Exhibit 99.1

 

Supplemental Information

(Unaudited)

 

 

December 31, 2005

 

 

 

 

Corporate Office Properties Trust

Index to Supplemental Information (Unaudited)

December 31, 2005

 

		Page
Highlights and Discussion
Period Highlights – Year Ended December 31, 2005 and Fourth Quarter 2005		1
Forward-Looking Statements		5
Financial Statements
Quarterly Selected Financial Summary Data		7
Quarterly Consolidated Balance Sheets		8
Quarterly Consolidated Statements of Operations		9
Quarterly Consolidated Reconciliations of Funds From Operations (FFO), Adjusted Funds From Operations (AFFO) and Earnings per diluted share, as adjusted		10
Quarterly Consolidated Reconciliations of Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA), Combined Net Operating Income (NOI), Discontinued Operations and Gain on Sales of Real Estate		11
Annual Selected Financial Summary Data		12
Annual Consolidated Balance Sheets		13
Annual Consolidated Statements of Operations		14
Annual Consolidated Reconciliations of Funds From Operations (FFO), Adjusted Funds From Operations (AFFO) and Earnings per diluted share, as adjusted		15
Annual Consolidated Reconciliations of Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA)		16
Selected Financial Analyses
Quarterly Equity Analysis		17
Quarterly Debt Analysis		18
Quarterly Operating Ratios		19
Quarterly Dividend Analysis		20
Investor Composition and Analyst Coverage		21
Debt Maturity Schedule – December 31, 2005		22
Portfolio Summary
Property Summary by Region – December 31, 2005 – Wholly Owned Properties		23
Property Summary by Region – December 31, 2005 – Joint Venture Properties		28
Property Occupancy Rates by Region by Quarter – Wholly Owned Properties		29
Property Occupancy Rates by Region by Quarter – Joint Venture Properties		30
Top Twenty Office Tenants of Wholly Owned Properties as of December 31, 2005		31
Combined Real Estate Revenue and Combined Net Operating Income by Geographic Region by Quarter		32
Same Office Property Cash and GAAP Net Operating Income by Quarter		33
Average Occupancy Rates by Region for Same Office Properties		34
Office Lease Expiration Analysis by Year for Wholly Owned Properties		35
Annual Office Renewal Analysis		36
Quarterly Office Renewal Analysis as of December 31, 2005		38
Year to Date Acquisition Summary as of December 31, 2005		39
Year to Date Disposition Summary as of December 31, 2005		41
Development Summary as of December 31, 2005		42
Development Placed into Service for the Year Ended December 31, 2005		44
Land Inventory as of December 31, 2005		45
Joint Venture Summary as of December 31, 2005		46
Reconciliations of Non GAAP Measurements		47

 

 

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 page 47.  Refer to our Form 8-K for definitions of certain terms used herein.

 

Shareholder Return

 

•      Our shareholders earned a total return of 25.4% for the year 2005 and 365.5% for the past five years on the basis of numbers compiled by the National Association of Real Estate Investment Trusts as of December 31, 2005.  These return computations include the re-investment of dividends on the ex-dividend date and share price appreciation.

 

Reporting Period Highlights – Year Ended December 31, 2005

 

Financial Results

 

•      Reported Net Income Available to Common Shareholders of $24,416,000 or $.63 per diluted share for the year ended December 31, 2005 as compared to $18,890,000 or $.54 per diluted share for the comparable 2004 period, representing an increase of 16.7% per share.

•      Reported FFO – diluted of $88,801,000 or $1.86 per share/unit for the year ended December 31, 2005 as compared to $76,248,000 or $1.74 per share/unit for the comparable 2004 period, representing an increase of 6.9% per share/unit. 

•      Reported AFFO – diluted of $63,414,000 for the year ended December 31, 2005 as compared to $51,372,000 for the comparable 2004 period, representing an increase of 23.4%. 

•      Our FFO payout ratio was 56.3% for the year ended December 31, 2005 as compared to 55.7% for the comparable 2004 period.  Our AFFO payout ratio was 78.8% for the year ended December 31, 2005 as compared to 82.7% for the comparable 2004 period.

 

Financing Activity and Capital Transactions

 

•      During the year, we issued 2.3 million common shares and generated proceeds of $75.3 million, or $32.76 per share.  The proceeds were used to pay down our unsecured revolving credit facility.

•      We increased our quarterly dividend 9.8% from $.255 to $.280 per share.

•      On June 24, 2005, we raised our borrowing capacity in our unsecured line of credit from $300 to $400 million, with a right to further increase to $600 million.  Additionally, the maturity date was extended to March 9, 2008, with the right to extend for an additional one year period, subject to certain conditions.

•      During the year, we closed two, ten year, non-recourse, fixed rate loans totaling $211.5 million with an average interest rate of 5.55%.  In addition, we closed on four credit facilities for a maximum of $95.5 million to fund construction of 6711 Columbia Gateway Drive, 15010 Conference Center Drive (known as WTP II), 322 Sentinel Drive (known as 322 NBP), and 306 Sentinel Drive (known as 306 NBP).

 

1

 

Acquisitions / Dispositions

During 2005, we expanded into two new markets, began to reduce our presence in non-core markets and acquired 3.1 million square feet of space and 372 acres of land with development potential of 4.6 million square feet.  These figures include acquisitions through joint venture agreements of 611,464 square feet and 199 acres of land for development of 2.8 million square feet.  Some highlights follow:

 

•      We expanded into two additional markets with the acquisition of 468,994 square feet in San Antonio, Texas for $30.5 million and the acquisition of 316,577 square feet in Colorado Springs, Colorado for $38.4 million.  Additionally, we purchased 196 acres, developable into 1.6 million square feet, in our Colorado Springs, Colorado market and 27 acres with 350,000 developable square feet in our San Antonio, Texas market.  These amounts include 132 acres with development potential of 935,000 square feet that were acquired through a 50% undivided interest in a cotenancy agreement.

•      We sold an 80% ownership interest in our Harrisburg, Pennsylvania portfolio.  This portfolio consisted of 16 office buildings containing 671,759 square feet, and an option on 6.3 acres of land, valued at $73.0 million.  This transaction allowed for redeployment of proceeds into acquisitions and development in our core and expanding markets.

•      We purchased a portfolio of 21 properties with approximately 1.1 million square feet in Baltimore County, Maryland, for $124.5 million.  This acquisition represents a value-add, strategic opportunity.

 

Joint Venture/Development

 

•      We entered into a joint venture, known as COPT Opportunity Invest I, LLC in which COPT will own an 80% to 93% interest in each property acquired by the venture.  The purpose of the venture is to acquire warehouse properties primarily within the Greater Washington, DC submarkets that will be redeveloped into office space.  As of December 31, 2005, the joint venture had acquired two properties to be redeveloped.

•      We placed into service 764,058 square feet in five buildings. This space is 100% leased as of December 31, 2005.

 

Operations

 

•      During 2005, we leased 2.1 million square feet including 1.5 million square feet of renewed and retenanted space, 256,277 square feet of previously unoccupied space and 380,391 square feet of new development space.

•      We renewed 888,116 square feet or 66.6% of our expiring office leases (based upon square footage) with an average capital cost of $3.98 per square foot during the year ended December 31, 2005.  For our renewed and retenanted space of 1.5 million square feet, we realized a decrease in total rent of (1.5%), as measured from the GAAP straight-line rent in effect preceding the renewal date, and a decrease of (8.6%) in total cash rent.  We incurred an average committed cost of $8.23 per square foot for our renewed and retenanted space for the year.

 

2

 

Reporting Period Highlights – Fourth Quarter 2005

 

Financial Results

 

•      Reported Net Income Available to Common Shareholders of $6,628,000 or $.16 per diluted share for the fourth quarter of 2005 as compared to $5,792,000 or $.15 per diluted share for the comparable 2004 period, representing an increase of 6.7% per share.

•      Reported FFO – diluted of $23,804,000 or $.48 per share/unit for the fourth quarter of 2005 as compared to $20,879,000 or $.45 per share/unit for the comparable 2004 period, representing an increase of 6.7% per share/unit. 

•      Reported AFFO – diluted of $15,892,000 for the fourth quarter of 2005 as compared to $13,164,000 for the comparable 2004 period, representing an increase of 20.7%. 

•      Our FFO payout ratio was 57.0% for the fourth quarter of 2005 as compared to 55.4% for the comparable 2004 period.  Our AFFO payout ratio was 85.3% for the fourth quarter of 2005 as compared to 87.9% for the comparable 2004 period. 

 

Financing Activity and Capital Transactions

 

•      On October 17, 2005, we closed a $103.0 million, ten year non-recourse secured loan, requiring interest only payments at a fixed interest rate of 5.53%.  In connection with this permanent loan, we terminated our $73.4 million forward swap and remitted $603,000.

•      On December 22, 2005, we closed a $41.6 million loan, bearing interest based upon a pricing grid that was initially priced at LIBOR plus 1.25%.  This loan requires interest only payments and matures in December 2006 unless extended to December 2007 through the exercise of two six-month options.

•      On December 29, 2005, we closed a $108.5 million, ten year non-recourse secured loan, requiring interest only payments at a fixed interest rate of 5.56%.  This loan matures January 1, 2016.  In connection with this mortgage, we repaid $32.0 million of construction financing for 191 Sentinel Drive (known as 191 NBP) and 304 Sentinel Drive (known as 304 NBP) and paid down $72.0 million on our unsecured revolving credit facility.

•      As of December 31, 2005, our debt to market capitalization was 41.5% and our debt to undepreciated book value of real estate assets was 62.6%.  We achieved an EBITDA interest coverage ratio of 2.82x and an EBITDA fixed charge coverage ratio of 2.26x for this quarter.

 

Acquisitions / Dispositions

 

•      On October 21, 2005, we purchased an office building containing 117,803 rentable square feet, on a 21 acre land parcel, located in Frederick, Maryland for $17.0 million.  We leased 58% of this building to Farmers & Mechanics Bank for a ten year term.  The land parcel can support future development of two office buildings containing approximately 80,000 square feet.

•      On December 1, 2005, we purchased a building containing 61,203 rentable square feet located in Columbia, Maryland for $9.2 million.  We assumed a $3.9 million mortgage loan, which bears interest at a fixed rate of 7.87% and matures in November 2019.

•      On December 20, 2005, we acquired two buildings for redevelopment through a joint venture in which we hold a 92.5% interest.

•      A 140,000 square foot property comprised of a 61,000 square foot office building with an attached 79,000 square foot warehouse building on a 12.5 acre land parcel, located in Herndon, Virginia for $12.0 million.  The land parcel can support future development of approximately 55,000 square feet of warehouse space.

 

3

 

 

•      An existing 472,000 square foot warehouse that will be converted into 325,000 square feet of office space, located in Hanover, Maryland for $18.8 million.

•      On December 22, 2005, we acquired two buildings containing 113,000 rentable square feet on a 10 acre parcel in Colorado Springs, Colorado for $11.4 million.

•      On December 22, 2005, we acquired seven buildings totaling approximately 705,000 rentable square feet located in Hunt Valley, Maryland and 14 buildings totaling approximately 402,000 rentable square feet located in Woodlawn, Maryland for $124.5 million.

 

Joint Venture/Development

 

•      During this quarter, we placed into service 660,375 square feet which was 100% leased.  The four buildings are 318 Sentinel Drive (known as 318 NBP), 8611 Military Drive (a two building complex) and 8621 Robert Fulton Drive.

•      We executed a lease for 32,286 rentable square feet at 306 Sentinel Drive (known as 306 NBP) for a ten year lease term.

•      We executed a long term lease for all 125,568 rentable square feet at 322 Sentinel Drive (known as 322 NBP).

 

Operations

 

•      Our wholly owned portfolio was 94.0% occupied and 95.4% leased as of December 31, 2005.  Our entire portfolio was 93.4% occupied and 94.8% leased as of December 31, 2005.

•      Our same property cash NOI increased by 10.0% or $3.6 million as compared to the quarter ended December 31, 2004.  The primary driver of the increase in cash NOI for our same office portfolio as compared to fourth quarter of 2004, among other effects, was higher rental revenues.  This increase was primarily due to improved occupancy and higher rental rates in our Baltimore Washington Corridor and Northern Virginia regions.  Although our termination fee revenues remained flat for our same office portfolio, we experienced a $1.0 million increase in the Baltimore Washington Corridor offset by a corresponding $1.0 million drop in our Northern/Central New Jersey portfolio.  Our same property portfolio consists of 115 properties and represents 77.3% of our total square feet wholly owned as of December 31, 2005.

•      Weighted average lease term of our wholly owned portfolio is 5.0 years as of December 31, 2005, with an average contractual rental rate (including tenant reimbursements of operating costs) of $20.28 per square foot.

•      We renewed 153,106 square feet, or 50.6%, of our expiring office leases (based upon square footage) with an average committed cost of $2.89 per square foot during the fourth quarter.  For our renewed and retenanted space of 219,027 square feet, we realized an increase in total rent of 7.53%, as measured from the GAAP straight-line rent in effect preceding the renewal date and an increase of 0.38% in total cash rent.  We incurred an average committed cost of $10.54 per square foot for our renewed and retenanted space in the fourth quarter.

 

4

 

Subsequent Events

 

•      On January 1, 2006, we placed into service the 162,498 square foot development property at 304 Sentinel Drive (known as 304 NBP).  This building is 100% leased to a large credit worthy tenant.

•      On January 19, 2006, we acquired for redevelopment a building containing approximately 60,000 rentable square feet on an 11 acre land parcel, located in Colorado Springs, Colorado, for $2.6 million.  The land parcel can support up to 30,000 square feet of future office space.

•      On January 20, 2006, we acquired a 31 acre land parcel in San Antonio, Texas for $7.2 million that can support approximately 375,000 developable square feet.  This parcel is contiguous to the 27 acre land parcel and the 470,000 square foot building that we acquired during 2005.

•      On February 6, 2006, we sold two office properties containing 141,783 rentable square feet, in Laurel, Maryland for $17.0 million.

•      On February 10, 2006, we acquired for $1.8 million a 50% interest in a joint venture which will develop an office building containing 43,000 square feet in Hanover, Maryland.  As part of this joint venture formation, we have guaranteed a $1.0 million loan which matures in January 2007 and bears interest at a variable rate.

 

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;

 

5

 

•      our ability to satisfy and operate effectively under federal income tax rules relating to real estate investment trusts and partnerships;

•      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, 2004.

 

6

 

Quarterly Selected Financial Summary Data

(Dollars in thousands)

 

		2005												2004
		December 31			September 30			June 30			March 31			December 31
Revenues from Real Estate Operations		$	67,024		$	62,996		$	60,186		$	59,705		$	57,776
Total Revenues		80,913			92,780			78,650			76,802			65,491
Combined Net Operating Income		46,938			44,338			43,133			41,709			41,444
EBITDA		43,386			45,918			40,463			39,366			38,439
Net Income		10,282			10,589			9,120			9,040			9,446
Preferred Share dividends		(3,654		)	(3,653		)	(3,654		)	(3,654		)	(3,654		)
Net Income Available to Common Shareholders		$	6,628		$	6,936		$	5,466		$	5,386		$	5,792
Earnings per diluted share		$	0.16		$	0.18		$	0.14		$	0.14		$	0.15
Funds From Operations (FFO) - Diluted		$	23,804		$	22,127		$	21,834		$	21,143		$	20,879
FFO per diluted share		$	0.48		$	0.47		$	0.47		$	0.45		$	0.45
Adjusted FFO - Diluted		$	15,892		$	15,892		$	16,981		$	14,756		$	13,164
Payout Ratios:
Earnings Payout		167.0		%	158.1		%	171.6		%	173.4		%	160.4		%
FFO - Diluted		57.0		%	60.6		%	53.1		%	54.5		%	55.4		%
AFFO - Diluted		85.3		%	84.4		%	68.2		%	78.1		%	87.9		%
Total Dividends/Distributions		$	17,274		$	17,236		$	15,405		$	15,337		$	15,286

 

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

 

7

 

Quarterly Consolidated Balance Sheets

(Dollars in thousands except per share data)

 

		2005												2004
		December 31			September 30			June 30			March 31			December 31
Assets
Investment in real estate:
Land - operational		$	314,719		$	268,583		$	274,531		$	268,307		$	268,327
Land - development		117,434			127,085			108,320			97,085			74,190
Construction in progress		138,183			147,184			138,337			109,345			61,962
Buildings and improvements		1,491,254			1,315,611			1,333,168			1,294,099			1,280,537
Investment in and advances to unconsolidated real estate joint ventures		1,212			1,208			1,233			1,209			1,201
Less: accumulated depreciation		(174,935		)	(163,381		)	(165,058		)	(153,084		)	(141,716		)
Net investment in real estate		1,887,867			1,696,290			1,690,531			1,616,961			1,544,501
Cash and cash equivalents		10,784			17,348			21,486			6,212			13,821
Restricted cash		21,476			15,083			15,982			13,830			12,617
Accounts receivable, net		15,845			12,537			13,613			17,529			16,771
Investment in and advances to other unconsolidated entities		1,621			1,621			1,621			1,621			1,621
Deferred rent receivable		32,579			30,222			29,291			27,890			26,282
Deferred charges, net		35,046			31,420			28,662			27,168			27,642
Intangible assets on real estate acquisitions, net		90,984			67,686			66,354			64,965			67,560
Prepaid and other assets		29,872			25,465			19,501			19,658			18,646
Furniture, fixtures and equipment, net		4,302			4,024			3,407			3,086			2,565
Total assets		$	2,130,376		$	1,901,696		$	1,890,448		$	1,798,920		$	1,732,026
Liabilities and shareholders’ equity
Liabilities:
Mortgage and other loans payable		$	1,348,351		$	1,124,299		$	1,177,779		$	1,091,688		$	1,022,688
Accounts payable and accrued expenses		41,693			38,795			53,984			46,400			46,307
Rents received in advance and security deposits		14,774			14,191			13,421			13,298			12,781
Deferred revenue associated with acquired operating leases		12,707			8,045			8,092			6,612			7,247
Distributions in excess of investment in unconsolidated real estate joint venture		3,081			2,519			—			—			—
Dividends and distributions payable		16,703			16,665			14,834			14,766			14,713
Fair value of derivatives		—			1,516			4,188			—			—
Other liabilities		4,727			4,619			4,024			7,661			7,488
Total liabilities		1,442,036			1,210,649			1,276,322			1,180,425			1,111,224
Minority interests:
Preferred units in the Operating Partnership		8,800			8,800			8,800			8,800			8,800
Common units in the Operating Partnership		95,014			98,433			87,439			87,539			88,355
Other consolidated real estate joint ventures		2,013			1,297			861			1,699			1,723
Total minority interests		105,827			108,530			97,100			98,038			98,878
Commitments and contingencies		—			—			—			—			—
Shareholders’ equity:
Preferred Shares ($0.01 par value; 15,000,000 authorized)		67			67			67			67			67
Common Shares of beneficial interest ($0.01 par value; 75,000,000 authorized, 39,927,316 shares issued as of December 31, 2005)		399			396			372			370			368
Additional paid-in capital		657,544			654,024			586,567			582,805			578,228
Cumulative distributions in excess of net income		(67,697		)	(63,256		)	(59,226		)	(55,312		)	(51,358		)
Value of unearned restricted common share grants		(7,318		)	(7,318		)	(7,396		)	(7,473		)	(5,381		)
Accumulated other comprehensive loss		(482		)	(1,396		)	(3,358		)	—			—
Total shareholders’ equity		582,513			582,517			517,026			520,457			521,924
Total shareholders’ equity and minority interests		688,340			691,047			614,126			618,495			620,802
Total liabilities and shareholders’ equity		$	2,130,376		$	1,901,696		$	1,890,448		$	1,798,920		$	1,732,026

 

8

 

Quarterly Consolidated Statements of Operations

(Dollars and units in thousands)

 

		2005												2004
		December 31			September 30			June 30			March 31			December 31
Revenues
Rental revenue		$	58,053		$	54,978		$	53,601		$	52,430		$	51,903
Tenant recoveries and other real estate operations revenue		8,971			8,018			6,585			7,275			5,873
Construction contract revenues		12,708			28,476			17,445			15,728			6,882
Other service operations revenues		1,181			1,308			1,019			1,369			833
Total Revenues		80,913			92,780			78,650			76,802			65,491
Expenses
Property operating		20,087			19,032			17,574			18,565			16,876
Depreciation and amortization associated with real estate operations		15,604			18,004			15,068			14,387			13,668
Construction contract expenses		12,341			28,073			17,223			14,897			6,453
Other service operations expenses		1,254			1,253			955			1,291			823
General and administrative expenses		3,774			3,318			3,166			3,276			3,467
Total Operating Expenses		53,060			69,680			53,986			52,416			41,287
Operating Income		27,853			23,100			24,664			24,386			24,204
Interest expense		(15,374		)	(14,370		)	(13,728		)	(13,183		)	(12,483		)
Amortization of deferred financing costs		(732		)	(641		)	(471		)	(396		)	(495		)
Income from continuing operations before equity in loss of unconsolidated entities, income taxes and minority interests		11,747			8,089			10,465			10,807			11,226
Equity in loss of unconsolidated entities		(88		)	—			—			—			—
Income tax benefit (expense)		265			(263		)	(213		)	(456		)	(420		)
Income from continuing operations before minority interests		11,924			7,826			10,252			10,351			10,806
Minority interest in income from continuing operations
Common units in the Operating Partnership		(1,517		)	(806		)	(1,265		)	(1,281		)	(1,377		)
Preferred units in the Operating Partnership		(165		)	(165		)	(165		)	(165		)	(165		)
Other consolidated entities		27			19			15			24			12
Income from continuing operations		10,269			6,874			8,837			8,929			9,276
(Loss) income from discontinued operations, net of minority interests		(8		)	3,656			115			92			150
Income before gain on sales of real estate		10,261			10,530			8,952			9,021			9,426
Gain on sales of real estate		21			59			168			19			20
Net Income		10,282			10,589			9,120			9,040			9,446
Preferred share dividends		(3,654		)	(3,653		)	(3,654		)	(3,654		)	(3,654		)
Net Income Available to Common Shareholders		$	6,628		$	6,936		$	5,466		$	5,386		$	5,792
For EPS Computations:
Numerator for Dilutive EPS		$	6,628		$	6,936		$	5,466		$	5,386		$	5,792
Denominator:
Weighted Average Common Shares - Basic		39,297			36,913			36,692			36,555			36,296
Dilutive options		1,678			1,667			1,528			1,537			1,638
Weighted Average Common Shares - Diluted		40,975			38,580			38,220			38,092			37,934
Earnings per diluted share		$	0.16		$	0.18		$	0.14		$	0.14		$	0.15

 

9

 

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

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

(Dollars in thousands)

 

		2005												2004
		December 31			September 30			June 30			March 31			December 31
Net Income		$	10,282		$	10,589		$	9,120		$	9,040		$	9,446
Combined real estate related depreciation and other amortization		15,410			17,848			15,087			14,505			13,625
Depreciation and amortization of unconsolidated real estate entities		182			—			—			—			—
Depreciation and amortization allocable to minority interests in other consol. entities		(29		)	(23		)	(30		)	(32		)	(30		)
Gain on sales of real estate properties, excluding development		(14		)	(4,360		)	(24		)	(24		)	(24		)
Funds From Operations (FFO)		25,831			24,054			24,153			23,489			23,017
Minority interest - common units, gross		1,520			1,726			1,335			1,308			1,418
Preferred share dividends		(3,654		)	(3,653		)	(3,654		)	(3,654		)	(3,654		)
Funds From Operations (FFO) - Basic		23,697			22,127			21,834			21,143			20,781
Restricted share dividends		107			—			—			—			98
Funds From Operations (FFO) - Diluted		$	23,804		$	22,127		$	21,834		$	21,143		$	20,879
Straight line rent adjustments		(2,292		)	(1,519		)	(1,369		)	(1,583		)	(2,895		)
Amortization of deferred market rental revenue		(394		)	229			(191		)	(70		)	(125		)
Recurring capital expenditures		(5,226		)	(4,945		)	(3,293		)	(4,734		)	(4,695		)
Adjusted Funds from Operations - Diluted		$	15,892		$	15,892		$	16,981		$	14,756		$	13,164
Preferred dividends - redeemable non-convertible		3,654			3,653			3,654			3,654			3,654
Preferred distributions		165			165			165			165			165
Common distributions		2,386			2,452			2,205			2,179			2,179
Common dividends		11,069			10,966			9,381			9,339			9,288
Total Dividends/Distributions		$	17,274		$	17,236		$	15,405		$	15,337		$	15,286
Denominator for earnings per share - Diluted		40,975			38,580			38,220			38,092			37,934
Restricted shares		224			—			—			—			238
Common units		8,688			8,758			8,676			8,544			8,588
Denominator for funds from operations per share - Diluted		49,887			47,338			46,896			46,636			46,760

 

10

 

Quarterly Consolidated Reconciliations of Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA), Combined Net Operating Income (NOI), Discontinued Operations and Gain on Sales of Real Estate

(Dollars in thousands)

 

		2005												2004
		December 31			September 30			June 30			March 31			December 31
Net Income		$	10,282		$	10,589		$	9,120		$	9,040		$	9,446
Combined interest expense		15,374			14,496			13,916			13,358			12,648
Amortization of deferred financing costs		732			641			471			396			495
Income tax benefit (expense), gross		(265		)	294			213			457			420
Depreciation of furniture, fixtures and equipment		195			178			171			161			234
Combined real estate related depreciation and other amortization		15,410			17,848			15,087			14,505			13,625
Minority interest - preferred units		165			165			165			165			165
Minority interest - other consolidated entities		(27		)	(19		)	(15		)	(24		)	(12		)
Minority interest - common units, gross		1,520			1,726			1,335			1,308			1,418
Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA)		$	43,386		$	45,918		$	40,463		$	39,366		$	38,439
Addback:
General and administrative		3,774			3,318			3,166			3,276			3,467
(Income) from service operations		(294		)	(458		)	(286		)	(909		)	(439		)
Gain on sales of depreciated real estate properties		(14		)	(4,360		)	(24		)	(24		)	(24		)
Merchant sales and real estate services		(2		)	(80		)	(186		)	—			1
Equity in loss of unconsolidated entities		88			—			—			—			—
Combined Net Operating Income (NOI)		$	46,938		$	44,338		$	43,133		$	41,709		$	41,444
Discontinued Operations:
Revenues from real estate operations		$	—		$	671		$	855		$	922		$	837
Property operating expenses		1			(296		)	(334		)	(353		)	(294		)
Depreciation and amortization		—			(23		)	(190		)	(279		)	(191		)
Interest		—			(126		)	(188		)	(175		)	(165		)
(Loss) gain on sales of real estate		(11		)	4,335			—			—			—
(Loss) income from discontinued operations		(10		)	4,561			143			115			187
Minority interests in discontinued operations		2			(905		)	(28		)	(23		)	(37		)
Income from discontinued operations, net of minority interests		$	(8	)	$	3,656		$	115		$	92		$	150
Gain/(loss) on sales of real estate, net, per statement of operations		$	21		$	59		$	168		$	19		$	20
Add income taxes and minority interest		6				46			42			5			4
(Loss)/gain on sales of real estate from discontinued operations		(11		)	4,335			—			—			—
Combined gain/(loss) on sales of real estate		16			4,440			210			24			24
Merchant sales and real estate services		(2		)	(80		)	(186		)	—			—
Gain on sales of depreciated real estate properties		$	14		$	4,360		$	24		$	24		$	24

 

11