UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 1998
CORPORATE OFFICE PROPERTIES TRUST
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(Exact name of registrant as specified in its charter)
Maryland 0-20047 23-2947217
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification Number)
One Logan Square, Suite 1105
Philadelphia, PA 19103
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(Address of principal executive offices) (Zip Code)
(215) 567-1800
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(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets.
On May 28, 1998, Corporate Office Properties Trust (the "Company") through
Corporate Office Properties, L.P. (the "Operating Partnership"), acquired
Fairfield Corporate Center, two multistory office buildings (the "Acquired
Properties") located in Fairfield, NJ, from 695 Rt. 46 Realty LLC and 710 Rt. 46
Realty LLC, unrelated parties. The purchase price of the Acquired Properties
aggregated approximately $28.8 million including $6.5 million of assumed debt
(the "Assumed Debt"). The balance of the purchase price was paid in cash.
Life Investors Insurance Company of America is the lender on the Assumed Debt.
The Assumed Debt bears interest at a fixed rate of 8.29% per annum and provides
for monthly payments of principal and interest totaling $56,402. This debt
matures on May 1, 2007.
Concurrent with the acquisition, the Company closed on a $100 million, two-year,
senior revolving credit facility with Bankers Trust Company (the "Credit
Facility"). The Credit Facility will be used to refinance existing indebtedness,
fund acquisitions and new development projects, and for general working capital
purposes, including capital expenditures and tenant improvements. The Credit
Facility is recourse to the Company and the Operating Partnership and will be
secured by, among other items, first mortgage liens on certain of the office
properties owned by the Operating Partnership. The Credit Facility is a variable
rate loan, bears interest at LIBOR plus 175 basis points and provides for
monthly payments of interest only. A fee of 25 basis points per annum on the
unused amount of the Credit Facility will be payable quarterly, in arrears. On
May 28, 1998, the Company borrowed as the initial funding proceeds,
approximately $23.8 million. The Company used the loan proceeds primarily for
the acquisition of the Acquired Properties, including costs associated with the
acquisition.
The Acquired Properties, located on Rt. 46 in Fairfield, NJ, total approximately
262,000 square feet. As of June 1, 1998, the Acquired Properties were
approximately 84% leased to 25 tenants. Major tenants include the United Health
Care Services and Pearson Inc., under leases aggregating approximately 34,000
and 24,000 square feet, respectively, representing 13% and 9% of the Acquired
Properties' aggregate square feet.
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The following table sets forth a summary schedule of the lease expirations for
the Acquired Properties, for leases in place as of June 1, 1998, assuming that
none of the tenants exercise renewal options.
Total Rental Total Rental
Square Revenue of Revenue of Percentage of
Number Footage of Percentage of Expiring Expiring Leases Total Rental
Year of Lease of Leases Expiring Total Leased Leases ($000) per Rentable Revenue
Expiration Expiring Leases Square Feet (1) Square Foot (1) Expiring (1)
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6/1/98 - 1 8,257 3.77% $ 134,095 $ 16.24 3.44%
12/31/98 (2)
1999 2 21,191 9.68 347,338 16.39 8.92
2000 3 6,208 2.83 110,373 17.63 2.83
2001 7 75,177 34.34 1,276,210 17.78 32.75
2002 4 10,932 5.00 203,007 16.98 5.21
2003 4 17,337 7.92 314,169 18.57 8.06
2004 2 27,034 12.35 478,879 17.71 12.29
2005 - - - - - -
2006 - - - - - -
2007 1 18,648 8.52 400,377 21.47 10.28
2008 1 34,163 15.60 632,016 18.50 16.22
2009 and
thereafter - - - - - -
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Total/Average 37 218,947 100.00% $ 3,896,462 $17.80 100.00%
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(1) Total Rental Revenue is the monthly contractual charge as of June 1, 1998
multiplied by 12 including any operating expense reimbursements.
(2) Excludes 43,053 vacant square feet as of June 1, 1998.
Item 5. Other Events.
See Item 2 above for a description of the Company's Credit
Facility closed on May 28, 1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
The combined financial statements of the Acquired
Properties will be filed by amendment not later than
July 27, 1998.
(b) Pro Forma Financial Information
The pro forma condensed consolidated financial
statements of the Company will be filed by amendment
not later than July 27, 1998.
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(c) Exhibits
Exhibit Number Description
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10.6 Purchase and Sale Agreement dated as of March 4, 1998
between 695 Rt. 46 Realty, LLC, 710 Rt. 46 Realty, LLC
and COPT Acquisitions, Inc.
10.7 Letter Amendment to Purchase and Sale
Agreement dated as of March 26, 1998 between
695 Rt. 46 Realty, LLC, 710 Rt. 46 Realty, LLC
and COPT Acquisitions, Inc.
10.8 Secured Promissory Note dated as of April 29, 1997
between 710 Rt. 46 Realty, LLC and Life Investors
Insurance Company of America
10.9 Mortgage and Security Agreement dated as of April 29,
1997 between 710 Rt. 46 Realty, LLC and Life Investors
Insurance Company of America
10.10 Senior Secured Revolving Credit Agreement dated as of
May 28, 1998 between Corporate Office Properties, L.P.,
Corporate Office Properties Trust, Any Mortgaged
Property Subsidiary and Bankers Trust Company
Exhibits and Schedules have been omitted based on rule 601 (b) (2). Such
exhibits and schedules are described in the agreements. The registrant hereby
agrees to furnish to the Commission upon its request any or all such omitted
exhibits or schedules.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 10, 1998
CORPORATE OFFICE PROPERTIES TRUST
By: /s/ Clay W. Hamlin, III
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Name: Clay W. Hamlin, III
Title: President and
Chief Executive Officer
By: /s/ Thomas D. Cassel
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Name: Thomas D. Cassel
Title: Vice President Finance
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