 %   14.75 %
  Increase in Total Rent—Straight-line     0.00 %   4.24 %   20.06 %   0.00 %   9.74 %
 
Increase in Base Rent—Cash

 

 

0.00

%

 

3.45

%

 

13.01

%

 

0.00

%

 

6.52

%
  Increase in Total Rent—Cash     0.00 %   1.44 %   2.97 %   0.00 %   1.97 %
 
Average Capital Cost per Square Foot

 

$


 

$

5.32

 

$

27.35

 

$


 

$

12.57

 

Quarter Ended June 30, 2000:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
Expiring Square Feet

 

 


 

 

71,275

 

 

10,322

 

 

23,483

 

 

105,080

 
  Vacated Square Feet         34,644         3,920     38,564  
  Renewed Square Feet         36,631     10,322     19,563     66,516  
  Retention Rate (% based upon square feet)     0.00 %   51.39 %   100.00 %   83.31 %   63.30 %

Renewal & Retenanted Space:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Increase in Base Rent—Straight-line     0.00 %   18.79 %   15.87 %   4.15 %   17.03 %
  Increase in Total Rent—Straight-line     0.00 %   14.10 %   4.75 %   3.69 %   11.05 %
 
Increase in Base Rent—Cash

 

 

0.00

%

 

13.92

%

 

14.87

%

 

0.78

%

 

13.14

%
  Increase in Total Rent—Cash     0.00 %   9.43 %   3.42 %   0.38 %   7.33 %
  Average Capital Cost per Square Foot   $   $ 7.40   $ 19.95   $ 4.58   $ 9.85  

24



Acquisition Summary as of June 30, 2001
(Dollars in Thousands)

 
  Submarket
  Acquisition Date
  Square Feet
  Occupied Sq. Ft. at
Acquisition

  Occupancy
Percentage at
Acquisition

  June 30, 2001
Occupancy Percentage

  Investment(1)
Wholly Owned Portfolio:(2)                              

6700 Alexander Bell Drive

 

Howard County Perimeter

 

5/14/2001

 

75,635

 

75,635

 

100.0%

 

100.0%

 

$

8,762
6708 Alexander Bell Drive   Howard County Perimeter   5/14/2001   35,040   35,040   100.0%   100.0%     4,478
           
 
         
  Total           110,675   110,675   100.0%   100.0%   $ 13,240
           
 
         
Joint Venture Portfolio:(3)                              

920 Elkridge Landing Road

 

BWI Airport

 

3/21/2001

 

96,566

 

96,566

 

100.0%

 

100.0%

 

$

10,939
938 Elkridge Landing Road   BWI Airport   3/21/2001   52,988   52,988   100.0%   100.0%     5,941
940 Elkridge Landing Road   BWI Airport   3/21/2001   51,704   51,704   100.0%   100.0%     4,904
891 Elkridge Landing Road   BWI Airport   3/21/2001   56,489   56,489   100.0%   89.0%     6,129
901 Elkridge Landing Road   BWI Airport   3/21/2001   56,847   50,155    88.2%    88.2%     5,705
           
 
         
  Total           314,594   307,902    97.9%    95.9%   $ 33,618
           
 
         

(1)
Initial investment recorded by property as of June 30, 2001 for asset purchase.

(2)
In conjunction with these operating properties, we also purchased a 30,855 square foot property to be redeveloped.

(3)
We held a 40% ownership interest in these office properties through a joint venture agreement during the quarter. As of July 2, 2001, we acquired the remaining 60% ownership interest for $6.9 million.

NOTE:

 

COPT classifies its acquisitions by type—entity, portfolio or individual acquisitions. Entity acquisitions are defined as mergers of significant portfolios of $100 + million with strong management organizations and a regional presence.


Disposition Summary as of June 30, 2001
(Dollars in Thousands)

 
  Submarket
  Disposition
Date

  Square
Feet

  Gross
Sales
Proceeds

  Debt
Assumption
or Repayment

  Cash Proceeds
After Debt
Repayment

Individual Property:                              

19 Commerce

 

Cranbury, NJ

 

6/18/2001

 

65,277

 

$

11,525

 

$

7,000

 

$

4,525

25


Development Summary as of June 30, 2001
(Dollars in Thousands except per square foot data)

Property and Location

   
  Submarket
  Owned or
Joint
Venture (JV)

  Rentable
Square
Feet

  Percentage
Pre-Leased
or
Committed

  Anticipated
Cost per
Rentable
Square Foot

  Anticipated
Cost

  Cost
to date

  Anticipated
Stabilization/
Delivery

Under Construction                                          
 
2701 Phoenix Road (201 NBP)
Annapolis Junction, MD

 

(1

)

BWI Airport

 

JV

 

118,000

 

77.11

%

$

155

 

$

18,313

 

$

13,604

 

September 2001
 
1304 Concourse Drive
Linthicum, MD

 

(2

)

BWI Airport

 

Owned

 

100,000

 

0.00

%

 

166

 

 

16,572

 

 

11,866

 

October 2001
 
Robert Fulton Drive—Phase IA
Columbia, Maryland

 

(3

)

Howard County Perimeter

 

JV

 

115,850

 

0.00

%

 

116

 

 

13,406

 

 

6,239

 

October 2001
 
114 National Business Parkway
Annapolis Junction, MD

 

 

 

BWI Airport

 

Owned

 

10,000

 

100.00

%

 

164

 

 

1,644

 

 

656

 

December 2001
 
6731 Columbia Gateway Drive
Columbia, Maryland

 

(4

)

Howard County Perimeter

 

Owned

 

122,889

 

0.00

%

 

176

 

 

21,613

 

 

13,574

 

December 2001
 
6724 Alexander Bell Drive
Columbia, Maryland

 

(5

)

Howard County Perimeter

 

Owned

 

30,855

 

0.00

%

 

157

 

 

4,835

 

 

2,378

 

March 2002
 
2711 Phoenix Road (211 NBP)
Annapolis Junction, MD

 

(6

)

BWI Airport

 

JV

 

150,000

 

100.00

%

 

174

 

 

26,135

 

 

8,941

 

March 2002
 
4260 Forbes Boulevard—Phase I
Laurel, Maryland

 

(7

)

Lanham

 

JV

 

54,692

 

43.08

%

 

92

 

 

5,027

 

 

4,640

 

April 2002
               
 
 
 
 
   
 
Total Under Construction:

 

 

 

 

 

 

 

702,286

 

39.09

%

$

153

 

$

107,545

 

$

61,898

 

 
               
 
 
 
 
   

Under Development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
Robert Fulton Drive—Phase IB
Columbia, Maryland

 

(3

)

Howard County Perimeter

 

JV

 

28,500

 

0.00

%

 

116

 

 

3,298

 

 

771

 

December 2002
               
 
 
 
 
   
 
Total Under Development:

 

 

 

 

 

 

 

28,500

 

0.00

%

$

116

 

$

3,298

 

$

771

 

 
               
 
 
 
 
   
 
TOTAL/AVERAGE

 

 

 

 

 

 

 

730,786

 

37.57

%

$

152

 

$

110,843

 

$

62,669

 

 
               
 
 
 
 
   

(1)
On September 29, 2000, we contributed this development asset into a joint venture. The joint venture obtained a $13,725 construction loan in October 2000 and $4,436 is outstanding as of June 30, 2001.

(2)
We obtained a $11,800 construction loan and $6,018 is outstanding as of June 30, 2001.

(3)
We participate in the development of this asset through a joint venture arrangement. The joint venture has obtained a $14,000 construction loan (to fund Phase IA and Phase IB) and has borrowed $2,965 as of June 30, 2001.

(4)
We obtained a $15,750 construction loan and $5,081 is outstanding as of June 30, 2001.

(5)
We purchased this property in May 2001 and are redeveloping.

(6)
On December 15, 2000, we contributed this development asset into a joint venture. The joint venture has obtained a $20,550 construction loan. No draws have been made as of June 30, 2001.

(7)
We participate in the development of this asset through a joint venture arrangement. The joint venture has obtained a $9,026 construction loan (to fund Phase I and II) and has borrowed $3,125 as of June 30, 2001.

26




QuickLinks

FORM 8-K
SIGNATURES
Corporate Office Properties Trust Index to Supplemental Information (Unaudited) June 30, 2001
Quarterly Selected Financial Summary Data (Dollars in thousands)
Quarterly Consolidated Balance Sheets (Dollars in thousands except per share data)
Quarterly Consolidated Statements of Operations and Funds From Operations (FFO) (Dollars and units in thousands)
Quarterly Consolidated Statements of Operations and FFO per Diluted Share (Shares in thousands)
Quarterly Equity Analysis (Amounts in thousands, except per share data, share prices and ratios)
Quarterly Valuation Analysis (Dollars in thousands except per share data and ratios)
Quarterly Debt Analysis (Dollars in thousands)
Quarterly Operating Ratios
Quarterly Dividend Analysis
Investor Composition and Analyst Coverage (as of June 30, 2001)
Property Summary by Region—June 30, 2001
Property Occupancy Rates by Region by Quarter
Top Twenty Office Tenants as of June 30, 2001 (Dollars and Square Feet in thousands)
Total Rental Revenue by Geographic Region by Quarter(1) (Dollars in thousands)
Net Operating Income by Geographic Region by Quarter (Dollars in thousands)
Same Office Property Cash Net Operating Income by Quarter (1) (Dollars in thousands)
Same Office Property GAAP Net Operating Income by Quarter(1) (Dollars in thousands)
Office Lease Expiration Analysis by Year
Acquisition Summary as of June 30, 2001 (Dollars in Thousands)
Disposition Summary as of June 30, 2001 (Dollars in Thousands)
Development Summary as of June 30, 2001 (Dollars in Thousands)