Exhibit 99.1

 

Supplemental Information

(Unaudited)

 

 

September 30, 2004

 

 

 

 

Corporate Office Properties Trust

Index to Supplemental Information (Unaudited)

September 30, 2004

 

Highlights and Discussion
Reporting Period Highlights – Third Quarter 2004	1
Forward-Looking Statements	3
Financial Statements
Quarterly Selected Financial Summary Data	4
Quarterly Consolidated Balance Sheets	5
Quarterly Consolidated Statements of Operations	6
Quarterly Consolidated Reconciliations of Funds From Operations (FFO), Adjusted Funds From Operations (AFFO) and Earnings per diluted share, as adjusted	7
Quarterly Consolidated Reconciliations of Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA), Combined Net Operating Income (NOI), Discontinued Operations and Gains on Sales of Real Estate	8
Selected Financial Analyses
Quarterly Equity Analysis	9
Quarterly Debt Analysis	10
Quarterly Operating Ratios	11
Quarterly Dividend Analysis	12
Investor Composition and Analyst Coverage	13
Debt Maturity Schedule – September 30, 2004	14
Portfolio Summary
Property Summary by Region – September 30, 2004	15
Property Occupancy Rates by Region by Quarter	19
Top Twenty Office Tenants as of September 30, 2004	20
Combined Real Estate Revenue and Combined Net Operating Income by Geographic Region by Quarter	21
Same Office Property Cash and GAAP Net Operating Income by Quarter	22
Average Occupancy Rates by Region for Same Office Properties	23
Office Lease Expiration Analysis by Year	24
Quarterly Office Renewal Analysis	25
Year-to-date Acquisition Summary as of September 30, 2004	27
Development Summary as of September 30, 2004	28
Year to Date Development Placed Into Service as of September 30, 2004	29
Land Inventory as of September 30, 2004	30
Joint Venture Summary as of September 30, 2004	31
Reconciliations of Non GAAP Measurements	32

 

 

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, furnished to the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our quarterly and annual reports.  If you have any questions or comments, please contact Ms. Mary Ellen Fowler, Vice President, Finance and Investor Relations at (410) 992-7324 or maryellen.fowler@copt.com.  Reconciliations between GAAP and non-GAAP measurements have been provided on pages 32 through 33.  Refer to our Form 8k for definitions of certain terms used herein.

 

 

Reporting Period Highlights – Third Quarter 2004

 

Financial Results

 

•      Reported Net Income Available to Common Shareholders of $4,153,000 or $.12 per diluted share for the third quarter of 2004 as compared to $5,425,000 or $.18 per diluted share for the comparable 2003 period.  Included in our net income available to common shareholders is recognition of an accounting charge of $1.8 million associated with the write-off of initial offering costs associated with the redemption of the Series B preferred shares.  Without this accounting charge, our net income available to common shareholders – diluted, as adjusted, would have been $.17 per share, representing a decrease of (5.6)% over the comparable 2003 period.

•      Reported FFO – diluted of $17,368,000 or $.39 per share/unit for the third quarter of 2004 as compared to $16,725,000 or $.41 per share/unit for the comparable 2003 period, representing a decrease of (4.9)% per share/unit.  Included in our FFO – diluted is recognition of the same $1.8 million accounting charge associated with the Series B preferred share redemption.  Without this accounting charge, our FFO – diluted, as adjusted, would have been $.43 per share, representing an increase of 4.9%.

•      Recorded SFAS 141 accretion of intangible assets and liabilities classified as revenues of $224,000 and $347,000 in the third quarter of 2004 and 2003, respectively, which increased FFO.

•      Reported AFFO – diluted of $11,759,000 for the third quarter of 2004 as compared to $11,963,000 for the comparable 2003 period, representing a decrease of (1.7)%. 

•      Our FFO payout ratio was 65.9% for the third quarter of 2004 as compared to 53.9% for the comparable 2003 period.  Our AFFO payout ratio was 97.3% for the third quarter of 2004 as compared to 75.4% for the comparable 2003 period. 

 

Financing Activity and Capital Transactions

 

•      On July 15, 2004, we redeemed all of our 10.0% Series B Cumulative Redeemable Preferred Shares at a price of $25.00 per share.

•      On August 27, 2004, we closed a $115.0 million, 5.47% fixed rate mortgage, collateralized by three Northern Virginia properties and utilized the proceeds to retire a $43.6 million mortgage secured by one of the properties, bearing interest at LIBOR rate plus 1.85%.   The remaining loan proceeds were used to repay borrowings under our unsecured revolving credit facility and for general corporate purposes.

•      Increased our quarterly dividend 8.5% from $.235 to $.255 per share.

 

1

 

•      On September 23, 2004, we issued 2,283,600 common shares, generating proceeds of $57.3 million, or $25.10 per share.  The proceeds were used to pay down our unsecured revolving credit facility.

•      On September 28, 2004, we closed a $63.0 million construction facility and initially borrowed $8.3 million.  This facility matures in September 2007, unless a one-year extension option is exercised.   This facility will be used to fund construction costs associated with 318 Carina Road, 2691 Technology Drive and 304 Carina Road (known as 318 NBP, 191 NBP and 304 NBP, respectively).

•      As of September 30, 2004, our debt to market capitalization was 41.5% and our debt to undepreciated book value of real estate assets was 56.2%.  We achieved an EBITDA interest coverage ratio of 3.2x and an EBITDA fixed charge coverage ratio of 2.4x for this quarter.

 

Acquisitions / Dispositions

 

•      On September 23, 2004, we acquired two office buildings containing 440,102 rentable square feet for $112.5 million in McLean, Virginia.  We funded this purchase by assuming a $64.4 million, 5.2% fixed rate mortgage scheduled to mature in October 2013.  Additionally, we issued 352,000 Series I convertible preferred units at $25.00 per unit for a total of $8.8 million in consideration.  Finally, we closed a $34.5 million secured term loan facility and used cash reserves to fund the remaining purchase price.  This purchase marks our entrance into the Tysons Corner submarket.

•      On September 29, 2004, we acquired an office building containing 114,126 square feet for $21.7 million in Chantilly, Virginia.  We assumed a $9.9 million, 7.94% fixed rate mortgage scheduled to mature in September 2025 and funded the remaining purchase price from cash reserves.  Accordingly, we have expanded our Northern Virginia presence to 12 properties containing 2.2 million rentable square feet.

 

Joint Venture / Development

 

•      In September 2004, we acquired for $4.9 million, the remaining joint venture interest in the property located at 2720 Technology Drive (known as 220 NBP).  This former development property was placed into service upon rent commencement in September 2004.  The entire building is leased to The Titan Corporation for a ten-year term.

•      Executed a lease with Northrop Grumman Systems Corporation for all 103,683 rentable square feet of 2691 Technology Drive (known as 191 NBP).  This building is under construction with an anticipated occupancy in the third quarter of 2005.

•      Executed a lease with Booz Allen Hamilton Inc. for all 162,498 rentable square feet of 304 Carina Road (known as 304 NBP). This building is under construction with an anticipated occupancy in the first quarter of 2006.

•      Acquired 14.0 acres of land located in Columbia Gateway Business Park for $6.3 million.  The purchase was funded with $1.1 million in cash and a $5.0 million loan from the seller.  This non-interest bearing loan is repayable in $2.5 million installments due in December 2004 and in March 2005.

 

Operations

 

•      Overall occupancy was 93.0% and our portfolio was 94.9% leased as of September 30, 2004.

•      Our same property cash NOI decreased slightly by (1.0)% or $(267,000) as compared to the quarter ended September 30, 2003.  This drop in cash NOI in our same office portfolio primarily relates to $1.1 million increase in repairs and maintenance costs offset by higher rental income of $1.0 million.  Our same property portfolio consists of 111 properties and represents 79.5% of our total square feet owned as of September 30, 2004.

 

2

 

•      Weighted average lease term of our office portfolio is 4.9 years as of September 30, 2004, with an average contractual rental rate (including tenant reimbursements of operating costs) of $20.28 per square foot.

•      We renewed 198,318 square feet or 77.3% of our expiring office leases (based upon square footage) with an average capital cost of $2.52 per square foot during the third quarter.  For our renewed and retenanted space of 403,810 square feet, we realized changes in base rent and total rent, on a straight-line basis, of 9.5% and 6.4%, respectively, as measured from the GAAP straight-line rent, in effect preceding the renewal date.  We incurred an average capital cost of $10.15 per square foot for our renewed and retenanted space in the third quarter.

 

Forward-Looking Statements

 

This supplemental information contains “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on our current expectations, estimates and projections about future events and financial trends affecting us.  Forward-looking statements can be identified by the use of words such as “may”, “will”, “should”, “expect”, “estimate” or other comparable terminology.  Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate.  Accordingly, we can give no assurance that these expectations, estimates and projections will be achieved.  Future events and actual results may differ materially from those discussed in the forward-looking statements.

 

Important factors that may affect these expectations, estimates, and projections include, but are not limited to:

 

•      our ability to borrow on favorable terms;

•      general economic and business conditions, which will, among other things, affect office property demand and rents, tenant creditworthiness, interest rates and financing availability;

•      adverse changes in the real estate markets including, among other things, increased competition with other companies;

•      risk of real estate acquisition and development, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated;

•      risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives;

•      governmental actions and initiatives; and

•      environmental requirements.

 

We undertake no obligation to update or supplement any forward-looking statements.  For further information, please refer to our filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2003.

 

3

 

Quarterly Selected Financial Summary Data

(Dollars in thousands)

 

		2004									2003
		September 30			June 30			March 31			December 31			September 30
Revenues from Real Estate Operations		$	53,097		$	53,892		$	48,971		$	46,579		$	45,448
Total Revenues		60,822			60,251			56,829			51,856			65,252
Combined Net Operating Income		36,899			39,245			33,932			32,710			32,384
EBITDA		34,713			37,020			32,078			30,711			31,312
Net Income		9,750			8,843			8,993			8,070			8,582
Preferred Share dividends		(3,784		)	(4,435		)	(4,456		)	(3,779		)	(3,157		)
Issuance costs associated with redeemed preferred shares		(1,813		)	—			—			—			—
Net Income (Loss) Available to Common Shareholders		$	4,153		$	4,408		$	4,537		$	4,291		$	5,425
Earnings per diluted share		$	0.12		$	0.13		$	0.14		$	0.14		$	0.18
Earnings per diluted share, as adjusted for issuance costs associated with redeemed preferred shares		$	0.17		$	0.13		$	0.14		$	0.14		$	0.18
Funds From Operations (FFO) - Diluted		$	17,368		$	21,410		$	16,307		$	16,187		$	16,725
FFO per diluted share		$	0.39		$	0.50		$	0.40		$	0.40		$	0.41
FFO per diluted share, as adjusted for issuance costs associated with redeemed preferred shares		$	0.43		$	0.50		$	0.40		$	0.40		$	0.41
FFO - Diluted, excluding SFAS 141		$	17,144		$	21,137		$	15,998		$	15,835		$	16,378
FFO per diluted share, excluding SFAS 141		$	0.39		$	0.49		$	0.39		$	0.39		$	0.41
Adjusted FFO - Diluted		$	11,759		$	13,956		$	12,209		$	11,060		$	11,963
Payout Ratios:
Earnings Payout		222.37		%	178.71		%	158.21		%	158.63		%	125.31		%
FFO - Diluted (A)		65.85		%	46.40		%	56.87		%	55.77		%	53.93		%
AFFO - Diluted (B)		97.26		%	71.19		%	75.95		%	81.62		%	75.39		%
Total Dividends/Distributions		$	15,235		$	14,370		$	13,708		$	12,670		$	12,040

 

(A)  Computed by dividing total dividends/distributions (except for dividends on Series B, E, F, G and H Cumulative Redeemable Preferred Shares which are deducted to calculate FFO) by FFO diluted.

 

(B)   Computed by dividing total dividends/distributions (except for dividends on Series B, E, F, G and H Cumulative Redeemable Preferred Shares which are deducted to calculate AFFO) by AFFO diluted.

 

Note:  The above presentation does not separately report discontinued operations.

 

4

 

Quarterly Consolidated Balance Sheets

(Dollars in thousands except per share data)

 

		2004									2003
		September 30			June 30			March 31			December 31			September 30
Assets
Investment in real estate:
Land - operational		$	260,197		$	236,026		$	229,558		$	216,703		$	208,380
Land - development		75,925			70,407			59,231			53,356			43,482
Construction in progress		49,371			51,365			35,387			13,793			9,474
Buildings and improvements		1,231,518			1,091,865			1,071,701			1,003,214			981,347
Investment in and advances to unconsolidated real estate joint ventures		1,094			1,055			1,059			5,262			9,576
Less: accumulated depreciation		(131,018		)	(121,630		)	(110,155		)	(103,070		)	(96,538		)
Net investment in real estate		1,487,087			1,329,088			1,286,781			1,189,258			1,155,721
Cash and cash equivalents		6,812			12,202			9,536			9,481			13,372
Restricted cash		10,760			12,137			13,528			11,030			7,878
Accounts receivable, net		10,278			16,012			9,708			13,047			7,049
Investment in and advances to other unconsolidated entities		1,621			1,621			1,621			1,621			1,621
Deferred rent receivable		23,383			20,857			18,673			17,903			16,728
Deferred charges, net		26,407			24,006			19,551			17,723			17,487
Intangible assets on real estate acquisitions, net		67,083			53,874			55,577			55,692			57,371
Prepaid and other assets		14,703			18,380			14,719			14,311			21,237
Furniture, fixtures and equipment, net of accumulated depreciation		2,579			2,512			2,316			2,010			2,006
Total assets		$	1,650,713		$	1,490,689		$	1,432,010		$	1,332,076		$	1,300,470
Liabilities and shareholders’ equity
Liabilities:
Mortgage and other loans payable		$	947,332		$	820,344		$	829,755		$	738,698		$	759,298
Accounts payable and accrued expenses		41,155			37,523			29,217			23,126			15,450
Rents received in advance and security deposits		11,519			11,950			11,842			10,112			11,503
Deferred revenue associated with acquired operating leases		7,670			8,335			8,734			9,630			10,291
Dividends/distributions payable		14,533			13,668			12,991			12,098			11,637
Fair value of derivatives		45			106			429			467			726
Other liabilities		7,115			7,105			3,184			7,768			7,114
Total liabilities		1,029,369			899,031			896,152			801,899			816,019
Minority interests:
Preferred Units in the Operating Partnership		8,800			—			—			—			—
Common Units in the Operating Partnership		90,029			84,844			79,245			79,796			80,411
Other consolidated real estate joint ventures		1,594			5,602			5,498			—			—
Total minority interests		100,423			90,446			84,743			79,796			80,411
Commitments and contingencies		—			—			—			—			—
Shareholders’ equity:
Preferred Shares ($0.01 par value; 15,000,000 authorized);
1,725,000 designated as Series B Cumulative Redeemable Preferred Shares of beneficial interest (no shares issued as of September 30, 2004)		—			13			13			13			13
544,000 designated as Series D Cumulative Convertible Redeemable Preferred Shares of beneficial interest (no shares issued as of September 30, 2004)		—			—			—			5			5
1,265,000 designated as Series E Cumulative Redeemable Preferred Shares of beneficial interest (1,150,000 shares issued as of September 30, 2004)		11			11			11			11			11
1,425,000 designated as Series F Cumulative Redeemable Preferred Shares of beneficial interest (1,425,000 shares issued as of September 30, 2004)		14			14			14			14			14
2,200,000 designated as Series G Cumulative Redeemable Preferred Shares of beneficial interest (2,200,000 shares issued as of September 30, 2004)		22			22			22			22			22
2,000,000 designated as Series H Cumulative Redeemable Preferred Shares of beneficial interest (2,000,000 shares issued as of September 30, 2004)		20			20			20			20			—
Common Shares of beneficial interest ($0.01 par value; 45,000,000 authorized, 36,801,533 shares issued as of September 30, 2004)		368			341			312			296			296
Treasury Shares, at cost (166,600 shares as of September 30, 2004)		(1,415		)	(1,415		)	(1,415		)	(1,415		)	(1,415		)
Additional paid-in capital		575,180			552,341			499,132			494,299			445,717
Cumulative distributions in excess of net income		(47,862		)	(44,593		)	(41,123		)	(38,483		)	(35,968		)
Value of unearned restricted common share grants		(5,381		)	(5,459		)	(5,543		)	(4,107		)	(4,107		)
Accumulated other comprehensive loss		(36		)	(83		)	(328		)	(294		)	(548		)
Total shareholders’ equity		520,921			501,212			451,115			450,381			404,040
Total shareholders’ equity and minority interests		621,344			591,658			535,858			530,177			484,451
Total liabilities and shareholders’ equity		$	1,650,713		$	1,490,689		$	1,432,010		$	1,332,076		$	1,300,470

 

5

 

Quarterly Consolidated Statements of Operations

(Dollars and units in thousands)

 

		2004									2003
		September 30			June 30			March 31			December 31			September 30
Revenues
Rental revenue		$	47,491		$	49,038		$	43,194		$	40,127		$	40,210
Tenant recoveries and other revenue		5,606			4,854			5,777			6,452			5,238
Construction contract revenues		6,766			5,233			6,137			4,643			19,008
Other service operations revenues		959			1,126			1,721			634			795
Total Revenues		60,822			60,251			56,829			51,856			65,251
Expenses
Property operating		16,197			14,647			15,039			13,869			13,075
Depreciation and amortization		11,802			15,884			10,359			10,387			9,462
Construction contract expenses		6,483			4,979			5,818			4,384			18,034
Other service operations expenses		754			1,142			1,298			666			1,027
General and administrative expenses		2,698			2,487			2,286			2,242			1,937
Total operating expenses		37,934			39,139			34,800			31,548			43,535
Operating Income		22,888			21,112			22,029			20,308			21,716
Interest expense		(10,839		)	(10,514		)	(10,262		)	(10,471		)	(10,436		)
Amortization of deferred financing costs		(577		)	(500		)	(859		)	(811		)	(773		)
Income from continuing operations before gain on sales of real estate, equity in (loss)/income of unconsolidated entities, income taxes and minority interests		11,472			10,098			10,908			9,026			10,507
Gain/(loss) on sales of real estate, excluding discontinued operations		24			24			(222		)	24			23
Equity in (loss)/income of unconsolidated entities		—			—			(88		)	(7		)	95
Income tax (expense)/benefit		(145		)	(30		)	(200		)	406			(297		)
Income from continuing operations before minority interests		11,351			10,092			10,398			9,449			10,328
Minority interest in income from continuing operations of consolidated subsidiaries
Common units in the Operating Partnership		(1,595		)	(1,241		)	(1,405		)	(1,378		)	(1,757		)
Preferred units in the Operating Partnership		(14		)	—			—			—			—
Other consolidated entities		8			(8		)	—			—			—
Income from continuing operations		9,750			8,843			8,993			8,071			8,571
Income from discontinued operations, net of minority interests		—			—			—			(1		)	11
Net Income		9,750			8,843			8,993			8,070			8,582
Preferred share dividends		(3,784		)	(4,435		)	(4,456		)	(3,779		)	(3,157		)
Issuance costs associated with redeemed preferred shares		(1,813		)	—			—			—			—
Net Income Available to Common Shareholders		$	4,153		$	4,408		$	4,537		$	4,291		$	5,425
For EPS Computations:
Numerator:
Net Income Available to Common Shareholders		$	4,153		$	4,408		$	4,537		$	4,291		$	5,425
Dividends on convertible preferred shares		—			—			21			136			136
Numerator for Dilutive EPS Computation		$	4,153		$	4,408		$	4,558		$	4,427		$	5,561
Denominator:
Weighted Average Common Shares - Basic		33,797			32,743			29,814			28,951			28,832
Dilutive options		1,655			1,639			1,749			1,658			1,480
Preferred shares outstanding assuming conversion		—			—			539			1,197			1,197
Weighted Average Common Shares - Diluted		35,452			34,382			32,102			31,806			31,509
Earnings per diluted share		$	0.12		$	0.13		$	0.14		$	0.14		$	0.18

 

6

 

Quarterly Consolidated Reconciliations of Funds From Operations (FFO), Adjusted Funds From

Operations (AFFO) and Earnings per diluted share, as adjusted

(Dollars and shares in thousands)

 

		2004									2003
		September 30			June 30			March 31			December 31			September 30
Net Income		$	9,750		$	8,843		$	8,993		$	8,070		$	8,582
Preferred share dividends		(3,784		)	(4,435		)	(4,456		)	(3,779		)	(3,157		)
Issuance costs associated with redeemed preferred shares		(1,813		)
Combined real estate related depreciation and other amortization		11,700			15,785			10,261			10,292			9,337
Depreciation and amortization of unconsolidated real estate entities		—			—			106			112			86
Depreciation and amortization allocable to minority interests in other consol. entities		(56		)	—			—			—			—
Minority interest - common units, gross		1,595			1,241			1,405			1,378			1,763
Gain on sale of real estate properties, excluding redevelopment		(24		)	(24		)	(23		)	(23		)	(23		)
Funds From Operations (FFO) - Basic		17,368			21,410			16,286			16,050			16,588
Convertible preferred share dividends		—			—			21			136			136
Expense on dilutive options		—			—			—			1			1
Funds From Operations (FFO) - Diluted		$	17,368		$	21,410		$	16,307		$	16,187		$	16,725
Straight line rents		(2,519		)	(2,184		)	(766		)	(1,061		)	(1,293		)
Accretion of intangible assets and liabilities classified as revenues		(224		)	(273		)	(309		)	(352		)	(347		)
Issuance costs associated with redeemed preferred shares		1,813			—			—			—			—
Recurring capital improvements		(4,679		)	(4,997		)	(3,023		)	(3,714		)	(3,122		)
Adjusted Funds from Operations - Diluted		$	11,759		$	13,956		$	12,209		$	11,060		$	11,963
Preferred dividends - redeemable non-convertible (1)		3,784			4,435			4,435			3,643			3,021
Preferred dividends - redeemable convertible		—			—			21			136			136
Preferred distributions		14			—			—			—			—
Common distributions		2,202			2,057			2,074			2,084			2,085
Common dividends		9,235			7,878			7,178			6,807			6,798
Total Dividends/Distributions		$	15,235		$	14,370		$	13,708		$	12,670		$	12,040
Denominator for earnings per share - Diluted		35,452			34,382			32,102			31,806			31,509
Common units		8,690			8,765			8,863			8,870			8,909
Dilutive options		—			—			—			5			—
Denominator for funds from operations per share - Diluted		44,142			43,147			40,965			40,681			40,418
Funds From Operations (FFO) - Diluted		$	17,368		$	21,410		$	16,307		$	16,187		$	16,725
Reclassification of accretion of intangible assets and liabilities classified as revenues		(224		)	(273		)	(309		)	(352		)	(347		)
Funds From Operations (FFO) - Diluted, excluding SFAS 141		$	17,144		$	21,137		$	15,998		$	15,835		$	16,378
Funds From Operations (FFO) - Diluted		$	17,368		$	21,410		$	16,307		$	16,187		$	16,725
Issuance costs associated with redeemed preferred shares (2)		1,813			n/a			n/a			n/a			n/a
Earnings per diluted share, as adjusted for issuance costs associated with redeemed preferred shares		$	19,181		$	21,410		$	16,307		$	16,187		$	16,725
Numerator for Dilutive EPS Computation		$	4,153		$	4,408		$	4,558		$	4,427		$	5,561
Issuance costs associated with redeemed preferred shares (2)		1,813			n/a			n/a			n/a			n/a
Numerator for Dilutive EPS Computation, as adjusted		$	5,966		$	4,408		$	4,558		$	4,427		$	5,561
Earnings per diluted share, as adjusted for issuance costs associated with redeemed preferred shares		$	0.17		$	0.13		$	0.14		$	0.14		$	0.18

 

(1)   Includes Series B, E, F, G and H Cumulative Redeemable Preferred Share dividends deducted for FFO/AFFO computations.

 

(2)   Earnings per diluted share and FFO per diluted share have been adjusted to exclude the issuance costs associated with our Series B redeemed preferred shares.

 

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