UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-14023
(Exact name of registrant as specified in its charter)
Maryland |
|
23-2947217 |
(State or other jurisdiction of |
|
(IRS Employer |
|
|
|
8815 Centre Park Drive, Suite 400, Columbia MD |
|
21045 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrants telephone number, including area code: (410) 730-9092
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
ý Yes o No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). ýYes o No
On August 1, 2005, 37,212,126 shares of the Companys Common Shares of Beneficial Interest, $0.01 par value, were issued.
TABLE OF CONTENTS
FORM 10-Q
2
Corporate Office Properties Trust and Subsidiaries
(Dollars in thousands)
(unaudited)
|
|
June 30, |
|
December 31, |
|
||
Assets |
|
|
|
|
|
||
Investment in real estate: |
|
|
|
|
|
||
Operating properties, net |
|
$ |
1,425,506 |
|
$ |
1,389,369 |
|
Properties held for sale, net |
|
17,450 |
|
17,779 |
|
||
Projects under construction or development |
|
246,657 |
|
136,152 |
|
||
Total commercial real estate properties, net |
|
1,689,613 |
|
1,543,300 |
|
||
Investments in and advances to unconsolidated real estate joint ventures |
|
1,233 |
|
1,201 |
|
||
Investment in real estate, net |
|
1,690,846 |
|
1,544,501 |
|
||
Cash and cash equivalents |
|
21,486 |
|
13,821 |
|
||
Restricted cash |
|
15,982 |
|
12,617 |
|
||
Accounts receivable, net |
|
13,613 |
|
16,771 |
|
||
Investment in other unconsolidated entity |
|
1,621 |
|
1,621 |
|
||
Deferred rent receivable |
|
29,291 |
|
26,282 |
|
||
Intangible assets on real estate acquisitions, net |
|
66,354 |
|
67,560 |
|
||
Deferred charges, net |
|
28,662 |
|
27,642 |
|
||
Prepaid and other assets |
|
19,501 |
|
18,646 |
|
||
Furniture, fixtures and equipment, net |
|
3,092 |
|
2,565 |
|
||
Total assets |
|
$ |
1,890,448 |
|
$ |
1,732,026 |
|
Liabilities and shareholders equity |
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
||
Mortgage and other loans payable |
|
$ |
1,177,779 |
|
$ |
1,022,688 |
|
Accounts payable and accrued expenses |
|
53,984 |
|
46,307 |
|
||
Rents received in advance and security deposits |
|
13,421 |
|
12,781 |
|
||
Dividends and distributions payable |
|
14,834 |
|
14,713 |
|
||
Deferred revenue associated with acquired operating leases |
|
8,092 |
|
7,247 |
|
||
Fair value of derivatives |
|
4,188 |
|
|
|
||
Other liabilities |
|
4,024 |
|
7,488 |
|
||
Total liabilities |
|
1,276,322 |
|
1,111,224 |
|
||
Minority interests: |
|
|
|
|
|
||
Common units in the Operating Partnership |
|
87,439 |
|
88,355 |
|
||
Preferred units in the Operating Partnership |
|
8,800 |
|
8,800 |
|
||
Other consolidated real estate joint ventures |
|
861 |
|
1,723 |
|
||
Total minority interests |
|
97,100 |
|
98,878 |
|
||
Commitments and contingencies (Note 19) |
|
|
|
|
|
||
Shareholders equity: |
|
|
|
|
|
||
Preferred Shares of beneficial interest
($0.01 par value; 15,000,000 shares authorized) |
|
67 |
|
67 |
|
||
Common Shares of beneficial interest ($0.01 par value; 75,000,000 shares authorized, shares issued of 37,191,370 at June 30, 2005 and 36,842,108 at December 31, 2004) |
|
372 |
|
368 |
|
||
Additional paid-in capital |
|
586,567 |
|
578,228 |
|
||
Cumulative distributions in excess of net income |
|
(59,226 |
) |
(51,358 |
) |
||
Value of unearned restricted common share grants |
|
(7,396 |
) |
(5,381 |
) |
||
Accumulated other comprehensive loss |
|
(3,358 |
) |
|
|
||
Total shareholders equity |
|
517,026 |
|
521,924 |
|
||
Total liabilities and shareholders equity |
|
$ |
1,890,448 |
|
$ |
1,732,026 |
|
See accompanying notes to consolidated financial statements.
3
Corporate Office Properties Trust and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(unaudited)
|
|
For the Three Months |
|
For the Six Months |
|
||||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
||||
Rental revenue |
|
$ |
53,601 |
|
$ |
48,339 |
|
$ |
106,031 |
|
$ |
90,825 |
|
Tenant recoveries and other real estate operations revenue |
|
6,585 |
|
4,752 |
|
13,860 |
|
10,422 |
|
||||
Construction contract revenues |
|
17,445 |
|
5,233 |
|
33,173 |
|
11,370 |
|
||||
Other service operations revenues |
|
1,019 |
|
837 |
|
2,388 |
|
2,352 |
|
||||
Total revenues |
|
78,650 |
|
59,161 |
|
155,452 |
|
114,969 |
|
||||
Expenses |
|
|
|
|
|
|
|
|
|
||||
Property operating |
|
17,574 |
|
14,365 |
|
36,139 |
|
29,073 |
|
||||
Depreciation and other amortization |
|
15,068 |
|
15,705 |
|
29,455 |
|
25,893 |
|
||||
Construction contract expenses |
|
17,223 |
|
4,979 |
|
32,120 |
|
10,797 |
|
||||
Other service operations expenses |
|
955 |
|
853 |
|
2,246 |
|
1,945 |
|
||||
General and administrative expenses |
|
3,166 |
|
2,487 |
|
6,442 |
|
4,773 |
|
||||
Total operating expenses |
|
53,986 |
|
38,389 |
|
106,402 |
|
72,481 |
|
||||
Operating income |
|
24,664 |
|
20,772 |
|
49,050 |
|
42,488 |
|
||||
Interest expense |
|
(13,728 |
) |
(10,346 |
) |
(26,911 |
) |
(20,449 |
) |
||||
Amortization of deferred financing costs |
|
(471 |
) |
(500 |
) |
(867 |
) |
(1,359 |
) |
||||
Income from continuing operations before gain (loss) on sales of real estate, equity in loss of unconsolidated entities, income taxes and minority interests |
|
10,465 |
|
9,926 |
|
21,272 |
|
20,680 |
|
||||
Gain (loss) on sales of real estate |
|
210 |
|
24 |
|
234 |
|
(198 |
) |
||||
Equity in loss of unconsolidated entities |
|
|
|
|
|
|
|
(88 |
) |
||||
Income tax expense |
|
(213 |
) |
(30 |
) |
(670 |
) |
(230 |
) |
||||
Income from continuing operations before minority interests |
|
10,462 |
|
9,920 |
|
20,836 |
|
20,164 |
|
||||
Minority interests in income from continuing operations Common units in the Operating Partnership |
|
(1,307 |
) |
(1,203 |
) |
(2,592 |
) |
(2,571 |
) |
||||
Preferred units in the Operating Partnership |
|
(165 |
) |
|
|
(330 |
) |
|
|
||||
Other consolidated entities |
|
15 |
|
(8 |
) |
39 |
|
(8 |
) |
||||
Income from continuing operations |
|
9,005 |
|
8,709 |
|
17,953 |
|
17,585 |
|
||||
Income from discontinued operations, net of minority interests |
|
115 |
|
134 |
|
207 |
|
251 |
|
||||
Net income |
|
9,120 |
|
8,843 |
|
18,160 |
|
17,836 |
|
||||
Preferred share dividends |
|
(3,654 |
) |
(4,435 |
) |
(7,308 |
) |
(8,891 |
) |
||||
Net income available to common shareholders |
|
$ |
5,466 |
|
$ |
4,408 |
|
$ |
10,852 |
|
$ |
8,945 |
|
Basic earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
||
Income from continuing operations |
|
$ |
0.15 |
|
$ |
0.13 |
|
$ |
0.29 |
|
$ |
0.28 |
|
Discontinued operations |
|
|
|
|
|
0.01 |
|
0.01 |
|
||||
Net income |
|
$ |
0.15 |
|
$ |
0.13 |
|
$ |
0.30 |
|
$ |
0.29 |
|
Diluted earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
||
Income from continuing operations |
|
$ |
0.14 |
|
$ |
0.12 |
|
$ |
0.28 |
|
$ |
0.26 |
|
Discontinued operations |
|
|
|
0.01 |
|
|
|
0.01 |
|
||||
Net income |
|
$ |
0.14 |
|
$ |
0.13 |
|
$ |
0.28 |
|
$ |
0.27 |
|
See accompanying notes to consolidated financial statements.
4
Corporate Office Properties Trust and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
|
|
For the Six Months Ended |
|
||||
|
|
2005 |
|
2004 |
|
||
Cash flows from operating activities |
|
|
|
|
|
||
Net income |
|
$ |
18,160 |
|
$ |
17,836 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
||
Minority interests |
|
2,934 |
|
2,654 |
|
||
Depreciation and other amortization |
|
29,924 |
|
26,243 |
|
||
Amortization of deferred financing costs |
|
867 |
|
1,359 |
|
||
Amortization of deferred market rental revenue |
|
(261 |
) |
(582 |
) |
||
Equity in loss of unconsolidated entities |
|
|
|
88 |
|
||
(Gain) loss on sales of real estate |
|
(234 |
) |
198 |
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
||
Increase in deferred rent receivable |
|
(3,009 |
) |
(2,947 |
) |
||
Decrease (increase) in accounts receivable, restricted cash and prepaid and other assets |
|
235 |
|
(11,169 |
) |
||
Increase in accounts payable, accrued expenses, rents received in advance and security deposits |
|
9,854 |
|
3,892 |
|
||
Other |
|
1,647 |
|
1,465 |
|
||
Net cash provided by operating activities |
|
60,117 |
|
39,037 |
|
||
Cash flows from investing activities |
|
|
|
|
|
||
Purchases of and additions to commercial real estate properties |
|
(174,455 |
) |
(114,393 |
) |
||
Proceeds from sales of properties |
|
2,545 |
|
|
|
||
Acquisition of minority interest in consolidated joint venture |
|
(1,208 |
) |
|
|
||
Investments in and advances to unconsolidated entities |
|
(32 |
) |
|
|
||
Leasing costs paid |
|
(2,468 |
) |
(3,909 |
) |
||
Advances to certain real estate joint ventures |
|
|
|
(515 |
) |
||
Other |
|
(1,593 |
) |
793 |
|
||
Net cash used in investing activities |
|
(177,211 |
) |
(118,024 |
) |
||
Cash flows from financing activities |
|
|
|
|
|
||
Proceeds from mortgage and other loans payable |
|
278,455 |
|
253,302 |
|
||
Repayments of mortgage and other loans payable |
|
(123,154 |
) |
(207,719 |
) |
||
Deferred financing costs paid |
|
(2,173 |
) |
(1,992 |
) |
||
Increase in other liabilities associated with financing activities |
|
|
|
4,000 |
|
||
Net proceeds from issuance of common shares |
|
2,252 |
|
61,746 |
|
||
Dividends paid |
|
(25,933 |
) |
(22,348 |
) |
||
Distributions paid |
|
(4,688 |
) |
(4,166 |
) |
||
Other |
|
|
|
(1,115 |
) |
||
Net cash provided by financing activities |
|
124,759 |
|
81,708 |
|
||
Net increase in cash and cash equivalents |
|
7,665 |
|
2,721 |
|
||
Cash and cash equivalents |
|
|
|
|
|
||
Beginning of period |
|
13,821 |
|
9,481 |
|
||
End of period |
|
$ |
21,486 |
|
$ |
12,202 |
|
See accompanying notes to consolidated financial statements.
5
Corporate Office Properties Trust and Subsidiaries
Notes
to Consolidated Financial Statements
(Dollars in thousands, except per share data)
(unaudited)
Corporate Office Properties Trust (COPT) and subsidiaries (collectively, the Company) is a fully-integrated and self-managed real estate investment trust (REIT). We focus on the ownership, management, leasing, acquisition and development of suburban office properties. We typically focus our operations geographically in select submarkets that are attractive to our tenant base and in which we believe we can establish a critical mass of square footage. At June 30, 2005, all of our operating properties were located in the Mid-Atlantic region of the United States, although in accordance with our strategy of focusing on submarkets that are attractive to our tenants, we do from time to time seek to expand our operations outside of that region, as evidenced by our acquisitions in 2005 of properties in San Antonio, Texas and Colorado Springs, Colorado. COPT is qualified as a REIT as defined in the Internal Revenue Code of 1986 and is the successor to a corporation organized in 1988. As of June 30, 2005, our portfolio included 147 office properties in operations, including two properties owned through joint ventures.
We conduct almost all of our operations through our operating partnership, Corporate Office Properties, L.P. (the Operating Partnership), for which we are the managing general partner. The Operating Partnership owns real estate both directly and through subsidiary partnerships and limited liability companies (LLCs). A summary of our Operating Partnerships forms of ownership and the percentage of those ownership forms owned by COPT as of June 30, 2005 follows:
|
|
% Owned |
|
Common Units |
|
80 |
% |
Series E Preferred Units |
|
100 |
% |
Series F Preferred Units |
|
100 |
% |
Series G Preferred Units |
|
100 |
% |
Series H Preferred Units |
|
100 |
% |
Series I Preferred Units |
|
0 |
% |
The Operating Partnership also owns 100% of Corporate Office Management, Inc. (COMI) (collectively with its subsidiaries defined as the Service Companies). COMIs consolidated subsidiaries are set forth below:
Entity Name |
|
Type of Service Business |
Corporate Realty Management, LLC (CRM) |
|
Real Estate Management |
Corporate Development Services, LLC (CDS) |
|
Construction and Development |
Corporate Cooling and Controls, LLC (CC&C) |
|
Heating and Air Conditioning |
COMI owns 100% of these entities. Most of the services that CRM and CDS provide are for us.
The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States for complete Consolidated Financial Statements are not included herein. These interim financial statements should be read together with the financial statements and notes thereto included in our 2004 Annual Report on Form 10-K. The interim financial statements on the previous pages reflect all adjustments that we believe are necessary for the fair statement of our financial position and results of operations for the interim periods presented. These adjustments are of a normal recurring nature. The results of operations for such interim periods are not necessarily indicative of the results for a full year.
6
A summary of the numerator and denominator for purposes of our basic and diluted EPS calculations is set forth below (dollars and shares in thousands, except per share data):
|
|
For the Three Months |
|
For the Six Months |
|
||||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations |
|
$ |
9,005 |
|
$ |
8,709 |
|
$ |
17,953 |
|
$ |
17,585 |
|
Less: Preferred share dividends |
|
(3,654 |
) |
(4,435 |
) |
(7,308 |
) |
(8,891 |
) |
||||
Numerator for basic EPS from continuing operations |
|
5,351 |
|
4,274 |
|
10,645 |
|
8,694 |
|
||||
Add: Convertible preferred share dividends |
|
|
|
|
|
|
|
21 |
|
||||
Numerator for diluted EPS from continuing operations |
|
5,351 |
|
4,274 |
|
10,645 |
|
8,715 |
|
||||
Add: Income from discontinued operations, net |
|
115 |
|
134 |
|
207 |
|
251 |
|
||||
Less: Convertible preferred share dividends |
|
|
|
|
|
|
|
(21 |
) |
||||
Numerator for basic EPS on net income available to common shareholders |
|
5,466 |
|
4,408 |
|
10,852 |
|
8,945 |
|
||||
Add: Convertible preferred share dividends |
|
|
|
|
|
|
|
21 |
|
||||
Numerator for diluted EPS on net income available to common shareholders |
|
$ |
5,466 |
|
$ |
4,408 |
|
$ |
10,852 |
|
$ |
8,966 |
|
Denominator (all weighted averages): |
|
|
|
|
|
|
|
|
|
||||
Denominator for basic EPS (common shares) |
|
36,692 |
|
32,743 |
|
36,624 |
|
31,278 |
|
||||
Assumed conversion of share options |
|
1,528 |
|
1,639 |
|
1,534 |
|
1,691 |
|
||||
Assumed conversion of convertible preferred shares |
|
|
|
|
|
|
|
270 |
|
||||
Denominator for diluted EPS |
|
38,220 |
|
34,382 |
|
38,158 |
|
33,239 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Basic EPS: |
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations |
|
$ |
0.15 |
|
$ |
0.13 |
|
$ |
0.29 |
|
$ |
0.28 |
|
Income from discontinued operations |
|
|
|
|
|
0.01 |
|
0.01 |
|
||||
Net income available to common shareholders |
|
$ |
0.15 |
|
$ |
0.13 |
|
$ |
0.30 |
|
$ |
0.29 |
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations |
|
$ |
0.14 |
|
$ |
0.12 |
|
$ |
0.28 |
|
$ |
0.26 |
|
Income from discontinued operations |
|
|
|
0.01 |
|
|
|
0.01 |
|
||||
Net income available to common shareholders |
|
$ |
0.14 |
|
$ |
0.13 |
|
$ |
0.28 |
|
$ |
0.27 |
|
Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods:
|
|
Weighted Average Shares in Denominator |
|
||||||
|
|
For the Three Months |
|
For the Six Months |
|
||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
Conversion of weighted average common units |
|
8,676 |
|
8,765 |
|
8,681 |
|
8,814 |
|
Conversion of weighted average convertible preferred units |
|
176 |
|
|
|
176 |
|
|
|
Restricted common shares |
|
147 |
|
162 |
|
149 |
|
168 |
|
Conversion of share options |
|
|
|
|
|
|
|
5 |
|
7
Expenses from share-based compensation are reflected in our Consolidated Statements of Operations as follows:
|
|
For the Three Months |
|
For the Six Months |
|
||||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
Increase in general and administrative expenses |
|
$ |
510 |
|
$ |
401 |
|
$ |
923 |
|
$ |
760 |
|
Increase in construction contract and other service operations expenses |
|
77 |
|
145 |
|
123 |
|
284 |
|
||||
The following table summarizes our operating results as if we elected to account for our share-based compensation under the fair value provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation:
|
|
For the Three Months |
|
For the Six Months |
|
||||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
Net income, as reported |
|
$ |
9,120 |
|
$ |
8,843 |
|
$ |
18,160 |
|
$ |
17,836 |
|
Add: Share-based compensation expense, net of related tax effects and minority interests, included in the determination of net income |
|
448 |
|
381 |
|
802 |
|
718 |
|
||||
Less: Share-based compensation expense determined under the fair value based method, net of related tax effects and minority interests |
|
(429 |
) |
(316 |
) |
(768 |
) |
(595 |
) |
||||
Net income, pro forma |
|
$ |
9,139 |
|
$ |
8,908 |
|
$ |
18,194 |
|
$ |
17,959 |
|
Basic EPS on net income available to common shareholders, as reported |
|
$ |
0.15 |
|
$ |
0.13 |
|
$ |
0.30 |
|
$ |
0.29 |
|
Basic EPS on net income available to common shareholders, pro forma |
|
$ |
0.15 |
|
$ |
0.14 |
|
$ |
0.30 |
|
$ |
0.29 |
|
Diluted EPS on net income available to common shareholders, as reported |
|
$ |
0.14 |
|
$ |
0.13 |
|
$ |
0.28 |
|
$ |
0.27 |
|
Diluted EPS on net income available to common shareholders, pro forma |
|
$ |
0.14 |
|
$ |
0.13 |
|
$ |
0.29 |
|
$ |
0.27 |
|
The share-based compensation expense under the fair value method, as reported in the above table, was computed using the Black-Scholes option-pricing model.
In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (SFAS 153). The Accounting Principles Boards Opinion No. 29, Accounting for Nonmonetary Transactions (APB 29) is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. However, the guidance in APB 29 included certain exceptions to that principle. SFAS 153 amends APB 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Under SFAS 153, a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 will be effective for us for nonmonetary asset exchanges occurring after December 31, 2005. We are reviewing the provisions of SFAS 153 and assessing the impact it will have on us upon adoption.
In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations-an interpretation of FASB Statement No. 143 (FIN 47). FIN 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations,
8
refers to an unconditional obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional upon future events that may or may not be within the entitys control. The fair value of liabilities related to such obligations should be recognized when incurred and reasonably estimable. Uncertainty about the timing and (or) method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. Statement 143 acknowledges that in some cases, sufficient information may not be available to reasonably estimate the fair value of an asset retirement obligation. This Interpretation also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than December 31, 2005. We are reviewing the provisions of FIN 47 and assessing the impact it will have on us upon adoption.
In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123(R), Share-Based Payment (SFAS 123(R)). The statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, focusing primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. The statement will require us to measure the cost of employee services received in exchange for an award of equity instruments based generally on the fair value of the award on the grant date; such cost will be recognized over the period during which the employee is required to provide service in exchange for the award (generally the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. SFAS 123(R) was to be effective for us in June 2005 for applicability to all awards granted, modified, repurchased or cancelled after July 1, 2005; the statement also was to require that we recognize compensation cost on or after July 1, 2005 for the portion of outstanding awards for which the requisite service has not yet been rendered, based on the fair value of those awards on the date of grant. In April 2005, the Securities and Exchange Commission (the SEC) extended the effective date of SFAS 123(R) to the beginning of our next fiscal year (January 1, 2006). The SECs new rule does not change the accounting required by SFAS 123(R); it changes only the dates for compliance with the standard. We are reviewing the provisions of SFAS 123(R) and assessing the impact it will have on us upon adoption.
In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107). SAB 107 expresses the SEC staffs views regarding the interaction between SFAS 123(R) and certain SEC rules and regulations and provides the SEC staffs views regarding the valuation of share-based payment arrangements for public companies. In particular, it provides guidance in a number of areas, including share-based payment transactions with nonemployees, valuation methods, the classification of compensation expense, non-GAAP measures, capitalization of compensation costs related to share-based payment arrangements, the accounting for income tax effects of share-based payment arrangements upon adoption of SFAS 123(R), the modification of employee share options prior to adoption of SFAS 123(R) and certain disclosure requirements. We are reviewing the provisions of SAB 107 and assessing the impact it will have on us upon our adoption of SFAS 123(R).
Operating properties consisted of the following:
|
|
June 30, |
|
December 31, |
|
||
Land |
|
$ |
270,861 |
|
$ |
264,631 |
|
Buildings and improvements |
|
1,316,239 |
|
1,263,340 |
|
||
|
|
1,587,100 |
|
1,527,971 |
|
||
Less: accumulated depreciation |
|
(161,594 |
) |
(138,602 |
) |
||
|
|
$ |
1,425,506 |
|
$ |
1,389,369 |
|
As of June 30, 2005, we were under contract to sell three of our properties located in the Northern/Central New Jersey region. As a result, these properties were classified as held for sale. The components associated with these properties at June 30, 2005 included the following:
9
|
|
June 30, |
|
December 31, |
|
||
Land |
|
$ |
3,670 |
|
$ |
3,696 |
|
Buildings and improvements |
|
17,287 |
|
17,197 |
|
||
|
|
20,957 |
|
20,893 |
|
||
Less: accumulated depreciation |
|
(3,507 |
) |
(3,114 |
) |
||
|
|
$ |
17,450 |
|
$ |
17,779 |
|
Projects we had under construction or pre-construction consisted of the following:
|
|
June 30, |
|
December 31, |
|
||
Land |
|
$ |
108,320 |
|
$ |
74,190 |
|
Construction in progress |
|
138,337 |
|
61,962 |
|
||
|
|
$ |
246,657 |
|
$ |
136,152 |
|
2005 Acquisitions
We acquired the following office properties during the six months ended June 30, 2005:
Project Name |
|
Location |
|
Date of |
|
Number of |
|
Total |
|
Initial Cost |
|
|
1 Sony Place (1) |
|
San Antonio, TX |
|
3/30/2005 |
|
2 |
|
468,994 |
|
$ |
30,720 |
|
Rockville Corporate Center |
|
Rockville, MD (2) |
|
4/7/2005 |
|
2 |
|
221,702 |
|
37,617 |
|
|
|
|
|
|
|
|
|
|
690,696 |
|
$ |
68,337 |
|
(1) The buildings in this project are initially undergoing redevelopment that is expected to be completed by the fourth quarter of 2005.
(2) Located in the Suburban Maryland region.
The table below sets forth the allocation of the acquisition costs of these properties:
|
|
1 Sony Place |
|
Rockville |
|
Total |
|
|||
Land, operating properties |
|
$ |
|
|
$ |
6,222 |
|
$ |
6,222 |
|
Land, construction or development |
|
10,962 |
|
|
|
10,962 |
|
|||
Building and improvements |
|
|
|
28,925 |
|
28,925 |
|
|||
Construction in progress |
|
19,758 |
|
|
|
19,758 |
|
|||
Intangible assets on real estate acquisitions |
|
|
|
4,004 |
|
4,004 |
|
|||
Total assets |
|
30,720 |
|
39,151 |
|
69,871 |
|
|||
Deferred revenue associated with acquired operating leases |
|
|
|
(1,534 |
) |
(1,534 |
) |
|||
Total acquisition cost |
|
$ |
30,720 |
|
$ |
37,617 |
|
$ |
68,337 |
|
We also acquired the following during the six months ended June 30, 2005:
a 19 acre parcel of land located in Chantilly, Virginia that is adjacent to existing properties we own for $7,141 on January 27, 2005 (Chantilly, Virginia is located in the Northern Virginia region). We expect to develop this land parcel in the future;
a 39 acre parcel of land located in Dahlgren, Virginia that is adjacent to one of our office properties for $1,227 on March 16, 2005 (Dahlgren, Virginia is located in the St. Marys and King George Counties region). We expect to develop this land parcel in the future;
10
a 16 acre parcel of land adjacent to the two office properties we acquired in San Antonio, Texas for $3,013 on March 30, 2005. We expect to operate this land parcel as part of the campus that includes the two acquired office properties;
a 10 acre parcel of land adjacent to the Rockville Corporate Center for $6,234 on April 7, 2005. We expect to develop this land parcel in the future; and
a 27 acre parcel of land adjacent to the two office properties we acquired in San Antonio, Texas for $5,893 on June 14, 2005. We expect to develop this land parcel in the future.
In 2004, we sold a land parcel in Columbia, Maryland and a land parcel in Linthicum, Maryland for an aggregate of $9,600. We issued to the buyer a $5,600 mortgage loan; the balance of the acquisition was in the form of cash from the buyer. The buyer in this transaction had an option to contribute the two land parcels into our Operating Partnership between January 1, 2005 and February 28, 2005 in exchange for extinguishment of the $5,600 mortgage loan with us and common units in our Operating Partnership; the buyer exercised its option in February 2005 and, as a result, on April 18, 2005, the debt from us was essentially extinguished and the buyer received 142,776 common units in the Operating Partnership valued at $3,697. We accounted for the 2004 transaction using the financing method of accounting; as a result, the 2004 sale transaction was not recorded as a sale and the $4,000 in net proceeds received from the buyer was recorded as a liability prior to the contribution of the land parcels back into the Operating Partnership in April 2005.
We financed our acquisitions primarily using borrowings from our revolving credit facility and a new mortgage loan.
2005 Construction and Pre-Construction Activities
As of June 30, 2005, we had construction underway on seven new buildings in the Baltimore/Washington Corridor, one in Northern Virginia and one in St. Marys County, Maryland. We also had pre-construction activities underway on two new buildings located in the Baltimore/Washington Corridor and one building in King George County and redevelopment underway on two existing buildings in San Antonio, Texas. We financed a significant portion of our construction activities using borrowings from new and existing construction loans and our revolving credit facility.
2005 Dispositions
On June 10, 2005, we sold a four acre parcel of land located in Columbia, Maryland for $2,571. We recognized a gain of $186 on this sale.
7. Real Estate Joint Ventures
Our investments in and advances to unconsolidated real estate joint ventures accounted for using the equity method of accounting included the following:
|
|
Balance at |
|
|
|
|
|
|
|
Total |
|
Maximum |
|
||||||
|
|
June 30, |
|
December 31, |
|
Date |
|
Ownership |
|
Nature of |
|
Assets at |
|
Exposure |
|
||||
Route 46 Partners, LLC |
|
$ |
1,233 |
|
$ |
1,201 |
|
3/14/2003 |
|
20 |
% |
Operating building (2) |
|
$ |
23,061 |
|
$ |
1,647 |
|
(1) |
Derived from the sum of our investment balance and maximum additional unilateral capital contributions or loans required from us. Not reported above are additional amounts that we and our partner are required to fund when needed by this joint venture; these funding requirements are proportional to our respective ownership percentages. |
|
|
(2) |
This joint ventures property is located in Fairfield, NJ. |
The following table sets forth a condensed balance sheet for Route 46 Partners, LLC as of June 30, 2005:
11
Commercial real estate property |
|
$ |
21,326 |
|
Other assets |
|
1,735 |
|
|
Total assets |
|
$ |
23,061 |
|
|
|
|
|
|
Liabilities |
|
$ |
14,641 |
|
Owners equity |
|
8,420 |
|
|
Total liabilities and owners equity |
|
$ |
23,061 |
|
Our joint venture partner in Route 46 Partners, LLC has preference in receiving distributions of cash flows for a defined return. Once our partner receives its defined return, we are entitled to receive distributions for a defined return. We did not recognize income from our investment in Route 46 Partners, LLC in the six months ended June 30, 2005 and 2004 since the income earned by the entity in those periods did not exceed our partners defined return.
Our investments in consolidated real estate joint ventures included the following:
|
|
Date |
|
Ownership |
|
Nature of |
|
Total |
|
Collateralized |
|
||
MOR Forbes 2 LLC |
|
12/24/02 |
|
50 |
% |
Operating building (1) |
|
$ |
4,623 |
|
$ |
4,051 |
|
MOR Montpelier 3 LLC |
|
2/21/02 |
|
50 |
% |
Developing land parcel (2) |
|
1,377 |
|
|
|
||
|
|
|
|
|
|
|
|
$ |
6,000 |
|
$ |
4,051 |
|
(1) This joint ventures property is located in Lanham, Maryland (located in the Suburban Maryland region).
(2) This joint ventures property is located in Laurel, Maryland (located in the Suburban Maryland region).
From April 4, 2001 until June 9, 2005, we owned an 80% interest in Gateway 70 LLC, a consolidated joint venture developing two land parcels in Columbia, Maryland. On June 9, 2005, we acquired the remaining 20% interest in Gateway 70 LLC not previously owned by us for $1,208.
On April 11, 2005, we executed a contribution agreement that formed a joint venture relationship with a limited partnership to develop up to 1.8 million square feet of office space on 63 acres of land located in Hanover, Maryland (located in the Baltimore/Washington Corridor). Under the contribution agreement, we agreed to fund up to $2,200 in pre-construction costs associated with the property. As we and the joint venture partner agree to proceed with the construction of buildings in the future, we would make additional cash capital contributions into newly-formed entities and our joint venture partner would contribute land into such entities. We will have a 50% interest in this joint venture relationship.
Our commitments and contingencies pertaining to our real estate joint ventures are disclosed in Note 19.
Our investment in an unconsolidated non-real estate entity is set forth below:
|
|
June 30, |
|
December 31, |
|
Date |
|
Ownership |
|
Investment |
|
||
TractManager, Inc. (1) |
|
$ |
1,621 |
|
$ |
1,621 |
|
Various 2000 |
|
5 |
% |
Cost |
|
|
TractManager, Inc. has developed an Internet-based contract imaging and management system for sale to real estate owners and healthcare providers. |
12
Intangible assets on real estate acquisitions consisted of the following:
|
|
June 30, |
|
December 31, |
|
||
Lease-up value |
|
$ |
68,165 |
|
$ |
65,638 |
|
Lease to market value |
|
9,595 |
|
9,595 |
|
||
Lease cost portion of deemed cost avoidance |
|
9,053 |
|
8,700 |
|
||
Market concentration premium |
|
1,333 |
|
1,333 |
|
||
Tenant relationship value |
|
1,148 |
|
|
|
||
Subtotal |
|
89,294 |
|
85,266 |
|
||
Accumulated amortization |
|
(22,940 |
) |
(17,706 |
) |
||
Intangible assets on real estate acquisitions, net |
|
$ |
66,354 |
|
$ |
67,560 |
|
Deferred charges consisted of the following:
|
|
June 30, |
|
December 31, |
|
||
Deferred leasing costs |
|
$ |
34,991 |
|
$ |
33,302 |
|
Deferred financing costs |
|
19,282 |
|
16,996 |
|
||
Goodwill |
|
1,853 |
|
1,853 |
|
||
Deferred other |
|
155 |
|
155 |
|
||
|
|
56,281 |
|
52,306 |
|
||
Accumulated amortization |
|
(27,619 |
) |
(24,664 |
) |
||
Deferred charges, net |
|
$ |
28,662 |
|
$ |
27,642 |
|
Our accounts receivable are reported net of an allowance for bad debts of $287 at June 30, 2005 and $490 at December 31, 2004.
The following table sets forth our derivative contracts and their respective fair values:
Nature of Derivative |
|
Notional |
|
One-Month |
|
Effective |
|
Expiration |
|
Fair Value at |
|
Fair Value at |
|
|||
Interest rate swap |
|
$ |
50.0 |
|
2.3075 |
% |
1/2/2003 |
|
1/3/2005 |
|
$ |
|
|
$ |
|
|
Forward starting swap |
|
73.4 |
|
5.0244 |
% |
7/15/2005 |
|
7/15/2015 |
|
(4,188 |
) |
|
|
|||
|
|
|
|
|
|
|
|
|
|
$ |
(4,188 |
) |
$ |
|
|
|
We designated each of these derivatives as cash flow hedges. The first swap noted above hedged the risk of changes in interest rates on certain of our one-month LIBOR-based variable rate borrowings. On April 7, 2005, we entered into the forward starting swap to lock in the 10-year LIBOR swap rate in contemplation of our obtaining a long-term, fixed rate financing later in 2005. We expect to cash settle the swap at the time we lock the rate on a long-term, fixed rate financing. If the 10-year LIBOR swap rate is below 5.0244% at the time we cash settle the swap, we would be required to make a payment to the swap counter-party; if the 10-year LIBOR swap rate is above 5.0244% at the time we cash settle the swap, we would receive a payment from the swap counter-party. The amount that we either pay or receive would be equal to the present value of the basis point differential between
13
5.0244% and the 10-year LIBOR swap rate at the time we cash settle the swap. As of June 30, 2005, the forward starting swap is considered a highly effective cash flow hedge under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended.
The table below sets forth our accounting application of changes in derivative fair values:
|
|
For the Six Months |
|
||||
|
|
2005 |
|
2004 |
|
||
(Decrease) increase in fair value applied to AOCL (1) and minority interests |
|
$ |
(4,188 |
) |
$ |
284 |
|
Increase in fair value recognized as gain (2) |
|
$ |
|
|
$ |
77 |
|
(1) AOCL is defined as accumulated other comprehensive loss.
(2) Represents hedge ineffectiveness and is included in interest expense on our Consolidated Statements of Operations.
Preferred Shares
Preferred shares of beneficial interest (preferred shares) consisted of the following:
|
|
June 30, |
|
December 31, |
|
||
1,265,000 designated as Series E Cumulative Redeemable Preferred Shares of beneficial interest (1,150,000 shares issued with an aggregate liquidation preference of $28,750) |
|
11 |
|
11 |
|
||
1,425,000 designated as Series F Cumulative Redeemable Preferred Shares of beneficial interest (1,425,000 shares issued with an aggregate liquidation preference of $35,625) |
|
14 |
|
14 |
|
||
2,200,000 designated as Series G Cumulative Redeemable Preferred Shares of beneficial interest (2,200,000 shares issued with an aggregate liquidation preference of $55,000) |
|
22 |
|
22 |
|
||
2,000,000 designated as Series H Cumulative Redeemable Preferred Shares of beneficial interest (2,000,000 shares issued with an aggregate liquidation preference of $50,000) |
|
20 |
|
20 |
|
||
Total preferred shares |
|
$ |
67 |
|
$ |
67 |
|
Common Shares
During the six months ended June 30, 2005, we issued 130,975 common shares of beneficial interest (common shares) to certain employees. All of these shares are subject to forfeiture restrictions that lapse annually throughout their respective terms provided that the employees remain employed by us. During the same period, forfeiture restrictions lapsed on 136,056 common shares previously issued to employees.
We issued 216,389 common shares upon the exercise of share options during the six months ended June 30, 2005. During the same period, we converted 12,320 common units in our Operating Partnership into common shares on the basis of one common share for each common unit.
Comprehensive Income
A summary of the activity in the AOCL component of shareholders equity for the six months ended June 30, 2005 follows:
14
Beginning balance |
|
$ |
|
|
Unrealized loss on derivatives, net of minority interests |
|
(3,358 |
) |
|
Ending balance |
|
$ |
(3,358 |
) |
The table below sets forth our comprehensive income:
|
|
For the Three Months |
|
For the Six Months Ended |
|
||||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
Net income |
|
$ |
9,120 |
|
$ |
8,843 |
|
$ |
18,160 |
|
$ |
17,836 |
|
Unrealized (loss) gain on derivatives, net of minority interests |
|
(3,358 |
) |
245 |
|
(3,358 |
) |
211 |
|
||||
Total comprehensive income |
|
$ |
5,762 |
|
$ |
9,088 |
|
$ |
14,802 |
|
$ |
18,047 |
|
The following table summarizes our dividends and distributions when either the payable dates or record dates occurred during the six months ended June 30, 2005:
|
|
Record Date |
|
Payable Date |
|
Dividend/ |
|
Total |
|
||
Series E Preferred Shares: |
|
|
|
|
|
|
|
|
|
||
Fourth Quarter 2004 |
|
December 31, 2004 |
|
January 14, 2005 |
|
$ |
0.6406 |
|
$ |
737 |
|
First Quarter 2005 |
|
March 31, 2005 |
|
April 15, 2005 |
|
$ |
0.6406 |
|
$ |
737 |
|
Second Quarter 2005 |
|
June 30, 2005 |
|
July 15, 2005 |
|
$ |
0.6406 |
|
$ |
737 |
|
|
|
|
|
|
|
|
|
|
|
||
Series F Preferred Shares: |
|
|
|
|
|
|
|
|
|
||
Fourth Quarter 2004 |
|
December 31, 2004 |
|
January 14, 2005 |
|
$ |
0.6172 |
|
$ |
880 |
|
First Quarter 2005 |
|
March 31, 2005 |
|
April 15, 2005 |
|
$ |
0.6172 |
|
$ |
880 |
|
Second Quarter 2005 |
|
June 30, 2005 |
|
July 15, 2005 |
|
$ |
0.6172 |
|
$ |
880 |
|
|
|
|
|
|
|
|
|
|
|
||
Series G Preferred Shares: |
|
|
|
|
|
|
|
|
|
||
Fourth Quarter 2004 |
|
December 31, 2004 |
|
January 14, 2005 |
|
$ |
0.5000 |
|
$ |
1,100 |
|
First Quarter 2005 |
|
March 31, 2005 |
|
April 15, 2005 |
|
$ |
0.5000 |
|
$ |
1,100 |
|
Second Quarter 2005 |
|
June 30, 2005 |
|
July 15, 2005 |
|
$ |
0.5000 |
|
$ |
1,100 |
|
|
|
|
|
|
|
|
|
|
|
||
Series H Preferred Shares: |
|
|
|
|
|
|
|
|
|
||
Fourth Quarter 2004 |
|
December 31, 2004 |
|
January 14, 2005 |
|
$ |
0.4688 |
|
$ |
938 |
|
First Quarter 2005 |
|
March 31, 2005 |
|
April 15, 2005 |
|
$ |
0.4688 |
|
$ |
938 |
|
Second Quarter 2005 |
|
June 30, 2005 |
|
July 15, 2005 |
|
$ |
0.4688 |
|
$ |
938 |
|
|
|
|
|
|
|
|
|
|
|
||
Common Shares: |
|
|
|
|
|
|
|
|
|
||
Fourth Quarter 2004 |
|
December 31, 2004 |
|
January 14, 2005 |
|
$ |
0.2550 |
|
$ |
9,288 |
|
First Quarter 2005 |
|
March 31, 2005 |
|
April 15, 2005 |
|
$ |
0.2550 |
|
$ |
9,339 |
|
Second Quarter 2005 |
|
June 30, 2005 |
|
July 15, 2005 |
|
$ |
0.2550 |
|
$ |
9,381 |
|
|
|
|
|
|
|
|
|
|
|
||
Series I Preferred Units: |
|
|
|
|
|
|
|
|
|
||
Fourth Quarter 2004 |
|
December 31, 2004 |
|
January 14, 2005 |
|
$ |
0.4688 |
|
$ |
165 |
|
First Quarter 2005 |
|
March 31, 2005 |
|
April 15, 2005 |
|
$ |
0.4688 |
|
$ |
165 |
|
Second Quarter 2005 |
|
June 30, 2005 |
|
July 15, 2005 |
|
$ |
0.4688 |
|
$ |
165 |
|
|
|
|
|
|
|
|
|
|
|
||
Common Units: |
|
|
|
|
|
|
|
|
|
||
Fourth Quarter 2004 |
|
December 31, 2004 |
|
January 14, 2005 |
|
$ |
0.2550 |
|
$ |
2,179 |
|
First Quarter 2005 |
|
March 31, 2005 |
|
April 15, 2005 |
|
$ |
0.2550 |
|
$ |
2,179 |
|
Second Quarter 2005 |
|
June 30, 2005 |
|
July 15, 2005 |
|
$ |
0.2550 |
|
$ |
2,205 |
|
15
|
|
For the Six Months |
|
||||
|
|
2005 |
|
2004 |
|
||
Supplemental schedule of non-cash investing and financing activities: |
|
|
|
|
|
||
|
|
|
|
|
|
||
Consolidation of real estate joint ventures in connection with adoption of FASB |
|
|
|
|
|
||
Interpretation FIN 46(R), Consolidation of Variable Interest Entities: |
|
|
|
|
|
|
|
Operating properties |
|
$ |
|
|
$ |
2,176 |
|
Projects under construction or development |
|
|
|
17,959 |
|
||
Investments in and advances to unconsolidated real estate joint ventures |
|
|
|
(3,957 |
) |
||
Restricted cash |
|
|
|
10 |
|
||
Accounts receivable, net |
|
|
|
145 |
|
||
Deferred rent receivable |
|
|
|
7 |
|
||
Deferred charges, net |
|
|
|
1,026 |
|
||
Prepaid and other assets |
|
|
|
(3,263 |
) |
||
Mortgage and other loans payable |
|
|
|
(10,171 |
) |
||
Accounts payable and accrued expenses |
|
|
|
(2,737 |
) |
||
Rents received in advance and security deposits |
|
|
|
(347 |
) |
||
Other liabilities |
|
|
|
4,650 |
|
||
Minority interests-other consolidated real estate entities |
|
|
|
(5,498 |
) |
||
Net adjustment |
|
$ |
|
|
$ |
|
|
Adjustment to purchase of commercial real estate properties by acquiring joint venture interests: |
|
|
|
|
|
||
Operating properties |
|
$ |
|
|
$ |
(83 |
) |
Investments in and advances to unconsolidated real estate joint ventures |
|
|
|
83 |
|
||
Net adjustment |
|
$ |
|
|
$ |
|
|
Debt assumed in connection with acquisitions |
|
$ |
|
|
$ |
25,637 |
|
(Decrease) increase in accrued capital improvements and leasing costs |
|
$ |
(1,099 |
) |
$ |
9,146 |
|
Amortization of discounts and premiums on mortgage loans to commercial real estate properties |
|
$ |
135 |
|
$ |
318 |
|
Accretion of other liability to commercial real estate properties |
|
$ |
|
|
$ |
147 |
|
(Decrease) increase in fair value of derivatives applied to AOCL and minority interests |
|
$ |
(4,188 |
) |
$ |
284 |
|
Issuance of common units in the Operating Partnership in connection with contribution of properties accounted for under the financing method of accounting |
|
$ |
3,687 |
|
$ |
|
|
Adjustments to minority interests resulting from changes in ownership of Operating Partnership by COPT |
|
$ |
(1,708 |
) |
$ |
9,093 |
|
Dividends/distribution payable |
|
$ |
14,834 |
|
$ |
13,668 |
|
Decrease in minority interests and increase in shareholders equity in connection with the conversion of common units into common shares |
|
$ |
324 |
|
$ |
2,626 |
|
Conversion of preferred shares adjusted to common shares and paid in capital |
|
$ |
|
|
$ |
12 |
|
Issuance of restricted shares |
|
$ |
3,481 |
|
$ |
2,271 |
|
16
We have eight primary office property segments: Baltimore/Washington Corridor, Northern Virginia, Greater Philadelphia, St. Marys and King George Counties, Northern/Central New Jersey, Suburban Maryland, Greater Harrisburg and San Antonio, Texas.
The table below reports segment financial information. Our segment entitled Other includes assets and operations not specifically associated with the other defined segments, including elimination entries required in consolidation. We measure the performance of our segments based on total revenues less property operating expenses, a measure we define as net operating income (NOI). We believe that NOI is an important supplemental measure of operating performance for a REITs operating real estate because it provides a measure of the core operations that is unaffected by depreciation, amortization, financing and general and administrative expenses; this measure is particularly useful in our opinion in evaluating the performance of geographic segments, same-office property groupings and individual properties.
|
|
Baltimore/ |
|
Northern
|
|
Greater |
|
St.
Marys & |
|
Northern/
Jersey |
|
Suburban
|
|
Greater |
|
San Antonio |
|
Other |
|
Total |
|
||||||||||
Three Months Ended June 30, 2005: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
|
$ |
29,087 |
|
$ |
14,384 |
|
$ |
2,507 |
|
$ |
3,933 |
|
$ |
3,179 |
|
$ |
3,133 |
|
$ |
2,167 |
|
$ |
|
|
$ |
2,651 |
|
$ |
61,041 |
|
Property operating expenses |
|
8,538 |
|
4,782 |
|
37 |
|
645 |
|
1,524 |
|
1,081 |
|
663 |
|
|
|
638 |
|
17,908 |
|
||||||||||
NOI |
|
$ |
20,549 |
|
$ |
9,602 |
|
$ |
2,470 |
|
$ |
3,288 |
|
$ |
1,655 |
|
$ |
2,052 |
|
$ |
1,504 |
|
$ |
|
|
$ |
2,013 |
|
$ |
43,133 |
|
Commercial real estate property expenditures |
|
$ |
25,857 |
|
$ |
11,239 |
|
$ |
209 |
|
$ |
1,209 |
|
$ |
361 |
|
$ |
41,879 |
|
$ |
52 |
|
$ |
6,356 |
|
$ |
717 |
|
$ |
87,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended June 30, 2004: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
|
$ |
25,021 |
|
$ |
13,289 |
|
$ |
2,507 |
|
$ |
1,662 |
|
$ |
4,661 |
|
$ |
2,358 |
|
$ |
2,168 |
|
$ |
|
|
$ |
2,226 |
|
$ |
53,892 |
|
Property operating expenses |
|
7,611 |
|
3,074 |
|
39 |
|
359 |
|
1,241 |
|
785 |
|
759 |
|
|
|
779 |
|
14,647 |
|
||||||||||
NOI |
|
$ |
17,410 |
|
$ |
10,215 |
|
$ |
2,468 |
|
$ |
1,303 |
|
$ |
3,420 |
|
$ |
1,573 |
|
$ |
1,409 |
|
$ |
|
|
$ |
1,447 |
|
$ |
39,245 |
|
Commercial real estate property expenditures |
|
$ |
14,329 |
|
$ |
15,478 |
|
$ |
172 |
|
$ |
6,767 |
|
$ |
516 |
|
$ |
898 |
|
$ |
69 |
|
$ |
|
|
$ |
15,558 |
|
$ |
53,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2005: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
|
$ |
58,766 |
|
$ |
28,803 |
|
$ |
5,013 |
|
$ |
6,811 |
|
$ |
7,050 |
|
$ |
5,587 |
|
$ |
4,411 |
|
$ |
|
|
$ |
5,227 |
|
$ |
121,668 |
|
Property operating expenses |
|
17,947 |
|
9,797 |
|
73 |
|
1,351 |
|
3,033 |
|
2,170 |
|
1,407 |
|
|
|
1,048 |
|
36,826 |
|
||||||||||
NOI |
|
$ |
40,819 |
|
$ |
19,006 |
|
$ |
4,940 |
|
$ |
5,460 |
|
$ |
4,017 |
|
$ |
3,417 |
|
$ |
3,004 |
|
$ |
|
|
$ |
4,179 |
|
$ |
84,842 |
|
Commercial real estate property expenditures |
|
$ |
48,906 |
|
$ |
33,632 |
|
$ |
416 |
|
$ |
3,954 |
|
$ |
502 |
|
$ |
42,222 |
|
$ |
161 |
|
$ |
40,448 |
|
$ |
1,817 |
|
$ |
172,058 |
|
Segment assets at June 30, 2005 |
|
$ |
807,965 |
|
$ |
446,684 |
|
$ |
100,230 |
|
$ |
98,520 |
|
$ |
83,083 |
|
$ |
114,015 |
|
$ |
66,973 |
|
$ |
40,448 |
|
$ |
132,530 |
|
$ |
1,890,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2004: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
|
$ |
50,299 |
|
$ |
24,175 |
|
$ |
5,013 |
|
$ |
1,786 |
|
$ |
9,340 |
|
$ |
3,913 |
|
$ |
4,411 |
|
$ |
|
|
$ |
3,926 |
|
$ |
102,863 |
|
Property operating expenses |
|
15,736 |
|
6,386 |
|
79 |
|
392 |
|
2,727 |
|
1,383 |
|
1,501 |
|
|
|
1,482 |
|
29,686 |
|
||||||||||
NOI |
|
$ |
34,563 |
|
$ |
17,789 |
|
$ |
4,934 |
|
$ |
1,394 |
|
$ |
6,613 |
|
$ |
2,530 |
|
$ |
2,910 |
|
$ |
|
|
$ |
2,444 |
|
$ |
73,177 |
|
Commercial real estate property expenditures |
|
$ |
44,090 |
|
$ |
18,542 |
|
$ |
351 |
|
$ |
55,298 |
|
$ |
749 |
|
$ |
27,387 |
|
$ |
264 |
|
$ |
|
|
$ |
15,917 |
|
$ |
162,598 |
|
Segment assets at June 30, 2004 |
|
$ |
718,058 |
|
$ |
281,381 |
|
$ |
101,444 |
|
$ |
59,429 |
|
$ |
83,546 |
|
$ |
70,714 |
|
$ |
68,376 |
|
$ |
|
|
$ |
107,741 |
|
$ |
1,490,689 |
|
17
The following table reconciles our segment revenues to total revenues as reported on our Consolidated Statements of Operations:
|
|
For the Three Months |
|
For the Six Months |
|
||||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
Segment revenues |
|
$ |
61,041 |
|
$ |
53,892 |
|
$ |
121,668 |
|
$ |
102,863 |
|
Construction contract revenues |
|
17,445 |
|
5,233 |
|
33,173 |
|
11,370 |
|
||||
Other service operations revenues |
|
1,019 |
|
837 |
|
2,388 |
|
2,352 |
|
||||
Less: Revenues from discontinued operations |
|
(855 |
) |
(801 |
) |
(1,777 |
) |
(1,616 |
) |
||||
Total revenues |
|
$ |
78,650 |
|
$ |
59,161 |
|
$ |
155,452 |
|
$ |
114,969 |
|
The following table reconciles our segment property operating expenses to property operating expenses as reported on our Consolidated Statements of Operations:
|
|
For the Three Months |
|
For the Six Months |
|
||||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||||
Segment property operating expenses |
|
$ |
17,908 |
|
$ |
14,647 |
|
$ |