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): December 30, 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)
401 CITY AVENUE, SUITE 615
BALA CYNWYD, PA 19004
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(Address of principal executive offices)
(610) 538-1800
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(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
135 NATIONAL BUSINESS PARKWAY
On December 30, 1998, Corporate Office Properties Trust (the
"Company"), through affiliates of Corporate Office Properties L.P. (the
"Operating Partnership"), and pursuant to agreements with affiliates of
Constellation Real Estate Group, Inc. ("Constellation") to acquire certain real
estate properties and service businesses, acquired a newly-constructed office
building ("NBP 135") located in Anne Arundel County, Maryland.
NBP 135 was acquired at an aggregate price of $12.4 million, including
$250,000 in transaction costs, which was financed as follows: (i) the issuance
of 330,236 Common Shares of Beneficial Interest, par value $0.01 per share
("Common Shares"), valued at $3,467,000 ($10.50 per share), (ii) the issuance of
46,233 Series A Convertible Preferred Shares of Beneficial Interest ("Preferred
Shares"), valued at $1,156,000 ($25.00 per share), (iii) $7,125,000 in assumed
debt and (iv) $652,000 using a portion of the proceeds from an $8.8 million
disbursement from a nonrecourse loan with Teachers Insurance and Annuity
Association of America (the "TIAA Loan") funded on December 30, 1998. The
assumed debt was paid off on December 30, 1998, also using a portion of the
proceeds from the $8.8 million disbursement on the TIAA Loan. The Common Share
and Preferred Share per share prices were established pursuant to the
acquisition agreements with Constellation.
NBP 135, located in the National Business Park in Anne Arundel County,
Maryland, totals approximately 87,000 square feet. As of December 31, 1998, NBP
135 was 100% leased to 5 tenants. NBP 135's major tenant is Credit Management
Solutions, Inc., which is under lease for approximately 71,000 square feet or
82% of the building's total aggregate square feet.
The following schedule sets forth annual lease expirations for NBP 135
assuming that none of the tenants exercise renewal options:
NBP 135
SCHEDULE OF LEASE EXPIRATIONS
Total Rental
Revenue of Total Rental
Expiring Percentage Revenue
Square Leases of Total of Expiring
Number of Footage Percentage of Per Rentable Rental Leases Per
Year of Leases of Leases Leased Total Square Revenue Rentable Square
Expiration Expiring Expiring Square Feet Foot (1) Expiring (1) Foot (1)
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1999............... 1 3,986 4.59% $ 84,000 5.20% $21.07
2000............... - - 0.00% - 0.00% -
2001............... - - 0.00% - 0.00% -
2002............... - - 0.00% - 0.00% -
2003............... - - 0.00% - 0.00% -
2004............... 2 6,089 7.01% 127,869 7.92% 21.00
2005............... 1 5,806 6.68% 124,829 7.73% 21.50
2006............... - - 0.00% - 0.00% -
2007............... - - 0.00% - 0.00% -
2008............... 1 70,982 81.72% 1,277,676 79.15% 18.00
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5 86,863 100.00% $ 1,614,374 100.00% $18.59
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(1) Total Rental Revenue is the monthly contractual base rent as of
December 31, 1998 multiplied by 12, plus the estimated Annualized
expense reimbursements under existing leases.
GATEWAY PROPERTIES
On December 31, 1998, the Company, through affiliates of the Operating
Partnership, acquired three office buildings (the "Gateway Properties") and a
contiguous parcel of developed land (the "Gateway Land") located in Columbia,
Maryland.
The purchase price of the Gateway Properties totaled approximately
$19.1 million, including approximately $250,000 in transaction costs. The
purchase price was determined through arms-length negotiation with the sellers,
Metropolitan Life Insurance Company and M.O.R. 44 Gateway Associates Limited
Partnership. The Company paid the purchase price and transaction costs using
borrowings under its existing senior revolving credit facility with Bankers
Trust Company.
The Gateway Properties, located in the Columbia Gateway Business Park
in Columbia, Maryland, total approximately 149,000 square feet. As of December
31, 1998, the Gateway Properties were 100% leased to 14 tenants. Major tenants
as of December 31, 1998, include Sun Microsystems, Inc., Johns Hopkins
University and Cadence Design Systems, Inc., under leases aggregating
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approximately 42,000, 25,000 and 24,000 square feet, respectively. The Gateway
Land has aggregate office development potential of approximately 60,000 square
feet.
The following schedule sets forth annual lease expirations for the
Gateway Properties assuming that none of the tenants exercise renewal options:
GATEWAY PROPERTIES
SCHEDULE OF LEASE EXPIRATIONS
Total Rental
Revenue of Total Rental
Expiring Percentage Revenue
Square Leases of Total of Expiring
Number of Footage Percentage of Per Rentable Rental Leases Per
Year of Leases of Leases Leased Total Square Revenue Rentable Square
Expiration Expiring Expiring Square Feet Foot (1) Expiring (1) Foot (1)
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1999............ 2 17,188 11.54% $ 306,329 10.73% $17.82
2000............ 5 62,193 41.80% 1,098,649 38.47% 17.67
2001............ 2 6,871 4.62% 125,403 4.39% 18.25
2002............ 4 62,215 41.81% 1,316,421 46.09% 21.16
2003............ 1 337 0.23% 9,063 .32% 26.89
2004............ - - 0.00% - 0.00% -
2005............ - - 0.00% - 0.00% -
2006............ - - 0.00% - 0.00% -
2007............ - - 0.00% - 0.00% -
2008............ - - 0.00% - 0.00% -
2009 &
Thereafter..... - - 0.00% - 0.00% -
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14 148,804 100.00% $ 2,855,865 100.00% $19.19
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(1) Total Rental Revenue is the monthly contractual base rent as of
December 31, 1998 multiplied by 12, plus the estimated annualized
expense reimbursements under existing leases.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of Businesses Acquired
The combined financial statements of the Gateway
Properties will be filed by amendment. Financial
information is not available for NBP 135 since this
building was newly-constructed and as a result has no
operating history.
(b) Pro Forma Financial Information
The pro forma condensed consolidated financial
statements of the Company will be filed by amendment.
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(c) Exhibits
EXHIBIT NUMBER DESCRIPTION
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2.1.1 Contribution Agreement between the Company
and the Operating Partnership and certain
Constellation affiliates (filed as Exhibit A
of the Company's Schedule 14A Information on
June 26, 1998 and incorporated herein by
reference).
2.1.2 First Amendment to Contribution Agreement,
dated July 16, 1998, between Constellation
Properties, Inc. and certain entities
controlled by Constellation Properties, Inc.
(filed with the Company's Current Report on
Form 8-K on October 13, 1998 and incorporated
herein by reference).
2.1.3 Second Amendment to Contribution Agreement,
dated September 28, 1998, between
Constellation Properties, Inc. and certain
entities controlled by Constellation
Properties, Inc. (filed with the Company's
Current Report on Form 8-K on October 13,
1998 and incorporated herein by reference).
2.2 Contribution Agreement between the Company
and the Operating Partnership and certain
Constellation affiliates (filed as Exhibit A
of the Company's Schedule 14A Information on
June 26, 1998 and incorporated herein by
reference).
2.3 Contribution Agreement, dated December 31,
1998, between the Operating Partnership and
M.O.R. 44 Gateway Associates L.P., RA & DM,
Inc. and M.R.U. L.P.
2.4.1 Purchase and Sale Agreement, dated December
31, 1998, between Metropolitan Life Insurance
Company and Corporate Office Acquisitions,
Inc.
2.4.2 Amendment to Purchase and Sale Agreement,
dated December 31, 1998, between Metropolitan
Life Insurance Company, DPA/Gateway L.P.,
Corporate Office Acquisitions, Inc., COPT
Gateway, LLC and the Operating Partnership
4.1 Articles Supplementary of Corporate Office
Properties Trust Series A Convertible
Preferred Shares, dated September 28, 1998
(filed with the Company's Current Report on
Form 8-K on October 13, 1998 and incorporated
herein by reference).
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EXHIBIT NUMBER DESCRIPTION
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4.2 First Amendment to Amended and Restated
Limited Partnership Agreement of the
Operating Partnership, dated September 28,
1998 (filed with the Company's Current Report
on Form 8-K on October 13, 1998 and
incorporated herein by reference).
4.3 Third Amendment to Amended and Restated
Limited Partnership Agreement of the
Operating Partnership, dated December 31,
1998.
99.1 Definitive Proxy Statement for August 21,
1998 Special Meeting of Shareholders (filed
with the Company's Current Report on Form 8-K
on October 13, 1998 and incorporated herein
by reference).
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: January 14, 1999
CORPORATE OFFICE PROPERTIES TRUST
By: /S/ RANDALL M. GRIFFIN
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Name: Randall M. Griffin
Title: President
By: /S/ ROGER A. WAESCHE, JR.
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Name: Roger A. Waesche, Jr.
Title: Senior Vice President of Finance
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